2009 New York Life Annual Report

8/8/2019 2009 New York Life Annual Report

1/58


2/58


3/58


4/58


5/58


6/58


7/58


8/58


9/58


10/58


11/58


12/58


13/58

New York Life Annual R eport 2009

11The Company You Keepin good times and bad

Jack Snyderbegan his business 35 years ago with little more than a cutting machine and anold Ping-Pong table. But he also had the right friend: New York Life Agent Ron Paulseen. Jack had no idea that Ron would soon become one of New York Lifes most successfulagents. And Ron might not have suspected that Jacks company, Sharpline, would grow intoone of the nations leading suppliers of pinstriping and vinyl graphics for cars, recreational vehicles and watercraft.However, in 2008, as the nations economy went into free fall, sales of cars, RVs and boatsplummeted as did the demand for Sharplines products. As Jack recalls, My company became a full-fledged participant in the recession.Soon, cash flow became a real challenge. His company needed a cushion of capital but where could he get it? Bank loans were becoming increasingly diffi cult to obtain. And with

the markets in steep decline, Jack knew he would suffer big losses if he tapped into hisinvestment accounts.It never occurred to me, Jack said, that I was sitting on a readily available asset thecash value of our life insurance. In my family, life insurance was something you paid for,but never touched.Fortunately, Ron provided the advice Jack needed. He reminded Jack that many millionsof dollars in cash value had accumulated in the life insurance policies that he had purchased

over the years for himself and his management team. How soon could we have access tothose funds? Jack asked Ron. Rons answer: Immediately.Today, with his companys sales recovering, Jack plans to have the policy loans fully repaidin less than two years. For him, it was a convincing lesson in the living benefits of wholelife insurance.But theres also something else Jack says he learned from his friend Ron: When selecting alife insurance company, dont ask who offers the lowest price. Instead, make sure you know who can promise the greatest security. As far as Im concerned, New York Life is theonly choice.

Policy loans accrue interest and reduce the policys total cash value and death benet. Unpaid loans can result in policy lapse.


14/58

New York Life Annual Report 2009

12The Company You Keepwhen guarantees matter

Susan and Steve Kim

Without access to the value of that policy, wewould have had to liquidate everything we own.

The Company You Keepw n guara e ma r


15/58


13The Company You Keepwhen guarantees matter

Even as a teenager,Steve Kimknew he would one day nd a place for himself in Best Realty,his mother and fathers growing real estate company. James and Susan Kimrealized theirson was serious when he got a real estate license at age 18, shortly after graduating fromhigh school.The future of the familys business looked bright until a routine doctors visit revealed James Kim had cancer. There was no reason to suspect anything was the matter with him,Steve recalls. He worked out, didnt smoke or drink, and took care of his health. Susanadds, We were absolutely shocked. James had always been skeptical about purchasing life insurance, preferring to invest every dollar into the growth of his business. But Cindy Choo, his New York Life agent, hadpersuaded him over the years to gradually build a signicant amount of whole life coveragefor himself and his family.The two years of medical bills that followed Jamess diagnosis took a heavy toll on the Kims.Fortunately, Cindy had added a Living Benets Rider to one of the whole life policies,allowing early payment of a portion of the death benet in case of a terminal illness. Stevesays, Without access to the value of that policy, we would have had to liquidate everything we own. I imagine our home would have been the rst thing to go.Even still, the familys debts continued to mount. My husband was unable to work during the

two years he was battling the disease, Susan points out. At the same time, the recession hadcrippled the real estate market, putting tremendous strain on the business. James passed away in 2008. With the proceeds from the life insurance he purchased to protecthis family, Susan and Steve were able to erase their debts and put their company on a soundfooting. Steve now a co-owner of Best Realty believes his father took comfort in knowing his wife and son would be able to face the future with condence.Cindy Choo visited James in the hospital shortly before his passing. Barely strong enough to

speak, he motioned her to the bedside and laid his hand on hers. Thank you, he whispered.Thank you for all you did to take good care of us.

Living Benets Rider is subject to state availability and not available on all policies.


16/58


14The Company You Keepfor a lifetime

Dr. Vaman and Veena Chaubal

I tell everyone, We sleep very well at night because of New York Life.

The Company You Keep f r li i


17/58


15The Company You Keepfor a lifetime

Several generations of parents in Tinton Falls, New Jersey, have trustedDr. Vaman Chaubal to look after the health of their children. Vaman and his wife,Veena,trust their financial well-being in retirement to their New York Life agent of 30 years, Bill Van Winkle.Back in 2008, Bill cautioned Vaman and Veena that, by having their entire nest egg in thestock market, they could be putting their retirement savings at risk.The couple was worried, too. But every time they discussed their fears with their stockbroker,he told them, Dont worry about it. The markets will always go up and down.That might be ne advice to give a 20-year-old, concluded Vaman. But for us, in thischapter of our lives, nothing is more important than safety. So I went to Bill and askedhim, What can we do?Bill showed the Chaubals how to use the funds they had in stocks to purchase guaranteed

lifetime income annuities that will provide them with a secure monthly income for life.They exited the market just in time, only a few weeks before it crashed. Vaman and Veenaestimate that, had they remained fully invested in stocks, they would have lost at least half of their savings.After purchasing the annuities, Vaman and Veena asked Bill if anything bad could happento their retirement income if the economy continued to falter. Bill reassured them, Dont worry. Your income is guaranteed by the strength of New York Life.According to Vaman, he no longer gets dinner invitations from his stockbroker: But Im okay with that. The annuities have given us a peaceful life. We know exactly what our income willbe every month. We are able to plan and budget with no worries. I tell everyone, We sleep very well at night because of New York Life.

Guaranteed Lifetime Income products are issued by New York Life Insurance and Annuity Corporation, a wholly-owned subsidiary of New York Life Insurance Company. Guarantees are backed by the claims-paying ability of the issuer.


18/58


19/58


17The Company You Keepfor generations

Craig Christiansenstill remembers sitting in the lap of his great-uncle, Abe Duran, hearing stories about Abes days as a top agent for New York Life in the 1920s. Great-Uncle Abe boughtCraigs family their rst whole life insurance policy a policy that, years later, would helpsave a dream.This dream began when Craig and his wife,Cathy,discovered an abandoned century-oldtrain depot in the little town of Bald Knob, Arkansas. The building had become a dilapidated wreck and was slated for demolition. But Craig and Cathy envisioned a restored historiclandmark, one that would someday house a model railroad store and train museum.A lot of hard work and love went into bringing this depot back to life, said Craig. But wecame close to losing it all the depot, our home, our savings, everything when my motherpassed away earlier this year.

Craig and his mother shared responsibility for the familys investment accounts. Unfortunately, despite their estate planning efforts, all of their shared assets became temporarily entangledin dispute, leaving Craig and Cathy in a precarious nancial position.As Craig tells it, Just when it seemed we were at the end of our rope, some real-life angelsintervened. Two old family friends, father and son New York Life Agents Arthur andTracy Wood of Dallas, along with Arkansas Agent Jerry Coats, stepped forward to offer theirassistance. They asked Craig and Cathy, What about those whole life policies you own? You

can borrow what you need from the cash value thats built up. The very next day, Craig was cashing a check for loan proceeds from New York Life.He recalls, After I lost my mom, a lot of people came to us with their hands out. The trustee wanted money. The attorneys wanted money. The tax people wanted money. New York Lifepeople were the only ones who said, We are here to help. Thank goodness for Jerry andArthur and Tracy!To which Cathy replies, Dont forget our fourth New York Life angel Uncle Abe. Im pretty

sure he had a hand in this, too.


20/58


18Principal Businesses of New York Life

U.S. Life Insurance and Agency The troubled economy of the past two years hasbeen, for many Americans, a wake-up call, reminding them of the necessity of protecting their nancialfutures with triple-A nancial strength-rated lifeinsurance from New York Life, the number oneseller of individual life insurance in the nation.* Whole life insurance, our flagship product, offerscustomers the peace of mind of knowing that, evenin the most severe economic downturns, not only are their families protected, but they also can accessthe cash value of their policies whenever they need it, no questions asked. And its cash value isguaranteed to grow, year after year, for as long asthey own their policies.New York Life provides life insurance primarily through our network of nearly 12,000 career agentsnationwide. These agents are backed by one of themost highly regarded training and lifetime educationprograms in the industry. The value of these trustedadvisors was never more apparent than during theonset of the nancial crisis, whenthey quickly ralliedto come to the aid of their clients.With condencein many nancial institutions badly shaken, ouragents contacted policyholders to reassure them of New York Lifes strength and safety, helped themnd solutions to immediate concerns and worked with them to help assess how best to respond to theimpact of the crisis on their families nancial plans.Nowhere is the professionalism of our agents moreevident than in their dominance of the Million

Dollar Round Table (MDRT). Qualifying for MDRTranks an agent among the top one percent of lifeinsurance professionals in the world, and MDRTmembership is a widely recognized sign of superior

technical knowledge, client serviceand ethical standards. For the 55th consecutive year, New York Life led allU.S. insurers in MDRT membership, with more than 2,000 agent members.In 2009, Tim FitzGerald (top, right)of our Shreveport, Louisiana, offi ceand Michael Brown (bottom, right) of our Greater Kansas City offi ce receivedthe highest honors we bestow on ouragents the New York Life Council presidency and vice presidency, respectively.In addition to our career agents, we also provide lifeinsurance through our Advanced Market Network of independent insurance brokers, who offer corporate-and bank-owned insurance products, as well asinsurance solutions for high net-worth individuals.Through an exclusive marketing arrangement with AARP, New York Life offers insurance coverageto the associations nearly 38 million members. Thesuccess of this program has made the Company thelargest direct response marketer of life insurance

in the nation.

The exclusive term and permanentlife insurance products available to AARP membersprovide the protection of life insurance fromNew York Life in smaller face amounts. New YorkLife is also the exclusive provider of xed immediategroup annuities to AARPs membership.

New York Life offers insurance to members of other afnity groups through our Group MembershipAssociation division, focusing on professional,military, educational and alumni associations.

Principal Businesses of New York Life

*Source: LIMRA International, U.S. Individual Life Insurance Sales Survey, year-end 2009 results. Sales based on all planned recurring premiums plus 100 percent of reported single premiums.

Cash value is accessed through policy loans and surrenders, which both reduce the policys cash surrender value and total death benet. Source: LIMRA International, U.S. Individual Life Insurance Sales Survey, year-end 2009 and other publicly available sources. New York Lifes xed annuities are issued by New York Life Insurance and Annuity Corporation, a wholly-owned subsidiary of New York Life Insurance Company.


21/58



Retirement Income Security Approximately 77 million baby boomers in theUnited States are now approaching or already inretirement. For many of these men and women,the economic recession provided a harsh lesson inhow costly it can be to assume too much risk whencrafting a nancial plan for this stage of life.Poorly performing investments can have a devastating impact on retirement security, particularly for the

growing number of retirees who do not have denedbenet pensions. Social Security benets, which werenever designed to serve as a sole source of retirementincome, today only cover a small fraction of theaverage retirees living expenses. There are alsothe added nancial demands of increasing longevity:For a healthy married couple in their mid-sixties,there is now a 50 percent chance that one spouse willlive beyond his or her 92nd birthday.* With so many retirements spanning 30 years or more, many peopleface the very real prospect of outliving their savings.Our Retirement Income Security division offersa comprehensive suite of products that can providesolutions for all stages of retirement planning:Guaranteed Lifetime Income (GLI), InvestmentAnnuities and Long-TermCare Insurance. To roundout these retirement strategies, this business unit

also distributes the Companys family of MainStay mutual funds.

Guaranteed Lifetime Incomeproducts are immediate xed annuities that offer the security of monthly retirement income checks for life and featureimportant options, such as access to cash for unex-pected expenses, inflation protection and legacy benets. New York Life is the dominant providerin this marketplace, with a 25 percent share of the

market. GLI products are sold by our agents, by

broker-dealers and also through banks, whereNew York Life now accounts for more than half of all such products sold.Investment Annuitiesoffer our customers theability to accumulate money for their retirementon a tax-deferred basis, meaning no tax is paid onearnings until the funds are withdrawn. Our variable deferred annuities, in which money can be allocated

among a variety of investment choices and/or to aguaranteed xed account, are sold by New York Lifes network of career agents.** Fixed interest deferredannuities, which earn a guaranteed rate of interest,are sold by agents and also by a growing number of banks and broker-dealers nationwide.

Long-Term Care:An estimated 70 percent of Americans over the age of 65 will need long-termcare services during their lifetimes and the greatmajority of them will not qualify for governmentassistance to cover the costs. Those costs can begreat: Average fees in 2009 for care in an assistedliving facility topped $36,000 per year. That is why long-term care insurance, which can helppay for either out-of-home or at-home care, is now considered a nancial planning essential.In the long-term care insurance business,New York Life remains one of the few majorinsurers that have never raised the rates of in forcepolicyholders, a reflection of the Companysprudent underwriting and pricing practices. Inaddition, 2009 was the fth consecutive year thatNew York Life returned a dividend to eligiblelong-term care policyholders, further setting ourselves apart from competitors.

*Source: American Society of Actuaries, 2000 Mortality Tables. Mutual funds are distributed through NYLIFE Distributors LLC, a wholly-owned subsidiary of New York Life Insurance Company, Member FINRA/SIPC. New York Lifes xed annuities are issued by New York Life Insurance and Annuity Corporation (NYLIAC), a wholly-owned subsidiary of New York Life Insurance Company.

Source: LIMRA International, U.S. Individual Annuity Sales Survey, year-end 2009 results. Based on xed immediate annuity sales.**Variable annuities are issued by NYLIAC and distributed by NYLIFE Distributors LLC, Member FINRA/SIPC. U.S. Department of Health and Human Services: National Clearinghouse for Long-Term Care Information: www.longtermcare.gov.


22/58



New York Life InvestmentsFounded upon its acumen in managing the investment portfolio of New York Life Insurance Company,New York Life Investments ranks among the largestasset management rms in the United States,* withmore than $256 billion in assets under management.

In addition to managing $146 billion of New YorkLifes investment assets, New York Life Investmentsprovides investment management services to

institutional and retail clients, offers retirementplans for employers and individuals, and deliversguaranteed products to both the qualied andnon-qualied markets.Through its multi-boutique structure, the rmoffers one of the broadest arrays of investmentmanagement competencies in the industry:

Traditional Businesses

New York Life Investments Fixed IncomeInvestors Group (FIIG)manages the bulk of New York Lifes investment assets and also servesclients in the institutional market.New York Life Investments Real Estate Groupmanages a portfolio of real estate debt and equity investments for New York Lifes General Accountand third-party investors, with ofces acrossthe country providing a national presence.New York Life Investments Guaranteed Productsis a global provider of institutional xed incomeinvestment products issued by New York Life toinvestors seeking high quality, low volatility andstable returns.Madison Capital Funding is a nance company focused exclusively on the corporate nancing needs of private equity sponsors throughout theUnited States, providing nancing for acquisitions,recapitalizations, management buyouts andleveraged buyouts.

Asset Management Boutiques

MacKay Shieldsis a xed income-focused advisory rm managing assets on behalf of institutionalclients and retail sub-advisory relationships.Institutional Capital (ICAP)is a value-oriented,large cap equity investment rm managing bothinstitutional and retail assets.Madison Square Investorsoffers quantitativeinvestment solutions to a wide range of individual,

corporate, public, endowment and foundation, andmulti-employer retirement plans for union clients.New York Life Capital Partnersmanages theprivate equity investment activities of New YorkLife Insurance Company and third-party institu-tional clients.McMorgan & Company specializes in serving the needs of the union market, linking clients to the

investment expertise available across New YorkLife Investments.Retail Investments

ThroughMainStay Investments,the expertiseof our investment managers is made available toindividual investors. Clients can select from among some of the most highly regarded mutual fundsin the industry, including equity, xed income,blended, international and asset allocation funds.MainStay Managed Accounts provides individualportfolio solutions for small and mid-sizeinstitutionsand high net-worth individuals.Retirement Plan Services

New York Life Retirement Plan Servicesprovidesretirement plan management and administrationfor more than 1,900 corporations and union clients.For more than four decades we have offered a fullrange of products and services, including denedcontribution, dened benet and executivebenet plans.

*Source: New York Life Investments ranked 28th among the more than 700 money managers surveyed byPensions & Investments,May 18, 2009, The Largest Money Managers. Rankings are based on total worldwide institutional assets under management for year-end 2008.

NYL Investments assets under management consist of certain assets of the Companys domestic and international insurance operations and assets managed for third-party investors, including mutual funds, separately managed accounts and retirement plans. Source:Barronsmagazine The MainStay Fund Family ranked third onBarrons2009 list of the 48 Best Fund Families over a 10-year period ended December 31, 2009.


23/58



New York Life InternationalNew York Life International is the global arm of the Company, with operations in Mexico, India,China, Hong Kong, South Korea, Taiwan andThailand. Today, 21 percent of New York Lifestotal life insurance sales come from theseinternational markets.Our international strategy is based upon exporting to overseas markets New York Lifes core strength

165 years of experience delivering nancialsecurity and peace of mind. In addition, we arekeenly aware that life insurance can play animportant part in stabilizing and improving thenancial futures of entire communities that may have previously had very limited access to nancialprotection products. Just as in our domestic business, the primary focusof New York Lifes international business is lifeinsurance distributed through a career agency organization. New York Lifes proprietary systemsfor recruiting and training agents have provenhighly successful around the world. Over 660 of ourinternational agents qualied in 2009 for the MillionDollar Round Table, an honor reserved for the topone percent of life insurance agents in the world. InIndia and Mexico, our agency forces are recognized

as among the most productive in the industry.

While our international operations are built upon

the traditions and legacy of the parent company,New York Life International and its business partnerstailor their operationsto meet the preferences andneeds of each market. We enhance our ability toreach customers through additional distributionchannels, including sales through Thailands mostprominent bank, strategic partnerships in India, worksite sales in Mexico and telemarketing in Taiwan.In all we do, we strive to be the life insurer of choicefor policyholders, distributors and employees,building a customer-focused business that meets theprotection needs of families across Asia and LatinAmerica. The Companys international operationsreceived numerous recognitions in 2009, including awards for community involvement in Hong Kong,for innovation in India and Taiwan, and for an

exceptional workplace environment in Mexico.Rather than simply exporting a product, we aretransplanting the principles and ideals that havemade New York Life successful humanity, integrity and nancial strength.


24/58


222009 Investment Review

CASH AND INVESTED ASSETS

(DOLLARS IN MILLIONS) DECEMBER 31, 2008

PUBLIC CORPORATE BONDS AND LOANS $ 42,890 29%

PRIVATE CORPORATE BONDS AND LOANS 22,856 15%

U.S. GOVT AND AGENCY SECURITIES 20,644 14%

COMMERCIAL MORTGAGE-BACKED SECURITIES 10,939 7%

NON-AGENCY RESIDENTIAL SECURITIES 7,792 5%

ASSET-BACKED SECURITIES 6,400 4%

SUBTOTAL FIXED INCOME $111,521 75%

MORTGAGE LOANS 15,292 10%

EQUITIES 8,500 6%

POLICY LOANS 7,811 5%

CASH AND SHORT TERMS 5,560 4%

DERIVATIVES 934 1%

TOTAL CASH AND INVESTED ASSETS $149,618 100%

DECEMBER 31, 2009

$ 43,973 28%

24,568 16%

28,672 18%

10,996 7%

7,131 5%

6,718 4%

$122,058 77%

15,201 10%

7,362 5%

8,363 5%

3,919 2%

702 0%

$157,605 100%

Numbers may not add up due to rounding. Includes $53,713 million and $63,666 million of assets related to New York Life Insurance and Annuity Corporation for 2008 and 2009, respectively. Includes cash primarily received on nancing transactions of $2,970 million and $2,209 million for 2008 and 2009, respectively, and money market mutual funds of $447 million and $50 million for 2008 and 2009, respectively.

The following investment review presentsinformation for New York Life Insurance Company and its domestic insurance subsidiaries, New YorkLife Insurance and Annuity Corporation andNYLIFE Insurance Company of Arizona,* assets of which represent most of the invested assets of theCompany. The cash and invested asset informationbelow is presented on a statutory accounting basis.New York Lifes investment in its internationalinsurance afliates and domestic non-insuranceaffi liates is included in the Equities line of the tablebelow. New York Life International, the largest

affi liate in asset size, had cash and invested assetsof $7.4 billion. Cash and invested assets are presentedon a GAAP basis on the balance sheet on page 31.A reconciliation of cash and invested assets froma GAAP basis to a statutory basis is presentedon page 44.

Cash and Invested AssetsAs of December 31, 2009, New York Life and itsdomestic insurance subsidiaries had cash andinvested assets of $157.6 billion and maintaineda well-diversied investment portfolio.

2009Investment Review

New York Life Insurance Company and Its Domestic Insurance Subsidiaries

* NYLIFE Insurance Company of Arizona is not authorized in New York or Maine, and does not conduct insurance business in New York or Maine.


25/58



FIXED INCOME BY QUALITY*

(DOLLARS IN MILLIONS)

APPROXIMATE RATINGNAIC RATING AGENCY EQUIVALENT QUALITY DECEMBER 31, 2008

NAIC 1 AAA TO A- HIGHEST QUALITY $ 76,395 69%

NAIC 2 BBB+ TO BBB- HIGH QUALITY 25,876 23%

INVESTMENT GRADE 102,271 92%

NAIC 3 BB+ TO BB- MEDIUM QUALITY 4,505 4%

NAIC 4 B+ TO B- LOW QUALITY 3,088 3%

NAIC 5 CCC+ TO CCC- LOWER QUALITY 1,556 1%NAIC 6 CC TO D IN OR NEAR DEFAULT 101 0%

BELOW INVESTMENT GRADE 9,250 8%

TOTAL FIXED INCOME $111,521 100%

DECEMBER 31, 2009

$ 83,057 68%

27,849 23%

110,906 91%

5,455 4%

3,887 3%

1,606 1%204 0%

11,152 9%

$122,058 100%

Numbers may not add up due to rounding.* Includes $43,797 million and $54,799 million of assets related to New York Life Insurance and Annuity Corporation for 2008 and 2009, respectively.

DIVERSIFICATION OF CORPORATE BONDS AND LOANS*


ELECTRIC UTILITIES $10,625 16%

CONSUMER PRODUCTS 6,205 9%

OIL AND GAS 4,315 6%

BANKING 4,276 6%

HEALTH CARE 3,923 6%

SERVICES 3,619 5%

REITS 3,107 5%GAS PIPELINES 2,580 4%

INSURANCE 2,532 4%

MACHINERY/TECHNOLOGY 2,521 4%

CABLE AND MEDIA 2,484 4%

SOVEREIGN/FOREIGN GOVERNMENT 2,252 3%

RETAIL 2,250 3%

OTHER 17,852 26%

TOTAL $68,541 100%

Numbers may not add up due to rounding.* Includes $28,861 million of assets related to New York Life Insurance

and Annuity Corporation.

Fixed Income AssetsThe xed income portfolio continues to be domi-natedby high-quality investments, with 91 percentbeing investment grade. A signicant proportionof xed income assets as of December 31, 2009, wererated highest-quality (NAIC 1), representing 68 percent of total xed assets.The corporate bond and loan portfolio remains well diversied across the broad industry spectrum

and is comprised of securities issued by more than2,300 individual issuers.The xed income portfolio is managed to limitexposure to individual issuers according to creditquality and other factors. No single corporateexposure was greater than $298 million. Theportfolios ten largest holdings by issuer represented1.5 percent of cash and invested assets.


26/58



Commercial Mortgage-Backed SecuritiesAs of year-end 2009, New York Life and its domesticinsurance subsidiaries owned $11 billion in com-mercial mortgage-backed securities, representing 7 percent of cash and invested assets. The majority of these securities were rated AAA even afterrepeated downgrades of a large number of suchsecurities by the rating agencies. Notwithstanding the ratings, these securities are selected by our realestate investment professionals based on the quality of the underlying mortgage loans.Non-Agency Residential SecuritiesAs of year-end 2009, New York Life and its domesticinsurance subsidiaries owned $7.1 billion in non-

agency residential securities, representing 5 percentof cash and invested assets. The mortgage loansunderlying these securities were held predominantly by prime borrowers. The majority of these securities were classied as NAIC 1 and 94 percent arecollateralized by xed-rate mortgage loans. Only $298 million, or less than 0.2 percent of cash andinvested assets, are collateralized by sub-primemortgage loans.

COMMERCIAL MORTGAGE-BACKED SECURITIESBY RATING CATEGORY*


AAA $ 9,808 89%

AA 718 7%

A 371 3%

BBB 85 1%

BB OR LOWER 14 0%

TOTAL $10,996 100%

* Includes $4,862 million of assets related to New York Life Insuranceand Annuity Corporation.



NON-AGENCY RESIDENTIAL SECURITIES BY TYPE AND NAIC RATING CATEGORY*


APPROXIMATE RATINGNAIC RATING AGENCY EQUIVALENT QUALITY PRIME MID-PRIME SUB-PRIME TOTAL

NAIC 1 AAA TO A- HIGHEST QUALITY $3,108 $ 830 $241 $4,179

NAIC 2 BBB+ TO BBB- HIGH QUALITY 717 36 0 753

NAIC 3 BB+ TO BB- MEDIUM QUALITY 731 196 17 944

NAIC 4 B+ TO B- LOW QUALITY 800 226 33 1,059

NAIC 5 CCC+ TO CCC- LOWER QUALITY 87 89 7 183

NAIC 6 CC TO D IN OR NEAR DEFAULT 13 0 0 13

TOTAL $5,456 $1,377 $298 $7,131

* Includes $3,856 million of assets related to New York Life Insurance and Annuity Corporation.


27/58



Asset-Backed SecuritiesAs of year-end 2009, New York Life and its domesticinsurance subsidiaries owned $6.7 billion in asset-backed securities, representing 4 percent of cash andinvested assets. Approximately 67 percent of thesesecurities were rated AAA and are collateralized by a broad range of collateral types. These securities areseasoned by issuance year and remain highly rated.Mortgage Loans

As of year-end 2009, the $15.2 billion of mortgageloans represented $14.3 billion of loans on com-mercial real estate properties and $0.9 billion of loans on single-family residential properties.Commercial Mortgage LoansThe Companys mortgage loan investment practicesemphasize conservative underwriting and focus onhigh-quality properties. The commercial mortgage

loan portfolio is broadly diversied by both property type and geographic location. The Company employsa proactive portfolio monitoring program with agoal of early identication of potential problems.The commercial mortgage loan portfolio hashistorically performed very well and the Company believes that the portfolio is strongly positionedin the current economic environment.As of December 31, 2009, none of the commercialmortgage loans were delinquent. During 2009, only two out of over 600 loans were foreclosed upon,representing $41 million* in outstanding principal.Single-Family Residential LoansIn addition to the non-agency residential securitieshighlighted earlier, New York Life and its domesticinsurance subsidiaries owned $0.9 billion inxed-rate residential loans. None of these weresub-prime loans.

ASSET-BACKED SECURITIES BY RATING*


AAA $4,516 67%

AA 841 13%

A 755 11%

BBB 488 7%

BB OR LOWER 118 2%

TOTAL $6,718 100%


COMMERCIAL MORTGAGE LOANS BYGEOGRAPHIC REGION*


SOUTHEAST $ 3,698 26%

MIDDLE ATLANTIC 3,110 22%

PACIFIC 3,107 22%

NORTH CENTRAL 1,804 13%

SOUTH CENTRAL 1,395 10%

OTHER 1,137 8%

TOTAL MORTGAGE LOANS $14,251 100%

Numbers may not add up due to rounding.* Includes $4,813 million of assets related to New York Life Insuranceand Annuity Corporation.

COMMERCIAL MORTGAGE LOANS BY PROPERTY TYPE*


OFFICE BUILDINGS $ 4,936 35%

RETAIL 3,269 23%

INDUSTRIAL 3,211 23%

MULTI-FAMILY 2,624 18%

OTHER COMMERCIAL PROPERTY 211 1%

TOTAL MORTGAGE LOANS $14,251 100%


* Includes $7 million of assets related to New York Life Insurance and Annuity Corporation. Includes $848 million of assets related to New York Life Insurance and Annuity Corporation.


28/58



Equity and Other InterestsAs of year-end 2009, New York Life and its domestic insurance subsidiaries had $7.4 billion of assetsclassied as equity and other interests.Of this amount, $2.8 billion represented limitedpartnerships and other interests invested in diversesectors of the economy. Private equity investmentsof $2.4 billion primarily represent leveraged buyoutfunds in a range of vintage years that are managedby various third-party private equity groups.Allocations to private equity provide an opportunity to exceed the returns of public equities over thelong term.

EQUITY AND OTHER INTERESTS*


VARIOUS LIMITED PARTNERSHIPS

AND OTHER INTERESTS 2,803 38%

PRIVATE EQUITY 2,360 32%

INVESTMENTS IN AFFILIATES 1,595 22%

REAL ESTATE 458 6%

PUBLIC EQUITY 75 1%CONVERTIBLE PREFERRED STOCKS 71 1%

TOTAL $7,362 100%

* Includes $570 million of assets related to New York Life Insuranceand Annuity Corporation.

DerivativesAs of year-end 2009, New York Life and its domesticinsurance subsidiaries had certain outstanding derivative positions carried as assets of $702 million.* Offsetting these were derivative liabilities of $437 million for a net asset of $265 million. Thederivative transactions are entered into to meetthe hedging needs of the Company or replicatepermissible investments. The single largest derivativeactivity involves the purchase of interest rate capsto protect against a rise in interest rates. Otherderivatives include cross currency and interest rateswaps. Cross currency swaps are entered into toconvert assets or liabilities of the Company that are

designated in a foreign currency into U.S. dollars.Interest rate swaps are used to primarily convertxed-rate investments to oating-rate investmentsin support of oating-rate liabilities.Derivative trades may expose New York Life andits domestic insurance subsidiaries to counterparty credit risk. This risk is controlled through theestablishment of collateral support agreements, which require the daily posting of cash collateralby the derivative counterparties if and whenthe market value of derivative positions with thecounterparty exceeds a predetermined dollar limit.These dollar limits are intentionally set at a low threshold. Derivatives credit exposure to eachcounterparty is combined with other direct creditrisk to the same counterparty and managed againstprudent credit risk limits.



* Includes $218 million of assets related to New York Life Insurance and Annuity Corporation.


29/58



Asset/Liability and Investment Risk Management

The investment portfolio has potential exposure to various sources of investment risk, including interestrate, credit and equity price risks. New York Life hasestablished comprehensive policies and proceduresat both the corporate and business segment levels tominimize overall risk exposures. The InvestmentCommittee of the board of directors providesoversight over New York Lifes investment activity,including review of various risk factors andestablishment of investment policies. One measureused to quantify and control overall investmentrisk is the Statutory Surplus-at-Risk metric thatmeasures the potential impact of adverse changesin nancial market and credit conditions over a12-month period at a high condence level. Wesupplement this measure with stress testing of extreme economic scenarios that incorporate

nancial market stresses, and we evaluate the riskimpact of such scenarios on our assets, liabilitiesand overall capital position.A substantial positive operating cash ow supportsNew York Lifes strong liquidity and ability to meetits liabilities when due. Primary sources of cashinclude sales of insurance and investment products,investment income, maturities and prepayments.

Additional liquidity to meet unexpected cash de-mands can be provided by New York Lifes portfolioof liquid assets, which include U.S. Treasury securities, short-term money market investments,agency bonds, agency mortgage-backed securitiesand public investment grade bonds. Funds are alsoavailable through a commercial paper programadministered by New York Life Capital Corporation,an indirect, wholly-owned subsidiary of New YorkLife, and a bank revolving credit facility, whichis used to back up the commercial paper issuanceprogram. We can also access the collateralizedborrowing facility with the Federal Home LoanBank of New York.Management evaluates the impact of various stressevents on the Companys liquidity using the analysis

of various stress scenarios. Based on the results of

these stress tests, management believes that theCompany has more than ample liquidity andnancial strength to provide for foreseeable cashrequirements, including cash outows in extremestressed conditions. Various liquidity risk indicatorsare tracked regularly to provide management withan early indication of any potential liquidity issues.Earnings and cash flows relating to xed-rate

investments are sensitive to interest rate changes.New York Life manages interest rate risk as part of its asset/liability management process and productdesign procedures. Asset/liability managementstrategies include segmentation of investments by product line and the construction of investmentportfolios designed to specically satisfy the projectedcash needs of the product lines. Interest rate risk isalso assessed and controlled by modeling asset andliability cash ows on a product-by-product basis,under current and various other projected interestrate scenarios, and purchase of hedges whereappropriate. New York Lifes asset/liability positionis monitored regularly, enabling management toadjust asset portfolios through dynamic rebalancing or option purchases, or to alter liability cash ows, in order to effi ciently mitigate risk exposures exceeding

managements risk tolerances.New York Lifes investments in corporate bondsand mortgage loans expose it to potential creditlosses. Credit risk is managed by applying disciplinedcredit evaluation and underwriting standards;aligning allocations to lower-quality, higher-yielding investments with our risk-return tolerances;and diversifying exposures by industry, issuer and

property type.New York Lifes holdings of public and privateequity securities are subject to market risk. Theseholdings are diversied and managed against risktolerance limits established by individual productlines and at the aggregate corporate level.


30/58


282009 Financial Overview

POLICYHOLDER BENEFITS AND DIVIDENDS

YEAR IN $ BILLIONS

2009 12.4

2008 12.3

2007 12.4

2006 11.22005 9.9

This chart shows the benefits and dividends paid topolicyholders in the U.S. during the last ve years. Benefitsprimarily include death claims paid to beneciaries, annuitypayments and surrender benefits. Dividends are payments

made to eligible policyholders from divisible surplus. TheCompany has consistently paid over $12 billion in benetsand dividends over the last three years.

SURPLUS AND ASSET VALUATION RESERVES *

YEAR IN $ MILLIONS

2009 15,009

2008 12,826

2007 14,680

2006 13,8592005 12,853

Surplus and asset valuation reserves, the funds that ensurewe can meet future obligations to policyholders and nance ourgrowth, totaled a record $15 billion at the end of 2009, anincrease of $2.2 billion during the year. Total surplus is oneof the key indicators of the Companys long-term financialstrength and stability.

OPERATING EARNINGS

YEAR IN $ MILLIONS

2009 1,222

2008 1,283

2007 1,278

2006 1,096

2005 942

Operating earnings is the measure used for managementpurposes to track the Companys results from ongoingoperations and the underlying profitability of our business.In 2009, New York Life recorded its fourth consecutive yearof operating earnings over $1 billion. Our stability of earningsreects the resilience of our business prole in all economicconditions. The decline from the record level set in 2008reects lower asset-based income as a result of the weakeningof the equity markets at the end of 2008.

2009Financial Overview

The following pages present the consolidatednancial results for New York Life InsuranceCompany and its subsidiaries (the Company).Our primary management reporting system isbased on accounting principles generally acceptedin the United States of America (GAAP), with

certain adjustments that we believe result in a more appropriate tracking of operating results. Resultsreported on this basis are referred to as non-GAAP

performance measures. In addition, statutory results are tracked as an important measure of capital adequacy.For a detailed reconciliation of the CompanysGAAP performance measures to its non-GAAPperformance measures, see page 45.For denitions of the Companys performancemeasures, see Glossary of Terms on page 54.

* See footnote on page 43.

N Y k Lif A l R 2009


31/58


292009 Financial Overview

OPERATING REVENUE

YEAR IN $ BILLIONS2009 14.4

2008 13.9

2007 12.9

2006 11.8

2005 10.7

This chart shows the revenue the Company has generatedfrom its domestic and international business during the lastfive years primarily premium and fee income, depositsincluded in policyholder account balances for life and annuityproducts, and net margins on guaranteed products. Operatingrevenue has increased each year since 2005.

INSURANCE SALES

YEAR IN $ MILLIONS

2009 2,655

2008 2,396

2007 2,117

2006 1,8762005 1,571

This chart shows the growth of new insurance sales since2005 and includes results from both our domestic andinternational operations. 2009 was another record year forthe Company, exceeding $2.6 billion in sales. Over the pastfour years, our insurance sales have grown at a compoundannual rate of 14 percent.

INVESTMENT SALES

YEAR IN $ MILLIONS

2009 32,848

2008 26,8672007 25,208

2006 23,717

2005 18,696

Investment sales include new sales of investment annuities,mutual funds and other investment-related products byboth our domestic and international operations. In 2009,investment sales increased over 22 percent, or nearly$6 billion, from 2008, due to growth of our third-partyasset management business.

INDIVIDUAL LIFE INSURANCE IN FORCE

YEAR IN $ BILLIONS2009 816.1

2008 781.2

2007 750.9

2006 694.8

2005 647.7

This chart shows the growth of the Companys individuallife insurance in force over the last four years. Our steadygrowth over $168 billion since 2005 is the sign of astrong and vibrant company.

ASSETS UNDER MANAGEMENT

YEAR IN $ BILLIONS

2009 286.7

2008 249.12007 280.0

2006 261.5

2005 222.8

The Companys assets under management rose 15 percentover 2008, reecting the strength of the Companys diversiedproducts and distribution channels.

N Y k Lif A l R t 2009


32/58


30Report of Independent Auditors

Report of Independent AuditorsTo the Board of Directors of New York Life Insurance Company

We have audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of New York Life Insurance Company and its subsidiaries asof December 31, 2009 and 2008, and the relatedconsolidated statements of income, of equity and of

cash flow for the years then ended (not presentedherein) appearing on the Company Web site andavailable from New York State InsuranceDepart-ment; and in our report dated March 17, 2010, we expressed an unqualied opinion on thoseconsolidated nancial statements.

In our opinion, the information set forth in theaccompanying condensed consolidated nancialstatements is fairly stated, in all material respects,in relation to the consolidated nancial statementsfrom which it has been derived.As described in Note 3 to the consolidated nancialstatements, the Company changed its method of accounting for other-than-temporary impairmentsof xed maturity investments and its method of presenting non-controlling interests in partially-owned consolidated subsidiaries in 2009.

PricewaterhouseCoopers LLP New York, New York March 17, 2010



33/58


31Consolidated Balance Sheet

Consolidated Balance Sheet New York Life Insurance Company and Subsidiaries

(DOLLARS IN MILLIONS) DECEMBER 31, 2008 DECEMBER 31, 2009

ASSETS

FIXED MATURITIES (INCLUDES SECURITIES PLEDGED AS COLLATERAL THAT CAN

BE SOLD OR REPLEDGED OF $3,155 IN 2008 AND $1,111 IN 2009)

AVAILABLE FOR SALE, AT FAIR VALUE $106,460 $128,138

HELD TO MATURITY, AT AMORTIZED COST 322 377

TRADING SECURITIES, AT FAIR VALUE 4,383 4,585

EQUITY SECURITIES (INCLUDES SECURITIES PLEDGED AS COLLATERAL THAT CANBE SOLD OR REPLEDGED OF $849 IN 2008 AND $1,314 IN 2009)

UNAFFILIATED, AVAILABLE FOR SALE, AT FAIR VALUE 2,298 411

AFFILIATED 94 104

TRADING SECURITIES, AT FAIR VALUE 1,553 2,381

MORTGAGE LOANS 15,410 15,264

POLICY LOANS 7,984 8,564

SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL 693 450

OTHER INVESTMENTS 10,507 10,029

TOTAL INVESTMENTS 149,704 170,303

CASH AND CASH EQUIVALENTS 5,049 4,415

DEFERRED POLICY ACQUISITION COSTS 10,132 8,930

INVESTMENT INCOME DUE AND ACCRUED 1,720 1,764

GOODWILL 505 520

OTHER ASSETS 6,940 3,616

SEPARATE ACCOUNT ASSETS 14,836 18,605

TOTAL ASSETS $188,886 $208,153

LIABILITIES

POLICYHOLDERS ACCOUNT BALANCES $ 77,188 $ 80,879FUTURE POLICY BENEFITS 66,868 71,730

DIVIDENDS PAYABLE TO POLICYOWNERS 1,270 1,283

POLICY CLAIMS 849 913

DEBT 1,783 3,481

COLLATERAL RECEIVED ON SECURITIES LENDING 3,301 1,146

OTHER LIABILITIES 7,885 9,648

SEPARATE ACCOUNT LIABILITIES 14,836 18,605

TOTAL LIABILITIES 173,980 187,685

EQUITYACCUMULATED OTHER COMPREHENSIVE LOSS (5,745) (1,451)

RETAINED EARNINGS 19,424 20,867

TOTAL NEW YORK LIFE EQUITY 13,679 19,416

NON-CONTROLLING INTEREST 1,227 1,052

TOTAL EQUITY 14,906 20,468

TOTAL LIABILITIES AND EQUITY $188,886 $208,153

See accompanying notes to condensed consolidated nancial statements.



34/58


32Consolidated Statement of Income

Consolidated Statement of Income New York Life Insurance Company and Subsidiaries

(DOLLARS IN MILLIONS) YEAR ENDED DECEMBER 31,

2008 2009

REVENUE

PREMIUMS $10,647 $11,496

FEES UNIVERSAL LIFE AND ANNUITY POLICIES 960 1,026

NET INVESTMENT INCOME 7,918 8,853

NET INVESTMENT (LOSSES) GAINS:

TOTAL OTHER-THAN-TEMPOR ARY IMPAIRMENTS ON FIXED MATURITY SECURITIES (840) (894)

TOTAL OTHER-THAN-TEMPORARY IMPAIRMENTS ON FIXED MATURITY SECURITIES

RECOGNIZED IN ACCUMULATED OTHER COMPREHENSIVE LOSS - 508

ALL OTHER NET INVESTMENT (LOSSES) GAINS, NET (2,656) 773

TOTAL NET INVESTMENT (LOSSES) GAINS (3,496) 387

OTHER INCOME 801 484

TOTAL REVENUE 16,830 22,246

EXPENSES

POLICYHOLDER BENEFITS 6,9376,964

INCREASE IN LIABILITIES FOR FUTURE POLICY BENEFITS 3,579 4,478

INTEREST CREDITED TO POLICYHOLDERS ACCOUNT BALANCES 3,232 3,268

OPERATING EXPENSES 3,276 4,341

DIVIDENDS TO POLICYHOLDERS 1,602 1,458

TOTAL EXPENSES 18,626 20,509

(LOSS) INCOME FROM OPERATIONS BEFORE INCOME TAXES

AND NON-CONTROLLING INTEREST (1,796) 1,737

INCOME TAX (BENEFIT) EXPENSE (599) 447

NET (LOSS) INCOME (1,197) 1,290NON-CONTROLLING INTEREST INCOME 181 37

NET (LOSS) INCOME ATTRIBUTABLE TO NEW YORK LIFE $ (1,016) $ 1,327

See accompanying notes to condensed consolidated nancial statements.



35/58


33Notes to Financial Statements

Notes to Condensed Consolidated Financial Statements New York Life Insurance Company and Subsidiaries, December 31, 2008 and 2009

Note 1Nature of OperationsNew York Life Insurance Company, a mutual life insurancecompany, and its subsidiaries (the Company) offer a wide rangeof insurance and investment products and services including lifeand health insurance, long-term care, annuities (including singlepremium immediate annuities or guaranteed lifetime income

annuities), pension products, mutual funds, and other investmentsand investment advisory services. The Company is domiciled inNew York State and is comprised of four primary businessoperations: U.S. Life Insurance and Agency, Retirement IncomeSecurity, Investment Management and International Operations.U.S. Life Insurance and Agency and Retirement Income Security operations are conducted through New York Life InsuranceCompany (New York Life), the parent company, and its wholly owned U.S. insurance subsidiaries: New York Life Insurance andAnnuity Corporation (NYLIAC) and NYLIFE Insurance

Company of Arizona (NYLIFE of Arizona). U.S. Life Insuranceand Agency comprises the individual, group and corporateowned life insurance operations. This business unit also includesgroup membership association operations, which underwritegroup life, health and disability programs for professional andafnity organizations, and AARP operations, which is theexclusive provider of life insurance (through New York Life)and xed immediate and deferred annuities (through NYLIAC)to members of AARP. Retirement Income Security comprises theCompanys guaranteed lifetime income annuities, xed and variable investment annuities, and long-term care insurance.Investment Management activities are conducted primarily through New York Life and various registered investment advisory subsidiaries of its wholly owned subsidiary, New York LifeInvestment Management Holdings LLC (New York LifeInvestments). The Company markets individual insurance andinvestment products in Asia and Latin America primarily throughNew York Life International, LLC (NYL International),a wholly owned subsidiary of New York Life. NYLIFE LLC is a wholly owned subsidiary of New York Life, and is a holding company for certain non-insurance subsidiaries of New York Life.NYLIFE LLC, through its subsidiaries, offers securities brokerage,nancial planning and investment advisory services, trustservices and capital nancing.BASIS OF PRESENTATION The accompanying consolidated nancialstatements have been extracted from the Companys unabridgedaudited consolidated nancial statements (available on theCompanys website and from the New York State InsuranceDepartment) and prepared in conformity with accounting principles generally accepted in the United States of America

(GAAP) and reect the consolidation of the parent company with its majority owned and controlled subsidiaries: principally NYLIAC, NYLIFE of Arizona, New York Life Investments,

NYL International and NYLIFE LLC, as wel l as variableinterest entities in which the Company is considered the primary beneciary, and certain investments in joint ventures and limitedpartnerships in certain instances where the Company is deemedto exercise control. All intercompany transactions have beeneliminated in consolidation.

Certain amounts in prior years have been reclassied to conform

to the current year presentation. These reclassications had noeffect on net income or equity as previously reported, and wereprimarily related to investments held in consolidated investmentcompanies (refer to Note 2 Signicant Accounting Policies forfurther discussion).

The New York State Insurance Department (the Department)recognizes only statutory accounting practices (SAP) fordetermining and reporting the nancial condition and results of operations of an insurance company. Accounting practices used toprepare statutory nancial statements for regulatory lings of lifeinsurance companies differ in certain instances from GAAP (refer toNote 8 Statutory Financial Information for further discussion).

Note 2Signicant Accounting PoliciesUSE OF ESTIMATES The preparation of consolidated nancialstatements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the nancial statements. Actualresults could differ from those estimates.

INVESTMENTS Fixed maturity investments, which the Company has both the ability and the intent to hold to maturity, are statedat amortized cost and classied as held-to-maturity. Investmentsclassied as available-for-sale or trading are reported at fair value.For a discussion on valuation methods for xed maturitiesreported at fair value refer to Note 7 Fair Value Measurements.The amortized cost of debt securities is adjusted for amortizationof premium and accretion of discounts. Interest income, as wellas the related amortization of premium and accretion of discount,is included in net investment income in the accompanying

Consolidated Statement of Income. Unrealized gains and losseson available-for-sale securities are reported in accumulatedother comprehensive income (AOCI), net of deferred taxesandrelated adjustments, in the accompanying Consolidated Balance Sheet. Unrealized gains and losses from xed maturity investmentsclassied as trading are reected in net investment gains (losses)in the accompanying Consolidated Statement of Income.

Included within xed maturity investments are mortgage-backedand asset-backed securities. Amortization of the premium ordiscount from the purchase of these securities considers theestimated timing and amount of cash ows of the underlying loans, including prepayment assumptions based on data obtained from



36/58

p



a bank or internal estimates. For high credit quality mortgage-backed and asset-backed securities (those rated AA or above atdate of acquisition), cash flows are provided quarterly, and theamortized cost and effective yield of the security are adjusted asnecessary to reect historical prepayment experience and changesin estimated future prepayments. The adjustments to amortizedcost are recorded as a charge or credit to net investment income in

accordance with the retrospective method. For asset-backed andmortgage-backed securities rated below AA at date of acquisition,certain oating rate securities and securities with the potentialfor a loss of a portion of the original investment due to contractualprepayments (i.e., interest-only securities); the effective yield isadjusted prospectively for any changes in estimated cash ows.

Unafliated equity securities are carried at fair value. For adiscussion on valuation methods for equity securities referto Note 7 Fair Value Measurements. Unrealized gains and losseson equity securities classied as available-for-sale are reected in

net unrealized investment gains in AOCI, net of deferred taxes andrelated adjustments, in the accompanying Consolidated BalanceSheet. Unrealized gains and losses from investments in equity securities classied as trading are reected in net investment gains(losses) in the accompanying Consolidated Statement of Income.

Afliated equity securities represent holdings in entities wherethere is at least 20 percent ownership or where the Company hasthe ability to exercise signicant inuence through its relationship,and are accounted for by the equity method of accounting.Accordingly, respective net earnings or losses are included in netincome in the accompanying Consolidated Statement of Income.The cost basis of xed maturities and equity securities is adjustedfor impairments in value deemed to be other than temporary.

Factors considered in evaluating whether a decline in valueis other-than-temporary include: i) whether the decline issubstantial; ii) the duration that the fair value has been less thancost; and iii) the nancial condition and near-term prospects of the issuer. For equity securities, the Company also considers in itsother-than-temporary impairment (OTTI) analysis its intent

and ability to hold a particular equity security for a period of timesuffi cient to allow for the recovery of its value to an amount equalto or greater than cost. When it is determined that a decline in value is other-than-temporary, the carrying value of the equity security is reduced to its fair value with the associated realizedloss reported in net investment gains (losses).

With respect to xed maturities in an unrealized loss position,an OTTI is recognized in earnings when it is anticipated that theamortized cost will not be recovered. The entire differencebetween the xed maturitys cost and its fair value is recognized

in earnings only when either the Company (a) has the intent tosell the xed maturi ty security or ( b) more likely than not will berequired to sell the xed maturity security before its anticipated

recovery. If neither of these two conditions exists, an OTTI wouldbe recognized in earnings (credit loss) for the differencebetween the amortized cost basis of the xed maturity andthe present value of projected future cash flows expected to becollected. If the fair value is less than the present value of projectedfuture cash ows expected to be collected, this portion of OTTIrelated to other-than-credit factors (noncredit loss) would be

recognized in other comprehensive income (loss) (OCI). Thenet present value is calculated by discounting the Companys bestestimate of projected future cash flows at the effective interestrate implicit in the debt security prior to impairment.

The determination of cash ow estimates in the net present valueis subjective and methodologies will vary, depending on the typeof security. The Company considers all information relevant tothe collectability of the security, including past events, currentconditions, and reasonably supportable assumptions and forecastsin developing the estimate of cash flows expected to be collected.

This information generally includes, but may not be limited to, theremaining payment terms of the security, estimated prepaymentspeeds, defaults, recoveries upon liquidation of the underlying collateral securing the notes, and the nancial condition of theissuer(s), credit enhancements and other third-party guarantees.In addition, other information, such as industry analyst reportsand forecasts, sector credit ratings, the nancial condition of thebond insurer for insured xed income securities and other marketdata relevant to the collectability may also be considered, as wellas the expected timing of the receipt of insured payments, if any.

The estimated fair value of the collateral may be used to estimaterecovery value if the Company determines that the security isdependent on the liquidation of the collateral for recovery.

The new cost basis of an impaired security is not adjusted forsubsequent increases in estimated fair value. In periods subsequentto the recognition of an OTTI, the impaired xed maturity security is accounted for as if it had been purchased on themeasurement date of the impairment. Accordingly, the discount(or reduced premium) based on the new cost basis may be accretedinto net investment income in future periods based on prospective

changes in cash flow estimates, to reflect adjustments to theeffective yield.

Mortgage loans on real estate that are funded through theinsurance company are carried at unpaid principal balances, net of discounts/premiums and valuation allowances, and are secured.Specic valuation allowances are established for the excesscarrying value of the mortgage loan over its estimated fair value, when it is probable that based on current information and events,the Company will be unable to collect all amounts due under thecontractual terms of the loan agreement. Specic valuationallowances are based on the estimated fair value of the collateral.Fair value is determined by discounting the projected cash ows



37/58

p


for each property to determine the current net present value.The Company also has a general valuation allowance for probableincurred but not specically identied losses. The generalallowance is based on the Companys historical loss experienceand other factors for the mortgage loan portfolio. Mortgage loansthat are funded through New York Life Investments are carriedat fair value. These mortgage loans are held in a partially-owned

limited partnership that follows the specialized accounting practices for investment companies, which requires that the mortgage loansbe fair valued.

Policy loans are stated at the aggregate balance due. A valuation allowance is established for policy loan balances,including capitalized interest that exceeds the relatedpolicys cash surrender value.

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

Short-term investments include investments with remaining maturities of one year or less, but greater than three months, atthe time of acquisition and are carried at fair value. Short-terminvestments are included in xed maturities on the ConsolidatedBalance Sheet.

Other investments consist primarily of direct investments inlimited partnerships and limited liability companies, derivatives,real estate and collateralized third-party commercial loans.Investments in limited partnerships and limited liability companies

are accounted for using the equity method of accounting.Investments in real estate, which the Company has the intent tohold for the production of income, are carried at depreciatedcost, net of write-downs for other-than-temporary declinesin fair value. Properties held for sale are carried at the lower of depreciated cost or fair value, less estimated selling costs.

In many cases, investment in limited partnerships and limitedliability companies qualify as investment companies and apply specialized accounting practices, which result in unrealizedgains and losses being recorded in the accompanying ConsolidatedStatement of Income. The Company retains this specializedaccounting practice in consolidation. For such consolidated limitedpartnerships, the underlying investments, which may consist of various classes of assets, are aggregated and stated atfair value inother investments in the accompanying Consolidated BalanceSheet. For such limited partnerships accounted for under the equity method, the unrealized gains and losses from the underlying investments are reported in net investment income in theaccompanying Consolidated Statement of Income.

Collateralized third-party commercial loans that management hasthe intent and ability to hold until maturity or payoff are reportedat their outstanding unpaid principal balances reduced by any

charge off or loss reserve and net of any deferred fees on originatedloans, or unamortized premiums or discounts on purchased loans.At the time of funding of a loan, management determines theamount of the loan that will be held for sale. The syndicationamounts have historically been sold within one year. Loans heldfor sale are carried at the lower of cost or fair value on anindividual asset basis.

Net investment gains (losses) on sales are generally computedusing the specic identication method.DEFERRED POLICY ACQUISITION COSTS (DAC) The costs of acquiring new and maintaining renewal business and certain costs of issuing policies that vary with and are primarily related to the productionof new and renewal business have beendeferred and recorded asan asset in the accompanying ConsolidatedBalance Sheet. Thesecosts consist primarily of commissions, certain expenses of underwriting and issuing contracts and certain agency expenses.

For traditional participating life insurance policies, such costs areamortized over the estimated life of the contracts, in proportionto estimated gross margins, basing amortization initially onpricing assumptions and updating periodically for actual results.For universal life and deferred annuity contracts, such costsare amortized in proportion to estimated gross prots over theestimated effective life of those contracts. Changes in assumptionsfor all policies and contracts are reected as retroactive adjustmentsin the current years amortization. For these contracts, the carrying amount of DAC is adjusted at each balance sheet date as if theunrealized investment gains or losses had been realized andincluded in the gross margins or gross prots used to de terminecurrent period amortization. The increase or decrease in DACdue to unrealized investment gains or losses i s recorded in OCI.Beginning 2009 for new business, the Company increased theexpected life for traditional participating life insurance policies,universal life policies and deferred annuity contracts up to amaximum of 99 years.

DAC for term contracts, group life and health, and long-termcare contracts are amortized in proportion to premium income

over the effective premium-paying period of the contract.Assumptions as to anticipated premiums are made at the date of policy issuance and are consistently applied during the life of thecontract. Deviations from estimated experience areincluded inoperating expenses in the accompanying ConsolidatedStatementof Income when they occur. For single premium immediateannuities with life contingencies and single premium structuredsettlements with life contingencies, all acquisition costs arecharged to expense immediately because generally all premiumsare received at the inception of the contract.

The Company assesses internal replacements to determine whethersuch modications signicantly change the contract terms. When



38/58



the modication substantially changes the contract, DAC is written off immediately through income and only new deferrableexpenses associated with the replacements are deferred. DAC written off at the date of lapse cannot be restored when a policy subsequently reinstates. If the contract modications do notsubstantially change the contract, DAC amortization on theoriginal policy will continue and any acquisition costs associated with the related modication are expensed.DERIVATIVE FINANCIAL INSTRUMENTS Derivative nancial instrumentsare accounted for at fair value. The treatment of changes inthe fair value of derivatives depends on the characteristics of thetransaction, including whether it has been designated and qualiesas part of a hedging relationship. Derivatives that do not qualify for hedge accounting are carried at fair value with changes in value included in net investment gains ( losses) in the accompanying Consolidated Statement of Income.POLICYHOLDERS ACCOUNT BALANCESThe Companys liability for policyholders account balances represents the contract valuethat has accrued to the benet of the policyholder as of the balancesheet date. This liability is generally equal to the accumulatedaccount deposits, plus interest credited, less policyholder withdrawals and other charges assessed against the account balance. This liability also includes amounts that have been assessed tocompensate the insurer for services to be performed over futureperiods, and the fair value of embedded derivatives in theabove contracts.FUTURE POLICY BENEFITS The Companys liability for futurepolicy benets 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 policyholdermortality or morbidity, less the present value of future netpremiums. For traditional individual participating life insuranceproducts, the mortality assumptions applied are those used tocalculate the policies guaranteed cash surrender values. Theinterest rate assumptions are based on the dividend guarantees.For non-participating traditional life insurance, annuity andlong-term care products, expected mortality and or morbidity for lapse or surrender are generally based on the Companyshistorical experience or standard industry tables including aprovision for the risk of adverse deviation. Interest rate assumptions are based on factors such as market conditions and expectedinvestment returns. Although mortality, morbidity and interestrate assumptions are locked in upon the issuance of new insurance, annuity business and long-term care policies withxed and guaranteed terms, signicant changes in experience orassumptions may require the Company to provide for expectedfuture losses on a product by establishing premium deciency reserves. Premium deciency reserves, if required, are determinedbased on assumptions at the time the premium deciency reserve is

established and do not include a provision for the risk of adversedeviation. The Companys liability for policy claims includes aliability for unpaid claims and claim adjustment expenses. TheCompany does not establish loss reserves until a loss has occurred.However, unpaid claims and claim adjustment expenses includeestimates of claims that the Company believes have been incurredbut have not yet been reported as of the balance sheet date. TheCompanys liability for future policy benets also includesliabilities for guarantee benets related to certain nontraditionallong-duration life and annuity contracts and deferred prot onlimited pay contracts.DEBT Debt is generally carried at unpaid principal balance.RECOGNITION OF INSURANCE INCOME AND RELATED EXPENSES Premiums from traditional participating life insurance policies,term life policies, annuity policies with life contingencies andgroup life and health contracts are recognized as income whendue. The associated benets and expenses are matched withincome so as to result in the recognition of prots over the lifeof the contracts. This match is accomplished by providing forliabilities for future policy benets and the deferral and subsequentamortization of policy acquisition costs.

Amounts received under universal life-type contracts andinvestment contracts are reported as deposits to policyholdersaccount balances. Revenues from these contracts consist of amounts assessed during the period for mortality and expenserisk, policy administration and surrender charges, and areincluded as fee income in the Consolidated Statement of Income.In addition to fees, the Company earns investment income from the investment of policyholders deposits in the Companys generalaccount portfolio. Amounts previously assessed to compensatethe Company for services to be performed over future periods aredeferred and recognized into income over the period beneted,using the same assumptions and factors used to amortize DACcosts. Policy benets and claims that are charged to expenseinclude benet claims incurred in the period in excess of relatedpolicyholders account balances.

Premiums for contracts with a single premium or a limited numberof premium payments due over a signicantly shorter periodthan the total period over which benets are provided are recordedas income when due. Any excess prot is deferred and recognizedas income in a constant relationship to insurance in force and,for annuities, in relation to the amount of expected futurebenet payments.

Premiums, universal life fee income, benets and expenses arestated 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 theunderlying policies.



39/58


POLICYHOLDERS DIVIDENDSThe amount of dividends to be paid toNew York Life participating policyholders is determined annually by New York Lifes board of directors. The aggregate amount of policyholders dividends is based on New York Lifesstatutory results and past experience, including investment income, netrealized investment gains and losses over a number of years,mortality experience, and other factors. New York Life accruesdividends to policyholders when they are due to the policyholder.

The amount of dividends to be paid to NYL Internationalspolicyholders is determined by means of formulas specic to eachcountrys regulations that reect the relative contribution of each groups policies to the results of operations.FEDERAL INCOME TAXES Current federal income taxes are charged orcredited to operations based upon amounts estimated to be payableor recoverable as a result of taxable operations for the current yearand any adjustments to such estimates from prior years. Deferredfederal income tax assets and liabilities are recognized for expectedfuture tax consequences of temporary differences between GAAPand taxable income. Temporary differences are identied andmeasured using a balance sheet approach whereby GAAP and taxbalance sheets are compared. Deferred income taxes are generally recognized based on enacted tax rates and a valuation allowanceis recorded if it is more likely than not that any portion of thedeferred tax asset will not be realized.

New York Life les a consolidated federal income tax return withcertain of its domestic insurance and non-insurance subsidiaries.The consolidated income tax liability is allocated among themembers of the group in accordance with a tax allocationagreement. The tax allocation agreement provides that eachmember of the group is allocated its share of the consolidatedtax provision or benet, determined generally on a separatecompany basis, but may, where applicable, recognize the taxbenets of net operating losses or capital losses utilizable in theconsolidated group. Intercompany tax balances are generally settled quarterly on an estimated basis with a nal settlement within 30 days of the ling of the consolidated return.

In accordance with the authoritative guidance related to incometaxes, the Company determines whether it is more likely than notthat a tax position will be sustained upon examination by theappropriate taxing authorities before any part of the benet can berecorded in the nancial statements. The amount of tax benetrecognized for an uncertain tax position is the largest amount of benet that is greater than 50 percent likely of being realizedupon settlement. Unrecognized tax benets are included withinother liabilities and are charged to earnings in the period thatsuch determination is made. The Company classies interest andpenalties related to tax uncertainties as income tax expense.

BENEFIT PLANS New York Life maintains various qualied andnon-qualied plans that provide dened benet pension and otherpostretirement benets covering eligible U.S. employees andagents. A December 31 measurement date is used for all denedbenet pension and other postretirement benet plans.

Under authoritative guidance related to pension plan obligations,the projected pension benet obligation (PBO) is dened as the

actuarially calculated present value of vested and non-vestedpension benets accrued based on future salary levels. The PBO of the dened benet pension plans are determined using a variety of actuarial assumptions, from which actual results may vary.

Under authoritative guidance related to postretirement benetplans, the accumulated postretirement plan benet obligations(APBO) represents the actuarial present value of future otherpostretirement benets attributed to employee services renderedthrough a particular date and is the valuation basis upon whichliabilities are established. The APBO is determined using a variety of actuarial assumptions, from which actual results may vary.The Company recognizes the funded status of each of the pensionand postretirement plans on the accompanying ConsolidatedBalance Sheet in OCI. The funded status of a plan is measured asthe difference between plan assets at fair value and PBO for pension plans or the APBO for any other postretirement plan.

Net periodic benet cost is determined using managementestimates and actuarial assumptions to derive service cost, interestcost and expected return on plan assets for a particular year. Net

periodic benet cost also includes the applicable amortization of any prior service cost (credit) arising from the increase (decrease) in prior years benet costs due to plan amendments or initiationof new plans. These costs are amortized into net periodic benetcost over the expected service years of employees whose benetsare affected by such plan amendments. Actual experience relatedto plan assets and/or the benet obligations may differ from thatoriginally assumed when determining net periodic benet costfor a particular period, resulting in gains or losses. To the extentsuch aggregate gains or losses exceed 10 percent of the greater of

the benet obligations or the market-related asset value of theplans, they are amortized into net periodic benet cost over theexpected service years of employees expected to receive benetsunder the plans.

The obligations and expenses associated with these plans requirean extensive use of assumptions such as the discount rate, expectedrate of return on plan assets, rate of future compensation increases,healthcare cost trend rates, as well as assumptions regarding participant demographics such as rate and age of retirements, withdrawal rates and mortality. Management, in consultation with



40/58


its external consulting actuarial rm, determines these assumptions based upon a variety of factors such as historical performance of the plan and its assets, currently available market and industry data, and expected benet payout streams. The assumptions usedmay differ materially from actual results due to, among otherfactors, changing market and economic conditions and changesin participant demographics.

New York Life also sponsors dened contribution plans forsubstantially all U.S. employees and agents under which a portionof employees/agents contributions are matched. Accordingly, theCompany recognizes compensation cost for current matching contributions. As all contributions are transferred currently tothe Trust for these plans, no liability for matching contributionsis recognized in the accompanying Consolidated Balance Sheet.

New York Life also maintains for certain eligible participantsa non-qualied unfunded arrangement that credits deferralamounts and matching contributions in respect of compensationin excess of the amount that may be taken into account underthe dened contribution plan because of applicable IRS limits.Accordingly, the Company recognizes compensation cost forcurrent matching contributions and holds a liability for thesebenets, which is included in other liabilities in the accompanying Consolidated Balance Sheet.

New York Life provides certain benets to eligible employees andagents during employment for paid absences. For those benetsthat accumulate or vest, a liability is accrued over the employeesexpected service period. For those benets that do not accumulateor vest, a liability is accrued when the benet is incurred.BUSINESS RISKS AND UNCERTAINTIES The securities and creditmarkets have been experiencing extreme volatility and disruptionand under certain interest rate scenarios, the Company couldbe subject to disintermediation risk and/or reduction in netinterest spread or prot margins.

The Risk-Based Capital, or RBC ratio, is the primary measure by which regulators evaluate the capital adequacy of New York Life.RBC is determined by statutory rules that consider risks relatedto the type and quality of invested assets, insurance-related risksassociated with New York Lifes products, interest-rate risk andgeneral business risks. A continuation or worsening of thedisruptions in the capital markets could increase equity and creditlosses and reduce New York Lifes statutory surplus and RBC ratio.To the extent that New York Lifes statutory capital resourcesare deemed to be insufcient to maintain a particular rating by one or more rating agencies, the Company may seek to improveits capital position, including through operational changes andpotentially seeking outside capital.


Note 3Recent Accounting PronouncementsIn April 2009, the FASB revised the authoritative guidance forthe recognition and presentation of OTTI. This guidance amendspreviously used methodology for determining whether an OTTIexists for xed maturity securities, changes the presentation of OTTI for xed maturity securities, and requires additional

disclosures for OTTI on xed maturity and equity securities ininterim and annual nancial statements. It requires that an OTTIbe recognized in earnings for a xed maturity security in anunrealized loss position when it is anticipated that the amortizedcost will not be recovered. In such situations, the OTTI recognizedin earnings is the entire difference between the xed maturity securitys amortized cost and its fair value only when either:i ) theCompany has the intent to sell the xed maturity security or ii ) it ismore likely than not that the Company will be required to sell thexed maturity security before recovery of the decline in fair value below amortized cost. If neither of these two conditionsexists, the difference between the amortized cost basis of the xedmaturity security and the present value of projected future cashows expected to be collected is recognized as an OTTI in earnings(credit loss). If the fair value is less than the present value of projected future cash ows expected to be collected, this portionof OTTI related to other-than-credit factors (noncredit loss)is recorded as other comprehensive income (loss). When anunrealized loss on a xed maturity security is consideredtemporary, the Company continues to record the unrealized loss inother comprehensive income (loss) and not in earnings. There was no change for equity securities which, when an OTTI hasoccurred, continue to be impaired for the entire difference betweenthe equity securitys cost or amortized cost and its fair value witha corresponding charge to earnings.

Prior to the adoption of the OTTI guidance, the Company recognized in earnings an OTTI for a xed maturity security inan unrealized loss position unless it could assert that it had boththe intent and ability to hold the xed maturity security for aperiod of time suffi cient to allow for a recovery of fair value to

the securitys amortized cost basis. Also prior to the adoption of this guidance the entire difference between the xed maturity securitys amortized cost basis and its fair value was recognizedin earnings if it was determined to have an OTTI.

This guidance is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permittedfor periods ending after March 15, 2009. The Company early adopted this guidance effective January 1, 2009, which resultedin an increase of $116 million, net of related DAC, policyholderliability and tax adjustments, to retained earnings with a

corresponding increase to accumulated other comprehensive loss



41/58


to reclassify the noncredit loss portion of previously recognizedOTTI losses on xed maturity securities held at January 1, 2009.

In December 2007, the FASB issued authoritative guidance relatedto non-controlling interests (formerly known as minority interest). The guidance includes provisions that call for: i) theownership interests in subsidiaries held by parties other thanthe parent be clearly identied, labeled and presented in the

Consolidated Statement of Financial Position within equity, butseparate from the parents equity; ii) the amount of consolidatednet income attributable to the parent and to the non-controlling interest be clearly identied and presented on the face of theConsolidated Statement of Income; and iii)all changes in a parents ownership interest in a subsidiary when control of the subsidiary isretained should be accounted for consi

2009 New York Life Annual Report

Documents