NEW YORK LIFE INSURANCE COMPANY FINANCIAL …

NEW YORK LIFE INSURANCE COMPANY

FINANCIAL STATEMENTS (STATUTORY BASIS)

DECEMBER 31, 2018 and 2017

Table of Contents

Independent Auditor's Report Statutory Statements of Financial Position Statutory Statements of Operations Statutory Statements of Changes in Capital and Surplus Statutory Statements of Cash Flows Notes to Statutory Financial Statements

Note 1 - Nature of Operations Note 2 - Basis of Presentation Note 3 - Significant Accounting Policies Note 4 - Business Risks and Uncertainties Note 5 - Recent Accounting Pronouncements Note 6 - Investments Note 7 - Derivative Instruments and Risk Management Note 8 - Separate Accounts Note 9 - Fair Value Measurements Note 10 - Investment Income and Capital Gains and Losses Note 11 - Related Party Transactions Note 12 - Insurance Liabilities Note 13 - Reinsurance Note 14 - Benefit Plans Note 15 - Commitments and Contingencies Note 16 - Income Taxes Note 17 - Surplus Note 18 - Significant Subsidiary Note 19 - Written Premiums Note 20 - Loan-Backed and Structured Security Impairments Note 21 - Subsequent Events Glossary of Terms

Page Number 1 3 4 5 6

8 8 13 21 22 23 33 38 41 52 56 58 63 64 76 81 85 86 87 88 91 92

Report of Independent Auditors

To the Board of Directors of New York Life Insurance Company:

We have audited the accompanying statutory financial statements of New York Life Insurance Company (the "Company"), which comprise the statutory statements of financial position as of December 31, 2018 and 2017, and the related statutory statements of operations, of changes in surplus, and of cash flows for the years then ended.

Management's Responsibility for the Financial Statements

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

Auditors' Responsibility

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

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

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

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

The effects on the financial statements of the variances between the statutory basis of accounting described in Note 2 and accounting principles generally accepted in the United States of America are material.

PricewaterhouseCoopers LLP, PricewaterhouseCoopers Center, 300 Madison Avenue, New York, NY 10017 T: (646) 471 3000, F: (813) 286 6000, us

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Adverse Opinion on U.S. Generally Accepted Accounting Principles In our opinion, because of the significance of the matter discussed in the "Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles" paragraph, the financial statements referred to above do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Company as of December 31, 2018 and 2017, or the results of its operations or its cash flows for the years then ended. Opinion on Statutory Basis of Accounting In our opinion, the financial statements referred to above present fairly, in all material respects, the admitted assets, liabilities and surplus of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the years then ended, in accordance with the accounting practices prescribed or permitted by the New York State Department of Financial Services described in Note 2. Emphasis of Matter As disclosed in Note 11 to the financial statements, the Company has entered into significant related party transactions with its affiliates. Our opinion is not modified with respect to this matter.

March 7, 2019

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NEW YORK LIFE INSURANCE COMPANY STATUTORY STATEMENTS OF FINANCIAL POSITION

Assets Bonds Common and preferred stocks Mortgage loans Policy loans Limited partnerships and other invested assets Cash, cash equivalents and short-term investments Derivatives Real estate Other investments

Total cash and invested assets

Deferred and uncollected premiums Investment income due and accrued Funds held by reinsurer - affiliated Other assets Separate accounts assets Total assets

Liabilities and surplus Liabilities: Policy reserves Deposit funds Dividends payable to policyholders Policy claims Borrowed money Amounts payable under security lending agreements Derivatives Funds held under coinsurance Other liabilities Interest maintenance reserve Asset valuation reserve Separate accounts liabilities Total liabilities Surplus: Surplus notes Unassigned surplus

Total surplus

December 31,

2018

2017

(in millions)

$ 106,077 $ 10,318 17,554 11,208

98,176 10,807 15,676 10,877

9,581 2,835

648 1,486

90 159,797

9,457 2,420

587 1,524

111 149,635

1,938

1,950

1,494 --

6,354

1,285 4,015 6,527

10,453

13,354

$ 180,036 $ 176,766

$ 109,968 $ 107,552

21,909

17,922

1,911

1,897

747

786

501

496

653

679

342

323

4,048

4,228

5,369

5,862

535

658

2,594

2,652

10,453

13,354

159,030

156,409

1,994 19,012 21,006

1,993 18,364 20,357

Total liabilities and surplus

$ 180,036 $ 176,766

See accompanying notes to financial statements. 3

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