NEW YORK LIFE INSURANCE COMPANY

NEW YORK LIFE INSURANCE COMPANY New York, New York

A++

Ultimate Parent:

New York Life Insurance Company

NEW YORK LIFE

INSURANCE COMPANY

51 Madison Avenue, Room 353

New York, NY 10010

Web:

Tel: 212-576-7000

Fax: 212-576-7317

AMB#: 006820

NAIC#: 66915

Ultimate Parent#: 006820

FEIN#: 13-5582869

BEST'S CREDIT RATING

Best's Financial Strength Rating: A++

Outlook: Stable

Best's Financial Size Category: XV

RATING RATIONALE The following text is derived from A.M. Best's Credit Report on New York Life Group (AMB# 069714).

Rating Rationale: The ratings of the members of New York Life Group (New York Life), which include New York Life Insurance Company and its insurance subsidiaries, reflect the group's market position among the leaders in the U.S. life insurance industry, its highly productive career agency force and its superior risk-adjusted capitalization. The ratings also consider NewYork Life's favorable liability profile, stable operating earnings and commitment to mutuality. Partially offsetting these positive factors are the potential for higher than normal, but manageable, credit losses within the group's general account investment portfolio, its relatively large exposure to interest rate risk and the intense competition the group faces in its core individual life and asset accumulation businesses.

New York Life benefits from the competitive advantages associated with its core career agency force, which has led the industry in Million Dollar Round Table membership for 58 consecutive years. The agency channel has contributed to the group's strong persistency and prominent market presence in individual life with particular strength in the middle market, while delivering strong sales growth. With its sizable in-force block of traditional life insurance and conservative product portfolio, New York Life has one of the more creditworthy liability profiles in the industry. The strong fundamentals within New York Life's core domestic individual life operation continue to be the foundation of the group's operating performance, which supports its superior risk-adjusted and absolute capitalization levels. A.M. Best also notes that New York Life's Investment Group realized a 25% increase in earnings in 2012, reflective of strong spread revenue and asset-based fees from higher assets under management, which resulted from a combination of strong positive net flows, market appreciation and fund adoptions. Additionally, A.M. Best notes that New York Life has an added measure of financial flexibility in support of its strong risk-adjusted capital position through the management of its policyholder dividend scale. A.M. Best views New York Life's mutual form of ownership as a positive rating factor. As a mutual insurer, New York Life is able to manage its businesses with a long-term perspective, as well as a singular focus on providing value to its policyholders. Overall, A.M. Best believes New York Life's future investment losses will be lower than the industry average (as a percentage of capital and surplus) and that statutory earnings will exceed expected losses. While A.M. Best believes that New York Life's investment management capabilities are strong, the potential still exists for higher than normal, albeit manageable, credit losses within the group's general

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account investment portfolio, as the group maintains significant holdings in public/private corporate bonds and structured securities. In addition, New York Life has approximately $19 billion (representing roughly 97% of total adjusted capital) of direct exposure to whole commercial mortgage loans, and the ongoing uncertainty in the commercial real estate market suggests the potential for impairments. However, A.M. Best notes that the commercial mortgage portfolio maintains below average exposure to properties with higher loan-tovalue ratios and lower debt service coverage ratios. A.M. Best also notes that New York Life maintains a relatively high exposure to interest rate risk related to its blocks of interest-sensitive life and annuity reserves, although this risk is actively managed through hedging and other techniques. Lastly, similar to its peers in the domestic individual life and annuity marketplaces, New York Life continues to face intense competition and will be challenged to maintain its market positions and sales momentum over the long term. While the members of New York Life continue to maintain A.M. Best's highest ratings, a potential negative rating action could result from a significant increase in realized investment losses, a meaningful increase in interest-sensitive liabilities as a percentage of total general account reserves, and/or a material decline in risk-adjusted capitalization.

KEY FINANCIAL INDICATORS ($000)

Total Capital

Capital Asset

Net

Net

Surplus Valuation Premiums

Invest

Net

Year Assets Funds Reserve

Written

Income Income

2008 117,305,625 11,793,474 648,853 11,285,898 5,148,919

-564,359

2009 117,835,521 13,686,268 831,822 11,161,524 5,035,365

455,267

2010 122,007,530 14,716,846 1,477,334 12,473,513 4,860,580

525,557

2011 130,685,773 15,128,949 2,070,302 14,107,160 4,865,404

262,613

2012 134,726,848 16,568,538 2,279,222 13,720,802 5,060,276

690,465

(*) Data reflected within all tables of this report has been compiled from the company-filed statutory

statement.

CORPORATE OVERVIEW New York Life Insurance Company (NYLIC), a mutual life insurer, and its subsidiaries (collectively referred to as NYL), offers a wide range of insurance and investment products and services including life, long term care (LTC) insurance, annuities, pension products, mutual funds and other investments and investment advisory services. NYL maintains strong market positions in the life insurance, annuities and executive benefits markets for middle and upper income individuals, as well as institutions of all sizes throughout the United States and abroad. NYL is one of the largest ordinary life writers in the country. The company's vast career agency distribution network, with a wide geographic reach, helped establish this strong competitive position, which has been enhanced in recent years by new distribution sources. NYL includes New York Life Insurance and Annuity Corporation (NYLIAC), a wholly owned subsidiary through which NYL offers variable and interest-sensitive products, and NYLIFE Insurance Company of Arizona (NYLAZ). The company intends to maintain its status as a mutual company in order to remain uniquely aligned with its customers, with sufficient capital available to support its growth strategies. NYL's businesses are managed under two primary segments: Insurance Group and Investments Group.

BUSINESS PROFILE The following text is derived from A.M. Best's Credit Report on New York Life Group (AMB# 069714).

In 2012, NYL reorganized into two major business units: Insurance Group and Investments Group. Businesses that operate within the Insurance Group include: Domestic Life, Long Term Care Insurance, New York Life Direct, Group Membership Association and Mexico. The NYL Investments Group is focused around the following key businesses: General Account Investment Management; Investment Annuities; Retail Mutual Funds; Investment Management Boutiques; Guaranteed Products; Retirement Solutions. INSURANCE GROUP NYL is one of the leading writers of individual life insurance in the U.S. and offers a broad array of participating whole life, survivorship whole life, fixed and variable universal life, fixed and variable survivorship universal life, term life insurance, and LTC insurance. The company also offers corporate-owned life insurance (COLI) and bank-owned life insurance (BOLI) opportunistically. NYL markets its traditional life insurance products primarily to middle and also to upper income individuals primarily through its large career agency system. This nationwide system is one of NYL's most valuable strengths, typically producing over half of total life insurance sales. Approximately one-fifth of active field agents in the U.S. are members of the "Million-Dollar Round Table" (MDRT), demonstrating their success in meeting high standards for productivity and professionalism. In addition to the wide geographic reach, the system has a strong presence in various cultural and women's markets. To increase productivity through the career agency channel, NYL has introduced innovative new products and technology-aided support and training. Life and annuity sales through this channel have grown steadily. LTC insurance products are also sold on an individual basis through NYL's career agency force. NYL brings a strong pricing and underwriting discipline to this market which is appropriate for the risk in the business. The Advanced Markets Network (AMN) provides an additional distribution channel for the sale of COLI and BOLI through specialized insurance brokers. This channel distributes products that are often customized for the needs of these markets. New York Life Direct is responsible for the AARP Life Insurance Program and the AARP Lifetime Income Program, which market group life insurance products and guaranteed lifetime immediate income annuities to AARP members. Through an exclusive marketing arrangement with AARP, NYL directly markets life insurance and fixed immediate annuities to the association's 37 million members. By virtue of this relationship, NYL is the largest direct marketer of life insurance in the U.S., insuring over 2.0 million AARP members with over $35 billion of life insurance inforce. NYL has consistently increased its sales in this line, while maintaining strong persistency, favorable mortality and expense management. In 2006, NYL began to directly market fixed immediate annuity products (AARP Lifetime Income Program) to its members and has become the number two direct marketer of fixed annuities in the country. Additionally, NYL's direct marketing expertise has recently been

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expanded to generate leads for products sold through the career agency force. This year NYL extended its contract with AARP on the Life Program and is confident it will continue to grow its presence in the 50 year old plus market with AARP. Group Membership Association sells life insurance and related products to members of professional associations through specialized brokers. Group Membership Association underwrites Group Life, Accidental Death and Dismemberment (AD&D) and Disability Income insurance programs to large professional associations and other groups. The portfolio also includes an in-force block of major medical business. Serving the members of more than 600 associations, Group Membership Association is the leading provider of life insurance programs to professional associations. Mexico is NYL's single strategic presence in international markets. The company has exited India, China, Hong Kong, Thailand and South Korea. The largest remaining subsidiary, Seguros Monterrey New York Life, S.A. (SM), was acquired in 2000 and ranks among top insurers providing individual life insurance in the Mexican marketplace. INVESTMENTS GROUP With the increasing market demand for retirement solutions and asset management services, along with low capital requirements and potential for high profit margins, investment management represents an attractive business for NYL. The Investments Group leverages its investment management expertise, its established multi-channel distribution network and its diversified customer base to expand their investment management services. As of December 31, 2012, the Investments Group held over $364 billion of assets under management, an increase of 14% over prior year; driven by strong net flows, market performance and fund adoptions. General Account Investment Management This business is primarily focused on delivering superior risk-adjusted performance for the General Account of New York Life. This is done through the company's Fixed Income and Real Estate Groupsthat manage over $184 billion in assets under management. In addition to managing the general account assets of the New York Life insurance companies, General Account Investment Management business generates third party fee revenue predominantly by syndicating mid-market financing and then structuring and managing collateralized debt transactions through, Madison Capital Funding. Madison Capital Funding provides financing solutions primarily to private equity backed middle market companies in the form of senior loans, mezzanine financing and equity co-investment. Investment Annuities NYL's Investment Annuities include fixed and variable deferred annuities, structured settlements and guaranteed income annuities. Other than structured settlements, Investment Annuities are sold through NYLIAC. Variable products are offered exclusively through NYL agents while fixed annuities and guaranteed income annuities are sold through banks and other financial institutions in addition to the core agency channel. For more than half of new variable annuity premiums, fees are based on a percentage of premium versus the common industry practice of a percentage of assets. This approach provides greater earnings stability for the company, as fee revenue is not sensitive to equity market volatility.

Guaranteed Lifetime Income, GLI, products are immediate fixed annuities that are sold through NYLIAC. The company's strong agency and bank distribution performance has led to record sales of Guaranteed Lifetime Income products for several years. Mutual Funds NYL's Mutual Funds are sold under the company's MainStay fund brand, which offers over 50 mutual funds, representing over $70 billion in assets under management. MainStay is among the fastest growing fund complexes, ranked by Barron's for five consecutive years among the top fund families for long term investment performance. The funds leverage the expertise of NYL's boutiques to provide investment solutions across a broad array of asset classes. The products are sold through a substantial Third Party Distribution group who market through leading financial intermediaries in 3 primary channels: national / regional broker dealers, independents and banks. NYL Agents are another key sales channel as well as New York Life Retirement Plan Services. Institutional Investment Managers Through its multiple boutique investment structure, The Investments Group offers a broad array of investment capabilities and strategies managed for the benefit of institutional and individual clients representing over $128 billion in assets under management. In addition to sub-advising the MainStay mutual funds, the boutiques also manage over $76 billion in other third party assets. Guaranteed Products Guaranteed Products (GP) provides a full array of products to both the qualified and non-qualified markets via guaranteed interest contracts and funding agreement-backed note programs to serve the needs of institutional investors (including plan sponsors, pension funds, and institutional fixed income managers) seeking stable returns and superior credit quality. The business is managed opportunistically to increase profitability by leveraging New York Life's strong balance sheet and high credit ratings to raise liabilities at an attractive cost of funding. In addition, GP provides maturity and terminal funding solutions for institutional pension plans. Retirement Plan Services New York Life Retirement Plan Services provides a comprehensive array of bundled retirement programs and investment solutions to defined benefit and defined contribution plans. Clients include corporations, governments, collective bargaining units and non-profit organizations. Distribution is through intermediaries including benefits consultants, financial advisors and New York Life's agent field force. Additionally, Retirement Plan Services distributes Mainstay Funds to competing bundled retirement platforms and key retirement advisors through the Defined Contribution Investment Only team and provides custom stable value solutions to large corporate plan sponsors and leading stable value managers through its Stable Value Investment products. Territory: The company is licensed in the District of Columbia, Guam, Puerto Rico, U.S. Virgin Islands and all states. The company also is licensed in Canada.

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OPERATING PERFORMANCE The following text is derived from A.M. Best's Credit Report on New York Life Group (AMB# 069714). Operating Results: As a mutual company with a long-term focus and a large block of ordinary life insurance in force, NYL's new business development utilizes a strict pricing discipline in order to deliver stable profits. The investment in future business results is a strain on current statutory earnings, but better positions the company for future profitability. On a consolidated GAAP basis, NYL reported strong operating earnings in 2012 of $1,586 million, which represented an 18% increase over the $1,340 million recorded in 2011. NYL's GAAP net income was strong at $1,999 million in 2012, representing a 72% increase over the $1,163 million in 2011. Insurance sales increased 3% in 2012 led by strong annual premium sales of individual life insurance; led by custom whole life and core whole life products, offset by lower single premium universal life sales. Investment group sales increased 27% driven from growth in sales of recurring mutual funds, investment annuities and guaranteed income annuities. On a statutory basis, NYL reported combined pretax net operating gains of $1,633 million in 2012 compared to the $1,233 million reported in 2011. Drivers of the increase include a $210 million increase in net investment income, primarily due to a dividend from New York Life Investments of $75 million and higher distribution income from limited partnerships of $67 million; as well as reserve increase of $129 million in 2011 for universal life policies with a No Lapse Guarantee provision that did not recur in 2012. Consolidated net income was $1,333 million in 2012 compared to $557 million in 2011. Contributing to the increase was a lower tax liability in 2012 compared to 2011, primarily due to a non-recurring tax benefit of $148 million for contributions the company made to its qualified pension plan; as well as the aforementioned increase in net investment income and reserve increase in 2011 for universal life policies with No Lapse Guarantee provision that did not recur in 2012.

BALANCE SHEET STRENGTH The following text is derived from A.M. Best's Credit Report on New York Life Group (AMB# 069714).

Capitalization: NYL maintains a superior capital position relative to its overall insurance and investment risks. For year-end 2012, NYL reported its highest-ever statutory surplus and AVR of $19.6 billion, increasing by 10% over the prior year. In addition to its recent organic surplus growth, a portion of the 2009 increase was attributable to $1 billion of 6.75% surplus notes issued in October 2009. A.M. Best views surplus notes as a lower quality of capital than retained earnings or paid-in capital as surplus notes are debt instruments that have the expectation of repayment. Therefore, A.M. Best notes that NYL's quality of capital is negatively impacted as a result of the surplus note issuance. Surplus notes represented 12.1% of capital and surplus as of year-end 2012 compared to 8.4% at year-end 2008. New York Life's adjusted GAAP financial leverage of 8.7% (excluding accumulated other comprehensive income along with secured and non-recourse debt) is within A.M. Best's guidelines for the compa-

ny's current ratings. Also, GAAP interest coverage is very strong at almost 23 times. NYL has more than ample resources for funding planned growth in the near term with the ability to take advantage of growth opportunities. The company also maintains flexibility in managing surplus accumulation through its ability to adjust its policyholder dividend scale.

The following text is derived from A.M. Best's Credit Report on New York Life Group (AMB# 069714).

Liquidity: With $180 billion in invested assets on a consolidated basis at year-end 2012, NYL maintains an investment portfolio that is very well diversified and of high quality. Based on past performance and current positions of the portfolio, A.M. Best anticipates that realized losses will be manageable. However, holdings in structured securities expose the portfolio to potentially higher realized losses and impairments than in the past. Bonds represent almost three quarters of invested assets. NYL's large corporate bond portfolio (approximately 43% of invested assets) is well diversified by sector and has significantly below average exposure to financial institutions. Investments in non-agency mortgage-backed securities, asset-backed securities and commercial mortgage-backed securities totaled approximately $21.5 billion at year-end 2012. In the event of a new real estate downturn, these asset classes have the potential to experience higher defaults and delinquencies; however, NYL's portfolio has performed very well with losses well below industry averages in these asset classes. NYL's exposure to public/private equity and mezzanine debt (4.1% of invested assets) represents additional risk to the investment portfolio. Historically, NYL has maintained a lower exposure to commercial mortgage loans than its peers, comprising 10.5% of invested assets. A.M. Best considers the company to be very conservative in managing this asset class and notes NYL's low level of underperforming assets. Nevertheless, A.M. Best expects defaults to rise and is most cautious on retail, hotel and office properties within close proximity to distressed housing markets and/or labor markets where unemployment is high. NYL is well positioned in most of these areas with below industry average exposure to retail and virtually no exposure to hotel properties. With the predominance of reserves in participating ordinary life insurance, a very stable line of business, and a strong surplus position, NYL has extremely strong liquidity. Sources of liquidity of over $88 billion includes NYL's portfolio of liquid assets and other funding sources including the company's facility for short-term borrowing arranged through New York Life Capital Corporation (NYLCC). NYLCC serves as a conduit for NYL to the credit markets and is authorized to issue up to $2 billion of commercial paper. For back-up liquidity needs, NYL maintains $4.9 billion of available borrowing capacity through the Federal Home Loan Bank of NY, and has a $1.0 billion revolving credit facility with a consortium of banks. To date, NYL has not utilized this facility.

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MANAGEMENT Officers: Chairman of the Board, President and Chief Executive Officer, Theodore A. Mathas; Executive Vice President and Chief Financial Officer, John T. Fleurant; Executive Vice President and Chief Investment Officer, John Y. Kim (Investments Group); Executive Vice President and Chief Administrative Officer, Frank M. Boccio; Executive Vice President, General Counsel and Chief Legal Officer, Sheila K. Davidson; Executive Vice Presidents, Christopher O. Blunt (Insurance Group), Mark W. Pfaff (Agency); Senior Vice President and Chief Information Officer, Susan B. Ericksen; Senior Vice President, Secretary and General Counsel, Susan A. Thrope; Senior Vice President and Treasurer, Thomas A. Hendry; Senior Vice President, Chief Actuary and Chief Risk Officer, Joel M. Steinberg; Senior Vice President and General Auditor, Patricia Barbari; Senior Vice President and Chief Human Resource Officer, Hy Pomerance; Senior Vice Presidents, George Nichols, III (Office of Government Affairs), Barry A. Schub. Directors: Betty C. Alewine, Ralph de la Vega, Mark L. Feidler, Kent B. Foster, Christina A. Gold, Conrad K. Harper, Theodore A. Mathas (Chairman), S. Thomas Moser, Joseph W. Prueher, Thomas C. Schievelbein, Gerald B. Smith, William G. Walter.

Balance Sheet

Assets ($000)

12/31/2012

*Total bonds . . . . . . . . . . . . . . . . . . . . . . . . . $ 68,459,473

*Total preferred stocks . . . . . . . . . . . . . . . . 61,976

*Total common stocks . . . . . . . . . . . . . . . . . 10,651,386 Mortgage loans . . . . . . . . . . . . . . . . . . . . . . 10,681,396 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . 519,297

Contract loans . . . . . . . . . . . . . . . . . . . . . . . 8,396,905

Cash & short-term inv . . . . . . . . . . . . . . . . . 1,622,393

Other invested assets . . . . . . . . . . . . . . . . . 9,450,555 Funds held or dep with reins . . . . . . . . . . . . 4,616,319

Prems and consids due . . . . . . . . . . . . . . . 1,656,469

Accrued invest income . . . . . . . . . . . . . . . . 1,125,943

Other assets . . . . . . . . . . . . . . . . . . . . . . . . 6,486,415 Separate account bus . . . . . . . . . . . . . . . . . 10,998,321

Assets . . . . . . . . . . . . . . . . . . . . . . . . . . $134,726,848

Liabilities ($000) Net policy reserves . . . . . . . . . . . . . . . . . . . $ 82,172,559 Policy claims . . . . . . . . . . . . . . . . . . . . . . . . 723,591 Deposit type contracts . . . . . . . . . . . . . . . . 13,224,197 Interest maint reserve . . . . . . . . . . . . . . . . . 511,865 Comm taxes expenses . . . . . . . . . . . . . . . . 1,140,910 Asset val reserve . . . . . . . . . . . . . . . . . . . . . 2,279,222 Contingency reserve . . . . . . . . . . . . . . . . . . 384,551 Other liabilities . . . . . . . . . . . . . . . . . . . . . . . 6,729,645 Separate account bus . . . . . . . . . . . . . . . . . 10,991,771

Total Liabilities . . . . . . . . . . . . . . . . . . . . $118,158,310 Surplus notes . . . . . . . . . . . . . . . . . . . . . . . 1,991,219 Unassigned surplus . . . . . . . . . . . . . . . . . . . 14,577,319

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $134,726,848

*Securities are reported on the bases prescribed by the National Association of Insurance Commissioners.

? 2013 A.M. Best Company, Oldwick, NJ 08858

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