As filed with the Securities and Exchange Commission on April 26, 2024
Registration No. 333-278199
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1
MassMutual Ascend Life Insurance Company
(Exact name of registrant as specified in its charter)
| Ohio | 6311 | 13-1935920 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
191 Rosa Parks Street, Cincinnati, Ohio 45202
(513) 361-9000
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
John P. Gruber
MassMutual Ascend Life Insurance Company
191 Rosa Parks Street, Cincinnati, Ohio 45202
(513) 361-9000
(Name and Address of Agent of Service)
Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
| Non-accelerated filer | ☒ | Smaller reporting company | ☐ | |||
| Emerging growth company | ☐ | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
Pursuant to Rule 429 under the Securities Act of 1933, the prospectuses contained herein also relate to Registration Statement No.: 333-270823. Upon effectiveness, this Registration Statement, which is a new Registration Statement, will also act as a post-effective amendment to such earlier Registration Statement.
The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
Administrative Office: P.O. Box 5423, Cincinnati OH 45201-5423
Street Address: 191 Rosa Parks Street, Cincinnati OH 45202
Policy Administration: 1-800-789-6771
INDEX FRONTIER® 7 PRO ANNUITY
PROSPECTUS DATED MAY 1, 2024
The Index Frontier® 7 Pro annuity is an Individual Index-linked Modified Single Premium Deferred Annuity (the “Contract”) issued by MassMutual Ascend Life Insurance Company® (“MassMutual Ascend Life,” “we” or “us”). It provides that we will pay annuity payout benefits to you in exchange for your purchase payments. The Contract offers you the opportunity to allocate funds to indexed strategies for one-year periods (a “Term”). Indexed strategies provide returns based, in part, on the change in the value of a market index or the share price of an exchange-traded fund (an “Index”). The returns of an Index do not include reinvestment of any dividends.
The Contract is a modified single premium deferred annuity. This means we will accept Purchase Payments only during the purchase payment period, which ends two months after the Contract Effective Date.
A glossary of defined terms used herein can be found in the Special Terms section starting on page 5 of this prospectus.
The Contract currently offers three Conserve Strategies, three Growth Strategies, and one Buffer Strategy.
| Conserve/0% Floor Strategies | Index | Maximum Loss/Floor of 0% Per Term | ||
| S&P 500 0% Floor | S&P 500® Index | Other than the reduction for the Daily Charge, you cannot lose money allocated to a Conserve Strategy due to a negative change in the Index. | ||
| iShares U.S. Real Estate 0% Floor | iShares U.S. Real Estate ETF | |||
| iShares MSCI EAFE 0% Floor | iShares MSCI EAFE ETF | |||
| Growth/-10% Floor Strategies | Index | Maximum Loss/Floor of 10% Per Term | ||
| S&P 500 -10% Floor | S&P 500® Index | In addition to the reduction for the Daily Charge, each Term you can lose up to 10% of money allocated to a Growth Strategy due to a negative change in the Index. | ||
| iShares U.S. Real Estate -10% Floor | iShares U.S. Real Estate ETF | |||
| iShares MSCI EAFE -10% Floor | iShares MSCI EAFE ETF | |||
| 10% Buffer Strategy | Index | End of Term Buffer of 10% Per Term | ||
| S&P 500 10% Buffer | S&P 500® Index | At the end of the Term, the Buffer protects against the first 10% negative change in the Index, but there is no limit on losses due to a negative change above that Buffer. The Buffer is less than 10% if you withdraw money before the end of the Term. The Buffer does not protect against reduction for the Daily Charge. | ||
At the end of a Term, we may stop offering any particular Indexed Strategy, but we will always offer at least one Conserve/0% Floor Strategy. Consequently, any Indexed Strategy listed above may not be available after the end of the initial Term. Indexed Strategies that may be available in the future may earn a return that is lower than the return your investments would have earned if they had been invested in the other Indexed Strategies listed above. In addition, if we reduce the available number of Index Strategies to just one Conserve/0% Floor Strategy, your ability to increase your Account Value could be significantly reduced.
In general, we will set a higher Maximum Gain for a Growth Strategy than the Maximum Gain for a Conserve Strategy that uses the same Index, and we will set a higher Maximum Gain for the Buffer Strategy than for the Growth Strategy that uses the same Index.
| • | Subject to the Daily Charge, the value of an indexed strategy will increase if there is a positive change in the applicable Index value during a Term. Any increase during a Term is subject to an upper limit called the Maximum Gain. At least 10 days before a Term starts, we will post the Maximum Gain that will apply to an Indexed Strategy for that Term on our website (www.gaig.com/RILArates). We can change the Maximum Gain for each new Term of an indexed strategy. |
| • | Before the end of a Term, any increase in the value of an indexed strategy is also subject to a vesting factor. The vesting factor limits the portion of the positive change in the Index that we take into account when we calculate the increase in the strategy value. The vesting factor varies depending on the day of the Term. It is 25% for any date within the first half of a Term, 50% for any date within the second half of a Term, and 100% at the end of a Term. |
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| • | Each day, we will subtract the Daily Charge from the value of each indexed strategy. The Daily Charge is calculated as a percentage of the amount applied to the strategy, adjusted for withdrawals and prior daily charges. The Daily Charge is a rate that compounds to 1.00% per year. |
| • | The value of a Conserve/0% Floor Strategy will not decrease by more than the Daily Charge even if there is a negative change in the applicable Index value during a Term. The value of each Conserve Strategy is reduced by the Daily Charge. |
| • | The value of a Growth/-10% Floor Strategy will decrease by more than the Daily Charge if there is a negative change in the applicable Index value during a Term. Any decrease during a Term for a Growth Strategy (other than by reason of the Daily Charge) is subject to a lower limit called the Maximum Loss. The Maximum Loss for each Term of a Growth Strategy is 10%. In addition to the Daily Charge, each Growth Strategy includes a risk of potential loss of up to 10% of principal and any prior earnings each Term. |
| • | The value of a 10% Buffer Strategy will decrease if there is a negative change in the applicable Index Value that is larger than the Buffer during a Term. The Buffer is the portion of a negative Index Change for a Term that is disregarded when calculating Buffer Strategy losses. The Buffer varies depending on the day of the Term. The Buffer at the end of a Term is 10%. Before the end of the Term, the Buffer is calculated daily as a prorated share of the annual 10% Buffer. In addition to the Daily Charge, each Buffer Strategy includes a risk of potential loss of principal and any prior earnings. At maximum, the Buffer protects 10% of principal and any prior earnings from loss each Term. |
The Contract is intended for long-term investment purposes and may not be appropriate for investors who plan to take withdrawals (including systematic withdrawals and required minimum distributions) during the first seven contract years. An early withdrawal charge may apply if you take a withdrawal or Surrender the Contract during the first seven contract years. That charge will reduce strategy values, including the value of a Conserve/0% Floor Strategy. The early withdrawal charge is 9% for withdrawals and Surrenders of the Contract in the first contract year, and falls each contract year during the seven-year period. Withdrawals and Surrenders may also be subject to income tax, and withdrawals and Surrenders before age 591/2 may also be subject to an additional 10% penalty tax.
Risk Factors for this Contract appear on pages 13-17 and pages A5-A12. Indexed annuity contracts are complex insurance and investment vehicles. You should speak with a financial advisor about the Index Frontier 7 Pro and its features, benefits, risks, and fees, and whether the Contract is appropriate for you based upon your financial situation and objectives.
Please read this prospectus before investing and keep it for future reference. It contains important information about your annuity and MassMutual Ascend Life that you ought to know before investing. It describes all material rights and obligations under the Contract including material state variations.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
| • | The Contract is not insured by the FDIC (Federal Deposit Insurance Corporation) or the NCUSIF (National Credit Union Share Insurance Fund). |
| • | Although the Contract may be sold through relationships with banks or other financial institutions, the Contract is not a deposit or obligation of, or guaranteed by, such institutions or any federal regulatory agency. |
| • | The Contract is a security. It involves investment risk and may lose value. There is a risk of loss of principal under the Contract and that loss can become greater due to Early Withdrawal Charges. |
All guarantees under the Contract are the obligations of MassMutual Ascend Life and are subject to the credit worthiness and claims-paying ability of MassMutual Ascend Life.
The Contract doesn’t invest in any equity, debt or other investments. If you buy this Contract, you aren’t investing directly in an Index, the stocks included in an Index, or the underlying investments or other assets held by an Index.
The “S&P 500 Index” is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and has been licensed for use by MassMutual Ascend Life Insurance Company. S&P®, S&P 500®, US 500, The 500, iBoxx®, iTraxx® and CDX® are trademarks of S&P Global, Inc. or its affiliates (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow
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Jones”); MassMutual Ascend Life Insurance Company’s Products is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500 Index.
The iShares U.S. Real Estate ETF and the iShares MSCI EAFE ETF are distributed by BlackRock Investments, LLC. iShares®, BLACKROCK®, and the corresponding logos are registered and unregistered trademarks of BlackRock, Inc. and its affiliates (“BlackRock”), and these trademarks have been licensed for certain purposes by MassMutual Ascend Life Insurance Company. MassMutual Ascend Life annuity products are not sponsored, endorsed, sold or promoted by BlackRock, and purchasers of an annuity from MassMutual Ascend Life do not acquire any interest in the iShares U.S. Real Estate ETF or the iShares MSCI EAFE ETF nor enter into any relationship of any kind with BlackRock. BlackRock makes no representation or warranty, express or implied, to the owners of any MassMutual Ascend Life annuity product or any member of the public regarding the advisability of purchasing an annuity, nor does it have any liability for any errors, omissions, interruptions or use of the iShares U.S. Real Estate ETF or the iShares MSCI EAFE ETF or any data related thereto.
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The principal underwriter of the Contract is MM Ascend Life Investor Services, LLC. The offering of the Contract is intended to be continuous. The underwriter will use its best efforts to sell the Contract.
This prospectus is not an offering in any state, country, or jurisdiction in which we are not authorized to sell the Contract.
If you purchase a Contract, you may cancel it within 20 days after you receive it. If you purchase a Contract to replace an existing annuity contract or insurance policy, you have 30 days to cancel the Contract. The right to cancel period may be longer in some states. In many states, you will bear the risk of investment gain or loss before cancellation. The right to cancel is described more fully in the Right to Cancel section of this prospectus.
Our form number for the Contract is P1833521NW. Our form numbers for the strategy endorsements to the Contract are E1322517NW, E1322617NW, E1322717NW, E1322817NW, E1322917NW, E1323017NW, E1829620NW, E1829720NW, and E1829820NW. The form numbers may vary by state. The Securities and Exchange Commission file number for the Contract is 333-278199.
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INDEX FRONTIER® 7 PRO ANNUITY INFORMATION
In this prospectus, the following capitalized terms have the meanings set out below.
ACCOUNT VALUE. The sum of the values of each Indexed Strategy, plus the value of the Purchase Payment Account, if any.
ANNUITANT. The natural person or persons on whose life Annuity Payout Benefit is based.
ANNUITY PAYOUT BENEFIT. A series of periodic payments made under a Payout Option. The terms and conditions are described in the Annuity Payout Benefit section of this prospectus.
ANNUITY PAYOUT INITIATION DATE. The first day of the first payment interval for which payment of an Annuity Payout Benefit is to be made.
BAILOUT TRIGGER. The Maximum Gain for the next Term of an Indexed Strategy that triggers a waiver of Early Withdrawal Charges under the Bailout right of an Indexed Strategy.
BENEFICIARY. A person entitled to receive all or part of a Death Benefit that is to be paid under the Contract on account of a death before the Annuity Payout Initiation Date.
BUFFER. The portion of a negative Index Change for a Term that is disregarded when determining a Vested Loss for a Buffer Strategy. The Buffer varies depending on the day of the Term. Once the final Market Day of the Term has been reached, the Buffer is 10%. Before the final Market Day, the Buffer is equal to: 10% x ((365 – N) / 365), where N is equal to the number of days remaining until the final Market Day of the Term.
CONTRACT. The legally binding agreement between you and MassMutual Ascend Life, including applicable endorsements and riders.
CONTRACT ANNIVERSARY. The date in each year that is the annual anniversary of the Contract Effective Date. That date is set out on your Contract Specifications Page.
CONTRACT EFFECTIVE DATE. The date as of which the initial Purchase Payment is applied to the Contract. That date is set out on your Contract Specifications Page.
CONTRACT SPECIFICATIONS PAGE. The page in your Contract that contains details unique to your Contract.
CONTRACT YEAR. A 12-month period that starts on the Contract Effective Date or on a Contract Anniversary.
DAILY CHARGE. The charge for maintaining your Contract. It is a daily rate that compounds at 1.00% per year. It is calculated daily as a percentage of, and is subtracted from, the then remaining investment base of each Indexed Strategy.
DEATH BENEFIT. An amount that becomes payable if you die before the Annuity Payout Initiation Date and before the date that the Contract is Surrendered. The terms and conditions are described in the Death Benefit section of this prospectus.
EARLY WITHDRAWAL CHARGE. A charge deducted from the Account Value of your Contract if, during the first seven Contract Years, you Surrender your Contract or you take a withdrawal in excess of the Free Withdrawal Allowance (including systematic withdrawals and required minimum distributions). The Early Withdrawal Charge does not apply to a withdrawal that qualifies for the Free Withdrawal Allowance or the amount, if any, that qualifies for another waiver. The Early Withdrawal Charge does not apply to an Annuity Payout Benefit or Death Benefit.
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FREE WITHDRAWAL ALLOWANCE. The total amount that may be taken as a withdrawal or Surrendered during a Contract Year without an Early Withdrawal Charge that would otherwise apply. This amount is described in the Free Withdrawal Allowance section of this prospectus. Like any other withdrawal, an amount withdrawn that is covered by the Free Withdrawal Allowance will reduce the value of an Indexed Strategy on a dollar-for dollar basis, and will proportionally reduce the Investment Base of a Strategy.
INDEX. A stock market index or an exchange-traded fund.
INDEX CHANGE. The increase or decrease, if any, in the applicable Index Value over a Term of an Indexed Strategy.
INDEX VALUE. For Indexed Strategies that use the S&P 500 Index, the Index Value is the closing value of the Index. For Indexed Strategies that use, the iShares U.S. Real Estate ETF, or the iShares MSCI EAFE ETF, the Index Value is the fund’s closing share price on the NYSE Arca.
INDEXED STRATEGY. A specified method by which gain or loss is calculated for a Term. Each Indexed Strategy provides a return based, in part, on changes in an Index Value. The Indexed Strategies that are currently available are set out on the first page of this prospectus.
INVESTMENT BASE. The amount applied to an Indexed Strategy at the start of a current Term. The Investment Base is reduced daily by an amount equal to the Daily Charge. A withdrawal and any related Early Withdrawal Charge reduces the Investment Base proportionally to the reduction in the value of that Indexed Strategy due to the withdrawal or charge. For example, if a withdrawal reduces the value of an Indexed Strategy by 15%, then it will reduce the Investment Base of that Strategy by 15%.
MARKET CLOSE. The close of the regular or core trading session on the market used to measure a given Indexed Strategy.
MARKET DAY. Each day that all markets that are used to measure available Indexed Strategies are open for regular trading.
MASSMUTUAL ASCEND LIFE (“WE,” “US,” “OUR,” “MMALIC”). MassMutual Ascend Life Insurance Company.
MAXIMUM GAIN. The largest positive Index Change for a Term that is taken into account to determine the Vested Gain for a given Indexed Strategy. We set the Maximum Gain for each Term of an Indexed Strategy before the first day of that Term. For a given Term, we may set a different Maximum Gain for amounts attributable to Purchase Payments received on different dates. The Maximum Gain can also be called a “Cap”. Daily Charges are not taken into account when calculating Maximum Gains.
MAXIMUM LOSS. The most negative Index Change for a Term that is taken into account to determine a Vested Loss for a given Conserve Strategy or Growth Strategy. The Maximum Loss for a Growth Strategy is a loss of 10% and will apply to all Terms of that Growth Strategy. The Maximum Loss for a Conserve Strategy is 0% and will apply to all Terms of that Conserve Strategy. The Maximum Loss can also be called a “Floor”. Daily Charges are not taken into account when calculating Maximum Losses.
OWNER (“YOU,” “YOURS”). The person(s) who possesses the ownership rights under the Contract. If there is more than one Owner, each Owner will be a joint owner of the Contract and each reference to Owner means joint owners.
PAYOUT OPTION. The form in which an Annuity Payout Benefit or Death Benefit may be paid. Standard options are described in the Payout Options section of this prospectus.
PURCHASE PAYMENT. An amount received by us for the Contract. This amount is after the deduction of any fee charged by the person remitting payment and any taxes withheld from the payment.
PURCHASE PAYMENT ACCOUNT. An account where a Purchase Payment is held from the date it is applied to the Contract until the first Strategy Application Date on or after that date.
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REQUEST IN GOOD ORDER. Information provided or a request made that is:
| • | complete and satisfactory to us; |
| • | sent to us on our form or in a manner satisfactory to us, which may, at our discretion, be by telephone or electronic means; and |
| • | received at our administrative office. |
Information provided or a request made is complete and satisfactory when we have received: (1) all the information and legal documentation that we require to process the information or the request; and (2) instructions that are sufficiently clear that we do not need to exercise any discretion to process the information or the request. If you have any questions, you should contact us or your registered representative before submitting your request.
STRATEGY APPLICATION DATE. The 6th and 20th days of each month.
SURRENDER. The termination of your Contract in exchange for its Surrender Value.
SURRENDER VALUE. The Account Value minus the Early Withdrawal Charge that would apply on a Surrender of the Contract.
TAX-QUALIFIED CONTRACT. An annuity contract that is intended to qualify for special tax treatment for retirement savings. If your Contract is a Tax-Qualified Contract, the cover page of your Contract includes information about its tax qualification. If your Contract is not a Tax-Qualified Contract, the cover page of your Contract will identify it as a “Nonqualified Annuity.”
TERM. The period for which Contract values are allocated to a given Indexed Strategy, and over which gain or loss is calculated. Each Term is one year long, and will start and end on a Strategy Application Date. A new Term will start on the date that the preceding Term ends.
VESTED GAIN. The portion of any positive Index Change for the Term of an Indexed Strategy that is taken into account when determining the value of that Indexed Strategy. For any day of a Term, the Vested Gain is equal to: (1) any positive Index Change for the Term, but not exceeding the Maximum Gain set for that Term; multiplied by (2) the applicable Vesting Factor for that day; and then multiplied by (3) the remaining Investment Base for that Term. Daily Charges are applied prior to calculating Vested Gains.
VESTED LOSS. The portion of any negative Index Change for the Term of an Indexed Strategy that is taken into account when determining the value of that Indexed Strategy. For any day of a Term, the Vested Loss is equal to: (1) any negative Index Change for the Term, after taking into account either the Maximum Loss for each Term of that Indexed Strategy or the Buffer; multiplied by (2) the remaining Investment Base for that Term. Daily Charges are applied prior to calculating Vested Losses.
VESTING FACTOR. A factor used to determine a Vested Gain. Vesting Factors are described in the Vested Gains and Losses section of this prospectus.
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The MassMutual Ascend Life Index Frontier® 7 Pro annuity is a modified single premium deferred annuity contract that may help you accumulate retirement savings. The Contract is intended for long term investment purposes. The Contract is a legal agreement between you as the Owner and MassMutual Ascend Life as the issuing insurance company. In the Contract, you agree to make one or more Purchase Payments to us and we agree to pay the Annuity Payout Benefit to you.
Like all deferred annuities, the Contract has two periods. During the period prior to the Annuity Payout Initiation Date, your Contract may accumulate earnings on a tax-deferred basis. During the period that begins on the Annuity Payout Initiation Date, we will make payments under the selected Payout Option.
The following chart describes the key features of the Contract. Read this prospectus for more detailed information about the Contract.
| Benefits | • The Annuity Payout Benefit is a series of periodic payments made under a Payout Option. This benefit can provide you with income for a fixed period of time or for life. It is based on the Account Value on the Annuity Payout Initiation Date.
• The Cash Benefit lets you take out all of your Account Value (Surrender) or take out part of it (withdrawal). An Early Withdrawal Charge generally applies if you take money out during the first seven Contract Years. You can Surrender your Contract or take a withdrawal before the Annuity Payout Initiation Date.
• The Death Benefit is payable if you die before the Annuity Payout Initiation Date. This benefit is paid to your beneficiaries. It is based on the Death Benefit Value, which will never be less than your Purchase Payments, reduced proportionately for withdrawals.
Please see the Annuity Payout Benefit, Cash Benefit, and Death Benefit sections on pages 55, 41, and 56 for more information. | |
| Purchase Payments | The Contract is a modified single premium annuity. This means we will accept Purchase Payments only during the purchase payment period, which ends two months after the Contract Effective Date. The initial Purchase Payment must be at least $25,000. Each additional Purchase Payment must be at least $10,000. You will need our prior approval if:
• you are age 80 or younger and want to make a Purchase Payment(s) of more than $1,000,000; or
• you are over age 80 and want to make a Purchase Payment(s) of more than $750,000. Please see the Purchase section on page 17 for more information. | |
| Issue Age | Each Owner must be age 80 or younger on the Contract Effective Date. Please see the Purchase section on page 17 for more information. | |
| Indexed Strategies | We currently offer seven Indexed Strategies. | |||
| Conserve/0% Floor Strategies | Index | |||
| S&P 500 0% Floor | S&P 500® Index | |||
| iShares U.S. Real Estate 0% Floor | iShares U.S. Real Estate ETF | |||
| iShares MSCI EAFE 0% Floor | iShares MSCI EAFE ETF | |||
| Growth/-10% Floor Strategies | Index | |||
| S&P 500 -10% Floor | S&P 500® Index | |||
| iShares U.S. Real Estate -10% Floor | iShares U.S. Real Estate ETF | |||
| iShares MSCI EAFE -10% Floor | iShares MSCI EAFE ETF | |||
| 10% Buffer Strategy | Index | |||
| S&P 500 10% Buffer | S&P 500® Index | |||
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Conserve/0% Floor Strategies
• The value of a Conserve Strategy will increase if there is a positive Index Change during a Term. Any positive Index Change is subject to the applicable Maximum Gain for the Term. Before the end of the Term, any positive Index Change is also subject to a Vesting Factor. A Vested Gain can never be more than the Maximum Gain for that Term.
• The value of a Conserve Strategy will never decrease due to a negative Index Change during a Term.
• The value of a Conserve Strategy will be reduced by the Daily Charge. The Daily Charge may result in a reduction in value over a Term equal to the Daily Charge.
• We will always offer at least one Conserve Strategy.
Growth/-10% Floor Strategies
• The value of a Growth Strategy will increase if there is a positive Index Change during a Term. Any positive Index Change is subject to the applicable Maximum Gain for the Term. Before the end of the Term, any positive Index Change is also subject to a Vesting Factor. A Vested Gain can never be more than the Maximum Gain for that Term.
• The value of a Growth Strategy will decrease due to a negative Index Change during a Term. If you allocate money to a Growth Strategy, you can lose up to 10% of that money during the Term due to a negative Index Change.
• The value of a Growth Strategy will be reduced by the Daily Charge. The Daily Charge may result in a reduction in value over a Term equal to the Daily Charge plus any loss due to a negative Index Change.
10% Buffer Strategy
• The value of the Buffer Strategy will increase if there is a positive Index Change during a Term. Any positive Index Change is subject to the applicable Maximum Gain for the Term. Before the end of the Term, any positive Index Change is also subject to a Vesting Factor. A Vested Gain can never be more than the Maximum Gain for that Term.
• The value of the Buffer Strategy will decrease due to a negative Index Change during a Term. If you allocate money to the Buffer Strategy, at the end of the Term you can lose up to 90% of that money due to a negative Index Change. At the end of the Term, 10% of the money you allocated is protected from loss. You can lose more than 90% of that money if you withdraw it before the end of the Term.
• The value of the Buffer Strategy will be reduced by the Daily Charge. The Daily Charge may result in a reduction in value over a Term even if the Buffer protects against any loss due to a negative Index Change.
Please see the Indexed Strategies section on page 19 for more information. | ||
Indexed Strategy Value and Investment Base | At the start of a Term, the value of an Indexed Strategy is equal to the Investment Base for that Term, which is the amount applied to that Strategy for that Term.
During a Term, a Vested Gain increases the Strategy value or a Vested Loss reduces the Strategy value.
The Daily Charge reduces the Investment Base of the Strategy equal to the amount of the charge. The Daily Charge reduces the amount to which Vested Gain or Vested Loss applies. This means that the Daily Charge will increase any losses and decrease any gains
A withdrawal reduces the Strategy value, including the value of any Conserve/0% Floor Strategy, by the amount of the withdrawal and related Early Withdrawal Charge. A withdrawal reduces the Investment Base by the portion of the Investment Base needed to pay for the withdrawal and related Early Withdrawal Charge. The reduction in the Investment Base is proportional to the reduction in the Strategy value. This means that we calculate the percentage of Strategy Value that is being withdrawn and we reduce your Investment Base by the same percentage. If you take a withdrawal when your Strategy Value is less than your Investment Base, the amount of Investment Base | |
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reduction will exceed the dollar amount of your withdrawal. For example, if your Strategy Value is $30,000 and you withdraw $12,000, you have withdrawn 40% of Strategy Value. If your Investment Base was $40,000 before the withdrawal, it would be reduced by $16,000 ($40,000 x .40) and your new Investment Base after the withdrawal would be $24,000 ($40,000 – $16,000). If your Strategy Value is greater than your Investment Base, the amount of the Investment Base reduction will be less than the dollar amount of the withdrawal.
Please see the Indexed Strategies section on page 19 for more information. | ||
| Daily Charge | Each day of this Contract, we will subtract a Daily Charge from the Investment Base of each Indexed Strategy. The Daily Charge is calculated as a percentage of the remaining Investment Base of the Strategy. The Daily Charge is a rate that compounds to 1.00% per year. Please see the Daily Charge section on page 51 for more information. | |
| Vested Gains and Losses | • Each day of a Term, the value of an Indexed Strategy is adjusted for the Vested Gain or Loss since the start of that Term. We use the following formulas to calculate Vested Gains and Losses.
• Vested Gain = any positive Index Change for the Term (but not exceeding the Maximum Gain set for the Term) x applicable Vesting Factor for that day x remaining Investment Base for the current Term.
• Vested Loss = any negative Index Change for the Term (after taking into account either the Maximum Loss for the Term or the Buffer, as applicable) x remaining Investment Base for the current Term.
• Daily Charges are applied prior to calculating Vested Gains and Vested Losses.
Please see the Vested Gains and Losses section on page 22 for more information. | |
| Maximum Gains | We set a Maximum Gain for each Indexed Strategy prior to the start of each Term. This means the Maximum Gain for an Indexed Strategy may change for each Term. At least 10 days before the next Term starts, we will post the Maximum Gain that will apply to an Indexed Strategy for that next Term on our website (www.gaig.com/RILArates). In general, we will set a higher Maximum Gain for a Growth/-10% Floor Strategy than the Maximum Gain for a Conserve/0% Floor Strategy that uses the same Index. In general, we will set a higher Maximum Gain for a 10% Buffer Strategy than the Maximum Gain for a Growth Strategy that uses the same Index.
The Daily Charges will decrease any gains.
Please see the Vested Gains and Losses section on page 22 for more information. | |
| Maximum Losses | The Maximum Loss for each Term of a Conserve Strategy is 0%.
The Maximum Loss for each Term of a Growth Strategy is a loss of 10%.
The Maximum Loss for each Term of the Buffer Strategy is a loss of 90%, or more than 90% if a withdrawal is taken before the end of the Term. In addition, your cumulative loss over Multiple Terms could exceed 90% of your investment.
The Daily Charge will increase any losses.
Please see the Vested Gains and Losses section on page 22 for more information. | |
| Buffer | The Buffer at the end of each Term of a Buffer Strategy is 10%. Before the end of each Term, the Buffer is calculated daily as a prorated share of the annual 10% Buffer. Please see the Vested Gains and Losses section on page 22 for more information. | |
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| Vesting Factors | Vesting Factors for the Indexed Strategies are fixed and are applied as follows:
• For a positive Index Change during a Term, the Vesting Factors are 25% for any date within the first six months of a Term; 50% for any date within the final six months of a Term but before the final Market Date of the Term; and 100% on or after the final Market Date of the Term. A Vesting Factor below 100% limits any positive increase during a Term.
• For a negative Index Change during a Term, there is no Vesting Factor.
Please see the Vested Gains and Losses section on page 22 for more information. | |
| Strategy Renewals | At the end of each Term of a given Indexed Strategy, we will apply the ending value of that Strategy to a new Term of that same Strategy. The amount applied to a new Term will not include any amount that is moved as part of a reallocation at the Term end. Please see the Strategy Renewals and Reallocations at Term End section on page 40 for more information. | |
| Strategy Reallocations | At the end of a Term, you may reallocate the ending values of the Indexed Strategies for that Term among the Strategies. Please see the Strategy Renewals and Reallocations at Term End section on page 40 for more information. | |
| Access to Your Money Through Withdrawals | You may take a withdrawal from your Contract at any time prior to the Annuity Payout Initiation Date.
• During the first seven Contract Years, unless you qualify for the Free Withdrawal Allowance or the bailout right as described below, an Early Withdrawal Charge will apply.
• A withdrawal from an Indexed Strategy will reduce the value of that Strategy on a dollar-for-dollar basis. A withdrawal from an Indexed Strategy during a Term will proportionally reduce the Investment Base used to calculate any subsequent Vested Gain or Loss in that Term.
• In addition to any applicable Early Withdrawal Charge, a withdrawal may be subject to income tax, and a withdrawal before age 591/2 may also be subject to an additional 10% penalty tax.
Please see the Early Withdrawal Charge section on page 52 for more information. | |
| Early Withdrawal Charge | An Early Withdrawal Charge applies during the first seven Contract Years if you Surrender your Contract or withdraw an amount in excess of the Free Withdrawal Allowance. The charge is equal to the amount subject to the charge multiplied by the applicable rate set out below. | |
Contract Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8+ | ||||||||||||||||||||||||
Early Withdrawal Charge Rate | 9 | % | 8 | % | 7 | % | 6 | % | 5 | % | 4 | % | 2 | % | 0 | % | ||||||||||||||||
If you take a withdrawal from your Contract, the amount subject to the charge is the amount you withdraw plus any amount needed to pay the Early Withdrawal Charge. If you Surrender your Contract, the amount subject to the charge is your Account Value.
When you request a withdrawal, we will reduce the amount we pay you by the amount of the Early Withdrawal Charge. If you instruct us to pay you the specific withdrawal amount, we will instead reduce your Account Value by both the requested specific withdrawal amount, as well as the amount of the Early Withdrawal Charge. In this case, since you opted not to pay the Early Withdrawal Charge out of your withdrawal proceeds, we treat the Early Withdrawal Charge as an additional requested withdrawal. We will apply the Early Withdrawal Charge to both the specified withdrawal amount, as well as any amounts we withdraw to cover your Early Withdrawal Charges. The Early Withdrawal Charge does not apply to (1) a withdrawal that qualifies for the Free Withdrawal Allowance; (2) any withdrawal under the Bailout right; or (3) the amount, if any, that qualifies for another waiver. Please see the Early Withdrawal Charge section on page 52 for more information.
For example, if after using their Free Withdrawal Allowance a contractholder requested that an additional $10,000 be withdrawn from their Account Value when a 9% Early Withdrawal Charge was in effect, a $900 Early Withdrawal Charge would apply (9% of $10,000 withdrawn). The contractholder would receive $9,100 ($10,000 - $900), minus any income tax withholding.
Similarly, if a contractholder instead requested that they receive a net amount of $10,000 from their account in the same circumstances, we would treat the Early Withdrawal Charge amount as an additional requested withdrawal subject to an Early Withdrawal Charge. This means that we will |
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| “gross up” your requested withdrawal to cover applicable Early Withdrawal Charges (and any income tax withholding). If we assume that no income tax withholding applies, the withdrawal would be grossed up to $10,989, calculated by dividing the net amount requested by 1 minus the Early Withdrawal Charge rate ($10,000 / (1 – 0.09)). The Early Withdrawal Charge would be $989 (9% of the $10,989 withdrawal), and the contractholder would receive $10,000 ($10,989 - $989). | ||
| Free Withdrawal Allowance | The Free Withdrawal Allowance lets you withdraw some money from your Contract without the imposition of the Early Withdrawal Charge. For the first Contract Year, the Free Withdrawal Allowance is an amount equal to 10% of the total Purchase Payments received by us. For each subsequent Contract Year, the Free Withdrawal Allowance is equal to 10% of the Account Value as of the most recent Contract Anniversary. The Free Withdrawal Allowance is non-cumulative and you may not carry over any unused portion to other Contract Years. Like any other withdrawal, an amount withdrawn that is covered by the Free Withdrawal Allowance will reduce the value of an Indexed Strategy on a dollar-for dollar basis, and will proportionally reduce the Investment Base of a Strategy. Please see the Early Withdrawal Charge section on page 52 for more information. | |
| Bailout Right | We will waive the Early Withdrawal Charge on an amount you withdraw if: (1) you withdraw it at the end of a Term from an Indexed Strategy; and (2) either the Maximum Gain for such Indexed Strategy for the next Term is less than the Bailout Trigger for the current Term, or such Indexed Strategy will not be available for the next Term. If the Bailout right will apply at the end of a Term, we will notify you at least 30 days before the end of that Term. The Bailout right does not apply to your initial Term. Please see the Early Withdrawal Charge section on page 52 for more information. | |
| Payout Options | Like all annuity contracts, the Contract offers a range of Payout Options, which provide payments for your lifetime or for a fixed period. After payments begin, you cannot change the Payout Option or any fixed period you selected. The standard Payout Options are listed below.
• Fixed Period Payout
• Life Payout
• Life Payout with Payments for at Least a Fixed Period
• Joint and One-half Survivor Payout
Please see the Payout Options section on page 58 for more information. | |
| Death Benefit | A Death Benefit is payable under the Contract if you die before the Annuity Payout Initiation Date. If the Owner is a non-natural person, such as a trust or a corporation, then a Death Benefit is payable under the Contract if an Annuitant dies before the Annuity Payout Initiation Date.
The Death Benefit Value is the greater of: (1) the Account Value as of the applicable date; or (2) your Purchase Payment(s) reduced proportionally for all withdrawals, but not including amounts applied to pay Early Withdrawal Charges.
Please see the Death Benefit section on page 56 for more information. | |
| Tax Deferral | The Contract is generally tax deferred, which means that you are not taxed on the earnings in your Contract until the money is paid to you. Contracts owned by non-natural owners, such as trusts and corporations, are subject to special rules.
A tax-qualified retirement plan such as an IRA also provides tax deferral. Buying the Contract within a tax-qualified retirement plan does not give you any extra tax benefits. There should be reasons other than tax deferral for buying the Contract within a tax-qualified retirement plan.
Please see the Federal Tax Considerations section on page 70 for more information. | |
| Right to Cancel | If you purchase a Contract, you may cancel it within 20 days after you receive it. If you purchase a Contract to replace an existing annuity contract or insurance policy, you have 30 days to cancel the Contract. The right to cancel period may be longer in some states. In many states, you will bear the risk of investment gain or loss before cancellation.
Please see the Right to Cancel (Free Look) section on page 63 for more information. | |
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The Contract involves certain risks that you should understand before purchasing it. You should carefully consider your income needs and risk tolerance to determine whether the Contract or a particular Indexed Strategy is appropriate for you. The level of risk you bear and your potential investment performance will differ depending on the Indexed Strategies you choose.
| Loss of Principal Related to Growth Strategy and Buffer Strategy due to Negative Index Changes | There is a significant risk of loss of principal and related earnings due to negative Index Changes if you allocate your Purchase Payment(s) to a Growth/-10% Floor Strategy or 10% Buffer Strategy. Such a loss may be substantial.
This risk exists for each Growth Strategy because you agree to absorb any loss in the Index during the Term up to the Maximum Loss of 10%. This risk exists for each Buffer Strategy because you agree to absorb any loss in the Index that exceeds the Buffer. This risk of loss does not exist if you allocate your Purchase Payment(s) to a Conserve/0% Floor Strategy.
If you allocate money to a Growth Strategy, you may lose up to 10% at the end of each Term. If you allocate money to a Growth Strategy over multiple Terms, you may lose up to 10% each Term, which may result in a cumulative loss that is greater than 10%.
If you allocate money to a Buffer Strategy, you may lose up to 90% at the end of each Term. If you allocate money to a Buffer Strategy and withdraw it before the end of the Term, you may lose more than 90% because the Buffer is less than 10% until the end of the Term. If you allocate money to a Buffer Strategy over multiple Terms, you may lose up to 90% at the end of each Term, which may result in a cumulative loss that is greater than 90%. | |
| Loss of Principal Related to Daily Charge | There is a risk of loss of principal and related earnings as a result of the Daily Charge that applies to your Contract values. The Daily Charge reduces your Investment Base and may result in reduced gains and/or increased losses. Strategy values will not include any Vested Gains or Losses attributable to amounts applied to Daily Charges because Daily Charges are applied to the Investment Base prior to calculating Vested Gains and Losses.
You could realize losses even when Index Values increase. This will occur when the amount of Vested Gain is smaller than the Daily Charge.
Even if you invest in the Conserve/0% Floor Strategy, the Daily Charge could cause you to realize losses in excess of the Maximum Loss.
If you invest in a 10% Buffer Strategy and the Index Value decreases but does not exceed the Buffer, the Daily Charge could cause you to experience losses. Any Vested Loss would be in addition to the Daily Charge.
If you invest in a Growth/-10% Floor Strategy and the Index Value decreases, the Daily Charge could cause you to experience losses in excess of the Maximum Loss. | |
| Loss of Principal Related to Early Withdrawal Charge | There is also a risk of loss of principal and related earnings if you take a withdrawal from your Contract or Surrender it during the first seven Contract Years. This risk exists for each Strategy because an Early Withdrawal Charge may apply. A withdrawal from any Strategy, including any Conserve/0% Floor Strategy, when an Early Withdrawal Charge applies, will reduce the value of the Strategy. This reduction will occur even if there is a Vested Gain on the date of the withdrawal. An Early Withdrawal Charge may reduce the value of an Indexed Strategy by more than increases in the value of the Indexed Strategy resulting from Vested Gains in the current and prior Terms. | |
| Long-Term Nature of Contract | The Contract is a deferred annuity, which means the Annuity Payout Benefit will begin on a future date. We designed the Contract to be a long-term investment that you can use to help build a retirement nest egg and provide income for retirement. The limitations and charges included in the Contract reflect its long-term nature. | |
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| Limits on Investment Return | Any increase in the value of an Indexed Strategy over a Term is limited by a Maximum Gain. Any increase in the value of an Indexed Strategy before the end of a Term is also limited by a Vesting Factor, which will be less than 100%. Due to these limitations, in many cases the return on money allocated to an Indexed Strategy will not fully reflect the corresponding positive Index Change for a Term.
The value of an Indexed Strategy only captures an Index Value at the applicable Market Close. You will bear the risk that an Index Value might be significantly lower at that Market Close than at another point during the Term.
We measure the Index Change by comparing the Index Value on the first day of the Term to the Index Value on the last day of the Term. This means that if the Index Value is lower on the last day of the Term, you may experience negative or flat performance even if the Index experienced gains through some, or most, of the Term. | |
| Limits on Reallocations | You cannot reallocate money among the Indexed Strategies prior to the end of a Term. If you want to take money out of Strategy during a Term, you must take a withdrawal from that Strategy or Surrender your Contract. | |
| Early Withdrawal Charge | If you withdraw money from or Surrender the Contract during the first seven Contract Years, we will deduct an Early Withdrawal Charge unless the Free Withdrawal Allowance or Bailout right applies. Deduction of the Early Withdrawal Charge may result in loss of principal and any prior earnings. An Early Withdrawal Charge will reduce Strategy values, including Conserve/0% Floor Strategy values. | |
| Timing of Withdrawals, Surrender, Annuity Payout Initiation Date, or Death Benefit Claim | You should take into consideration the dates on which the Term(s) of your Indexed Strategies end relative to the timing of a withdrawal or Surrender, the Annuity Payout Initiation Date, or the submission of a Death Benefit claim.
For example, a withdrawal from an Indexed Strategy before the end of a Term will lock in the existing Vested Gain or Loss. In addition, due to the Vesting Factors that we use to calculate Vested Gains, increase in the value of an Indexed Strategy before the end of a Term will be less than the corresponding positive Index Change. | |
| No Ability to Determine Strategy Values in Advance | If you request a withdrawal from an Indexed Strategy, we will process the withdrawal at the first Market Close after receipt of your Request in Good Order. This means you will not be able to determine in advance the value of an Indexed Strategy or the amount of any Vested Gain or Vested Loss. Likewise, you will not be able to determine in advance the amount payable upon Surrender, applied to the Annuity Payout Benefit, or payable as the Death Benefit. | |
| Changes in Maximum Gains | We set a Maximum Gain for each new Term of an Indexed Strategy. The Maximum Gain for a new Term of an Indexed Strategy may be lower than its Maximum Gain for the current Term and may be as low as 1%. You risk the possibility that the Maximum Gain for a new Term may be lower than you would find acceptable. | |
| Unavailable Indexed Strategies | At the end of a Term, we may stop offering any Indexed Strategy and, consequently, an Indexed Strategy you selected may not be available after the end of a Term. An Indexed Strategy you selected also may not be available after the end of a Term due to minimums and maximums that we set. In that case, if you do not withdraw the funds pursuant to your Bailout Right or reallocate them to another Indexed Strategy, then we will reallocate the applicable funds to a default Strategy. The funds allocated to a default Strategy may earn a return that is lower than the return they would have earned if there had been no reallocation, but will not increase the risk of loss of principal and any prior earnings. | |
| Replacement of an Index | We have the right to replace an Index if it is discontinued or we are no longer able to use it, its calculation changes substantially, or we determine that hedging instruments are difficult to acquire or the cost of hedging becomes excessive. We may do so at the end of a Term or during a Term. If we replace an Index during a Term, we will calculate Vested Gains and Losses using the old Index up until the replacement date. After the replacement date, we will calculate Vested Gains and Losses using the new Index. The performance of the new Index may not be as good as the performance of the old Index. As a result, funds allocated to an Indexed Strategy may earn a return that is lower than the return they would have earned if there had been no replacement. | |
| Involuntary Termination of Contract | If your Account Value falls below the minimum value of $5,000 for any reason, we may terminate your Contract. For example, we may terminate your Contract if a loss on a Growth/-10% Floor Strategy or a 10% Buffer Strategy causes your Account Value to fall below $5,000. | |
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| No Direct Investment in the Market | When you allocate money to an Indexed Strategy that uses the S&P 500 Index, you will not be investing in that Index, or in any stock included in that Index. Index Changes for these Strategies are calculated without taking into account dividends paid on stocks that make up the S&P 500 Index.
When you allocate money to an Indexed Strategy that uses the iShares U.S. Real Estate ETF, you will not be investing in that exchange-traded fund, in the securities or other assets that it holds, or in any real estate investment trust. Index Changes for these Strategies are calculated without taking into account dividends paid by the iShares U.S. Real Estate ETF.
When you allocate money to an Indexed Strategy that uses the iShares MSCI EAFE ETF, you will not be investing in that exchange-traded fund or in the securities or other assets that it holds, or in any stock included in the MSCI EAFE Index. Index Changes for these Strategies are calculated without taking into account dividends paid by the iShares MSCI EAFE ETF.
Because changes in the value of an Indexed Strategy are subject to Maximum Gains and either Maximum Losses or a Buffer, as applicable, and may be subject to a Vesting Factor, the performance of an Indexed Strategy may diverge from the performance of the Index. | |
| Market Risk | Money allocated to a Growth/-10% Floor Strategy or 10% Buffer Strategy that uses the S&P 500 Index is subject to the risk that the market value of the underlying securities that comprise the S&P 500 Index may decline. For a Growth Strategy, you will absorb any such market loss up to the amount of the Maximum Loss of 10%. For a Buffer Strategy, you will absorb any such market loss to the extent it exceeds the Buffer. In addition, any positive change in the Index Value over a Term will be lower than the total return on an investment in the stocks that comprise the S&P 500 Index because the total return will reflect dividend payments on those stocks and the Index Values will not reflect those dividend payments. Because the return on an Indexed Strategy that uses the S&P 500 Index will be subject to limitations and will be linked to its performance and not the performance of the underlying stocks, your return may be less than that of a direct investment in such stocks. In addition, due to the same limitations, your return may be less than that of a direct investment in a fund that tracks the S&P 500 Index. Due to the Daily Charge, any positive return will be less than that of a direct investment in such stocks.
Money allocated to a Growth/-10% Floor Strategy that uses the iShares U.S. Real Estate ETF is subject to the risk that its share price may decline. You will absorb any such market loss up to the amount of the Maximum Loss of 10%. The share price of the iShares U.S. Real Estate ETF is tied to the performance of the real estate sector, which is highly sensitive to general and local economic conditions and developments, characterized by intense competition and periodic overbuilding, and subject to risks associated with leverage. The share price may not replicate the performance of the fund, its underlying index, or the components of that index. In addition, because the return on any indexed strategy that uses the iShares U.S. Real Estate ETF will be subject to limitations and will be linked to the performance of the iShares U.S. Real Estate ETF and not the performance of its underlying index or the components of that index, your return may be less than that of another investment linked directly to the performance of the fund, its underlying index, or a direct investment in such components. In addition, due to the same limitations, your return may be less than that of a direct investment in the iShares U.S. Real Estate ETF. Due to the Daily Charge, any positive return will be less than that of a direct investment in such stocks.
Money allocated to a Growth/-10% Floor Strategy that uses the iShares MSCI EAFE ETF is subject to the risk that its share price may decline. You will absorb any such market loss up to the amount of the Maximum Loss of 10%. The share price of the iShares MSCI EAFE ETF is tied to the performance of large- and mid-capitalization developed market equities, excluding the U.S. and Canada. The share price may not replicate the performance of the fund, its underlying index, or the components of that index. In addition, because the return on any indexed strategy that uses | |
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the iShares MSCI EAFE ETF will be subject to limitations and will be linked to the performance of the iShares MSCI EAFE ETF and not the performance of its underlying index or the components of that index, your return may be less than that of another investment linked directly to the performance of the fund, its underlying index, or a direct investment in such components. In addition, due to the same limitations, your return may be less than that of a direct investment in the iShares MSCI EAFE ETF. Due to the Daily Charge, any positive return will be less than that of a direct investment in such stocks.
Geopolitical conflicts could also create economic disruption, including increased market volatility, and presents economic uncertainty. The full impact and duration of these events are difficult to determine in advance. Any such impact could adversely affect the performance of the securities that comprise the Indexes and may lead to losses on your investment in the Indexed Strategies.
The historical performance of an Index does not guarantee future results. | ||
| Regulatory Risk | MassMutual Ascend Life is not an investment company and is not registered as an investment company under the Investment Company Act of 1940. The protections provided to investors by that Act are not applicable to the Contract. | |
| Reliance on Our Claims-Paying Ability | No company other than MassMutual Ascend Life has any legal responsibility to pay amounts owed under the Contract. You should look to the financial strength of MassMutual Ascend Life for its claims-paying ability.
Our general account assets fund the guarantees provided in the Contracts. The assets are subject to our general business operation liabilities and claims of our creditors and may lose value. We established a non-unitized separate account for the purpose of supporting our obligation to adjust the Indexed Strategy values. The assets in the non-unitized separate account are not chargeable with liabilities arising out of any other business that we conduct but may lose value. The non-unitized separate account differs from the unitized separate accounts that support our variable annuity contracts. As a result, unlike the owner of a traditional variable annuity who has a beneficial interest in, and participates in the performance of, the assets of the related unitized separate account, you do not have any interest in or claim on the assets in the non-unitized separate account and you will not participate in any way in the performance of assets held in that account.
• Financial losses including those resulting from the following events:
• Adverse developments in financial markets and deterioration in global economic conditions
• Unfavorable interest rate environments
• Losses on our investment portfolio
• Loss of market share due to intense competition
• Ineffectiveness of risk management policies
• Changes in applicable law and regulations
• Inability to obtain or collect on reinsurance
• A downgrade or potential downgrade in our financial strength ratings
• Variations from actual experience and management’s estimates and assumptions that could result in inadequate reserves
• Significant variations in the amount of capital we must hold to meet statutory capital requirements
• Legal actions and regulatory proceedings
• Difficulties with technology or data security
• Failure to protect confidentiality of customer information | |
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• Failure to maintain effective and efficient information systems
• Occurrence of catastrophic events, public health crises (e.g., the Covid-19 pandemic) terrorism or military actions
We continue to be subject to significant state solvency regulations that require us to reserve amounts to pay our contractual guarantees. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risks Primarily Related to MMALIC’s Financial Strength and Claims-Paying Ability,” and “Financial Statements”, and “Regulation” for additional financial information about the company and the state solvency regulations to which we are subject. | ||
| Business Disruption and Cyber Security Risks | We rely on technology, including interconnected computer systems and data storage networks and digital communications, to conduct our business activities. Because our business is highly dependent upon the effective operation of our computer systems and those of our service providers and other business partners, our business is vulnerable to disruptions from utility outages, and susceptible to operational and information security risks resulting from information systems failure (e.g., hardware and software malfunctions) and cyber attacks. Cyber attacks may be systemic (e.g., affecting the internet, cloud services, or other infrastructure) or targeted (e.g., failures in or breach of our systems or those of third parties on whom we rely, including ransomware and malware attacks).
Cyber security risks include, but are not limited to, the loss, theft, misuse, corruption, and destruction of data maintained online or digitally, denial-of-service attacks, attacks on our website (or websites on which we rely), disruption of routine business operations, and unauthorized release of confidential information. The risk of cyber attacks may be higher during periods of geopolitical turmoil. Due to the increasing sophistication of cyber attacks, a cyber security breach could occur and persist for an extended period of time without detection.
Systems failures and cyber security incidents affecting us, our affiliates, intermediaries, service providers, and other third parties on whom we rely may adversely affect your Contract values and interfere with our ability to process transactions and calculate Contract values. Systems failures and cyber security breaches may cause us to be unable to process orders from our website, cause us to be unable to calculate Index values, cause the release or possible destruction of confidential and/or business information, impede order processing or cause other operational issues, subject us and our service providers and intermediaries to regulatory fines, litigation, and financial losses, and/or cause reputational damage.
The preventative actions we take to reduce the frequency and severity of cyber security incidents and protect our computer systems may be insufficient to prevent a cyber security breach from impacting our operations or your Contract values. There can be no assurance that we or our service providers and intermediaries will be able to avoid cyber security breaches affecting your Contract. | |
You may purchase a Contract only through a registered representative of a broker-dealer that has a selling agreement with our affiliated underwriter, MM Ascend Life Investor Services, LLC.
Any Owner or Annuitant must be age 80 or younger on the Contract Effective Date. To determine eligibility, we will use the person’s age on his/her last birthday. We may make exceptions with respect to the maximum issue age in our discretion.
The Contract is not available in all states. To find out if it is available in the state where you live, ask your registered representative. The Contract may not be available for purchase during certain periods. There are a number of reasons why the Contract periodically may not be available, including that we want to limit the volume of sales of the Contract. You may wish to speak to your registered representative about how this may affect your purchase. For example, in order to purchase the Contract, you may be required to submit your application prior to a specific date. In that case, if there is a delay because your
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application is incomplete or otherwise not in good order, you might not be able to purchase the Contract. Your broker-dealer may impose conditions on the purchase of the Contract, such as a lower maximum issue age, than we or other selling firms impose. In addition, Selling Broker-Dealers may not make certain indexed strategies available. If you have any questions, you should contact your Selling Agent or his or her Selling Broker Dealer. We reserve the right to reject any application in our discretion.
Purchase Payments
The Contract is a modified single premium annuity contract. This means you may make one or more Purchase Payments during the purchase payment period. The purchase payment period begins on the Contract Effective Date. It will end two months after the Contract Effective Date.
We must receive your initial Purchase Payment on or before the Contract Effective Date. We must receive each additional Purchase Payment before the last day of the purchase payment period. We will not accept any Purchase Payment that we receive after the date that the Contract is cancelled or Surrendered or after a death for which a Death Benefit is payable.
The initial Purchase Payment must be at least $25,000. Each additional Purchase Payment must be at least $10,000. You will need our prior approval if you are age 80 or younger and want to make a Purchase Payment(s) of more than $1,000,000; or you are over age 80 and want to make a Purchase Payment(s) of more than $750,000.
We reserve the right to refuse a Purchase Payment made in the form of a personal check in excess of $100,000. We may accept a Purchase Payment over $100,000 made in other forms, such as EFT/wire transfers, or certified checks or other checks written by financial institutions. We will not accept a Purchase Payment made with cash, money orders, or traveler’s checks.
Exchanges, Transfers, or Rollovers
If you own an annuity or tax-qualified account, you may be able to exchange it for an Index Frontier annuity, directly transfer it to an Index Frontier annuity, or roll it over to an Index Frontier annuity without paying taxes. Before you do, compare the benefits, features, and costs of each annuity or account. You may pay an early withdrawal charge under the old annuity or account. You may also pay a sales charge under the new annuity or account, or you may pay an early withdrawal charge if you later take withdrawals from the new annuity or account. Please note that some financial professionals may have a financial incentive to offer this Contract in place of the one the investor already owns. Ask your registered representative whether an exchange, transfer, or rollover would be advantageous, based on the features, benefits, and charges of the Index Frontier annuity.
If you purchase your Contract with an exchange, transfer, or rollover, a delay in processing the exchange, transfer, or rollover may delay the issuance of your new Contract or prevent the application of additional Purchase Payments to your existing Contract.
You should only exchange your existing contract for this Contract if you determine after comparing the features, fees, and risks of both contracts that it is preferable for you to purchase this Contract rather than continuing to own your existing contract.
Application of Purchase Payments
Each Purchase Payment will be held in the Purchase Payment Account until it is applied to an Indexed Strategy on a Strategy Application Date. On each Strategy Application Date, we will apply the then current balance of the Purchase Payment Account to the Indexed Strategies you selected.
In certain states, we are required to give back your Purchase Payment(s) if you decide to cancel your Contract during the free look period. If we are required by law to refund your Purchase Payment(s), we reserve the right to hold your Purchase Payment(s) in the Purchase Payment Account until the first Strategy Application Date on or after the end of the free look period.
We will credit interest daily on amounts held in the Purchase Payment Account at the annual effective rate set out in your Contract. This rate will be at least 1%.
Purchase Payment Account Value
On any day, the value of the Purchase Payment Account is equal to:
| • | Purchase Payments received by us plus interest earned daily; minus |
| • | the premium tax or other tax that may apply to the Purchase Payments; and minus |
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| • | each withdrawal and related Early Withdrawal Charge taken from the Purchase Payment Account since the last Strategy Application Date. |
Unforeseen Processing Delays
We are exposed to risks related to natural and man-made disasters and catastrophes, such as (but not limited to) storms, fires, floods, earthquakes, public health crises, malicious acts, and terrorist acts, any of which could adversely affect our ability to conduct business. A natural or man-made disaster or catastrophe, including a pandemic (such as the COVID-19 pandemic), could affect the ability or willingness of our employees or the employees of our service providers to perform their job responsibilities. While many of our employees and the employees of our service providers are able to work remotely, those remote work arrangements may result in our business operations being less efficient than under normal circumstances and could lead to delays in our processing of contract-related transactions, including orders from contract owners. Catastrophic events may negatively affect the computer and other systems on which we rely, impact our ability to calculate values under your Contract, or have other possible negative impacts. There can be no assurance that our service providers will be able to successfully avoid negative impacts associated with natural and man-made disasters and catastrophes.
A processing delay will not affect the effective date as of which we process transactions, including orders from contract owners, the date that a Term begins or ends, or the values used to process the transaction.
You make your initial selection of Indexed Strategies in your purchase application. Your initial selection is set out on your Contract Specifications Page.
Your initial selection will also apply to each subsequent Purchase Payment. If you wish to change your selection for a specific Purchase Payment, we must receive your Request in Good Order with the Indexed Strategies you selected for that Purchase Payment before the Strategy Application Date that applies to that Purchase Payment.
When you select an Indexed Strategy, you must also indicate the percentage of the Purchase Payment that you wish to allocate to that Indexed Strategy. All allocations must be in whole percentages that total 100%. We reserve the right to round amounts up or down to make whole percentages, and to reduce or increase amounts proportionally in order to total 100%.
Currently there are no limitations on the amounts that may be applied to an Indexed Strategy.
We may establish minimum and maximum amounts or percentages that may be applied to a given Indexed Strategy for any future Term in our discretion. We will notify you of any such minimum or maximum. We may limit the availability of a Strategy for a Term that would extend beyond the Annuity Payout Initiation Date. All Strategies may not be available in all states.
The Indexed Strategies provide returns that are based, in part, upon changes in an Index Value. The Indexed Strategies do not earn interest at a fixed rate. Unlike a traditional variable annuity, the values of the Indexed Strategies are not based on the investment performance of underlying portfolios.
Each Indexed Strategy has a Maximum Gain for each Term.
| • | We will set a new Maximum Gain for each Indexed Strategy prior to the start of each Term. In general, the Maximum Gain for a Growth Strategy will be higher than the Maximum Gain for a Conserve Strategy using the same Index, and the Maximum Gain for a Buffer Strategy will be higher than the Maximum Gain for a Growth Strategy using the same Index. |
Each Conserve Strategy and Growth Strategy has a Maximum Loss for each Term.
| • | The Maximum Loss for each Term of a Conserve Strategy is 0%. The Maximum Loss for each Term of a Growth Strategy is a loss of 10%. |
Each Buffer Strategy has a Buffer for each Term.
| • | The Buffer at the end of each Term is 10%. Before the end of each Term, the Buffer is calculated daily as a prorated share of the annual 10% Buffer. |
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Changes in the value of an Indexed Strategy reflect the change in the applicable Index Value since the start of the applicable Term, the Maximum Gain we set for that Indexed Strategy for that Term, the applicable Vesting Factor, and the applicable Buffer or Maximum Loss for that Indexed Strategy. If you select a Growth Strategy or a Buffer Strategy, then each Term it is possible for you to lose a portion of your Purchase Payment(s) and any earnings allocated to that Indexed Strategy.
See Vested Gains and Losses section below for additional details.
The Indexed Strategies that are currently available are listed below. You may allocate your funds to any of the Indexed Strategies, subject to the procedures disclosed in this prospectus.
| Conserve/0% Floor Strategies | Index | Maximum Loss/Floor of 0% | ||
| S&P 500 0% Floor | S&P 500® Index | If you allocate money at the start of a Term to a Conserve Strategy, you cannot lose that money during the Term due to a negative change in the Index. | ||
| iShares U.S. Real Estate 0% Floor | iShares U.S. Real Estate ETF | |||
| iShares MSCI EAFE 0% Floor | iShares MSCI EAFE ETF | |||
| Growth/-10% Floor Strategies | Index | Maximum Loss/Floor of 10% | ||
| S&P 500 -10% Floor | S&P 500® Index | If you allocate money at the start of a Term to a Growth Strategy, you can lose up to 10% of that money during the Term due to a negative change in the Index. | ||
| iShares U.S. Real Estate -10% Floor | iShares U.S. Real Estate ETF | |||
| iShares MSCI EAFE -10% Floor | iShares MSCI EAFE ETF | |||
| 10% Buffer Strategy | Index | End of Term Buffer of 10% | ||
| S&P 500 10% Buffer | S&P 500® Index | If you allocate money at the start of a Term to a Buffer Strategy, at the end of the Term you can lose up to 90% of that money due to a negative change in the Index. At the end of the Term, 10% of the money you allocated is protected from loss. You can lose more than 90% of that money if you withdraw it before the end of the Term. | ||
An Early Withdrawal Charge may apply if you take a withdrawal during the first seven Contract Years. That charge will reduce Strategy values, including the value of a Conserve/0% Floor Strategy.
Term
Each Term of an Indexed Strategy is one year long and will start and end on a Strategy Application Date. A new Term will start at the end of the preceding Term.
If you make only one Purchase Payment or you make all of your Purchase Payments before the initial Strategy Application Date, then each Term of each Indexed Strategy will end on the same date in any given year. If you make a Purchase Payment after the initial Strategy Application Date, then your Purchase Payments will be applied to the Indexed Strategies on different Strategy Application Dates. In this case, an Indexed Strategy may have Terms that end on different dates in any given year.
Examples. These examples show how a Contract with multiple Purchase Payments may have Terms that end on different dates.
| • | You make your initial Purchase Payment on March 10 and another Purchase Payment on March 17. You allocate both payments to the same Indexed Strategy and both payments are applied on March 20. Each Term of that Indexed Strategy will start and end on March 20. |
| • | You make your initial Purchase Payment on May 2 and another Purchase Payment on June 14. You allocate both payments to the same Indexed Strategy. Your initial Purchase Payment is applied on May 6 and the other Purchase Payment is applied on June 20. That Indexed Strategy will have Terms that start and end on May 6 and other Terms that start and end on June 20. |
Indexed Strategy Value
The value of an Indexed Strategy is equal to:
| • | the Investment Base for that Term, which is the amount applied to the Strategy at the start of the current Term; minus |
| • | the sum of the Daily Charges subtracted from the investment base during the current Term; |
| • | the portion of that Investment Base that is taken from the Strategy to pay for each withdrawal and related Early Withdrawal Charge during the current Term; and plus or minus |
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| • | the Vested Gain or Loss for that Term on the remaining portion of the Investment Base. |
The portion of the Investment Base that is taken from an Indexed Strategy to pay for a withdrawal and any related Early Withdrawal Charge is proportional to the reduction in the value of the Indexed Strategy for the withdrawal and any related charge. This means that we calculate the percentage of Strategy Value that is being withdrawn and we reduce the Investment Base by the same percentage.
| • | A withdrawal and any related charge will reduce the value of an Indexed Strategy by an amount equal to the withdrawal and any charge. |
| • | But the reduction in the Investment Base to pay for a withdrawal and any related charge is proportional to the reduction in the value of the Indexed Strategy. For example, if the withdrawal and any related charge reduces the value of an Indexed Strategy by 15%, then it will reduce the Investment Base by 15%. |
| • | If there is a Vested Gain, then the portion of the Investment Base taken will be less than the withdrawal and any related charge. With a Vested Gain, the Indexed Strategy value will be higher than the Investment Base. For example, a 15% reduction in the Investment Base will be less than a 15% reduction in the Strategy value. |
| • | If there is a Vested Loss, then the portion of the Investment Base taken will be greater than the withdrawal and any related charge. With a Vested Loss, the Investment Base will be higher than Indexed Strategy value. For example, a 15% reduction in the Investment Base will be greater than a 15% reduction in the Strategy value. |
Here are the formulas that we use to calculate a proportional reduction in the Investment Base for a withdrawal and the remaining Investment Base.
Percentage reduction in Strategy value = withdrawal plus any related Early Withdrawal Charge / Strategy value immediately before the withdrawal
Proportionate reduction in Investment Base = Investment Base immediately before the withdrawal x percentage reduction in Strategy value
Remaining Investment Base = Investment Base immediately before the withdrawal—reduction in Investment Base
Examples. You allocate $5,000 to an Indexed Strategy at the start of a Term. This means the Investment Base at the start of the Term is $5,000. You take a $1,000 withdrawal on the 145th day of the Term and that amount includes the amount needed to pay any related Early Withdrawal Charge that applies to the withdrawal. On that date, a total of $20 has been subtracted for Daily Charges, and the remaining Investment Base is $4,980 ($5,000 - $20).
Assume at the time of your withdrawal that you have a Vested Gain of 5%.
| • | The Vested Gain is equal to $249 ($4,980 x 0.05). |
| • | The Strategy value on the withdrawal date is $5,229 ($4,980 + $249). |
| • | The withdrawal (including any related Early Withdrawal Charge) reduces the Strategy value by $1,000. |
| • | The Strategy value after the withdrawal is $4,229 ($5,229 - $1,000). |
| • | The percentage reduction in the Strategy value is 19.12% ($1,000 / $5,229). |
| • | The proportionate reduction in the Investment Base is $952 ($4,980 x 0.1912). |
| • | The remaining Investment Base is $4,028 ($4,980 - $952). |
| • | Due to the Vested Gain, the proportionate reduction in the Investment Base ($952) is less than the withdrawal and related charge ($1,000). This means, after the withdrawal, the Investment Base is $4,028 rather than $4,000. |
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Assume at the time of your withdrawal that you have a Vested Loss of 10%.
| • | The Vested Loss is equal to $498 ($4,980 x 0.10). |
| • | The Strategy value on the withdrawal date is $4,482 ($4,980 - $498). |
| • | The withdrawal (including any related Early Withdrawal Charge) reduces the Strategy value by $1,000. |
| • | The Strategy value after the withdrawal is $3,482 ($4,482 - $1,000). |
| • | The percentage reduction in the Strategy value is 22.31% ($1,000 / $4,482). |
| • | The proportionate reduction in the Investment Base is $1,111 ($4,980 x 0.2231). |
| • | The remaining Investment Base is $3,869 ($4,980 - $1,111). |
| • | Due to the Vested Loss, the proportionate reduction in the Investment Base ($1,111) is greater than the withdrawal and related charge ($1,000). This means, after the withdrawal, the Investment Base is $3,869 rather than $3,980. |
Overview
Each day of a Term, the value of an Indexed Strategy includes the Vested Gain or Loss, if any, since the start of that Term. Vested Gain or Loss is calculated on the remaining Investment Base for that Term.
Here is the formula that we use to calculate the amount of the Vested Gain or Loss.
Amount of Vested Gain or Loss = remaining Investment Base x Vested Gain or Loss percentage
Example. At the beginning of a Term in Contract Year 10, your entire Account Value of $100,000 is allocated to a Growth/-10% Floor Strategy. You do not take any withdrawals during that Term. You Surrender your Contract at the end of that Term. No Early Withdrawal Charge applies to a Surrender in Contract Year 10. A total of $1,000 has been subtracted for Daily Charges, and the remaining Investment Base is $99,000 ($100,000 - $1,000).
| • | If the Vested Gain is 4%, then the Strategy value includes a $3,960 Vested Gain ($99,000 x 0.04). The amount payable upon Surrender will be $102,960 ($99,000 + $3,960). |
| • | If the Vested Loss is 3%, then the Strategy value includes a $2,970 Vested Loss ($99,000 x 0.03). The amount payable upon Surrender will be $96,030 ($99,000 - $2,970). |
If in this example your Surrender occurs in Contract Year 5 instead, when a 5% Early Withdrawal Charge applies, the amount payable upon Surrender is reduced by applicable Early Withdrawal Charges. For this example, we assume that the Account Value was $100,000 on the most recent Contract Anniversary.
| • | If the Vested Gain is 4%, then the amount payable is reduced by Early Withdrawal Charges of $4,648, calculated as 5% of the Strategy Value minus the Free Withdrawal Allowance (5% x ($102,960 – ($100,000 x 10%))). The amount payable upon Surrender will be $98,312 ($102,960 - $4,648). |
| • | If the Vested Loss is 3%, then the amount payable is reduced by Early Withdrawal Charges of $4,302, calculated as 5% of the Strategy Value minus the Free Withdrawal Allowance (5% x ($96,030 – ($100,000 x 10%))). The amount payable upon Surrender will be $91,728 ($96,030 - $4,302). |
The Daily Charge reduces the Investment Base of the Strategy equal to the amount of the charge. The Daily Charge reduces the amount to which Vested Gain or Vested Loss applies. This means that the Daily Charge will increase any losses and decrease any gains.
Index Change. Before we can calculate the Vested Gain or Loss since the start of a Term, we must determine the Index Change since the start of that Term. The Index Change is the increase or decrease in the applicable Index Value. This increase or decrease is expressed as a percentage of the applicable Index Value at the start of that Term. It is measured from the Index Value at the start of that Term to the Index Value at the last Market Close on or before the date the Index Change is determined.
Example. The Index Value was 1000 at the start of a Term.
| • | If the Index Value at the applicable Market Close is 1065, then there is a positive Index Change of 6.5% ((1065 - 1000) / 1000). |
| • | If the Index Value at the applicable Market Close is 925, then there is a negative Index Change of 7.5% ((925 - 1000) / 1000). |
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Indexes. The S&P 500® Index is designed to reflect the large-cap sector of the U.S. equity market and, due to its composition, it also represents the U.S. equity market in general. It includes 500 leading companies and captures approximately 80% coverage of available market capitalization. The S&P 500 Index does not include dividends declared by any of the companies in this Index. Consequently, any positive change in the Index Value over a Term will be lower than the total return on a direct investment in the stocks that comprise the S&P 500 Index. The S&P 500 Index is a product of S&P Dow Jones Indices LLC. For more information, visit www.US.SPIndices.com.
The iShares U.S. Real Estate ETF is an exchange traded fund that seeks to track the investment performance of the Dow Jones U.S. Real Estate Index. This underlying index measures the performance of the real estate sector in the U.S. equity market. A significant portion of the underlying index is represented by real estate investment trusts (REITs), but the components are likely to change over time. The fund’s adviser uses an indexing strategy that involves investing in a representative sample of securities that collectively has an investment profile similar to that of the underlying index. The fund is subject to certain risks including the risk that it may not replicate the performance of the underlying index and those risks associated with concentrated investment in REITS. The fund’s performance will be reduced by its expenses and fees. The fund’s shares trade on the NYSE Arca under the symbol IYR. For more information, visit www.iShares.com and search ticker symbol IYR.
The iShares MSCI EAFE ETF is an exchange traded fund that seeks to track the investment results of an index composed of large- and mid-capitalization developed market equities, excluding the U.S. and Canada (MSCI EAFE Index). This underlying index includes stocks from Europe, Australasia and the Far East. The components of the underlying index, and the degree to which these components represent certain industries and/or countries, are likely to change over time. The fund’s adviser uses an indexing strategy that involves investing in a representative sample of securities that collectively has an investment profile similar to that of the underlying index. The fund is subject to certain risks including the risk that it may not replicate the performance of the underlying index and those risks associated with investment in non-U.S. issuers. The fund’s performance will be reduced by its expenses and fees. The fund’s shares trade on the NYSE Arca under the symbol EFA. For more information, visit www.iShares.com and search ticker symbol EFA.
Index Values. Index Values are determined at each Market Close. An Index Value at the start of a Term is its value at the last Market Close on or before the first day of that Term. An Index Value at the end of a Term is its value at the Market Close on the last Market Day of that Term. We will use consistent sources to obtain the closing values of an Index. We currently obtain the closing values for the S&P 500 Index from S&P Dow Jones Indices LLC and the closing values for the iShares MSCI EAFE ETF and the iShares U.S. Real Estate ETF from BlackRock, Inc. If those sources are no longer available, we will select an alternative published source(s) to obtain such values.
Market Close. A Market Close is the close of the regular or core trading session on the market used to measure an Index Change for a give Indexed Strategy.
Market Day. A Market Day is each day that all markets that are used to measure Index Changes for available Indexed Strategies are open for regular trading.
Vested Gain
The Vested Gain is the portion of any positive Index Change that is taken into account when determining the value of an Indexed Strategy. Here is the formula that we use to calculate a Vested Gain for any day of a Term.
Vested Gain = any positive Index Change since the start of the current Term (but not exceeding the Maximum Gain set for the Term) x applicable Vesting Factor for that day x remaining Investment Base for the current Term
Maximum Gain. The Maximum Gain for an Indexed Strategy is the largest positive Index Change for a Term that is taken into account to determine the Vested Gain for that Indexed Strategy for that Term. For example, if the Maximum Gain for a Term is 5% and the Index Change at the end of that Term is positive 8%, then the Vested Gain for that Term is 5%.
| • | The Maximum Gain will vary between Indexed Strategies. |
| • | The Maximum Gain for a given Indexed Strategy will vary between Terms. |
| • | We guarantee that the Maximum Gain for a Term of an Indexed Strategy will never be less than 1%. |
| • | For each Term, your return on an Indexed Strategy may be less than any positive Index Change over that Term. |
| • | For each Term, your return on an Indexed Strategy may be less than the Maximum Gain. |
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We set the Maximum Gain for each Indexed Strategy based on the cost of hedging, interest rates, and other market factors, and the Purchase Payments received for a Contract. In general, the Maximum Gain we set for a Growth/-10% Floor Strategy will be higher than the Maximum Gain we set for the corresponding Conserve/0% Floor Strategy, and the Maximum Gain for a 10% Buffer Strategy will be higher than the Maximum Gain for the corresponding Growth Strategy. Likewise, we may set Maximum Gains for Contracts with larger Purchase Payments that are higher than Maximum Gains for Contracts with smaller Purchase Payments.
Each Purchase Payment is applied to an initial Term of a Strategy on the first Strategy Application Date on or after the date that the payment is received. The Maximum Gain for each Strategy Application Date may vary. The Maximum Gain for the first Strategy Application Date will be available on our website (www.massmutualascend.com/RILArates) on the date you signed the application (as long as we receive the application for the Contract within eight days after the date you sign it) and before the date of any Purchase Payment to which the Maximum Gain will apply. If we receive the application for the Contract within eight days after the date you sign it, we will guarantee the Maximum Gain in effect on the date you signed the application for three Strategy Application Dates from the date of the application..
If we receive the signed application within eight days after the date you sign it, then for any Indexed Strategy:
| • | For an initial Term starting on the first Strategy Application Date on or after the application date, the Maximum Gain will be the Maximum Gain in effect on the date you signed the application. |
| • | For an initial Term starting on one of the next two Strategy Application Dates, the Maximum Gain will be the higher of the Maximum Gain in effect on the date you signed the application or the Maximum Gain otherwise in effect for that Strategy Application Date. |
| • | For any initial Term starting on a later Strategy Application Date, the Maximum Gain will be the Maximum Gain in effect for that Strategy Application Date. |
If we receive the signed application more than eight days after the date you sign it, then the guarantee does not apply and the Maximum Gain for each Initial Term will be the Maximum Gain in effect for that Strategy Application Date.
Example : You sign an application for a Contract on May 1 and allocate all of your Purchase Payments to the S&P 500 -10% Floor Strategy. On the date of the application, the Maximum Gain for the first Strategy Application Date (May 6) is 13%. We receive the application and the first Purchase Payment from you on May 8 and the second Purchase Payment from you on May 23. The Maximum Gains for the next two Strategy Application Dates are 14% (May 20) and 12% (June 6).
In this case, the initial 1-year Term for the first Purchase Payment would begin on May 20 and would have a 14% Maximum Gain (the higher of the May 6 rate or the May 20 rate). The initial 1-year Term for the second Purchase Payment would begin on June 6 and would have an 13% Maximum Gain (the higher of the May 6 rate or the June 6 rate).
If we had not received your signed application until May 10 (more than eight days after the date you signed the application), then you would not qualify for the rate guarantee, and the initial 1-year Term for the first Purchase Payment received on May 8 would have a 14% Maximum Gain (the May 20 rate effective for Purchase Payments received between May 7 and May 20), and the initial 1-year Term for the second Purchase Payment received on May 23 would have a 12% Maximum Gain (the June 6 rate effective for Purchase Payments received between May 21 and June 6).
Once your Contract is effective, we will send you a written notice at least 30 days before the end of each Term with information about the Indexed Strategies that will be available for the next Term. At least 10 days before the next Term starts, we will post the Maximum Gain that will apply to an Indexed Strategy for that next Term on our website (www.massmutualascend.com/RILArates).
Because we can change the Maximum Gain that applies to an Indexed Strategy, the Contract has a Bailout right that allows you to take a withdrawal without incurring an Early Withdrawal Charge under certain circumstances. See Bailout Right discussion in the Early Withdrawal Charge section below.
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Vesting Factor. The Vesting Factor varies depending on the day of the Term for which the Vested Gain is calculated. A Vesting Factor limits the portion of a positive Index Change that is taken into account when calculating the Vested Gain for a given Indexed Strategy for a given Term.
| Vesting Factor | ||||
Dates within first six months of a Term | 25 | % | ||
Dates within the final six months of a Term but before the final Market Day of that Term | 50 | % | ||
On the final Market Day of a Term | 100 | % | ||
A Market Day is each day that all markets that are used to measure Index Changes for available Indexes Strategies are open for regular trading.
Months are measured from the first day of the Term. For example, if a Term starts on January 20, the final six months of that Term will begin on July 20.
If any date in a Term is after the final Market Day of that Term, then a 100% Vesting Factor applies on that date when Vested Gain for that Term is calculated. For example, if a Term ends on a Monday when the markets are closed due to a holiday, then the final Market Day of that Term is the Friday before that holiday. If an automatic transaction is scheduled for Saturday, then the 100% Vesting Factor applies to that transaction.
Example. On the date of Surrender, your entire Account Value of $100,000 is allocated to the S&P 500 Growth/-10% Floor Strategy, which has a 12% Maximum Gain for the Term . You Surrender your Contract on day 270 of that Term, which means that Daily Charges have totaled $741 and a Vesting Factor of 50% applies. For this example, we assume that you did not take any withdrawals before you Surrender your Contract. Assume there is a positive Index Change of 15% at the date on which you Surrender your Contract. Because the Index Change exceeds the Maximum Gain, the Maximum Gain applies and limits the Index Change to 12%. As a result, the Vested Gain is 6% (12% x 0.50). The Investment Base on the date of Surrender is $99,259 ($100,000 - $741). The Vested Gain that applies upon Surrender will be $5,956 ($99,259 x 0.06) and the amount payable will be $105,215 minus any related Early Withdrawal Charge.
Vested Loss
The Vested Loss is the portion of any negative Index Change that is taken into account when determining the value of an Indexed Strategy. Here is the formula that we use to calculate a Vested Loss for any day of a Term.
Vested Loss = any negative Index Change since the start of the current Term (after taking into account either the Maximum Loss for each Term or the Buffer, as applicable) x remaining Investment Base for the current Term
Maximum Loss. The Maximum Loss for a Conserve/0% Floor Strategy or a Growth/-10% Floor Strategy is the most negative Index Change for a Term that is taken into account to determine the Vested Loss for that Indexed Strategy for that Term. For example, if the Maximum Loss for a Term is 10% and the negative Index Change at the end of that Term is 14%, then the Vested Loss for that Term is 10%.
| • | The Maximum Loss for each Term of a Conserve Strategy is 0%. This means that the value of a Conserve Strategy will not decrease due to a negative Index Change. |
| • | The Maximum Loss for each Term of a Growth Strategy is a loss of 10%. This means that the value of a Growth Strategy will not decrease by more than 10% during a Term due to a negative Index Change. |
| • | The Maximum Loss will not vary depending on the day of the Term. This means that for a Growth Strategy, the Maximum Loss throughout the Term is 10%. |
Buffer. The Buffer is the portion of a negative Index Change for a Term that is disregarded when determining a Vested Loss for a 10% Buffer Strategy. The Buffer varies depending on the day of the Term. The Buffer at the end of a Term is 10%. Before the end of the Term, the Buffer is calculated daily as a prorated share of the annual 10% Buffer. For example, when 40% of a Term has elapsed, the Buffer on that day equals 40% of the Buffer that would apply at the end of the Term. When 80% of a Term has elapsed, the Buffer on that day equals 80% of the Buffer that would apply at the end of the Term. As a result, a negative Index Change of 15% would produce different Vested Losses at the following junctures:
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| • | Day 146 of Term: |
Days Remaining to last Market Day of Term: 219
Buffer: 10% x (365-219)/365 = 4%
Vested Loss: 15% - 4% = 11%
| • | Day 292 of Term: |
Days Remaining to last Market Day of Term: 73
Buffer: 10% x (365-73)/365 = 8%
Vested Loss: 15% - 8% = 7%
| • | End of Term: |
Buffer: 10%
Vested Loss: 15% - 10% = 5%
No Vesting Factor. A Vesting Factor does not apply when the Vested Loss is calculated. This means that all of the negative Index Change is taken into account when calculating the Vested Loss for a given Indexed Strategy for a given Term.
Example. On the date of Surrender, your entire Account Value of $100,000 is allocated to the S&P 500 Growth Strategy, which has a 10% Maximum Loss. You Surrender your Contract on day 270 of that Term, which means that Daily Charges have totaled $741. For this example, we assume that you did not take any withdrawals before you Surrender your Contract. Assume there is a negative Index Change of 12.5% on the day that you Surrender your Contract. Because the Index Change exceeds the Maximum Loss, the Maximum Loss applies and limits the Index Change to 10%. As a result, the Vested Loss is 10%. The Investment Base on the date of Surrender is $99,259 ($100,000 - $741). The Vested Loss that applies upon Surrender will be $9,926 ($99,259 x 0.10) and the amount payable will be $89,333 minus any related Early Withdrawal Charge.
Effect of Vested Gains and Losses
Here is a summary of the effect of Vested Gains and Losses in various situations.
| Vested Gain | A Vested Gain increases the Indexed Strategy value. | If you take a withdrawal, the Investment Base will be reduced by less than the actual amount of the withdrawal and any related Early Withdrawal Charge because of the Vested Gain. | ||
| Vested Loss | A Vested Loss reduces the Indexed Strategy value. | If you take a withdrawal, the Investment Base will be reduced by more than the actual amount of the withdrawal and any related Early Withdrawal Charge because of the Vested Loss. | ||
| Additional Information | Any change in an Indexed Strategy value will affect the Account Value, which is used to determine the Surrender Value, the Annuity Payout Value and the Death Benefit Value. | If you take a withdrawal, you will receive the amount you requested and the Indexed Strategy value will be reduced by the amount of the withdrawal and any related Early Withdrawal Charge. | ||
Asymmetrical Impact of Index Changes on Growth and Buffer Strategies Using the Same Index
A Growth/-10% Floor Strategy and a 10% Buffer Strategy that use the same Index will often perform differently over identical time periods. These divergent results are produced by variations in the methods used to calculate Vested Gains and Vested Losses for Growth Strategies and Buffer Strategies. You should consider these variations if you are choosing between a Growth Strategy and a Buffer Strategy, and whether either is consistent with your income needs and risk tolerance. Currently, the only Index used by both a Growth Strategy and a Buffer Strategy is the S&P 500 Index.
Vested Gain Variations
Vested Gains for Growth Strategies and Buffer Strategies are calculated using the same formula, but that formula can produce different results when different Maximum Gains are applied. The Maximum Gain for a Buffer Strategy generally will be higher than the Maximum Gain for a Growth Strategy that uses the same Index. This is because the maximum amount of money you can lose is larger for a Buffer Strategy than a Growth Strategy.
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For example, if we set a 12% Maximum Gain for the S&P 500 Growth Strategy and a 14% Maximum Gain for the S&P 500 Buffer Strategy, then the Vested Gains for identical investments in these two strategies would be the same over any period that the Index Value increased up to 12%, but would diverge over any period that the Index Value increased by more than 12%. During any such period, the Vested Gains for the Growth Strategy would be capped at 12%, while the Vested Gains for the Buffer Strategy may reach as high as 14%. As a result, it is possible for the Buffer Strategy to increase in value to a greater extent than the Growth Strategy.
Vested Loss Variations
The formulas used to calculate Vested Losses for Growth Strategies and Buffer Strategies are similar, except Vested Losses for a Growth Strategy are limited by a Maximum Loss, while Vested Losses for a Buffer Strategy are limited by a Buffer. The 10% Maximum Loss for a Growth Strategy does not change throughout the Term, which means that any negative Index Change between 0% and -10% is taken into account whenever Vested Loss is calculated. The amount of the Buffer for a Buffer Strategy increases each day during the course of each Term, culminating with a 10% Buffer at the end of each Term. This means that any a negative Index Change from 0 to -10% is disregarded when calculating Vested Loss at the end of the Term, but a smaller portion of a negative Index Change is disregarded when measuring a Vested Loss before the end of the Term.
The differences in the impact of negative Index Changes on a Growth Strategy and a Buffer Strategy using the same Index over the same Term depends on two variables: the size of the negative Index Change and the size of the Buffer on the date that the Vested Losses are measured.
The following chart illustrates how changes to these two variables impact Vested Losses for a Growth Strategy and a Buffer Strategy using the same Index over the same Term:
| Impact of Negative Index Changes on Growth and Buffer Strategy Values Throughout Term | ||||||||||||||||||||||||||||||||||||||||
| Vested Loss on: | ||||||||||||||||||||||||||||||||||||||||
| Day 73 (20% of Term Elapsed) | Day 146 (40% of Term Elapsed) | Day 219 (60% of Term Elapsed) | Day 292 (80% of Term Elapsed) | End of Term (100% of Term Elapsed) | ||||||||||||||||||||||||||||||||||||
Index Change | Growth Strategy | Buffer Strategy 2% Buffer | Growth Strategy | Buffer Strategy 4% Buffer | Growth Strategy | Buffer Strategy 6% Buffer | Growth Strategy | Buffer Strategy 8% Buffer | Growth Strategy | Buffer Strategy 10% Buffer | ||||||||||||||||||||||||||||||
0% | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||||||||||||||
-2% | -2 | % | 0 | % | -2 | % | 0 | % | -2 | % | 0 | % | -2 | % | 0 | % | -2 | % | 0 | % | ||||||||||||||||||||
-4% | -4 | % | -2 | % | -4 | % | 0 | % | -4 | % | 0 | % | -4 | % | 0 | % | -4 | % | 0 | % | ||||||||||||||||||||
-6% | -6 | % | -4 | % | -6 | % | -2 | % | -6 | % | 0 | % | -6 | % | 0 | % | -6 | % | 0 | % | ||||||||||||||||||||
-8% | -8 | % | -6 | % | -8 | % | -4 | % | -8 | % | -2 | % | -8 | % | 0 | % | -8 | % | 0 | % | ||||||||||||||||||||
-10% | -10 | % | -8 | % | -10 | % | -6 | % | -10 | % | -4 | % | -10 | % | -2 | % | -10 | % | 0 | % | ||||||||||||||||||||
-12% | -10 | % | -10 | % | -10 | % | -8 | % | -10 | % | -6 | % | -10 | % | -4 | % | -10 | % | -2 | % | ||||||||||||||||||||
-14% | -10 | % | -12 | % | -10 | % | -10 | % | -10 | % | -8 | % | -10 | % | -6 | % | -10 | % | -4 | % | ||||||||||||||||||||
-16% | -10 | % | -14 | % | -10 | % | -12 | % | -10 | % | -10 | % | -10 | % | -8 | % | -10 | % | -6 | % | ||||||||||||||||||||
-18% | -10 | % | -16 | % | -10 | % | -14 | % | -10 | % | -12 | % | -10 | % | -10 | % | -10 | % | -8 | % | ||||||||||||||||||||
-20% | -10 | % | -18 | % | -10 | % | -16 | % | -10 | % | -14 | % | -10 | % | -12 | % | -10 | % | -10 | % | ||||||||||||||||||||
-22% | -10 | % | -20 | % | -10 | % | -18 | % | -10 | % | -16 | % | -10 | % | -14 | % | -10 | % | -12 | % | ||||||||||||||||||||
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In general, Growth Strategies are designed to protect against larger negative Index Changes, while Buffer Strategies are designed to protect against smaller negative Index Changes. When identical investments are made in a Growth Strategy and a Buffer Strategy using the same Index over the same Term, a negative change in the Index produces the following results:
| • | a negative Index Change between 0% and -10%, measured on any day, would have a greater negative impact on the Growth Strategy |
| • | a negative Index Change between -10% and -20% could have a greater negative impact on either strategy, depending on the Index Change and the size of the Buffer on the day the Index Change is measured |
| • | a negative Index Change below -20%, measured on any day, would have a greater negative impact on the Buffer Strategy |
See Examples—Impact of Withdrawals on Contract Values and Amounts Realized section below for examples that illustrate these concepts.
Examples—Impact of Withdrawals on Contract Values and Amounts Realized
These examples are intended to show you how a withdrawal from an Indexed Strategy before the end of the Term affects the Indexed Strategy values, Vested Gains and Losses, and amounts realized at the end of the Term. These examples assume that you allocate a $50,000 Purchase Payment to the S&P 500 Growth/-10% Floor Strategy and a $50,000 Purchase Payment to the S&P 500 10% Buffer Strategy. The examples assume that the withdrawals are covered by the Free Withdrawal Allowance and therefore no Early Withdrawal Charges apply. If Early Withdrawal Charges did apply, the amounts realized at the end of the Term would be reduced by both the withdrawal and the amount of the Early Withdrawal Charge.
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Example A: Withdrawal When Index Rising Steadily
Impact of $10,000 Withdrawal on Day 146 of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
| Investment Base at Term Start | $50,000 | $50,000 | ||
| Index Value at Term Start | 1000 | 1000 | ||
| Daily Charges through Day 146 | $201 | $201 | ||
| Remaining Investment Base on Day 146 | $50,000 - $201 = $49,799 | $50,000 - $201 = $49,799 | ||
| Index Value at Date of Withdrawal | 1040 | 1040 | ||
| Positive Index Change | (1040 - 1000) / 1000 = 4.00% | (1040 - 1000) / 1000 = 4.00% | ||
| Maximum Gain | Gain of 12% | Gain of 14% | ||
| Positive Index Change Limited by Maximum Gain | 4.00% | 4.00% | ||
| Vesting Factor on Day 146 | 25% | 25% | ||
| Vested Gain as a Percentage | 4.00% x 25% = 1.00% Vested Gain | 4.00% x 25% = 1.00% Vested Gain | ||
| Vested Gain in Dollars | $49,799 x 1.00% = $498 Vested Gain | $49,799 x 1.00% = $498 Vested Gain | ||
| Strategy Value before Withdrawal | $49,799 + $498 = $50,297 | $49,799 + $498 = $50,297 | ||
| Amount Withdrawn | $5,000 | $5,000 | ||
| Percentage Reduction in Strategy Value | $5,000 / $50,297 = 9.94% | $5,000 / $50,297 = 9.94% | ||
| Proportional Reduction in Investment Base | $49,799 x 0.0994 = $4,950 | $49,799 x 0.0994 = $4,950 | ||
| Remaining Investment Base after Withdrawal | $49,799 - $4,950 = $44,849 | $49,799 - $4,950 = $44,849 | ||
Value at End of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
| Remaining Investment Base after Withdrawal | $44,849 | $44,849 | ||
| Daily Charges from Day 147 to Term End | $270 | $270 | ||
| Remaining Investment Base at Term End | $44,849 - $270 = $44,579 | $44,849 - $270 = $44,579 | ||
| Index Value at Term Start | 1000 | 1000 | ||
| Index Value at Term End | 1130 | 1130 | ||
| Positive Index Change | (1130 - 1000) / 1000 = 13.00% | (1130 - 1000) / 1000 = 13.00% | ||
| Maximum Gain | Gain of 12% | Gain of 14% | ||
| Positive Index Change Limited by Maximum Gain | 12.00% | 13.00% | ||
| Vesting Factor at Term End | 100% | 100% | ||
| Vested Gain as a Percentage | 12.00% x 100% = 12.00% Vested Gain | 13% x 100% = 13.00% Vested Gain | ||
| Vested Gain in Dollars | $44,579 x 12.00% = $5,349 Vested Gain | $44,579 x 13.00% = $5,795 Vested Gain | ||
| Strategy Value at Term End | $44,579 + $5,349 = $49,928 | $44,579 + $5,795 = $50,374 | ||
S&P 500 Growth Strategy
In this example, the amount you realized on your $50,000 investment in the S&P 500 Growth Strategy at the end of the Term is $54,928 ($5,000 withdrawal plus the $49,928 Strategy value at the end of the Term).
Had no withdrawal occurred, your S&P 500 Growth Strategy value at the end of the Term would have been $55,440 ($50,000 original Investment Base minus total Daily Charges of $500 and plus $5,940 gain ($49,500 x 12.00%)).
This hypothetical Strategy value of $55,440 exceeds the amount realized of $54,928 because:
| • | the gain at the time of the withdrawal caused the reduction in the Investment Base to be less than the actual amount withdrawn ($5,000 - $4,950 = $50); and |
| • | the subsequent gain at the term end was calculated on a smaller Investment Base, which caused that gain to be smaller than the hypothetical gain ($5,349 - $5,940 = - $591); and |
| • | the Daily Charges from Day 147 to Term End are lower than they would have been without the withdrawal by $29 because they are being applied to a decreased Investment Base. |
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The result for the S&P 500 Growth Strategy ($50 - $591 + $29 = -$512) is equal to the difference between the hypothetical Strategy value and the amount realized ($55,440 - $512 = $54,928).
S&P 500 Buffer Strategy
The amount you realized on your $50,000 investment in the S&P 500 Buffer Strategy at the end of the Term is $55,374 ($5,000 withdrawal plus the $50,374 Strategy value at the end of the Term). Had no withdrawal occurred, your S&P 500 Buffer Strategy value at the end of the Term would have been $55,935 ($50,000 original Investment Base minus total Daily Charges of $500 and plus $6,435 gain ($49,500 x 13.00%)). This hypothetical Strategy value exceeds the amount realized for the same reasons described above for the S&P 500 Growth Strategy.
Your investment in the S&P 500 Buffer Strategy outperformed the S&P 500 Growth Strategy by $446 in this example. The amount you realized under the Buffer Strategy ($55,374) exceeds the amount you realized under the Growth Strategy ($54,928) because the Growth Strategy had a lower Maximum Gain, and the Index Change at the end of the Term exceeded the Growth Strategy’s lower Maximum Gain.
Example B: Withdrawal When Index Falls and Then Rises
Impact of $10,000 Withdrawal on Day 146 of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
| Investment Base at Term Start | $50,000 | $50,000 | ||
| Daily Charges through Day 146 | $201 | $201 | ||
| Remaining Investment Base on Day 146 | $50,000 - $201 = $49,799 | $50,000 - $201 = $49,799 | ||
| Index Value at Term Start | 1000 | 1000 | ||
| Index Value at Date of Withdrawal | 880 | 880 | ||
| Negative Index Change | (880 - 1000) / 1000 = -12.00% | (880 - 1000) / 1000 = -12.00% | ||
| Maximum Loss | Loss of 10% | N/A | ||
| Negative Index Change Limited by Maximum Loss | -10.00% | N/A | ||
| Buffer on Day 146 of Term | N/A | 10% x (365-219)/365 = 4.00% Buffer | ||
| Negative Index Change Absorbed by Buffer | N/A | -4.00% | ||
| Negative Index Change after Buffer | N/A | -12.00% - (-4.00%) = -8.00% | ||
| Vested Loss as a Percentage | -10.00% x 100% = 10.00% Vested Loss | -8.00% x 100% = 8.00% Vested Loss | ||
| Vested Loss in Dollars | $49,799 x 10.00% = $4,980 Vested Loss | $49,799 x 8.00% = $3,984 Vested Loss | ||
| Strategy Value before Withdrawal | $49,799 - $4,980 = $44,819 | $49,799 - $3,984 = $45,815 | ||
| Amount Withdrawn* | $4,945 | $5,055 | ||
| Percentage Reduction in Strategy Value | $4,945 / $44,819 = 11.03% | $5,055 / $45,815 = 11.03% | ||
| Proportional Reduction in Investment Base | $49,799 x 0.1103 = $5,493 | $49,799 x 0.1103 = $5,493 | ||
| Remaining Investment Base after Withdrawal | $49,799 - $5,493 = $44,306 | $49,799 - $5,493 = $44,306 | ||
Value at End of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
| Remaining Investment Base after Withdrawal | $44,306 | $44,306 | ||
| Daily Charges from Day 147 to Term End | $266 | $266 | ||
| Remaining Investment Base at Term End | $44,306 - $266 = $44,040 | $44,306 - $266 = $44,040 | ||
| Index Value at Term Start | 1000 | 1000 | ||
| Index Value at Term End | 1130 | 1130 | ||
| Positive Index Change | (1130 - 1000) / 1000 = 13% | (1130 - 1000) / 1000 = 13% | ||
| Maximum Gain | Gain of 12% | Gain of 14% | ||
| Positive Index Change Limited by Maximum Gain | 12.00% | 13.00% | ||
| Vesting Factor at Term End | 100% | 100% | ||
| Vested Gain as a Percentage | 12.00% x 100% = 12.00% Vested Gain | 13.00% x 100% = 13.00% Vested Gain | ||
| Vested Gain in Dollars | $44,040 x 12% = $5,285 Vested Gain | $44,040 x 13% = $5,725 Vested Gain | ||
| Strategy Value at Term End | $44,040 + $5,285 = $49,325 | $44,040 + $5,725 = $49,765 | ||
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| * | Note: The withdrawal is taken proportionally from each Indexed Strategy, based on the ratio of that Strategy’s value to the total value of all Indexed Strategies immediately before the withdrawal. In this example, the total value of all Indexed Strategies immediately before the withdrawal was $90,634 ($44,819 + $45,815). The S&P 500 Growth Strategy value was 49.45% of that total value ($44,819 / $90,634 = 49.45%), so 49.45% of the $10,000 withdrawal ($4,945) was taken from it. The S&P 500 Buffer Strategy value was 50.55% of that total value ($45,815 / $90,634 = 50.55%), so 50.55% of the $10,000 withdrawal ($5,055) was taken from it. |
S&P 500 Growth Strategy
In this example, the amount you realized on your $50,000 investment in the S&P 500 Growth Strategy at the end of the Term is $54,270 ($4,945 withdrawal plus the $49,325 Strategy value at the end of the Term).
Had no withdrawal occurred, your S&P 500 Growth Strategy value at the end of the Term would have been $55,440 ($50,000 original Investment Base minus total Daily Charges of $500 and plus $5,940 gain ($49,500 x 12.00%)).
This hypothetical Strategy value of $55,440 exceeds the amount realized of $54,270 because:
| • | the loss at the time of the withdrawal caused the reduction in the Investment Base to be greater than the actual amount withdrawn ($4,945 - $5,493 = -$548); and |
| • | the subsequent gain at the term end was calculated on a smaller Investment Base, which caused that gain to be smaller than the hypothetical gain ($5,285 - $5,940 = -$655); and |
| • | the Daily Charges from Day 147 to Term End are lower than they would have been without the withdrawal by $32 because they are being applied to a decreased Investment Base. |
The result for the S&P 500 Growth Strategy (-$548 + -$655 + $33 = -$1,170) is equal to the difference between the hypothetical Strategy value and the amount realized ($55,440 - $1,170 = $54,270).
S&P 500 Buffer Strategy
The amount you realized on your $50,000 investment in the S&P 500 Buffer Strategy at the end of the Term is $54,820 ($5,055 withdrawal plus the $49,765 Strategy value at the end of the Term). Had no withdrawal occurred, your S&P 500 Buffer Strategy value at the end of the Term would have been $55,935 ($50,000 original Investment Base minus total Daily Charges of $500 and plus $6,435 gain ($49,500 x 13.00%)). This hypothetical Strategy value exceeds the amount realized for the same reasons described above for the S&P 500 Growth Strategy.
Your investment in the S&P 500 Buffer Strategy outperformed the S&P 500 Growth Strategy by $550 in this example. The amount you realized under the Buffer Strategy ($54,820) exceeds the amount you realized under the Growth Strategy ($54,270) for two reasons: (1) at the time of the withdrawal, the Buffer absorbed more of the negative Index Change (4 percentage points of the -12.00% change) than the Maximum Loss absorbed (2 percentage points of the -12.00% change), thus resulting in more of the withdrawal being taken from the Buffer Strategy’s value even though the Investment Base of both strategies was reduced by the same amount, and (2) the Index Change at the end of the Term exceeded the Growth Strategy’s lower Maximum Gain, thus increasing the Buffer Strategy’s value by more than the increase in the Growth Strategy’s value.
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Example C: Withdrawal When Index Falling Steadily
Impact of $10,000 Withdrawal on Day 146 of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
| Investment Base at Term Start | $50,000 | $50,000 | ||
| Daily Charges through Day 146 | $201 | $201 | ||
| Remaining Investment Base on Day 146 | $50,000 - $201 = $49,799 | $50,000 - $201 = $49,799 | ||
| Index Value at Term Start | 1000 | 1000 | ||
| Index Value at Date of Withdrawal | 980 | 980 | ||
| Negative Index Change | (980 - 1000) / 1000 = -2.00% | (980 - 1000) / 1000 = -2.00% | ||
| Maximum Loss | Loss of 10% | N/A | ||
| Negative Index Change Limited by Maximum Loss | -2% | N/A | ||
| Buffer on Day 146 of Term | N/A | 10% x (365-219)/365 = 4.00% Buffer | ||
| Negative Index Change Absorbed by Buffer | N/A | Entire -2.00% Index Change | ||
| Negative Index Change after Buffer | N/A | 0% | ||
| Vested Loss as a Percentage | -2.00% x 100% = 2.00% Vested Loss | 0.00% Vested Loss | ||
| Vested Loss in Dollars | $49,799 x 2.00% = $996 Vested Loss | $0 Vested Loss | ||
| Strategy Value before Withdrawal | $49,799 - $996 = $48,803 | $49,799 - $0 = $49,799 | ||
| Amount Withdrawn* | $4,949 | $5,051 | ||
| Percentage Reduction in Strategy Value | $4,949 / $48,803 = 10.14% | $5,051 / $49,799 = 10.14% | ||
| Proportional Reduction in Investment Base | $49,799 x 0.1014 = $5,050 | $49,799 x .0.1014 = $5,050 | ||
| Remaining Investment Base after Withdrawal | $49,799 - $5,050 = $44,749 | $49,799 - $5,050 = $44,749 | ||
Value at End of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
| Remaining Investment Base after Withdrawal | $44,749 | $44,749 | ||
| Daily Charges from Day 147 to Term End | $269 | $269 | ||
| Remaining Investment Base at Term End | $44,749 - $269 = $44,480 | $44,749 - $269 = $44,480 | ||
| Index Value at Term Start | 1000 | 1000 | ||
| Index Value at Term End | 860 | 860 | ||
| Negative Index Change | (860 - 1000) / 1000 = -14.00% | (860 - 1000) / 1000 = -14.00% | ||
| Maximum Loss | Loss of 10% | N/A | ||
| Negative Index Change Limited by Maximum Loss | -10.00% | N/A | ||
| Buffer at End of Term | N/A | 10% Buffer | ||
| Negative Index Change Absorbed by Buffer | N/A | -10.00% | ||
| Negative Index Change after Buffer | N/A | -14.00% - (-10.00%) = -4.00% | ||
| Vested Loss as a Percentage | -10.00% x 100% = 10.00% Vested Loss | -4.00% x 100% = 4.00% Vested Loss | ||
| Vested Loss in Dollars | $44,480 x 10% = $4,448 Vested Loss | $44,480 x 4% = $1,779 Vested Loss | ||
| Strategy Value at Term End | $44,480 - $4,448 = $40,032 | $44,480 - $1,779 = $42,701 | ||
| * | Note: The withdrawal is taken proportionally from each Indexed Strategy, based on the ratio of that Strategy’s value to the total value of all Indexed Strategies immediately before the withdrawal. In this example, the total value of all Indexed Strategies immediately before the withdrawal was $98,602 ($48,803 + $49,799). The S&P 500 Growth Strategy value was 49.49% of that total value ($48,803 / $98,602 = 49.49%), so 49.49% of the $10,000 withdrawal ($4,949) was taken from it. The S&P 500 Buffer Strategy value was 50.51% of that total value ($49,799 / $98,602 = 50.51%), so 50.51% of the $10,000 withdrawal ($5,051) was taken from it. |
S&P 500 Growth Strategy
In this example, the amount you realized on your $50,000 investment in the S&P 500 Growth Strategy at the end of the Term is $44,981 ($4,949 withdrawal plus the $40,032 Strategy value at the end of the Term).
Had no withdrawal occurred, your S&P 500 Growth Strategy value at the end of the Term would have been $44,550 ($50,000 original Investment Base minus total Daily Charges of $500 and minus $4,950 loss ($49,500 x -10.00%)).
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The amount realized of $44,981 exceeds this hypothetical Strategy value of $44,550 because:
| • | the loss at the time of the withdrawal caused the reduction in the Investment Base to be greater than the actual amount withdrawn ($4,949 - $5,050 = -$101); and |
| • | the subsequent loss at the term end was calculated on a smaller Investment Base, which caused that loss to be smaller than the hypothetical loss ($4,950 - $4,448 = $502); and |
| • | the Daily Charges from Day 147 to Term End are lower than they would have been without the withdrawal by $30 because they are being applied to a decreased Investment Base. |
The result for the S&P 500 Growth Strategy ($502 - $101 + $30 = $431) is equal to the difference between the amount realized and the hypothetical Strategy value ($44,981 - $431 = $44,550).
S&P 500 Buffer Strategy
The amount you realized on your $50,000 investment in the S&P 500 Buffer Strategy at the end of the Term is $47,752 ($5,051 withdrawal plus the $42,701 Strategy value at the end of the Term). Had no withdrawal occurred, your S&P 500 Buffer Strategy value at the end of the Term would have been $47,520 ($50,000 original Investment Base minus total Daily Charges of $500 and minus $1,980 loss ($49,500 x -4.00%)). This hypothetical Strategy value is lower than the amount realized for the same reasons described above for the S&P 500 Growth Strategy.
Your investment in the S&P 500 Buffer Strategy outperformed the S&P 500 Growth Strategy by $2,771 in this example. The amount you realized under the Buffer Strategy ($47,752) exceeds the amount you realized under the Growth Strategy ($44,981) for two reasons: (1) at the time of the withdrawal, the Buffer absorbed all of the negative Index Change of -2.00%, while the Maximum Loss did not absorb any of the negative Index Change, thus resulting in more of the withdrawal being taken from the Buffer Strategy’s value even though the Investment Base of both strategies was reduced by the same amount, and (2) at the end of the Term, the Buffer absorbed more of the negative Index Change (10 percentage points of the -14.00% change) than the Maximum Loss absorbed (4 percentage points of the -14.00% change), thus reducing the Growth Strategy value by more than the reduction in the Buffer Strategy value.
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Example D: Withdrawal When Index Falling Steadily and Precipitously
Impact of $10,000 Withdrawal on Day 146 of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
| Investment Base at Term Start | $50,000 | $50,000 | ||
| Daily Charges through Day 146 | $201 | $201 | ||
| Remaining Investment Base on Day 146 | $50,000 - $201 = $49,799 | $50,000 - $201 = $49,799 | ||
| Index Value at Term Start | 1000 | 1000 | ||
| Index Value at Date of Withdrawal | 850 | 850 | ||
| Negative Index Change | (850 - 1000) / 1000 = -15.00% | (850 - 1000) / 1000 = -15.00% | ||
| Maximum Loss | Loss of 10% | N/A | ||
| Negative Index Change Limited by Maximum Loss | -10% | N/A | ||
| Buffer on Day 146 of Term | N/A | 10% x (365-219)/365 = 4.00% Buffer | ||
| Negative Index Change Absorbed by Buffer | N/A | -4.00% | ||
| Negative Index Change after Buffer | N/A | -15.00% - (-4.00%) = -11.00% | ||
| Vested Loss as a Percentage | -10.00% x 100% = 10.00% Vested Loss | -11.00% x 100% = 11.00% Vested Loss | ||
| Vested Loss in Dollars | $49,799 x 10.00% = $4,980 Vested Loss | $49,799 x 11.00% = $5,478 Vested Loss | ||
| Strategy Value before Withdrawal | $49,799 - $4,980 = $44,819 | $49,799 - $5,478 = $44,321 | ||
| Amount Withdrawn* | $5,028 | $4,972 | ||
| Percentage Reduction in Strategy Value | $5,028 / $44,819 = 11.22% | $4,972 / $44,321 = 11.22% | ||
| Proportional Reduction in Investment Base | $49,799 x 0.1122 = $5,587 | $49,799 x 0.1122 = $5,587 | ||
| Remaining Investment Base after Withdrawal | $49,799 - $5,587 = $44,212 | $49,799 - $5,587 = $44,212 | ||
Value at End of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
| Remaining Investment Base after Withdrawal | $44,212 | $44,212 | ||
| Daily Charges from Day 147 to Term End | $266 | $266 | ||
| Remaining Investment Base at Term End | $44,212 - $266 = $43,946 | $44,212 - $266 = $43,946 | ||
| Index Value at Term Start | 1000 | 1000 | ||
| Index Value at Term End | 750 | 750 | ||
| Negative Index Change | (750 - 1000) / 1000 = -25.00% | (750 - 1000) / 1000 = -25.00% | ||
| Maximum Loss | Loss of 10% | N/A | ||
| Negative Index Change Limited by Maximum Loss | -10.00% | N/A | ||
| Buffer at End of Term | N/A | 10% Buffer | ||
| Negative Index Change Absorbed by Buffer | N/A | -10.00% | ||
| Negative Index Change after Buffer | N/A | -25.00% - (-10.00%) = -15.00% | ||
| Vested Loss as a Percentage | -10.00% x 100% = 10.00% Vested Loss | -15.00% x 100% = 15.00% Vested Loss | ||
| Vested Loss in Dollars | $43,946 x 10.00% = $4,395 Vested Loss | $43,946 x 15.00% = $6,592 Vested Loss | ||
| Strategy Value at Term End | $43,946 - $4,395 = $39,551 | $43,946 - $6,592 = $37,354 | ||
| * | Note: The withdrawal is taken proportionally from each Indexed Strategy, based on the ratio of that Strategy’s value to the total value of all Indexed Strategies immediately before the withdrawal. In this example, the total value of all Indexed Strategies immediately before the withdrawal was $89,140 ($44,819 + $44,321). The S&P 500 Growth Strategy value was 50.28% of that total value ($44,819 / $89,140 = 50.28%), so 50.28% of the $10,000 withdrawal ($5,028) was taken from it. The S&P 500 Buffer Strategy value was 49.72% of that total value ($44,321 / $89,140 = 49.72%), so 49.72% of the $10,000 withdrawal ($4,972) was taken from it. |
S&P 500 Growth Strategy
In this example, the amount you realized on your $50,000 investment in the S&P 500 Growth Strategy at the end of the Term is $44,579 ($5,028 withdrawal plus the $39,551 Strategy value at the end of the Term).
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Had no withdrawal occurred, your S&P 500 Growth Strategy value at the end of the Term would have been $44,550 ($50,000 original Investment Base minus total Daily Charges of $500 and minus $4,950 loss ($49,500 x -10.00%)).
The amount realized of $44,579 exceeds this hypothetical Strategy value of $44,550 because:
| • | the loss at the time of the withdrawal caused the reduction in the Investment Base to be greater than the actual amount withdrawn ($5,028 - $5,587 = -$559); and |
| • | the subsequent loss at the term end was calculated on a smaller Investment Base, which caused that loss to be smaller than the hypothetical loss ($4,950 - $4,395 = $555); and |
| • | the Daily Charges from Day 147 to Term End are lower than they would have been without the withdrawal by $33 because they are being applied to a decreased Investment Base. |
The result for the S&P 500 Growth Strategy ($555 - $559 + 33 = $29) is equal to the difference between the amount realized and the hypothetical Strategy value ($44,579 - $29 = $44,550).
S&P 500 Buffer Strategy
The amount you realized on your $50,000 investment in the S&P 500 Buffer Strategy at the end of the Term is $42,326 ($4,972 withdrawal plus the $37,354 Strategy value at the end of the Term). Had no withdrawal occurred, your S&P 500 Buffer Strategy value at the end of the Term would have been $42,075 ($50,000 original Investment Base minus total Daily Charges of $500 and minus $7,425 loss ($49,500 x -15.00%)).
The amount realized of $42,326 exceeds this hypothetical Strategy value of $42,075 because:
| • | the loss at the time of the withdrawal caused the reduction in the Investment Base to be greater than the actual amount withdrawn ($4,972 - $5,587 = -$615); |
| • | the subsequent loss at the term end was calculated on a smaller Investment Base, which caused that loss to be smaller than the hypothetical loss ($7,425 - $6,592 = $833); and |
| • | the Daily Charges from Day 147 to Term End are lower than they would have been without the withdrawal by $33. |
The result for the S&P 500 Buffer Strategy ($833 - $615 + 33 = $251) is equal to the difference between the amount realized and the hypothetical Strategy value ($42,326 - $251 = $42,075).
Your investment in the S&P 500 Buffer Strategy underperformed the S&P 500 Growth Strategy by $2,253 in this example. The amount you realized under the Buffer Strategy ($42,326) is smaller than the amount you realized under the Growth Strategy ($44,579) for two reasons: (1) at the time of the withdrawal, the Buffer absorbed less of the negative Index Change of -15.00%, thus resulting in more of the withdrawal being taken from the Buffer Strategy’s value even though the Investment Base of both strategies was reduced by the same amount, and (2) at the end of the Term, the Buffer absorbed less of the negative Index Change (10 percentage points of the -25.00% change) than the Maximum Loss absorbed (15 percentage points of the -25.00% change), thus reducing the Buffer Strategy value by more than the reduction in the Growth Strategy value.
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Example E: Withdrawal When Index Rises and Then Falls
Impact of $10,000 Withdrawal on Day 146 of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
| Investment Base at Term Start | $50,000 | $50,000 | ||
| Daily Charges through Day 146 | $201 | $201 | ||
| Remaining Investment Base on Day 146 | $50,000 - $201 = $49,799 | $50,000 - $201 = $49,799 | ||
| Index Value at Term Start | 1000 | 1000 | ||
| Index Value at Date of Withdrawal | 1080 | 1080 | ||
| Positive Index Change | (1080 - 1000) / 1000 = 8.00% | (1080 - 1000) / 1000 = 8.00% | ||
| Maximum Gain | Gain of 12% | Gain of 14% | ||
| Positive Index Change Limited by Maximum Gain | 8.00% | 8.00% | ||
| Vesting Factor on Day 146 | 25% | 25% | ||
| Vested Gain as a Percentage | 8.00% x 25% = 2.00% Vested Gain | 8.00% x 25% = 2.00% Vested Gain | ||
| Vested Gain in Dollars | $49,799 x 2.00% = $996 Vested Gain | $49,799 x 2.00% = $996 Vested Gain | ||
| Strategy Value before Withdrawal | $49,799 + $996 = $50,795 | $49,799 + $996 = $50,795 | ||
| Amount Withdrawn | $5,000 | $5,000 | ||
| Percentage Reduction in Strategy Value | $5,000 / $50,795 = 9.84% | $5,000 / $50,795 = 9.84% | ||
| Proportional Reduction in Investment Base | $49,799 x 0.0984 = $4,900 | $49,799 x 0.0984 = $4,900 | ||
| Remaining Investment Base after Withdrawal | $49,799 - $4,900 = $44,899 | $49,799 - $4,900 = $44,899 | ||
Value at End of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
| Remaining Investment Base after Withdrawal | $44,899 | $44,899 | ||
| Daily Charges from Day 147 to Term End | $270 | $270 | ||
| Remaining Investment Base at Term End | $44,899 - $270 = $44,629 | $44,899 - $270 = $44,629 | ||
| Index Value at Term Start | 1000 | 1000 | ||
| Index Value at Term End | 860 | 860 | ||
| Negative Index Change | (860 - 1000) / 1000 = -14.00% | (860 - 1000) / 1000 = -14.00% | ||
| Maximum Loss | Loss of 10.00% | N/A | ||
| Negative Index Change Limited by Maximum Loss | -10.00% | N/A | ||
| Buffer at End of Term | N/A | 10% Buffer | ||
| Negative Index Change Absorbed by Buffer | N/A | -10.00% | ||
| Negative Index Change after Buffer | N/A | -14% - (-10%) = -4.00% | ||
| Vested Loss as a Percentage | -10.00% x 100% = 10.00% Vested Loss | -4.00% x 100% = 4.00% Vested Loss | ||
| Vested Loss in Dollars | $44,629 x 10.00% = $4,463 Vested Loss | $44,629 x 4.00% = $1,785 Vested Loss | ||
| Strategy Value at Term End | $44,629 - $4,463 = $40,166 | $44,629 - $1,785 = $42,844 | ||
S&P 500 Growth Strategy
In this example, the amount you realized on your $50,000 investment in the S&P 500 Growth Strategy at the end of the Term is $45,166 ($5,000 withdrawal plus the $40,166 Strategy value at the end of the Term).
Had no withdrawal occurred, your S&P 500 Growth Strategy value at the end of the Term would have been $44,550 ($50,000 original Investment Base minus total Daily Charges of $500 and minus $4,950 loss ($49,500 x -10.00%)).
The amount realized of $45,166 exceeds this hypothetical Strategy value of $44,550 because:
| • | the gain at the time of the withdrawal caused the reduction in the Investment Base to be less than the actual amount withdrawn ($5,000 - $4,900 = $100); |
| • | the subsequent loss at the term end was calculated on a smaller Investment Base, which caused that loss to be smaller than the hypothetical loss ($4,950 - $4,463 = $487); and |
| • | the Daily Charges from Day 147 to Term End are lower than they would have been without the withdrawal by $29 because they are being applied to a decreased Investment Base. |
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The result for the S&P 500 Growth Strategy ($100 + $487 + $29 = $616) is equal to the difference between the amount realized and the hypothetical Strategy value ($45,166 - $616 = $44,550).
S&P 500 Buffer Strategy
The amount you realized on your $50,000 investment in the S&P 500 Buffer Strategy at the end of the Term is $47,844 ($5,000 withdrawal plus the $42,844 Strategy value at the end of the Term). Had no withdrawal occurred, your S&P 500 Buffer Strategy value at the end of the Term would have been $47,520 ($50,000 original Investment Base minus total Daily Charges of $500 and minus $1,980 loss ($49,500 x -4.00%)). This hypothetical Strategy value is lower than the amount realized for the same reasons described above for the S&P 500 Growth Strategy.
Your investment in the S&P 500 Buffer Strategy outperformed the S&P 500 Growth Strategy by $2,678 in this example. The amount you realized under the Buffer Strategy ($47,844) exceeds the amount you realized under the Growth Strategy ($45,166) because, at the end of the Term, the Buffer absorbed more of the negative Index Change (10 percentage points of the -14.00% change) than the Maximum Loss absorbed (4 percentage points of the -14.00% change), thus reducing the Growth Strategy value by more than the reduction in the Buffer Strategy value.
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Example F: Multiple Withdrawals in a Volatile Market
Impact of $2,500 Withdrawal on Day 146 of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
| Investment Base at Term Start | $50,000 | $50,000 | ||
| Daily Charges through Day 146 | $201 | $201 | ||
| Remaining Investment Base on Day 146 | $50,000 - $201 = $49,799 | $50,000 - $201 = $49,799 | ||
| Index Value at Term Start | 1000 | 1000 | ||
| Index Value at Date of Withdrawal | 1040 | 1040 | ||
| Positive Index Change | (1040 - 1000) / 1000 = 4.00% | (1040 - 1000) / 1000 = 4.00% | ||
| Maximum Gain | Gain of 12% | Gain of 14% | ||
| Positive Index Change Limited by Maximum Gain | 4.00% | 4.00% | ||
| Vesting Factor on Day 146 | 25% | 25% | ||
| Vested Gain as a Percentage | 4.00% x 25% = 1.00% Vested Gain | 4.00% x 25% = 1.00% Vested Gain | ||
| Vested Gain in Dollars | $49,799 x 1.00% = $498 Vested Gain | $49,799 x 1.00% = $498 Vested Gain | ||
| Strategy Value before Withdrawal | $49,799 + $498 = $50,297 | $49,799 + $498 = $50,297 | ||
| Amount Withdrawn | $1,250 | $1,250 | ||
| Percentage Reduction in Strategy Value | $1,250 / $50,297 = 2.49% | $1,250 / $50,297 = 2.49% | ||
| Proportional Reduction in Investment Base | $49,799 x 0.0249 = $1,240 | $49,799 x 0.0249 = $1,240 | ||
| Remaining Investment Base after Day 146 Withdrawal | $49,799 - $1,240 = $48,559 | $49,799 - $1,240 = $48,559 | ||
Impact of $3,500 Withdrawal on Day 219 of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
| Remaining Investment Base after Day 146 Withdrawal | $48,559 | $48,559 | ||
| Daily Charges from Day 147 through Day 219 | $98 | $98 | ||
| Remaining Investment Base on Day 219 | $48,559 - $98 = $48,461 | $48,559 - $98 = $48,4619 | ||
| Index Value at Term Start | 1000 | 1000 | ||
| Index Value at Date of Withdrawal | 970 | 970 | ||
| Negative Index Change | (970 - 1000) / 1000 = -3.00% | (970 - 1000) / 1000 = -3.00% | ||
| Maximum Loss | Loss of 10% | N/A | ||
| Negative Index Change Limited by Maximum Loss | -3.00% | N/A | ||
| Buffer on Day 219 of Term | N/A | 10% x (365-146)/365 = 6.00% Buffer | ||
| Negative Index Change Absorbed by Buffer | N/A | Entire -3% Index Change | ||
| Negative Index Change after Buffer | N/A | 0.00% | ||
| Vested Loss as Percentage | -3.00% x 100% = 3.00% Vested Loss | 0.00% Vested Loss | ||
| Vested Loss in Dollars | $48,461 x 3.00% = $1,454 Vested Loss | $0 Vested Loss | ||
| Strategy Value before Withdrawal | $48,461 - $1,454 = $47,007 | $48,461 - $0 = $48,461 | ||
| Amount Withdrawn* | $1,723 | $1,777 | ||
| Percentage Reduction in Strategy Value | $1,723 / $47,007 = 3.67% | $1,777 / $48,461 = 3.67% | ||
| Proportional Reduction in Investment Base | $48,461 x 0.0367 = $1,779 | $48,461 x 0.0367 = $1,779 | ||
| Remaining Investment Base after Day 219 Withdrawal | $48,461 - $1,779 = $46,682 | $48,461 - $1,779 = $46,682 | ||
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Impact of $4,000 Withdrawal on Day 292 of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
| Remaining Investment Base after Day 219 Withdrawal | $46,682 | $46,682 | ||
| Daily Charges Day 220 through Day 292 | $94 | $94 | ||
| Remaining Investment Base on Day 292 | $46,682 - $94 = $46,588 | $46,682 - $94 = $46,588 | ||
| Index Value at Term Start | 1000 | 1000 | ||
| Index Value at Date of Withdrawal | 1150 | 1150 | ||
| Positive Index Change | (1150 - 1000) / 1000 = 15.00% | (1150 - 1000) / 1000 = 15.00% | ||
| Maximum Gain | Gain of 12% | Gain of 14% | ||
| Positive Index Change Limited by Maximum Gain | 12.00% | 14.00% | ||
| Vesting Factor on Day 292 | 50% | 50% | ||
| Vested Gain as a Percentage | 12.00% x 50% = 6.00% Vested Gain | 14.00% x 50% = 7.00% Vested Gain | ||
| Vested Gain in Dollars | $46,588 x 6.00% = $2,795 Vested Gain | $46,588 x 7.00% = $3,261 Vested Gain | ||
| Strategy Value before Withdrawal | $46,588 + $2,795 = $49,383 | $46,588 + $3,261 = $49.849 | ||
| Amount Withdrawn* | $1,991 | $2,009 | ||
| Percentage Reduction in Strategy Value | $1,991 / $49,383 = 4.03% | $2,009 / $49,849 = 4.03% | ||
| Proportional Reduction in Investment Base | $46,588 x 0.0403 = $1,877 | $46,588 x 0.0403 = $1,877 | ||
| Remaining Investment Base after Day 292 Withdrawal | $46,588 - $1,877 = $44,711 | $46,588 - $1,8787= $44,711 | ||
Value at End of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
| Remaining Investment Base after Day 292 Withdrawal | $44,711 | $44,711 | ||
| Daily Charges Day 293 to Term End | $90 | $90 | ||
| Remaining Investment Base at Term End | $44,711 - $90 = $44,621 | $44,711 - $90 = $44,621 | ||
| Index Value at Term Start | 1000 | 1000 | ||
| Index Value at Term End | 860 | 860 | ||
| Negative Index Change | (860 - 1000) / 1000 = -14.00% | (860 - 1000) / 1000 = -14.00% | ||
| Maximum Loss | Loss of 10% | N/A | ||
| Negative Index Change Limited by Maximum Loss | -10.00% | N/A | ||
| Buffer at End of Term | N/A | 10% Buffer | ||
| Negative Index Change Absorbed by Buffer | N/A | -10.00% | ||
| Negative Index Change after Buffer | N/A | -14.00% - (-10.00%) = -4.00% | ||
| Vested Loss as a Percentage | -10.00% x 100% = 10.00% Vested Loss | -4.00% x 100% = 4.00% Vested Loss | ||
| Vested Loss in Dollars | $44,621 x 10.00% = $4,462 Vested Loss | $44,621 x 4.00% = $1,785 Vested Loss | ||
| Strategy Value at Term End | $44,621 - $4,462 = $40,159 | $44,621 - $1,785 = $42,836 | ||
| * | Note: The withdrawal is taken proportionally from each Indexed Strategy, based on the ratio of that Strategy’s value to the total value of all Indexed Strategies immediately before the withdrawal. In this example, on Day 219 the total value of all Indexed Strategies immediately before the withdrawal was $95,468 ($47,007 + $48,461). The S&P 500 Growth Strategy value was 49.24% of that total value ($47,007 / $95,468 = 49.24%), so 49.24% of the $3,500 withdrawal ($1,723) was taken from it. The S&P 500 Buffer Strategy value was 50.76% of that total value ($48,461 / $95,468 = 50.76%), so 50.76% of the $3,500 withdrawal ($1,777) was taken from it. |
In this example, on Day 292 the total value of all Indexed Strategies immediately before the withdrawal was $99,232 ($49,383 + $49,849). The S&P 500 Growth Strategy value was 49.77% of that total value ($49,383 / $99,232 = 49.77%), so 49.77% of the $4,000 withdrawal ($1,991) was taken from it. The S&P 500 Buffer Strategy value was 50.23% of that total value ($49,849 / $99,232 = 50.23%), so 50.23% of the $4,000 withdrawal ($2,009) was taken from it.
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S&P 500 Growth Strategy
In this example, the amount you realized on your $50,000 investment in the S&P 500 Growth Strategy at the end of the Term is $45,123 ($4,964 total withdrawal plus the $40,159 Strategy value at the end of the Term).
Had no withdrawal occurred, your S&P 500 Growth Strategy value at the end of the Term would have been $44,550 ($50,000 original Investment Base minus total Daily Charges of $500 and minus $4,950 loss ($49,500 x -10.00%)).
The amount realized of $45,123 exceeds this hypothetical Strategy value of $44,500 because:
| • | the gains at the time of the $2,500 and $4,000 withdrawals caused the reductions in the Investment Base to be less than the actual amounts withdrawn ($1,250 - $1,240 = $10 and $1,991 - $1,877 = $114); |
| • | the loss at the time of the $3,500 withdrawal caused the reduction in the Investment Base to be greater than the actual amount withdrawn ($1,723 - $1,779 = -$56); |
| • | the subsequent loss at the term end was calculated on a smaller Investment Base, which caused that loss to be less than the hypothetical loss ($4,950 - $4,462 = $488); and |
| • | the Daily Charges are lower than they would have been without the withdrawals by $17 because they are being applied to a decreased Investment Base. |
The result for the S&P 500 Growth Strategy ($10 + $114 - $56 + $488 + $17 = $573) is equal to the difference between the amount realized and the hypothetical Strategy value ($45,122 - $572 = $44,550).
S&P 500 Buffer Strategy
The amount you realized on your $50,000 investment in the S&P 500 Buffer Strategy at the end of the Term is $47,872 ($5,036 total withdrawals plus the $42,836 Strategy value at the end of the Term). Had no withdrawal occurred, your S&P 500 Buffer Strategy value at the end of the Term would have been $47,520 ($50,000 original Investment Base minus total Daily Charges of $500 and minus $1,980 loss ($49,500 x -4.00%)). This hypothetical Strategy value is lower than the amount realized for the same reasons described above for the S&P 500 Growth Strategy.
Your investment in the S&P 500 Buffer Strategy outperformed the S&P 500 Growth Strategy by $2,749 in this example. The amount you realized under the Buffer Strategy ($47,872) exceeds the amount you realized under the Growth Strategy ($45,123) for three reasons: (1) at the time of the Day 219 withdrawal, the Buffer absorbed all of the negative Index Change of -3.00%, while the Maximum Loss did not absorb any of the negative Index Change, thus resulting in more of the withdrawal being taken from the Buffer Strategy’s value even though the Investment Base of both strategies was reduced by the same amount, (2) at the time of the Day 292 withdrawal, the Index Change exceeded the Maximum Gain of both the Buffer Strategy and the Growth Strategy, but the Buffer Strategy had a higher Maximum Gain than the Growth Strategy, resulting in more of the withdrawal being taken from the Buffer Strategy’s value even though the Investment Base of both strategies was reduced by the same amount, and (3) at the end of the Term, the Buffer absorbed more of the negative Index Change (10 percentage points of the -14.00% change) than the Maximum Loss absorbed (4 percentage points of the -14.00% change), thus reducing the Growth Strategy value by more than the reduction in the Buffer Strategy value.
Strategy Renewals and Reallocations at Term End
Renewals
At the end of each Term of a given Indexed Strategy, we will apply the ending value of that Strategy to a new Term of that same Strategy. The amount applied to a new Term of the same Strategy will not include any amount that is moved to a different Strategy as part of a reallocation at the Term end.
Reallocations
At the end of a Term, you may reallocate the ending values of the Indexed Strategies for that Term among the available Strategies. You can only reallocate amounts from one Indexed Strategy to another at the end of the Term for which such amount is being held. You cannot make a reallocation at any other time.
We will send you written notice at least 30 days before the end of a Term to provide you with the opportunity to make a reallocation. We must receive your Request in Good Order for a reallocation on or before the last day of the Term. For example, if the end of a Term falls on a weekend, we must receive your request on the last Market Day before that weekend.
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Limitations
Reallocations must be in whole percentages that total 100%. We reserve the right to round amounts up or down to make whole percentages, and to reduce or increase amounts proportionally in order to total 100%.
Any renewal or reallocation will be subject to Strategy availability, minimums and maximums. Currently there are no limitations on the amounts that may be applied to an Indexed Strategy. We may establish minimum and maximum amounts or percentages that may be applied to a given Indexed Strategy for any future Term in our discretion. We will notify you of any such minimum or maximum.
The new Term of each Strategy is subject to the Maximum Gain in effect for that Strategy for that new Term. For example, the Maximum Gain for an Indexed Strategy for a new Term may be different than the Maximum Gain for that Indexed Strategy for the Term that is ending.
Availability of Strategies
At the end of a Term, we may eliminate a particular Indexed Strategy in our discretion. We will send you a written notice at least 30 days before the end of each Term with information about the Indexed Strategies that will be available for the next Term. At least 10 days before the next Term starts, we will post the Maximum Gains that will apply for that next Term on our website (www.massmutualascend.com/RILArates).
We are not obligated to offer any one particular Indexed Strategy. At the end of a Term, we can add or stop offering any Indexed Strategy at our discretion. For example, we could stop offering Growth/-10% Floor Strategies after the first seven Contract Years. We may limit the availability of an Indexed Strategy for a Term that would extend beyond the Annuity Payout Initiation Date. All Indexed Strategies may not be available in all states.
We will always offer at least one Conserve/0% Floor Strategy. No earnings are guaranteed for an Indexed Strategy.
If we add or stop offering a Indexed Strategy at the end of a Term, we will send you a notification. If funds are held in an Indexed Strategy that will no longer be available after the end of a Term, the funds will remain in that Indexed Strategy until the end of that Term.
If you have allocated money to an Indexed Strategy and that Indexed Strategy will not be available for the next Term, then the Bailout right will apply. In this case, you may withdraw money from that Indexed Strategy at the end of the current Term without incurring an Early Withdrawal Charge, or you may reallocate amounts to another Indexed Strategy.
Reallocations to Default Strategies
At the end of a Term, to the extent any amount cannot be applied to a given Indexed Strategy for the next Term because that Strategy is no longer available or the amount is under the minimum or over the maximum for that Strategy for the new Term, if you do not withdraw the funds pursuant to your Bailout Right or reallocate them to another Index Strategy, then we will reallocate the amount to a default Strategy. The default strategy will be a Conserve/0% Floor Strategy that we designate.
If the amount to be applied exceeds the maximum, then the default reallocation rules will apply only to the excess amount. For example, if the maximum amount for an Indexed Strategy is $50,000 and the amount to be applied is $54,000, then the default reallocation rules will apply only to the excess $4,000.
Surrender
You may Surrender your Contract at any time before the earlier of: (1) the Annuity Payout Initiation Date; or (2) a death for which a Death Benefit is payable. The right to Surrender may be restricted if your Contract is purchased under an employer plan subject to IRC Section 401 (pension, profit sharing, and 401(k) plans), IRC Section 403(b) (tax-sheltered annuity plans), or IRC Section 457(b) (governmental deferred compensation plans).
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A Surrender must be made by a Request in Good Order. The amount paid upon Surrender is the Surrender Value. If you Surrender your Contract, the Contract terminates.
Withdrawals
You may take a withdrawal from your Contract at any time before the earliest of: (1) the Annuity Payout Initiation Date; (2) a death for which a Death Benefit is payable; or (3) the date that this Contract is Surrendered. The right to withdraw may be restricted if your Contract is purchased under an employer plan subject to IRC Section 401 (pension, profit sharing, and 401(k) plans), IRC Section 403(b) (tax-sheltered annuity plans), or IRC Section 457(b) (governmental deferred compensation plans).
A withdrawal must be made by a Request in Good Order. The amount of any withdrawal must at least $500. If the withdrawal would reduce the Account Value to less than the minimum value of $5,000, we will treat the withdrawal request as a request to withdraw the maximum amount that may be taken without reducing your Account Value to less than $5,000.
We will withdraw funds from your Account Value as of the date on which we receive your Request in Good Order or any later specified effective date. Unless you instruct us otherwise by a Request in Good Order prior to the date of the withdrawal, a withdrawal will be taken in the following order:
| • | first proportionally from funds that then qualify for a waiver of the Early Withdrawal Charge pursuant to the Bailout right; |
| • | then from the Purchase Payment Account; and |
| • | then proportionally from Indexed Strategies. |
Effect of Withdrawals
A withdrawal reduces the Account Value, which in turn reduces the amount payable upon Surrender, applied to the Annuity Payout Benefit, or payable as the Death Benefit.
If an Early Withdrawal Charge applies to your withdrawal, you will receive the amount that you requested, and your Account Value will be reduced by the amount you receive plus the amount needed to pay the Early Withdrawal Charge. A withdrawal from an Indexed Strategy other than at the end of a Term also reduces the Investment Base used to calculate the Vested Gain or Loss for the Term. The reduction in the Investment Base for a withdrawal and any related Early Withdrawal Charge is proportional to the reduction in the Account Value. See Vested Gains and Losses section above.
Automatic Withdrawals
You may elect to automatically withdraw money from your Contract under any automatic withdrawal program that we offer. Your Account Value must be at least $10,000 in order to make an automatic withdrawal election. The minimum amount of each automatic withdrawal payment is $100. Automatic withdrawals will be taken from the Purchase Payment Account and Strategies of your Contract in the same order as any other withdrawal.
Subject to the terms and conditions of the automatic withdrawal program, you may begin or discontinue automatic withdrawals at any time. You must give us at least 30 days’ notice to change any automatic withdrawal instructions that are currently in place. Any request to begin, discontinue or change automatic withdrawals must be a Request in Good Order. We reserve the right to discontinue offering automatic withdrawals at any time.
Currently, we do not charge a fee to participate in an automatic withdrawal program. However, we reserve the right to impose an annual fee in such amount as we may then determine to be reasonable for participation in the automatic withdrawal program. If imposed, the fee will not exceed $30 annually.
Before electing an automatic withdrawal, you should consult with a financial advisor. Automatic withdrawals are similar to starting Annuity Payout Benefit payments, but will result in different taxation of payments and potentially a different amount of total payments over the life of your Contract. Automatic withdrawals will reduce the amount available under the Free Withdrawal Allowance described below. Unless a waiver applies, an Early Withdrawal Charge may apply to an automatic withdrawal during the Early Withdrawal Charge period.
Exchanges, Transfers, and Rollovers
An amount paid on a withdrawal or Surrender may be paid to or for another annuity or tax-qualified account in a tax-free exchange, transfer, or rollover to the extent allowed by federal tax law.
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Examples—Amount Available for Withdrawal
The following examples are intended to help you understand the amount that may be available for withdrawal in different market environments.
Example G: Amount Available for a Withdrawal When Index Rises
This example assumes:
| • | you allocate a $50,000 Purchase Payment to the S&P 500 Growth/-10% Floor Strategy and a $50,000 Purchase Payment to the S&P 500 10% Buffer Strategy; |
| • | the Contract Effective Date and the Term Start Date are both April 6, 2024; |
| • | the Maximum Gain for the initial Term of the S&P 500 Growth Strategy is 12% and the S&P 500 Buffer Strategy is 14%; |
| • | you request a $10,000 withdrawal from each Indexed Strategy on Day 146 of the Term (August 30, 2024); |
| • | you do not take any other withdrawals during the initial Term; and |
| • | the Term End Date is April 6, 2025. |
Term Start Date - April 6, 2024 | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||||||||
Strategy Value | $ | 50,000 | $ | 50,000 | See Footnote 1 below. | |||||
Investment Base | $ | 50,000 | $ | 50,000 | See Footnote 1 below. | |||||
Maximum Gain for Term | Gain of 12 | % | Gain of 14 | % | See Footnote 2 below. | |||||
Index Value | 1900 | 1900 | ||||||||
Withdrawal Date - August 30, 2024 | ||||||||||
Daily Charges through day 146 | $ | 201 | $ | 201 | See Footnote 3 below. | |||||
Remaining Investment Base on day 146 | $ | 49,799 | $ | 49,799 | See Footnote 4 below. | |||||
Index Value | 1976 | 1976 | ||||||||
Positive Index Change | 4.00 | % | 4.00 | % | See Footnote 5 below. | |||||
Positive Index Change Limited by Maximum Gain | 4.00 | % | 4.00 | % | See Footnote 6 below. | |||||
Vesting Factor on Day 146 | 25 | % | 25 | % | See Footnote 7 below. | |||||
Vested Gain as a Percentage | 1.00% Vested Gain | 1.00% Vested Gain | See Footnote 8 below. | |||||||
Vested Gain in Dollars | $ | 498 Vested Gain | $ | 498 Vested Gain | See Footnote 8 below. | |||||
Strategy Value before Withdrawal | $ | 50,297 | $ | 50,297 | See Footnote 9 below. | |||||
Amount of Withdrawal Requested | $ | 10,000 | $ | 10,000 | ||||||
Free Withdrawal Allowance | $ | 5,000 | $ | 5,000 | See Footnote 10 below. | |||||
Early Withdrawal Charge | $ | 495 | $ | 495 | See Footnote 11 below. | |||||
Total Amount Withdrawn | $ | 10,495 | $ | 10,495 | See Footnote 12 below. | |||||
Percentage Reduction in Strategy Value | 20.87 | % | 20.87 | % | See Footnote 13 below. | |||||
Proportional Reduction in Investment Base | $ | 10,393 | $ | 10,393 | See Footnote 13 below. | |||||
Remaining Investment Base after Withdrawal | $ | 39,406 | $ | 39,406 | See Footnote 14 below. | |||||
Strategy Value after Withdrawal | $ | 39,802 | $ | 39,802 | See Footnote 15 below. | |||||
Term End Date - April 6, 2025 | ||||||||||
Daily Charges withdrawal date to Term End | $ | 237 | $ | 237 | See Footnote 16 below. | |||||
Remaining Investment Base at Term End | $ | 39,169 | $ | 39,169 | See Footnote 17 below. | |||||
Index Value | 2033 | 2033 | ||||||||
Positive Index Change | 7.00 | % | 7.00 | % | See Footnote 18 below. | |||||
Positive Index Change Limited by Maximum Gain | 7.00 | % | 7.00 | % | See Footnote 19 below. | |||||
Vesting Factor at Term End | 100 | % | 100 | % | See Footnote 20 below. | |||||
Vested Gain as a Percentage | 7.00% Vested Gain | 7.00% Vested Gain | See Footnote 21 below. | |||||||
Vested Gain in Dollars | $ | 2,742 Vested Gain | $ | 2,742 Vested Gain | See Footnote 21 below. | |||||
Strategy Value at Term End | $ | 41,911 | $ | 41,911 | See Footnote 22 below. | |||||
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Footnote 1. On the Term Start Date, the Strategy value is equal to the amount applied to the Strategy on the Term Start Date. The amount applied on the Term Start Date is also the beginning Investment Base.
Footnote 2. The Maximum Gain is the largest positive Index Change for a Term taken into account to determine the Vested Gain. In this example, the Maximum Gain is 12% (for the Growth Strategy) or 14% (for the Buffer Strategy), which means it will not affect the calculation of Vested Gain unless the Index goes up more than 12% or 14%, respectively.
Footnote 3. The Daily Charge is the Investment Base from the prior day, multiplied by the Daily Charge rate. The amount in the table is the sum of the daily charges deducted from the Investment Base from the first day of the Term to the withdrawal date.
| Formula | Investment Base on the Term Start Date – (Investment Base on the Term Start Date x (1 – Daily Fee Rate) ^ number of days elapsed prior to withdrawal) | |
| Calculation | $50,000 - ($50,000 x (1 - 0.0000275348) ^ 146) = $201 |
Footnote 4. The remaining Investment Base is equal to the beginning Investment Base minus the sum of the Daily Charges and minus the proportional reduction for any prior withdrawals and related Early Withdrawal Charges.
| Formula | Beginning Investment Base – sum of Daily Charges since Term Start Date) – proportional reduction for any prior Withdrawals and related Early Withdrawal Charges = remaining Investment Base | |
| Calculation | $50,000 - $201 - $0 = $49,799 |
Footnote 5. The Index Change is equal to the percentage change in the Index Value measured from the Term Start Date to the withdrawal date.
| Formula | (Index Value on withdrawal date - Index Value on Term Start Date) / Index Value on Term Start Date | |
| Calculation | (1976 - 1900) / 1900 = 4.00% |
Footnote 6. In this example, the Index Change on the withdrawal date is not limited by the Maximum Gain because the Index did not go up more than 12% for the Growth Strategy or 14% for the Buffer Strategy.
Footnote 7. A Vesting Factor limits the portion of a positive Index Change that is taken into account to determine the Vested Gain. The Vesting Factor for a positive Index Change varies depending on the day of the Term. The Vesting Factor for a positive Index Change on any date within the first six months of a Term is 25%. The Vesting Factor for a positive Index Change on any date within the final six months of a Term (but before the Final Market Day of the Term) is 50%. The Vesting Factor for a positive Index Change on the final Market Day of the Term (or any date after that when the Vested Gain for the Term is calculated) is 100%. In this example, the Vesting Factor is 25% because the withdrawal date is a date within the first six months of the Term.
Footnote 8. When there is a positive Index Change, we use the following formulas to calculate the Vested Gain.
| Formula | Index Change limited by Maximum Gain x Vesting Factor = Vested Gain percentage | |
| Calculation | 4.00% x 25% = 1.00% | |
| Formula | Remaining Investment Base for the current Term x Vested Gain percentage = Vested Gain in dollars | |
| Calculation | $49,799 x 0.0100 = $498 | |
Footnote 9. In this example, there is a Vested Gain on the withdrawal date and you have not taken any withdrawals before that date. This means the Strategy value on the withdrawal date is the remaining Investment Base plus the Vested Gain as of that date.
| Formula | Remaining Investment Base + Vested Gain = Strategy value | |
| Calculation | $49,799 + $498 = $50,297 |
Footnote 10. The Free Withdrawal Allowance (FWA) for the first Contract Year is 10% of the Purchase Payment. The FWA for each subsequent Contract Year is 10% of the Account Value as of the most recent Contract Anniversary.
| Formula | Purchase Payment x 10% = FWA for first Contract Year | |
| Calculation | $50,000 x 0.10 = $5,000 |
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Footnote 11. The Early Withdrawal Charge that would apply to your withdrawal is equal to the amount subject to the charge multiplied by the Early Withdrawal Charge rate (EWC rate). The amount subject to the charge includes the charge itself. The amount subject to the charge does not include the FWA. The EWC rate depends on the Contract Year. In this example, the withdrawal occurs in the first Contract Year, when the EWC rate is 9%. The Early Withdrawal Charge rate declines after each of the first seven Contract Years. There is no Early Withdrawal Charge after Contract Year 7.
| Formula | [(Requested withdrawal - FWA) x EWC rate] / (1.00 - EWC rate) = Early Withdrawal Charge | |
| Calculation | [($10,000 - $5,000) x 0.09] / (1.00 - 0.09) = $5,000 x 0.09 / 0.91 = $400 / 0.91 = $495 |
Footnote 12. When you request a withdrawal, you receive the amount you requested. If an Early Withdrawal Charge applies, we also withdraw an amount equal to the charge. This means that the total amount withdrawn from your annuity is equal to the amount you requested plus the applicable Early Withdrawal Charge.
| Formula | Requested withdrawal + Early Withdrawal Charge = total amount withdrawn | |
| Calculation | $10,000 + $495 = $10,495 |
Footnote 13. When you take a withdrawal, the portion of the Investment Base taken to pay for the withdrawal is proportional to the reduction in the value of the Indexed Strategy due to the withdrawal. If there is a Vested Gain as of the withdrawal date, the reduction in the Investment Base will be less than the total amount withdrawn. This difference occurs because your withdrawal is credited with a proportionate share of the Vested Gain.
| Formula | Total amount withdrawn / Strategy value before withdrawal = percentage reduction in Strategy value | |
| Calculation | $10,495 / $50,297 = 20.87% | |
| Formula | Investment Base before withdrawal x percentage reduction in Strategy value = proportional reduction in Investment Base | |
| Calculation | $49,799 x 0.2087 = $10,393 | |
Footnote 14. On the withdrawal date after the withdrawal, the remaining Investment Base is equal to the Investment Base before the withdrawal minus the proportional reduction in the Investment Base for the withdrawal.
| Formula | Investment Base before withdrawal - proportional reduction in Investment Base for withdrawal = Investment Base after withdrawal | |
| Calculation | $49,799 - $10,393 = $39,406 |
Footnote 15. On the withdrawal date, the Strategy value after the withdrawal is equal to Strategy value before the withdrawal minus the total amount withdrawn.
| Formula | Strategy value before withdrawal - total amount withdrawn = Strategy value after withdrawal | |
| Calculation | $50,297 - $10,495 = $39,802 |
Footnote 16. The Daily Charge is the Investment Base from the prior day, multiplied by the Daily Charge rate. The amount in the table is the sum of the daily charges deducted from the Investment Base from the withdrawal date to the last day of the Term.
| Formula | Investment Base after Previous Withdrawal – (Investment Base after Previous Withdrawal x (1 – Daily Fee Rate) ^ Number of Days Elapsed Since Previous Withdrawal) = Daily Charges | |
| Calculation | $39,408 - ($39,408 x (1 - 0.0000275348) ^ 219) = $237 |
Footnote 17. The remaining Investment Base is equal to the beginning Investment Base minus the sum of the Daily Charges and minus the proportional reduction for any prior withdrawals and related Early Withdrawal Charges.
| Formula | Beginning Investment Base – sum of Daily Charges since Term Start Date) – proportional reduction for any prior Withdrawals and related Early Withdrawal Charges = remaining Investment Base | |
| Calculation | $50,000 – ($201 + $237) - $10,393 = $39,169 |
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Footnote 18. The Index Change on the Term End Date is equal to the percentage change in the Index Value measured from the Term Start Date to the Term End Date.
| Formula | (Index Value on Term End Date - Index Value on Term Start Date) / Index Value on Term Start Date | |
| Calculation | (2033 - 1900) / 1900 = 7.00% |
Footnote 19. In this example, the Index Change on the Term End Date is not limited by the Maximum Gain because the Index did not go up more than 12% for the Growth Strategy or 14% for the Buffer Strategy.
Footnote 20. The Vesting Factor for a positive Index Change on the Term End Date is 100%.
Footnote 21. When there is a positive Index Change, we use the following formulas to calculate the Vested Gain.
| Formula | Index Change limited by Maximum Gain x Vesting Factor = Vested Gain percentage | |
| Calculation | 7.00% x 100% = 7.00% | |
| Formula | Remaining Investment Base for the current Term x Vested Gain percentage = Vested Gain in dollars | |
| Calculation | $39,169 x 0.07 = $2,742 | |
Footnote 22. In this example, there is a Vested Gain on the Term End Date and you have taken a $10,000 withdrawal during the Term. This means the Strategy value on that date is the remaining Investment Base on the Term End Date plus the Vested Gain as of that date.
| Formula | Remaining Investment Base on Term End Date + Vested Gain = Strategy value on Term End Date | |
| Calculation | $39,169 + $2,742 = $41,911 |
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Example H: Amount Available for a Withdrawal When Index Falls
This example assumes:
| • | you allocate a $50,000 Purchase Payment to the S&P 500 Growth/-10% Floor Strategy and a $50,000 Purchase Payment to the S&P 500 10% Buffer Strategy; |
| • | the Contract Effective Date and the Term Start Date are both April 6, 2024; |
| • | you request a $10,000 withdrawal from each Indexed Strategy on Day 146 of the Term (August 30, 2024); |
| • | you do not take any other withdrawals during the initial Term; and |
| • | the Term End Date is April 6, 2025. |
Term Start Date—April 6, 2024 | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||||||||||
Strategy Value | $ | 50,000 | $ | 50,000 | See Footnote 1 below. | |||||||
Investment Base | $ | 50,000 | $ | 50,000 | See Footnote 1 below. | |||||||
Maximum Loss for Term | Loss of 10% | N/A | See Footnote 2 below. | |||||||||
End of Term Buffer | N/A | 10% Buffer | See Footnote 3 below. | |||||||||
Index Value | 1900 | 1900 | ||||||||||
Withdrawal Date—August 30, 2024 | ||||||||||||
Daily Charges through Day 146 | $ | 201 | $ | 201 | See Footnote 4 below. | |||||||
Remaining Investment Base on Day 146 | $ | 49,799 | $ | 49,799 | See Footnote 5 below. | |||||||
Index Value | 1786 | 1786 | ||||||||||
Negative Index Change | -6.00 | % | -6.00 | % | See Footnote 6 below. | |||||||
Negative Index Change Limited by Maximum Loss | -6.00 | % | N/A | See Footnote 7 below. | ||||||||
Buffer on Day 146 | N/A | 4% Buffer | See Footnote 8 below. | |||||||||
Vested Loss Percentage | -6.00% Vested Loss | -2.00% Vested Loss | See Footnote 9 below. | |||||||||
Vested Loss in Dollars | -$ | 2,988 Vested Loss | -$ | 996 Vested Loss | See Footnote 9 below. | |||||||
Strategy Value before Withdrawal | $ | 46,811 | $ | 48,803 | See Footnote 10 below. | |||||||
Amount of Withdrawal Requested | $ | 10,000 | $ | 10,000 | ||||||||
Free Withdrawal Allowance | $ | 5,000 | $ | 5,000 | See Footnote 11 below. | |||||||
Early Withdrawal Charge | $ | 495 | $ | 495 | See Footnote 12 below. | |||||||
Total Amount Withdrawn | $ | 10,495 | $ | 10,495 | See Footnote 13 below. | |||||||
Percentage Reduction in Strategy Value | 22.42 | % | 21.50 | % | See Footnote 14 below. | |||||||
Proportional Reduction in Investment Base | $ | 11,165 | $ | 10,707 | See Footnote 14 below. | |||||||
Remaining Investment Base after Withdrawal | $ | 38,634 | $ | 39,092 | See Footnote 15 below. | |||||||
Strategy Value after Withdrawal | $ | 36,316 | $ | 38,308 | See Footnote 16 below. | |||||||
Term End Date—April 6, 2025 | ||||||||||||
Daily Charges from Day 147 to Term End | $ | 232 | $ | 235 | See Footnote 17 below. | |||||||
Remaining Investment Base at Term End | $ | 38,402 | $ | 38,857 | See Footnote 18 below. | |||||||
Index Value | 1748 | 1748 | ||||||||||
Negative Index Change | -8.00 | % | -8.00 | % | See Footnote 19 below. | |||||||
Negative Index Change Limited by Maximum Loss | -8 | % | N/A | See Footnote 20 below. | ||||||||
Negative Index Change Limited by Buffer | N/A | 0.00 | % | See Footnote 21 below. | ||||||||
Vested Loss as a Percentage | 8.00% Vested Loss | 0.00% Vested Loss | See Footnote 22 below. | |||||||||
Vested Loss in Dollars | $ | 3,072 Vested Loss | $ | 0 Vested Loss | See Footnote 22 below. | |||||||
Strategy Value at Term End | $ | 35,330 | $ | 38,857 | See Footnote 23 below. | |||||||
Footnote 1. On the Term Start Date, the Strategy value is equal to the amount applied to the Strategy on the Term Start Date. The amount applied on the Term Start Date is also the beginning Investment Base.
Footnote 2. The Maximum Loss is the largest negative Index Change for a Term taken into account to determine the Vested Loss for Growth Strategies. In this example, the Maximum Loss is 10%, which means it will not affect the calculation of Vested Loss unless the Index goes down more than 10%.
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Footnote 3. The Buffer is the portion of a negative Index Change for a Term that is disregarded when determining a Vested Loss for a Buffer Strategy. The Buffer varies depending on the day of the Term. Once the final Market Day of the Term has been reached, the Buffer is 10%. Before the final Market Day, the Buffer is:
10% × 365 – N
365
where N is equal to the number of days remaining until the final Market Day of the Term.
Footnote 4. The Daily Charge is the Investment Base from the prior day, multiplied by the Daily Charge rate. The amount in the table is the sum of the daily charges deducted from the Investment Base from the first day of the Term to the withdrawal date.
Formula | Investment Base on the Term Start Date – (Investment Base on the Term Start Date x (1 – Daily Fee Rate) ^ number of days elapsed prior to withdrawal) | |
Calculation | $50,000 - ($50,000 x (1 - 0.0000275348) ^ 146) = $201 |
Footnote 5. The remaining Investment Base is equal to the beginning Investment Base minus the sum of the Daily Charges and minus the proportional reduction for any prior withdrawals and related Early Withdrawal Charges.
Formula | Beginning Investment Base – sum of Daily Charges since Term Start Date) – proportional reduction for any prior Withdrawals and related Early Withdrawal Charges = remaining Investment Base | |
Calculation | $50,000 - $201 - $0 = $49,799 |
Footnote 6. The Index Change is equal to the percentage change in the Index Value measured from the Term Start Date to the withdrawal date.
| Formula | (Index Value on withdrawal date - Index Value on Term Start Date) / Index Value on Term Start Date | |
| Calculation | (1786 - 1900) / 1900 = -6.0% |
Footnote 7. In this example, the negative Index Change on the withdrawal date is not limited by the Maximum Loss because the Index did not go down more than 10%.
Footnote 8. In this example, only a portion of the negative Index Change on the withdrawal date is limited by the Buffer because the Index went down more than 4.00%.
Footnote 9.
Vested Loss – Growth Strategies: When there is a negative Index Change, we use the following formulas to calculate the Vested Loss for Growth Strategies.
| Formula | Index Change limited by Maximum Loss = Vested Loss percentage | |
| Calculation | -6.00% = -6.00% | |
| Formula | Remaining Investment Base for the current Term x Vested Loss percentage = Vested Loss in dollars | |
| Calculation | $49,799 x -0.0600 = -$2,988 | |
Vested Loss – Buffer Strategies: When there is a negative Index Change, we use the following formulas to calculate the Vested Loss for Buffer Strategies.
| Formula | Index Change limited by Buffer = Vested Loss percentage | |
| Calculation | -6.00% Index Change – (-4.00%) Buffer = -2.00% | |
| Formula | Remaining Investment Base for the current Term x Vested Loss percentage = Vested Loss in dollars | |
| Calculation | $49,799 x -0.0200 = -$996 | |
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Footnote 10. In this example, there is a Vested Loss on the withdrawal date and you have not taken any withdrawals before that date. This means the Strategy value on the withdrawal date is the Investment Base, minus the Vested Loss as of that date.
| Formula | Investment Base - Vested Loss = Strategy value | |
| Calculation | For Growth Strategy: $49,799 - $2,988 = $46,811 | |
For Buffer Strategy: $49,799 - $996 = $48,803 |
Footnote 11. The Free Withdrawal Allowance (FWA) for the first Contract Year is 10% of the Purchase Payment. The FWA for each subsequent Contract Year is 10% of the Account Value as of the most recent Contract Anniversary.
| Formula | Purchase Payment x 10% = FWA for first Contract Year | |
| Calculation | $50,000 x 10% = $5,000 |
Footnote 12. The Early Withdrawal Charge that would apply to your withdrawal is equal to the amount subject to the charge multiplied by the Early Withdrawal Charge rate (EWC rate). The amount subject to the charge includes the charge itself. The amount subject to the charge does not include the FWA. The EWC rate depends on the Contract Year. In this example, the withdrawal occurs in the first Contract Year, when the EWC rate is 9%. The Early Withdrawal Charge rate declines after each of the first seven Contract Years. There is no Early Withdrawal Charge after Contract Year 7.
| Formula | [(Requested withdrawal - FWA) x EWC rate] / (1.00 - EWC rate) = Early Withdrawal Charge | |
| Calculation | [($10,000 - $5,000) x 0.09] / (1.00 - 0.09) = $5,000 x 0.09 / 0.91 = $400 / 0.91 = $495 |
Footnote 13. When you request a withdrawal, you receive the amount you requested. If an Early Withdrawal Charge applies, we also withdraw an amount equal to the charge. This means that the total amount withdrawn from your annuity is equal to the amount you requested plus the applicable Early Withdrawal Charge.
| Formula | Requested withdrawal + Early Withdrawal Charge = total amount withdrawn | |
| Calculation | $10,000 + $495 = $10,495 |
Footnote 14. When you take a withdrawal, the portion of the Investment Base taken to pay for the withdrawal is proportional to the reduction in the value of the Indexed Strategy due to the withdrawal. If there is a Vested Loss as of the withdrawal date, the reduction in the Investment Base will be more than the total amount withdrawn. This difference occurs because your withdrawal is charged with a proportionate share of the Vested Loss.
| Formula | total amount withdrawn / Strategy value before withdrawal = percentage reduction in Strategy value | |
| Calculation | For Growth Strategy: $10,495 / $46,811 = 22.42% For Buffer Strategy: $10,495 / $48,803 = 21.50% | |
| Formula | Investment Base before withdrawal x percentage reduction in Strategy value = proportional reduction in Investment Base | |
| Calculation | For Growth Strategy: $49,799 x 0.2242 = $11,165 For Buffer Strategy: $49,799 x 0.2150 = $10,707 | |
Footnote 15. On the withdrawal date, the remaining Investment Base after the withdrawal is equal to the Investment Base before the withdrawal minus the proportional reduction in the Investment Base for the withdrawal.
| Formula | Investment Base before withdrawal - proportional reduction in Investment Base for withdrawal = Investment Base after withdrawal | |
| Calculation | For Growth Strategy: $49,799 - $11,165 = $38,634 For Buffer Strategy: $49,799 - $10,707 = $39,092 |
Footnote 16. On the withdrawal date, the Strategy value after the withdrawal is equal to the Strategy value before the withdrawal minus the total amount withdrawn.
| Formula | Strategy value before withdrawal - total amount withdrawn = Strategy value after withdrawal | |
| Calculation | For Growth Strategy: $46,811 - $10,495 = $36,316 For Buffer Strategy: $48,803 - $10,495 = $38,308 |
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Footnote 17. The Daily Charge is the Investment Base from the prior day, multiplied by the Daily Charge rate. The amount in the table is the sum of the daily charges deducted from the Investment Base from the withdrawal date to the last day of the Term.
| Formula | Investment Base after Previous Withdrawal – (Investment Base after Previous Withdrawal x (1 – Daily Fee Rate) ^ Number of Days Elapsed Since Previous Withdrawal) = Daily Charges | |
| Calculation | For Growth Strategy: $38,634 – ($38,634 x (1 - 0.0000275348) ^ 219) = $233 For Buffer Strategy: $39,092 – ($39,092 x (1 - 0.0000275348) ^ 219) = $235 |
Footnote 18. The remaining Investment Base is equal to the beginning Investment Base minus the sum of the Daily Charges and minus the proportional reduction for any prior withdrawals and related Early Withdrawal Charges.
| Formula | Beginning Investment Base – sum of Daily Charges since Term Start Date) – proportional reduction for any prior Withdrawals and related Early Withdrawal Charges = remaining Investment Base | |
| Calculation | For Growth Strategy: $50,000 – ($201 + $232) – $11,165 = $38,402 For Buffer Strategy: $50,000 – ($201 + $235) – $10,707 = $38,857 |
Footnote 19. The Index Change on the Term End Date is equal to the percentage change in the Index Value measured from the Term Start Date to the Term End Date.
| Formula | (Index Value on Term End Date - Index Value on Term Start Date) / Index Value on Term Start Date | |
| Calculation | (1748 - 1900) / 1900 = -8.00% |
Footnote 20. For the Growth Strategy, in this example, the negative Index Change on the Term End Date is not limited by the Maximum Loss because the Index did not go down more than 10%.
Footnote 21. For the Buffer Strategy, in this example, the entire negative Index Change on the Term End Date is limited by the Buffer because the Index went down less than 10%.
Footnote 22.
Vested Loss – Growth Strategies: When there is a negative Index Change, we use the following formula to calculate the Vested Loss percentage for Growth Strategies.
| Formula | Index Change limited by Maximum Loss = Vested Loss percentage | |
| Calculation | -8.00% = -8.00% | |
| Formula | Remaining Investment Base for the current Term x Vested Loss percentage = Vested Loss in dollars | |
| Calculation | $38,402 × -0.0800 = -$3,072 | |
Vested Loss – Buffer Strategies: When there is a negative Index Change, we use the following formula to calculate the Vested Loss percentage for Buffer Strategies.
| Formula | Index Change limited by Buffer = Vested Loss percentage | |
| Calculation | -8% Index Change > -10% Buffer = 0% | |
| Formula | Remaining Investment Base for the current Term x Vested Loss percentage = Vested Loss in dollars | |
| Calculation | $38,857 × 0.0000 = $0 | |
Footnote 23. In this example, there is a Vested Loss on the Term End Date for the Growth Strategy and you have taken a $10,000 withdrawal during the Term. This means the Strategy value on that date is the remaining Investment Base on the Term End Date minus the Vested Loss as of that date.
| Formula | Remaining Investment Base on Term End Date - Vested Loss = Strategy value | |
| Calculation | $38,402 - $3,072 = $35,330 |
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In this example, there is no Vested Loss on the Term End Date for the Buffer Strategy and you have taken a $10,000 withdrawal during the Term. This means the Strategy value on that date is the remaining Investment Base on the Term End Date.
Formula | Remaining Investment Base on Term End Date = Strategy value | |
Calculation | $38,857 = $38,857 |
We impose a Daily Charge to reimburse us for contract sales expenses, including commissions and other distribution, promotion, and acquisition expenses, and to help us maximize Indexed Strategy Maximum Gains. The Daily Charge is calculated using a daily rate that compounds at 1.00% per year.
For an Indexed Strategy, it is calculated as a percentage of the remaining Investment Base and deducted daily.
Example I: Amount Available for a Withdrawal When Index Rises Less Than Daily Charge Rate
The following example is intended to help you understand the amount that may be available for withdrawal when the Index rises at a rate lower than the amount of the Daily Charge over a Term. In such a scenario, Strategy Values will be lower at the end of a Term than they were at the beginning of the Term, despite the fact that the Index rose over that period.
Term Start Date—April 6, 2024 | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||||||||
Strategy Value | $ | 50,000 | $ | 50,000 | See Footnote 1 below. | |||||
Investment Base | $ | 50,000 | $ | 50,000 | See Footnote 1 below. | |||||
Maximum Gain for Term | Gain of 12 | % | Gain of 14 | % | See Footnote 2 below. | |||||
Maximum Loss for Term | Loss of 10 | % | N/A | See Footnote 3 below. | ||||||
End of Term Buffer | N/A | 10% Buffer | See Footnote 4 below. | |||||||
Index Value | 2000 | 2000 | ||||||||
Term End Date—April 6, 2025 | ||||||||||
Daily Charges through Term End | $ | 500 | $ | 500 | See Footnote 5 below. | |||||
Remaining Investment Base at Term End | $ | 49,500 | $ | 49,500 | See Footnote 6 below | |||||
Index Value | 2005 | 2005 | ||||||||
Positive Index Change | 0.25 | % | 0.25 | % | See Footnote 7 below. | |||||
Positive Index Change Limited by Maximum Gain | 0.25 | % | 0.25 | % | See Footnote 8 below. | |||||
Vesting Factor at Term End | 100 | % | 100 | % | See Footnote 9 below. | |||||
Vested Gain as a Percentage | 0.25% Vested Gain | 0.25% Vested Gain | See Footnote 10 below. | |||||||
Vested Gain in Dollars | $ | 124 Vested Gain | $ | 124 Vested Gain | See Footnote 10 below. | |||||
Strategy Value at Term End | $ | 49,624 | $ | 49,624 | See Footnote 11 below. | |||||
Footnote 1. On the Term Start Date, the Strategy value is equal to the amount applied to the Strategy on the Term Start Date. The amount applied on the Term Start Date is also the beginning Investment Base.
Footnote 2. The Maximum Gain is the largest positive Index Change for a Term taken into account to determine the Vested Gain. In this example, the Maximum Gain is 12% (for the Growth Strategy) or 14% (for the Buffer Strategy), which means it will not affect the calculation of Vested Gain unless the Index goes up more than 12% or 14%, respectively.
Footnote 3. The Maximum Loss is the largest negative Index Change for a Term taken into account to determine the Vested Loss for Growth Strategies. In this example, the Maximum Loss is 10%, which means it will not affect the calculation of Vested Loss unless the Index goes down more than 10%.
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Footnote 4. The Buffer is the portion of a negative Index Change for a Term that is disregarded when determining a Vested Loss for a Buffer Strategy. The Buffer varies depending on the day of the Term. Once the final Market Day of the Term has been reached, the Buffer is 10%. Before the final Market Day, the Buffer is:
10% x 365 – N
365
where N is equal to the number of days remaining until the final Market Day of the Term.
Footnote 5. When no withdrawals are taken over the course of a Term, the Daily Charges through the Term End Date are equal to the Investment Base on the Term Start Date times the annual rate at which the Daily Charge compounds.
| Formula | Investment Base on Term Start Date × annual rate | |
| Calculation | $50,000 × 1.00% = $500 |
Footnote 6. The remaining Investment Base is equal to the beginning Investment Base minus the sum of the Daily Charges and minus the proportional reduction for any prior withdrawals and related Early Withdrawal Charges.
| Formula | Beginning Investment Base – sum of Daily Charges since Term Start Date) – proportional reduction for any prior Withdrawals and related Early Withdrawal Charges = remaining Investment Base | |
| Calculation | $50,000 - $500 - $0 = $49,500 |
Footnote 7. The Index Change on the Term End Date is equal to the percentage change in the Index Value measured from the Term Start Date to the Term End Date.
| Formula | (Index Value on Term End Date—Index Value on Term Start Date) / Index Value on Term Start Date | |
| Calculation | (2005 - 2000) / 2000 = 0.25% |
Footnote 8. In this example, the Index Change on the Term End Date is not limited by the Maximum Gain because the Index did not go up more than 12% for the Growth Strategy or 14% for the Buffer Strategy.
Footnote 9. The Vesting Factor for a positive Index Change on the Term End Date is 100%.
Footnote 10. When there is a positive Index Change, we use the following formulas to calculate the Vested Gain.
| Formula | Index Change limited by Maximum Gain x Vesting Factor = Vested Gain percentage | |
| Calculation | 0.25% × 100% = 0.25% | |
| Formula | Remaining Investment Base for the current Term x Vested Gain percentage = Vested Gain in dollars | |
| Calculation | $49,500 × 0.0025 = $124 | |
Footnote 11. In this example, there is a Vested Gain on the Term End Date. This means the Strategy value on that date is the remaining Investment Base on the Term End Date plus the Vested Gain as of that date.
| Formula | Remaining Investment Base on Term End Date + Vested Gain = Strategy value on Term End Date | |
| Calculation | $49,500 + $124 = $49,624 |
We impose an Early Withdrawal Charge to reimburse us for contract sales expenses, including commissions and other distribution, promotion, and acquisition expenses, and to allow us to support higher Indexed Strategy Maximum Gains by investing assets for a longer duration.
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The Early Withdrawal Charge applies if, during the first seven Contract Years, you take a withdrawal from your Contract or Surrender it. After that, the Early Withdrawal Charge does not apply.
53
The Early Withdrawal Charge is equal to the amount that is subject to the charge multiplied by the Early Withdrawal Charge rate.
| • | If you take a withdrawal from your Contract, the amount subject to the charge is the amount you withdraw plus any amount needed to pay the Early Withdrawal Charge. |
| • | If you Surrender your Contract, the amount subject to the charge is your Account Value. |
| • | The amount subject to the charge will not include: (1) the Free Withdrawal Allowance; (2) the amount, if any, that qualifies under the Bailout right; or (3) the amount, if any, that qualifies for another waiver as described below. |
The Early Withdrawal Charge rate depends on how long you own your Contract. The rate schedule is set out below.
Contract Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8+ | ||||||||||||||||||||||||
Early Withdrawal Charge Rate | 9 | % | 8 | % | 7 | % | 6 | % | 5 | % | 4 | % | 2 | % | 0 | % | ||||||||||||||||
Example. You Surrender your annuity in Contract Year 6 when your Account Value is $100,000. You have already used your Free Withdrawal Allowance for the year and no other exception applies. We take an Early Withdrawal Charge of $4,000 ($100,000 x 0.04) and you receive $96,000.
Example. You take a $10,000 withdrawal from your annuity in Contract Year 6 when your Account Value is $100,000. You have already used your Free Withdrawal Allowance for the year and no other exception applies. We take an Early Withdrawal Charge of $400 ($10,000 x 0.04) and you receive $9,600.
An Early Withdrawal Charge may apply if you take a withdrawal during the first seven Contract Years. That charge will reduce Strategy values, including the value of a Conserve/0% Floor Strategy.
Free Withdrawal Allowance
The Free Withdrawal Allowance lets you withdraw some money from your Contract without the imposition of the Early Withdrawal Charge. For the first Contract Year, the Free Withdrawal Allowance is an amount equal to 10% of the total Purchase Payments received by us. For each subsequent Contract Year, the Free Withdrawal Allowance is equal to 10% of the Account Value as of the most recent Contract Anniversary. The Free Withdrawal Allowance is non-cumulative and you may not carry over any unused portion to other Contract Years.
For qualified annuities, the Free Withdrawal Allowance will be large enough to cover your required minimum distribution to age 93. However, if you have used your Free Withdrawal Allowance to facilitate a transfer or rollover, then an Early Withdrawal Charge may apply to a required minimum distribution.
Example. Your Account Value as of the end of Contract Year 3 is $200,000. Your Free Withdrawal Allowance for Contract Year 4 is $20,000 ($200,000 x 0.10). If you take a withdrawal of $50,000 at the beginning of Contract Year 4, the Early Withdrawal Charge will not apply to the first $20,000 of the withdrawal, but will apply to the remaining $30,000 plus the amount needed to pay the Early Withdrawal Charge. If you take another withdrawal later in Contract Year 4, the Early Withdrawal Charge applies to the entire withdrawal plus the amount needed to pay the Early Withdrawal Charge.
Early Withdrawal Charge Waivers
Bailout Right. We will waive the Early Withdrawal Charge on amounts that you withdraw from this Contract at the end of a current Term if the amounts are held under an Indexed Strategy for that Term and either:
| • | the Maximum Gain for the next Term of that Strategy is less than its Bailout Trigger for the current Term; or |
| • | that Strategy will not be available for the next Term. |
Each current Term of an Indexed Strategy has its own Bailout Trigger, even if no funds are held under the Indexed Strategy for that Term. If your Contract has multiple Purchase Payments, the Bailout Trigger for one current Term of an Indexed Strategy may be different from the Bailout Trigger for another current Term of the same Indexed Strategy that started on a different date.
The initial Bailout Trigger for each Indexed Strategy is set out on the Contract Specifications page. It is less than the Maximum Gain that we anticipate setting for the initial Term of that Indexed Strategy.
For each subsequent Term, the Bailout Trigger is the lesser of:
| • | the Bailout Trigger for the Term that ended on the date the current Term began; or |
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| • | the Maximum Gain set for the current Term. |
This means that:
| • | if the Maximum Gain is never set below the Bailout Trigger, then the Bailout Trigger will not change; and |
| • | if the Maximum Gain is ever set below the Bailout Trigger, then the Bailout Trigger will be reduced for the new Term and for each Term that starts on an anniversary of that Term start date. |
The Bailout Trigger will never increase from one Term to the next.
Example. The Bailout Trigger for the initial Term of an Indexed Strategy is 6.5%.
| • | If we set the Maximum Gain for the next Term of that Indexed Strategy at 7.5%, then you will not qualify for a waiver of the Early Withdrawal Charge at the end of the current Term and the Bailout Trigger for that next Term will continue to be 6.5%. |
| • | If we set the Maximum Gain for the next Term of that Indexed Strategy at 5.5%, then you will qualify for a waiver of the Early Withdrawal Charge at the end of the current Term and the Bailout Trigger for that next Term will change to 5.5%. |
If this waiver will apply to an Indexed Strategy at the end of a Term, we will notify you in writing at least 30 days before that Term ends. You may elect a withdrawal under the Bailout right by a Request in Good Order. We must receive your request before the end of the applicable Term.
This waiver will only apply to the amount held under the Indexed Strategy for the Term that is ending. It will not apply to amounts then held under a different Strategy, or to amounts held under the same Strategy for a Term ending on a different date. You may not carry over any unused part of the waiver from one Term to the next.
If you withdraw funds that qualify for a waiver under the Bailout right, the withdrawal will reduce the Free Withdrawal Allowance for the applicable Contract Year. For example, if the amount you withdraw that qualifies for a waiver under the Bailout right in Contract Year 4 is more than 10% of your Account Value as of the most recent Contract Anniversary, then no Free Withdrawal Allowance will be available for subsequent withdrawals in Contract Year 4.
Instead of withdrawing amounts that qualify for a waiver under the Bailout right, you may wish to reallocate those amounts to a different Strategy. A Request in Good Order to reallocate funds must be received by us before the end of the applicable Term.
Extended Care Waiver. (Rider form R1462316NW-Waiver of Early Withdrawal Charges for Extended Care Rider). We will waive the Early Withdrawal Charge that would otherwise apply if you make a Request in Good Order and:
| • | your Contract is modified by the Extended Care Waiver Rider; |
| • | you are confined in a long-term care facility or hospital and the confinement is prescribed by a physician and is medically necessary; |
| • | the first day of the confinement is at least one year after the Contract Effective Date; and |
| • | the confinement has continued for a period of at least 90 consecutive days. |
You must provide us with satisfactory proof that you meet these conditions before the date of the withdrawal or Surrender. There is no charge for this rider, but it may not be available in all states. In California, the Extended Care Waiver Rider has been replaced with the Waiver of Early Withdrawal Charges for Facility Care or Home Care or Community-Based Services Rider, which provides for a waiver of Early Withdrawal Charges under an expanded variety of circumstances. Please see the rider for details.
Terminal Illness Waiver. (Rider form R1462416NW-Waiver of Early Withdrawal Charges Upon Terminal Illness Rider). We will waive the Early Withdrawal Charge that would otherwise apply if you make a Request in Good Order and:
| • | your Contract is modified by the Waiver of Early Withdrawal Charges upon Terminal Illness Rider; |
| • | you are diagnosed with a terminal illness by a physician and, as a result of the terminal illness, you have a life expectancy of less than 12 months from the date of diagnosis; and |
| • | the diagnosis is rendered by a physician more than one year after the Contract Effective Date. |
You must provide us with satisfactory proof that you meet these conditions before the date of the withdrawal or Surrender. There is no charge for this rider, but it may not be available in all states. Please see the rider for details.
Required Minimum Distributions. No special waiver of Early Withdrawal Charges exists for required minimum distributions except as may be offered from time to time under an automated payment program.
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State Limitations. In some states, our ability to waive fees or charges may be limited by applicable laws, regulations or administrative positions. Please see the “State Variations” section below for information on additional state variations.
Under the Contract you may receive regular Annuity Payout Benefit payments for the duration of the period that you select. Once Annuity Payout Benefit payments start, you can no longer Surrender the Contract or take a withdrawal, no Death Benefit will be payable under your Contract, and your Beneficiary designations will no longer apply. The amount payable after death, if any, is governed by the Payout Option you select.
The Annuity Payout Benefit is payable if the Annuity Payout Initiation Date is reached before the earlier of: (1) a death for which a Death Benefit is payable; or (2) the date that this Contract is Surrendered.
Annuity Payout Initiation Date
The Annuity Payout Initiation Date is the first day of the first payment interval for which payment of the Annuity Payout Benefit is to be made. Annuity Payout Benefit payments are made at the end of each payment interval. This means that for annual payments, the first payment will be made one year after the Annuity Payout Initiation Date.
You may select the Annuity Payout Initiation Date by a Request in Good Order. We must receive your request before the last Market Close on or before the Annuity Payout Initiation Date you selected and at least 30 days before the first Annuity Payout Benefit payment is to be made.
| • | The earliest Annuity Payout Initiation you may select is the first Contract Anniversary. |
| • | Unless we agree, the latest Annuity Payout Initiation Date you may select is the Contract Anniversary following your 95th birthday or the 95th birthday, of a joint owner, if earlier. If the Owner is not a human being such as a trust or a corporation, then the Annuity Payout Initiation Date may not be later than the Contract Anniversary following the 95th birthday of the eldest Annuitant, unless we agree. |
The earliest permitted date and the latest permitted date for the Annuity Payout Initiation Date are set out on your Contract Specifications Page. The latest permitted date may change if an Owner changes.
If you do not select an Annuity Payout Initiation Date by the latest permitted date, we may select it for you. We will notify you in writing at least 45 days before the date we select. We will give you an opportunity to select an earlier date.
Annuity Payout Amount
The amount of each payment under the Annuity Payout Benefit is determined on the Annuity Payout Initiation Date based on the Annuity Payout Value on that date, the Payout Option that applies, and the payment interval.
The Annuity Payout Value is the amount that can be applied to the Annuity Payout Benefit is equal to: (1) the Account Value on the Annuity Payout Initiation Date; minus (2) premium tax or other taxes not previously deducted.
Form of Annuity Payout Benefit
The Annuity Payout Benefit is paid in the form of annual payments as a Life Payout with Payments for at Least a Fixed Period. That fixed period will be 10 years or, if fewer, the maximum number of whole years permitted by any tax qualification endorsement.
In place of that, you may elect to have the Annuity Payout Benefit paid in any form of Payout Option that is available under your Contract. The available Payout Options are described in the Payout Options section below. You may elect a Payout Option by a Request in Good Order. We must receive your request before the last Market Close on or before the Annuity Payout Initiation Date and at least 30 days before the first Annuity Payout Benefit payment is to be made.
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Payee for Annuity Payout Benefit
Payment of the Annuity Payout Benefit generally is made to the surviving Owner(s) as the payee(s). In place of that, the surviving Owner(s) may elect for payment to be made as a tax-free exchange, transfer, or rollover, or for payment to be made to the Annuitant. That election must be made by a Request in Good Order that we receive at least 30 days before the payment date.
Payments that become due after the death of the payee are made to:
| • | the surviving Owner(s); or if none |
| • | then to the surviving contingent payee(s) designated by the surviving Owner(s); or if none; |
| • | the estate of the last payee who received payments. |
The portion of any Annuity Payout Benefit remaining after the death of an Owner or Annuitant must be paid at least as rapidly as payments were being made at the time of such death.
You may designate a contingent payee by a Request in Good Order. If you designate your spouse as a contingent payee and your marriage ends before your death, then we will treat your former spouse as having predeceased you except in the following situations: (1) if a court order provides that the former spouse’s rights as a contingent payee are to continue; or (2) if the former spouse remains or becomes an Owner.
A Death Benefit is payable under your Contract if you die before the Annuity Payout Initiation Date and before the Contract is Surrendered. If your spouse becomes a successor owner of the Contract, no Death Benefit will be payable on account of your death.
When the Owner is a non-natural person, a Death Benefit is payable under the Contract if the Annuitant dies before the Annuity Payout Initiation Date and before the Contract is Surrendered. For this purpose, a non-natural person is a trust, custodial account, corporation, limited liability company, partnership, or other entity.
Only one Death Benefit will be paid under the Contract. If a Death Benefit becomes payable, it will be in place of all other benefits under the Contract, and all other rights under this Contract will terminate except for rights related to the Death Benefit.
Death Benefit Payout Date
| • | If the Death Benefit is to be paid as a lump sum, then it will be paid as soon as practicable after the receipt of proof of death and a Request in Good Order for a lump sum payment. |
| • | If the Death Benefit is to be paid under a Payout Option, then we will apply the Death Benefit Value to a Payout Option as soon as practicable after receipt of proof of death and a Request in Good Order. That application date will be the first day of the first payment interval for which a payment is to be made. Death Benefit payments under a Payout Option are made at the end of each payment interval. This means that, for annual payments, the first payment will be made one year after that application date. |
Death Benefit Amount
| • | If the Death Benefit is paid in a lump sum, then it is equal to the Death Benefit Value, increased by any additional post- death interest as required by law. |
| • | If the Death Benefit will be paid as a series of periodic payments under a Payout Option, then the amount of each payment under the Death Benefit is determined on the date that the Death Benefit Value is applied to the Payout Option. The amount or each payment will be based on the Death Benefit Value (increased by any additional post-death interest as required by law to the date it is applied to the Payout Option), the Payout Option that applies, and the payment interval. |
Death Benefit Value
The Death Benefit Value is the greater of:
| • | the Account Value determined as of the date that the Death Benefit Value is determined; or |
| • | the Purchase Payments, reduced proportionally for all withdrawals, but not including amounts applied to pay Early Withdrawal Charges (the “Purchase Payment base”). |
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In either case, the Death Benefit Value is reduced by premium tax or other taxes not previously deducted.
The reduction in your Purchase Payment base for withdrawals will be in the same proportion that your Account Value was reduced on the date of the withdrawal. A proportional reduction in your Purchase Payment base could be larger than the dollar amount of your withdrawal.
Example. Here is an example of how we calculate a proportional reduction of your Purchase Payment base. In this example, we assume you take an $8,000 withdrawal. To simplify the example, we also assume no Early Withdrawal Charge, no premium tax is deducted, and no additional post-death interest is added.
| Before Withdrawal | After Withdrawal | Explanation | ||||||||
Account Value | $ | 100,000 | $ | 92,000 | Your withdrawal reduces your Account Value by $8,000 (which is an 8% reduction in your Account Value). $8,000 / $100,000 = 8% | |||||
Purchase Payment Base for Death Benefit | $ | 120,000 | $ | 110,400 | After the withdrawal, the Purchase Payment base for the Death Benefit is also reduced by 8% or $9,600. $120,000 x 0.08 = $9,600 | |||||
Determination Date
The date that the Death Benefit Value is determined is the earlier of: (1) the first anniversary of the date of death; or (2) the date that we have received both proof of death and Requests in Good Order with instructions as to the form of Death Benefit from all Beneficiaries. Thus, in many cases where there are multiple Beneficiaries, the date that the Death Benefit Value is determined will be the date when the last Beneficiary submits the necessary Request in Good Order or the first anniversary of death. Until then, the Contract values remain in the Indexed Strategies and the Indexed Strategy values may fluctuate. This risk is borne by the Beneficiaries.
Proof of Death
Before making payment of a Death Benefit, or any other payment or transfer of ownership rights that depends on the death of a specified person, we will require proof of death. We may delay making any payment until it is received. For this purpose, proof of death is:
| • | a certified copy of a death certificate showing the cause and manner of death; |
| • | a certified copy of a decree that is made by a court of competent jurisdiction as to the finding of death; or |
| • | other proof that is satisfactory to us. |
Form of Death Benefit
The Death Benefit is paid in the form of annual payments for a fixed period of two years.
In place of that, you may elect to have the Death Benefit paid in one lump sum or in any form of Payout Option that is available under your Contract. The available Payout Options are described in the Payout Options section below. There is no additional charge associated with this election.
You may make an election by a Request in Good Order. We must receive your request on or before the date of death for which a Death Benefit is payable. If you do not make such an election, the Beneficiary may make that election after the date of death. The Beneficiary’s election must be made by a Request in Good Order that is received by us no later than the date that the Death Benefit Value is applied to a Payout Option and at least 30 days before the date of the first payment to be made.
Additional Rules
Any election is subject to the Death Benefit Distribution Rules described below.
A Payout Option that is contingent on life is based on the life of the Beneficiary or, in some cases, the life of a person to whom the Beneficiary is obligated.
We will pay the Death Benefit as a lump sum rather than as payments under a Payout Option if: (1) the Death Benefit is less than $2,000; or (2) as of the date that the Death Benefit Value is to be applied to a Payout Option, the Death Benefit Distribution Rules do not allow a two-year payout.
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Payee of Death Benefit Payments
Death Benefit payments generally are made to the Beneficiary as the payee.
In place of that, the Beneficiary may elect to have payments made:
| • | as a tax-free exchange, transfer, or rollover to or for an annuity or tax-qualified account as permitted by federal tax law; or |
| • | in cases where the Beneficiary is an estate, trust, custodial account, corporation, limited liability company, partnership, or other entity, to a person to whom the Beneficiary is obligated to make corresponding payments. |
Payments that become due after the death of the Beneficiary are made to:
| • | the contingent payee designated as part of a Death Benefit Payout Option elected by you; or if none |
| • | then to a contingent payee designated by the Beneficiary; or if none |
| • | the estate of the last payee who received payments. |
Such payments are subject to the Death Benefit Distribution Rules described below.
You may designate a contingent payee by a Request in Good Order. A Beneficiary may make or change a payee or contingent payee, except a Beneficiary may not change a designation made as part of a Payout Option election made by you for the Death Benefit. If the Beneficiary designates his or her spouse as a contingent payee and their marriage ends before the Beneficiary’s death, then we will treat the former spouse as having predeceased the Beneficiary except to the extent a court order provides that the former spouse’s rights as a contingent payee are to continue.
Death Benefit Distribution Rules
The Death Benefit Distribution Rules are summarized below.
| • | For a Tax Qualified Contract. The Death Benefit must be paid in accordance with the tax qualification endorsement. |
| • | For a Nonqualified Contract. The Death Benefit must be paid either: (1) in full within five years of the date of death; or (2) over the life of the Beneficiary or over a period certain not exceeding the Beneficiary’s life expectancy, with payments at least annually, and with the first payment made within one year of the date of death. |
The standard Payout Options are described below.
Payments under each standard Payout Option are made at the end of a payment interval. For example, if the Annuity Payout Initiation Date is October 31, 2029 and you select annual payments, then the first payment will be paid as of October 31, 2030.
Option | Description for Annuity Payout Benefit | Description for Death Benefit | ||
| Fixed Period Payout | We will make periodic payments to you, or to the Annuitant, if you direct, for the fixed period of time that you select.
• If the payee dies before the end of the fixed period, then we will make periodic payments to the surviving owner(s), or if none, then to the surviving contingent payee(s), or if none, then to the estate of the last payee who received payments.
• In all cases, payments will stop at the end of the fixed period.
For a nonqualified contract, fixed periods shorter than 10 years are not available. For a tax-qualified contract, the only fixed period available is 10 years. | We will make periodic payments to the Beneficiary for the fixed period of time that you or the Beneficiary selects.
• If the Beneficiary dies before the end of the fixed period, then we will make periodic payments to the contingent payee designated as part of any Death Benefit Payout Option that you have elected. If no such contingent payee is surviving, then such payments will be made to a contingent payee designated by the Beneficiary. If there is no contingent payee surviving, then such payments will be made to the estate of the last payee who received payments.
• In all cases, payments will stop at the end of the fixed period.
The fixed period cannot exceed the life expectancy of the Beneficiary. For a tax-qualified contract, the fixed period also cannot exceed 10 years. |
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Option | Description for Annuity Payout Benefit | Description for Death Benefit | ||
| Life Payout | We will make periodic payments to you, or to the Annuitant, if you direct, for as long as the Annuitant lives.
Payments will stop on the death of the Annuitant. This means that, even if we have made only one payment when the Annuitant dies, payments will stop.
If the Annuitant dies after the Annuity Payout Initiation Date but before the first payment, a Life Payout will not provide any benefit at all. In that case, we will reverse the Annuity Benefit Payout election and treat the Contract as if the Annuity Payout Initiation Date had not yet been reached.
• If the Owner is living, this treatment will generally allow the Owner to choose between continuing the Contract as a deferred annuity or electing a new Annuity Payout Initiation Date and another Payout Option.
• If the Annuitant’s death before the Annuity Payout Initiation Date would give rise to a Death Benefit, then the Death Benefit will be available. | We will make periodic payments to the Beneficiary for as long as the Beneficiary lives.
Payments will stop on the death of the Beneficiary. This means that, even if we have made only one payment when the Beneficiary dies, payments will stop.
If the Beneficiary dies after the Death Benefit is applied to the Payout Option but before the first payment, a Life Payout will not provide any benefit at all. In that case, we will reverse the Payout Option election and allow the Beneficiary’s estate to choose a new Payout Option or to take the Death Benefit as a lump sum.
For a tax-qualified contract, a Life Payout is not available to all Beneficiaries. | ||
| Life Payout with Payments for at Least a Fixed Period | We will make periodic payments to you, or to the Annuitant, if you direct, for as long as the Annuitant lives.
• If the Annuitant dies after the end of the fixed period you selected, then payments will stop on the death of the Annuitant.
• If the Annuitant dies before the end of the fixed period you selected, then we will make periodic payments to the surviving owner(s), or if none, then to the surviving contingent payee(s), or if none, then to the estate of the last payee who received payments. In this case, payments will stop at the end of the fixed period you selected.
For a tax-qualified contract, fixed periods longer than 10 years are not available. | We will make periodic payments to the Beneficiary for as long as the Beneficiary lives.
• If the Beneficiary dies after the end of the fixed period selected, then payments will stop on the death of the Beneficiary.
• If the Beneficiary dies before the end of the fixed period you or the Beneficiary selected, then we will make periodic payments to the contingent payee designated as part of any Death Benefit Payout Option that you have elected. If no such contingent payee is surviving, then such payments will be made to a contingent payee designated by the Beneficiary. If there is no contingent payee surviving, then such payments will be made to the estate of the last payee who received payments. In this case, payments will stop at the end of the fixed period you or the Beneficiary selected.
The fixed period cannot exceed the life expectancy of the Beneficiary. For a tax-qualified contract, a Life Payout with Payments for at Least a Fixed Period is not available to all Beneficiaries, and the fixed period also cannot exceed 10 years. | ||
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Option | Description for Annuity Payout Benefit | Description for Death Benefit | ||
| Joint and One-Half Survivor Payout | We will make periodic payments to you, or to the primary Annuitant, if you direct, for as long as the primary Annuitant lives.
• If the primary Annuitant dies and the secondary Annuitant does not survive the primary Annuitant, then payments will stop on the death of the primary Annuitant.
• If the primary Annuitant dies and the secondary Annuitant is surviving, then we will make one-half of the periodic payment to you, or the secondary Annuitant, if you direct, for the rest of the secondary Annuitant’s life. In this case, payments will stop on the death of the secondary Annuitant.
This means that, even if we have made only one payment when the primary Annuitant dies, payments will stop unless the secondary Annuitant survives.
If the Annuitant dies after the Annuity Payout Initiation Date but before the first payment, a Joint and One-Half Survivor Payout will never provide the full payment amount. In that case, if the secondary Annuitant agrees, we will reverse the Annuity Benefit Payout election and treat the Contract as if the Annuity Payout Initiation Date had not been reached.
• If the Owner is living, this treatment will generally allow the Owner to choose between continuing the Contract as a deferred annuity or electing a new Annuity Payout Initiation Date and another Payout Option.
• If the Annuitant’s death before the Annuity Benefit Payout Initiation Date would give rise to a Death Benefit, then the Death Benefit will be available. | We will make periodic payments to the Beneficiary for as long as the Beneficiary lives.
• If the Beneficiary dies and the contingent payee does not survive the Beneficiary, then payments will stop on the death of the Beneficiary.
• If the Beneficiary dies and the contingent payee designated as part of the Death Benefit Payout Option election is surviving, then we will make one-half of the periodic payment to the contingent payee for the rest of the contingent payee’s life. In this case, payments will stop on the death of the contingent payee.
This means that, even if we have made only one payment when the Beneficiary dies, payments will stop unless the contingent payee survives.
If the Beneficiary dies after the Death Benefit is applied to the Payout Option but before the first payment, a Joint and One-Half Survivor Payout will never provide the full payment amount. In that case, if the contingent payee agrees, we will reverse the Payout Option election and allow the Beneficiary’s estate to choose a new Payout Option or to take the Death Benefit as a lump sum.
A Joint and One-Half Survivor Payout is only available to a Beneficiary who is the surviving spouse of the owner. |
We will make payments in any other form of Payout Option that is acceptable to us at the time of any election. More than one Payout Option may be elected if the requirements for each Payout Option elected are satisfied. All elected Payout Options must comply with pertinent laws and regulations.
Payments under a Payout Option are calculated and paid as fixed dollar payments. The stream of payments is an obligation of the general account of MassMutual Ascend Life. Fixed dollar payments will remain level for the duration of the payment period. Once payments begin under a Payout Option, the Payout Option may not be changed. Once the Contract value is applied to a Payout Option, the periodic payments cannot be accelerated or converted into a lump sum payment unless we agree.
We will use the 2012 Individual Annuity Reserving Table with projection scale G2 for blended lives (60% female/40% male) with interest at 1% per year, compounded annually, to compute all guaranteed Payout Option factors, values, and benefits under the Contract. For purposes of calculating payments based on the age of a person, we will use his or her age as of his or her last birthday.
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Considerations in Selecting a Payout Option
Payments under a Payout Option are affected by various factors, including the length of the payment period, the life expectancy of the person on whose life payments are based, and the frequency of the payment interval (monthly, quarterly, semi-annually or annually).
| • | Generally, the longer the period over which payments are made or the more frequently the payments are made, the lower the amount of each payment because more payments will be made. |
| • | For Life Payout Options, the longer the life expectancy of the Annuitant or Beneficiary, the lower the amount of each payment because more payments are expected to be paid. |
Non-Human Payees under a Payout Option
Except as stated below, the primary payee under a Payout Option must be a human being. All payments during his or her life must be made by check payable to the primary payee or by electronic transfer to a bank account owned by the primary payee.
Exceptions. Below are some exceptions to the general rule that the primary payee must be a human being. We may make other exceptions in our discretion.
| • | A nonhuman that is the Owner of the Contract may be the primary payee. For example, if the Owner is a trust, that trust may be the primary payee. |
| • | Payments may be made payable to another insurance company or financial institution as a tax-free exchange, transfer, or rollover to or for another annuity or tax-qualified account as allowed by federal tax law. |
Processing Applications and Requests
Processing Applications and Initial Purchase Payments
We will process an application when we have received both the application and the initial Purchase Payment.
| • | If that happens on a Market Day before the Market Close, we will process the application and apply the Purchase Payment on that Market Day. |
| • | If that happens on a Market Day after the Market Close or on a day that is not a Market Day, then we will process the application and apply the Purchase Payment on the next Market Day. |
We cannot process your application if it is not a Request in Good Order or if we have not received your initial Purchase Payment. Likewise, we cannot apply your initial Purchase Payment if we have not received your application.
If you have any questions, you should contact us or your registered representative before submitting your application or sending your initial Purchase Payment.
Processing Additional Purchase Payments
| • | If we receive an additional Purchase Payment on a Market Day before the Market Close, we will apply it on that Market Day. |
| • | If we receive an additional Purchase Payment on a Market Day after the Market Close or on a day that is not a Market Day, then we will apply it on the next Market Day. |
We cannot apply an additional Purchase Payment if we do not have complete instructions from you.
If you have any questions, you should contact us or your registered representative before sending an additional Purchase Payment.
Processing Requests
Requests may be made by mail at P.O. Box 5423, Cincinnati OH 45201-5423. Request by fax may be made at 800-807-9777.
Requests for reallocations among Strategies may be made by telephone at 1-800-789-6771 between 8:00 AM and 4:00 PM Eastern Time Monday through Friday. We may also permit reallocation requests to be made at our website (www.massmutualascend.com). Some selling firms may restrict the ability of their registered representatives to convey reallocation requests by telephone or Internet on your behalf.
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To obtain one of our forms (for example, a Strategy Selection form or a Withdrawal Request form) or to obtain more information about how to make a request, call us at 1-800-789-6771 or send us a fax at 800-807-9777. You can also request forms or information by mail at MassMutual Ascend Life Insurance Company, P.O. Box 5423, Cincinnati OH 45201-5423. You may also obtain forms on our website, www.massmutualascend.com.
We cannot process a request unless it is a Request in Good Order. A request may be rejected or delayed if it is not a Request in Good Order.
| • | If we receive a Request in Good Order on a Market Day before the Market Close, we will process it using values determined at the Market Close on that Market Day. |
| • | If we receive a Request in Good Order after the Market Close or on a day that is not a Market Day, then we will treat that request as received at the start of the next Market Day. |
If you have any questions, you should contact us or your registered representative before submitting the request.
Exception. If a withdrawal under an automatic withdrawal program is scheduled for a date that is not a Market Day, then we will process the withdrawal on the scheduled date using values at the most recent Market Close. For example, if the automatic withdrawal is scheduled for a date that falls on Sunday and there was a Market Close at 4:00 PM on the previous Friday, then we will process the withdrawal on Sunday using values determined at 4:00 PM on that Friday.
Market Days and Market Close
A Market Day is each day that all markets that are used to measure available Indexed Strategies are open for regular trading.
| • | Saturdays, Sundays, holidays and any other day that the New York Stock Exchange and the NYSE Arca are closed are not Market Days. |
| • | The NYSE and the NYSE Arca observe the following holidays: New Year’s Day, Martin Luther King, Jr. Day, President’s Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. |
A Market Close is the close of the regular or core trading session on the market used to measure a given Indexed Strategy.
NYSE | NYSE Arca | |
| Regular trading hours usually end at 4:00 PM Eastern Time | Core trading session usually ends at 4:00 PM Eastern Time | |
| Trading hours end at 1:00 PM Eastern Time on the day before the Fourth of July and the Friday after Thanksgiving Christmas Eve. | Core trading session ends at 1:00 PM Eastern Time on the day before the Fourth of July and the Friday after Thanksgiving Christmas Eve. | |
Regular trading or a core trading session may end at a different time on a Market Day under certain circumstances when and as permitted under applicable rules. Such circumstances generally cannot be predicted in advance.
Specific information about NYSE and NYSE Arca holidays and trading hours in any given calendar year is available at https://www.nyse.com/markets/hours-calendars.
Receipt of Purchase Payments, Applications and Requests
For purposes of processing, we deem Purchase Payments and applications, Requests in Good Order and other instructions (paperwork) mailed to our post office box as received by us at our administrative office when the Purchase Payment or the paperwork reaches the applicable processing department located at 191 Rosa Parks Street, Cincinnati OH 45202.
Risks and Limitations Related to Requests by Telephone or Internet
We will use reasonable procedures such as requiring certain identifying information, tape recording the telephone instructions, and providing written confirmation of the transaction, in order to confirm that instructions communicated by telephone, fax, Internet or other means are genuine. Any telephone, fax or Internet instructions reasonably believed by us to be genuine will be your responsibility, including losses arising from any errors in the communication of instructions. As a result of this policy, you will bear the risk of loss. We are not responsible for the validity of any request or action.
Telephone and computer systems may not always be available. Any telephone or computer system, whether it is yours, your service provider’s, your agent’s, or ours, can experience outages or slowdowns for a variety of reasons. These outages or slowdowns may delay or prevent our processing of your request. Although we have taken precautions to help our systems handle heavy use, we cannot promise complete reliability under all circumstances. If you experience technical difficulties or problems, you should consider making your request by mail.
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If you purchase your contract and subsequently move or travel to a country for which we restrict website access due to Office of Foreign Assets Control (OFAC) sanctions, other US government regulations, or high computer hacker risk, you will only be able to submit transaction requests via telephone, U.S. postal service, or private carriers. The list of countries for which we currently block website access is as follows: Iran, Russia, North Korea, Ukraine, China, Syrian Arab Republic, Tunisia, Belarus, Turkey, South Korea, Venezuela, Palestinian Territory, and Vietnam. We will update this list from time to time, as needed.
Suspension of Payments or Transfers
We may be required to suspend or delay payments, withdrawals and reallocations when we cannot obtain an Index Value because:
| • | the New York Stock Exchange or NYSE Arca is closed (other than customary weekend and holiday closings); |
| • | trading on the New York Stock Exchange or NYSE Arca is restricted; |
| • | an emergency exists such that it is not reasonably practicable to determine fairly the value of the Index; or |
| • | we are permitted to do so under a regulatory order. |
Restrictions on Financial Transactions
Federal laws designed to counter terrorism and prevent money laundering might, in certain circumstances, require us to block an Owner’s ability to make certain transactions. This means that we may be required to refuse to accept any request for withdrawals, Surrenders, Annuity Payout Benefit payments or Death Benefit payments, until instructions are received from the appropriate regulator. We may also be required to provide additional information about you and your Contract to government regulators.
If you change your mind about owning the Contract, you can cancel it within 20 days after you receive it. If you purchased this Contract to replace an existing annuity contract or life insurance policy, you have 30 days after you receive it. This is known as a “free look.” The right to cancel period may be longer in some states.
To cancel your Contract, you must submit your request to cancel to the producer who sold it or send it to us at P.O. Box 5423, Cincinnati, OH 45201-5423. If sent to us by mail, it is effective on the date postmarked with proper address and postage paid. Your request to cancel must be in writing and signed by you.
When you cancel the Contract within this free look period, we will not assess an Early Withdrawal Charge. Unless otherwise required by state law, you will receive the Account Value of your Contract on the day that we receive your cancellation request. The amount you receive may be more or less than your Purchase Payment(s) depending upon the amount of interest earned by your Contract during the free look period and any Vested Gain or Loss that applies as of the day that we receive your cancellation request. This means that you bear the risk of any decline in the Account Value of your Contract during the free look period. We do not refund any Daily Charge assessed during the free look period. We do not refund any Early Withdrawal Charges assessed during the free look period that relate to a withdrawal taken before you cancel the Contract.
In certain states, we are required to give back your Purchase Payment(s) if you decide to cancel your Contract during the free look period. If we are required by law to refund your Purchase Payment(s), we reserve the right to hold your Purchase Payment(s) in the Purchase Payment Account until the first Strategy Application Date on or after the end of the free look period. In those states, no interest or Vested Gain will be paid.
Annual Statement and Confirmations
At least once each calendar year, we will send you a statement that will show: (1) your Account Value; (2) all transactions regarding your Contract during the year; and (3) the interest credited to your Contract and Vested Gains and Losses credited to your Contract.
We will also send you written confirmations of Purchase Payments, Strategy allocations and renewals, withdrawals, and other financial transactions under your Contract. Statements and confirmations will be sent to your last known address on our records.
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You should promptly report any inaccuracy or discrepancy in a statement or confirmation. To report an inaccuracy or discrepancy, contact us at P.O. Box 5423, Cincinnati, OH 45201-5423, or call us at 1-800-789-6771. To protect your rights, you should consider reconfirming any oral communications by sending a written statement to P.O. Box 5423, Cincinnati, OH 45201-5423.
You may elect to receive electronic delivery of the Contract prospectus and other Contract related documents. Contact us at our website at www.massmutualascend.com for more information and to enroll.
Abandoned Property Requirements
Every state has unclaimed property laws. These laws generally declare annuity contracts to be abandoned after a period of inactivity of three to five years from: (1) the latest permitted Annuity Payout Initiation Date; or (2) the date of death for which a Death Benefit is due and payable. For example, if the payment of a death benefit has been triggered, but the beneficiary does not come forward to claim the death benefit in a timely manner, the unclaimed property laws will apply.
If a Death Benefit, Annuity Payout Benefit payments or other contract proceeds are unclaimed, we will pay them to the abandoned property division or unclaimed property office of the applicable state. (Escheatment is the formal, legal name for this process.) For example, on an unclaimed Death Benefit, depending on the circumstances, the proceeds are paid: (1) to the state where the beneficiary last resided, as shown on our books and records; (2) to the state where the contract owner last resided, as shown on our books and records; or (3) to Ohio, which is our state of domicile. The state will hold the proceeds without interest until a valid claim is made by the person entitled to the proceeds.
To prevent escheatment of the Death Benefit, Annuity Payout Benefit payments, or other proceeds from your Contract, it is important:
| • | to update your contact information, such as your address, phone number, and email address, if and as it changes; and |
| • | to update your Beneficiary and other designations, including complete names, complete addresses, phone numbers, and social security numbers, if and as they change. |
Please contact us at P.O. Box 5423, Cincinnati, OH 45201-5423, or call us at 1-800-789-6771, to make such updates.
State unclaimed property laws do not apply to annuity contracts that are held under an employer retirement plan that is subject to the Employee Retirement Income Security Act of 1974 (ERISA).
The Owner on the Contract Effective Date is set out on your Contract Specifications Page. The Owner possesses all of the ownership rights under a Contract, such as making allocations among the Strategies, electing a Payout Option, and designating a Beneficiary.
If an Owner is a trust, custodial account, corporation, limited liability company, partnership, or other entity, then the age of the eldest Annuitant is treated as the age of the Owner for all purposes of this Contract.
Joint Owners
| • | For a Nonqualified Contract. Two persons may jointly own the Contract. In this case, the term “Owner” includes the joint Owner and you must exercise all rights of ownership by joint action. |
| • | For a Tax Qualified Contract. No joint owner is permitted. |
Change of Owner
| • | For a Nonqualified Contract. You may change the Owner at any time during your lifetime. A change of Owner cancels all prior Beneficiary designations. It does not cancel a designation of an Annuitant or a Payout Option election. |
| • | For a Tax Qualified Contract. You cannot change the Owner except to the limited extent permitted by the tax qualification endorsement. |
A change of Owner must be made by a Request in Good Order. A change of Owner may have adverse tax consequences.
Assignment
| • | For a Nonqualified Contract. You may assign all or any part of your rights under this Contract except your rights to designate or change a Beneficiary or an Annuitant, to change Owners, or to elect a Payout Option. |
| • | For a Tax Qualified Contract. You cannot assign your rights under this Contract except to the limited extent permitted by the tax qualification endorsement. |
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An assignment must be made by a Request in Good Order. We are not responsible for the validity of any assignment. An assignment may have adverse tax consequences.
The rights of a person holding an assignment, including the right to any payment under this Contract, come before the rights of an Owner, Annuitant, Beneficiary, or other payee. An assignment may be ended only the person holding it or as provided by law.
Successor Owner
Your spouse becomes the successor owner of the Contract and succeeds to all rights of ownership if all of the following requirements are met:
| • | a Death Benefit is payable on account of your death; |
| • | the sole Beneficiary under the Contract is your spouse or a revocable trust or custodial account created by your spouse; |
| • | either you make that election by a Request in Good Order before your death or your spouse makes that election by a Request in Good Order before the Death Benefit Payment Date; and |
| • | you were not a successor owner of the Contract. |
A successor owner election cancels all prior Beneficiary designations. It does not cancel a designation of an Annuitant or a Payout Option election.
In some states, state law extends this successor owner right to a civil union partner or other person who is not your spouse as defined by federal tax law. In that case, distributions after your death must be made as required by the Death Benefit Distributions Rules described in the Death Benefit section on page 56.
Community Property
If you live in a community property state and have a spouse at any time while you own this Contract, the laws of that state may vary your ownership rights.
The Annuitant is the natural person on whose life Annuity Payout Benefit payments are based. The Annuitant on the Contract Effective Date is set out on your Contract Specifications Page.
| • | For a Nonqualified Contract. The Annuitant cannot be changed at any time that the Contract is owned by a trust, custodial account, corporation, limited liability company, partnership, or other entity. Otherwise, you may change a designation of Annuitant at any time before the Annuity Payout Initiation Date. |
| • | For a Tax Qualified Contract. The Annuitant must be the natural person covered under the retirement arrangement for whose benefit the Contract is held. |
A change of Annuitant must be made by a Request in Good Order. A change of Annuitant does not cancel a designation of a Beneficiary or a Payout Option election.
If an Annuitant dies before the Annuity Payout Initiation Date and no Death Benefit is payable, then in the absence of a new designation, the Annuitant will be:
| • | the surviving joint Annuitant(s); or if none |
| • | the Owner(s). |
A Beneficiary is a person entitled to receive all or part of a Death Benefit that is to be paid under this Contract on account of a death before the Annuity Payout Initiation Date.
| • | If a Death Benefit becomes payable on account of your death or the death of a joint Owner, then the surviving Owner is the Beneficiary no matter what other designation you may have made. |
| • | In all other cases, you may designate a person or person who will be the Beneficiaries as provided in the Designation of Beneficiary provision of the Contract. |
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| • | If no designated Beneficiary is surviving, then the Beneficiary is your estate. |
| • | If the sole Beneficiary under the Contract is your spouse or a revocable trust or custodial account created by your spouse and all other requirements for successor ownership are met, then your spouse may become the successor owner of the Contract in lieu of receiving the Death Benefit. |
A designation of Beneficiary must be made by a Request in Good Order. We must receive the request on or before the date of death for which a Death Benefit is payable.
| • | You may designate two or more persons jointly as the Beneficiaries. Unless you state otherwise, joint Beneficiaries that are surviving are entitled to equal shares. |
| • | You may designate one or more persons as contingent Beneficiary. Unless you state otherwise, a contingent Beneficiary is entitled to a benefit only if there is no primary Beneficiary who that is surviving. |
Survivorship Required
In order to be entitled to receive a Death Benefit, a Beneficiary must survive for at least 30 days after the death for which the Death Benefit is payable.
If you designate your spouse as a Beneficiary and your marriage ends before your death, we will treat your former spouse as having predeceased you unless:
| • | a court order provides that the former spouse’s rights as a beneficiary are to continue; or |
| • | the former spouse remains or becomes an Owner. |
Amendment of the Contract
We reserve the right to amend the Contract to comply with applicable Federal or state laws or regulations. We will notify you in writing of any such amendments.
Misstatement
We may require proof of the age of the Annuitant, Owner and/or the Beneficiary before making any payments under the Contract that are measured by such person’s life. If the age of the measuring life has been misstated, the amount payable will be the amount that would have been provided at the correct age. If payments based on the correct age would have been higher, we will pay the underpaid amount with interest. If payments would be lower, we may deduct the overpaid amount, with interest, from succeeding payments.
Involuntary Termination
If your Account Value on any anniversary of the initial Strategy Application Date is below the minimum value of $5,000 for any reason, we may terminate your Contract on that anniversary. If your Contract has Terms that end on the same date because you made only one Purchase Payment, any involuntary termination will occur on that date. If your Contract has Terms that end on different dates because you made more than one Purchase Payment, any involuntary termination will occur on one of those dates, which will be the end of one Term but not the end of the other Terms. In this case, the Surrender Value payable upon termination of your Contract will reflect the Vested Gains and Vested Losses used to calculate the values of Indexed Strategies with Terms that are not ending on the termination date.
Loans
Loans are not available under the Contract.
This prospectus describes the material features of the Contract. Contracts issued in your state may provide different features and benefits from, and impose different costs than, those described in this prospectus because of state law variations. However, please note that the maximum charge is set forth in this prospectus. If you would like to review a copy of the Contract and any endorsements, contact us at P.O. Box 5423, Cincinnati, OH 45201-5423, visit our website at www.massmutualascend.com or call us at 1-800-789-6771.
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The following information is a summary of material state variations as of the date of this prospectus.
General
For Contracts Issued in Illinois and New Jersey: References to “spouse” have been changed to “spouse or civil union partner.”
Extended Care Waiver Rider. The table below summarizes material state variations related to the rider.
For Contracts Issued in: | Variations in Extended Care Waiver Rider | |
| California | The Waiver of Early Withdrawal Charges for Facility Care or Home Care or Community-Based Services Rider (CA Rider) replaces the Extended Care Waiver Rider. The CA Rider provides a waiver under an expanded set of circumstances. The waiver will apply if, at the time of the withdrawal or surrender, or within the immediately preceding 90 days, the following conditions are met: (1) the insured is confined in a facility or is receiving, as prescribed by a physician, registered nurse or licensed social worker, home care or community-based services; (2) the insured’s confinement in a facility, the insured’s receipt of home care or community-based services, or any combination thereof has continued for a period of at least 90 consecutive days; and (3) the first day of such 90-day period was at least one year after the contract effective date. Facility includes a skilled nursing facility, a convalescent nursing home, or an extended care facility or a residential care facility or a residential care facility for the elderly. Home care or community-based services includes home health care, adult day care, personal care, homemaker services, hospice services and respite care as defined in the rider. Additional conforming changes have been made including revised and new definitions, and inclusion of a description of circumstances under which the waiver does not apply. The termination provision has been modified to reflect that the rider will not terminate if you transfer or assign an interest in the contract to a person or entity other than the insured. | |
| Connecticut | The conditions under which the waiver applies have been modified. The waiver will apply if at the time of a withdrawal or surrender or within the immediately preceding 90 days all of the following conditions are met: (1) an insured is confined in a long-term care facility or hospital; and (2) the confinement has continued for a period of at least 90 consecutive days. | |
| Kansas | The conditions under which the waiver applies have been modified. The first day of confinement must be at least 90 days after the contract effective date, rather than one year after the contract effective date. | |
| Massachusetts and Missouri | This waiver rider in not available in Massachusetts or Missouri. | |
| Montana | The definition of medically necessary has been modified and refers to the insured’s physician. | |
| Nebraska | The definition of skilled nursing facility has been modified by adding a licensed practical nurse to the list of persons who may provide nursing services or supervise the provision of nursing services. | |
| New Hampshire | The definition of skilled nursing facility has been modified by changing the phrase “licensed and operated as a skilled nursing facility” to “operated as a skilled nursing facility.” | |
| Pennsylvania | The conditions under which the waiver is available have been modified. The waiver will apply if at the time of a withdrawal or surrender or within the immediately preceding 90 days all of the following conditions are met: (1) an insured is confined in one or more long-term care facilities, hospital, or a combination of such; (2) the confinement is prescribed by a physician and is medically necessary; (3) the first day of the confinement is at least one year after the contract effective date; and (4) the confinement has continued for a period of at least 90 consecutive days, or has continued for a total of at least 90 days if each successive confinement occurs within six months of the previous confinement and is for the same related medical cause.
The definition of long-term care facility has been modified. The following facilities have been deleted from the list of facilities excluded from that definition: a facility that primarily treats drug addicts and a facility that is a home for the mentally ill. An exclusion provision has been added to clarify that the waiver will not apply if the insured is confined in a long-term care facility or hospital for the treatment of certain types of drug addiction or mental illnesses.
The definition of hospital has been modified by changing the phrase “it maintains, or has access to, medical, diagnostic, and major surgical facilities” to “it maintains, or has access to, medical and diagnostic facilities.” | |
| Vermont | The definition of long-term care facility has been modified. The following facilities have been deleted from the list of excluded facilities: a facility that primarily treats drug addicts, a facility that primarily treats alcoholics, and a facility that is a home for the mentally ill. | |
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For Contracts Issued in: | Variations in Extended Care Waiver Rider | |
| The definition of physician has been modified by changing the phrase “a person who is licensed in the United States as a medical doctor or a doctor of osteopathy and who is practicing within the scope of his or her license” to “a person who is licensed in the United States who is providing medical care and treatment when such services are provided within the scope of his or her license and provided pursuant to applicable law.” | ||
| Washington | The waiver is based on confinement to an extended care facility or hospital rather than a long-term care facility or hospital. Definitions are modified to reflect the new terminology, references to “skilled nursing facility” are changed to “nursing facility” and the related definition is modified. In the definition of nursing facility and hospital, a licensed practical nurse is added to the list of persons who may provide nursing services or supervise the provision of nursing services. | |
Terminal Illness Waiver Rider. The table below summarizes material state variations related to the rider.
For Contracts Issued in: | Variations in Terminal Illness Waiver Rider | |
| Illinois, Kansas, Washington | As a result of the terminal illness, your life expectancy must be 24 months from the date of death, rather than 12 months. | |
| Kansas | The diagnosis must be rendered 90 days after the contract effective date, rather than one year after the contract effective date. | |
| New Jersey | The requirement related to the timing of the diagnosis does not apply. But the waiver will not be available until at least one year after the contract effective date. | |
| Massachusetts | This waiver rider in not available in Massachusetts. | |
| Pennsylvania | The diagnosis must be rendered after the contract effective date, rather than one year after the contract effective date. But the waiver will not be available until at least one year after the contract effective date. The waiver is based on a terminal condition as defined in the rider, rather than a terminal illness. | |
| Texas | The diagnosis must be rendered on or after the contract effective date, rather than one year after the contract effective date. | |
Form of Annuity Payout Benefit
For Contracts Issued in Texas: Payments under a Payout Option are subject to a $50 minimum.
Right to Cancel (Free Look)
State law governs the length of the free look period and the amount of the refund that you will receive. The table below summarizes the state law provisions.
For Contracts Issued in: | Free Look Period and Refund | Replacement Situations: Free Look Period and Refund | ||
| Alabama, Colorado, Hawaii, Iowa, Maine, Mississippi, Montana, New Mexico, Ohio, Oregon, Vermont, Virginia, West Virginia | 20 days Account Value | 30 days Account Value + Fees/Charges | ||
| Alaska, Arizona, Connecticut, Illinois, Kansas, Michigan, New Jersey, North Dakota, South Dakota | 20 days Account Value + Fees/Charges | 30 days Account Value + Fees/Charges | ||
| Arkansas, District of Columbia, Pennsylvania | 20 days Account Value | 30 days Account Value | ||
| Delaware, Indiana, Massachusetts, Tennessee | 20 days Account Value | 30 days Purchase Payments | ||
| Georgia, Idaho, Missouri, Nevada, Oklahoma, Utah | 20 days Purchase Payments | 30 days Purchase Payments | ||
| Kentucky, Louisiana, Maryland, Nebraska, New Hampshire, North Carolina, Rhode Island, South Carolina, Texas | 20 days Purchase Payments | 30 days Account Value + Fees/Charges | ||
| California | 30 days Account Value + Fees/Charges If owner is age 60 or older, refund amount is Purchase Payments | 30 days Account Value + Fees/Charges If owner is age 60 or older, refund amount is Purchase Payments | ||
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For Contracts Issued in: | Free Look Period and Refund | Replacement Situations: Free Look Period and Refund | ||
| Florida | 21 days Account Value + Fees/Charges | 30 days Account Value + Fees/Charges | ||
| Minnesota | 20 days Account Value + Fees/Charges | 30 days Purchase Payments | ||
| Washington | 20 days Greater of: (1) Purchase Payments or (2) Account Value minus taxes | 30 days Purchase Payments | ||
| Wisconsin | 30 days Account Value | 30 days Account Value + Fees/Charges | ||
| Wyoming | 20 days Account Value | 30 days Greater of: (1) Purchase Payments or (2) Account Value + Fees/Charges | ||
Assignment
For Contracts Issued in Ohio: Subject to the tax qualifications endorsement, if any, you may assign your rights to designate or change a Beneficiary or an Annuitant, to change Owners, or to elect a Payout Option if you make a specific Request in Good Order.
Amendment of the Contract
For Contracts Issued in Florida and Texas: You have the right to reject an endorsement that changes the provisions of this Contract to obtain or retain the intended tax treatment under federal tax law, or to take into account other pertinent laws and governmental regulations and rulings. We will not be responsible for the tax or other consequences of your rejection.
Involuntary Termination
For Contracts Issued in Texas: Our right to terminate this Contract is not tied to the minimum required value. We have the right to terminate this Contract if the Account Value would provide a benefit of less than $20 each month at age 70 under a life payout with payments for at least a fixed period of 10 years.
We may replace an Index if it is discontinued or we are no longer able to use it, its calculation changes substantially, or we determine that hedging instruments are difficult to acquire or the cost of hedging becomes excessive. We may do so at the end of a Term or during a Term. We will notify you in writing at least 30 days before we replace an Index.
We would attempt to choose a replacement Index that is similar to the old Index. To determine if a new Index is similar, we will consider factors such as asset class, Index composition, strategy or methodology inherent to the Index and Index liquidity.
If we replace an Index during a Term, we will calculate Vested Gains and Losses using the old Index up until the replacement date. After the replacement date, we will calculate Vested Gains and Losses using the new Index, but with a modified start of Term value for the new Index. The modified start of Term value for the new Index will reflect the Index Change for the old Index from the start of the Term to the replacement date.
If we replace an Index, the applicable Maximum Gain and Bailout Trigger for the Term, the applicable Maximum Loss or Buffer, and the Vesting Factors will not change.
Example. This example is intended to show how we would calculate Vested Gain or Loss on any day during a Term if we have replaced an Index during the Term. This example assumes: (1) you allocate $50,000 to a Growth/-10% Floor Strategy; and (2) the replacement is made on day 90 of the Term. To simplify the example, we assume that you take no withdrawals during the Term.
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Index Change on Replacement Date for Old Index | ||||
Old Index Value at Term Start | 1000 | |||
Old Index Value on Replacement Date | 1050 | |||
Old Index Change on Replacement Date | (1050 - 1000) / 1,000 = 5% | |||
The 5% Index Change on the Replacement Date is then used to calculate the modified start of Term value for the new Index.
Modified Start of Term Value for New Index | ||||
Old Index Change on Replacement Date | 5 | % | ||
New Index Value on Replacement Date | 1785 | |||
Modified Start of Term Value for New Index | 1785 / (100% + 5%) = 1700 | |||
The modified start of Term value for the new Index is then used to calculate the Strategy value on any date after the replacement date, including the value at the Term end.
Strategy Value at Term End | ||
Daily Charges through Term End | $50,000 × 1% = $500 | |
Remaining Investment Base at Term End | $50,000 - $500 = $49,500 | |
Modified Start of Term Value for New Index | 1700 | |
Value of New Index at Term End | 1853 | |
Positive Index Change | (1853 - 1,700) /1700) = 9% | |
Maximum Gain | Gain of 8% | |
Positive Index Change Limited by Maximum Gain | 8% | |
Vesting Factor for Positive Index Change at Term End | 100% | |
Vested Gain as a Percentage | 8% × 100% = 8% | |
Vested Gain in Dollars | $49,500 × 8% = $3,960 | |
Strategy Value at Term End | $49,500 + $3,960 = $53,460 |
This section provides a general description of federal income tax considerations relating to the Contracts. The purchase, holding and transfer of a Contract may have federal estate and gift tax consequences in addition to income tax consequences. Estate and gift taxation is not discussed in this prospectus. State taxation will vary, depending on the state in which you reside, and is not discussed in this prospectus.
The tax information provided in this prospectus is not intended or written to be used as legal or tax advice. It is written solely to provide general information related to the sale and holding of the Contracts. You should seek advice on legal or tax questions based on your particular circumstances from an attorney or tax advisor.
Tax Deferral on Annuities
Internal Revenue Code (“IRC”) Section 72 governs taxation of annuities in general. The income earned on a Contract is generally not included in income until it is withdrawn from the Contract. In other words, a Contract is a tax-deferred investment. Tax deferral is not available for a Contract when an Owner is not a natural person unless the Contract is part of a tax-qualified retirement plan or the Owner is a mere agent for a natural person. For a nonqualified deferred compensation plan, this rule means that the employer as Owner of the Contract will generally be taxed currently on any increase in the Surrender Value, although the plan itself may provide a tax deferral to the participating employee.
Under certain circumstances, based on a rule known as the “Investor Control Doctrine,” the IRS has stated that the holder of an annuity contract could be treated as the owner (for tax purposes) of the assets of a separate account that supports the annuity contract. If you were treated as the owner of an interest in the separate account, then you would be taxed on the income, gain, and loss arising out of your interest in the separate account. Although the IRS has not provided definitive guidance on the application of this rule to indexed annuity contracts, we do not believe that this rule applies to the Contract because you have no specific, fractional, or unitized interest in the separate account assets, we are not obligated to invest the separate account in any particular assets, the investment return and market value of the separate account assets is not allocated in an identical manner to any Contract, the Contract values are determined based on gains and losses regardless of the performance of the separate account assets, and the derivatives that we may hold in the separate account are not publicly traded.
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Tax-Qualified Retirement Plans
Annuities may also qualify for tax-deferred treatment, or serve as a funding vehicle, under tax-qualified retirement plans that are governed by other IRC provisions. These provisions include IRC Section 401 (pension, profit sharing, and 401(k) plans), IRC Section 403(b) (tax-sheltered annuities), IRC Sections 408 and 408A (individual retirement annuities), and IRC Section 457(b) (governmental deferred compensation plans). Tax-deferral is generally also available under these tax-qualified retirement plans through the use of a trust or custodial account without the use of an annuity.
The tax law rules governing tax-qualified retirement plans and the treatment of amounts held and distributed under such plans are complex. If the Contract is to be used in connection with a tax-qualified retirement plan, including an individual retirement annuity (“IRA”) under a Simplified Employee Pension (SEP) Plan, you should seek competent legal and tax advice regarding the suitability of the Contract for your particular situation.
Contributions to a tax-qualified Contract are typically made with pre-tax dollars, while contributions to other Contracts are typically made from after-tax dollars, though there are exceptions in either case. Tax-qualified Contracts may also be subject to restrictions on withdrawals that do not apply to other Contracts. These restrictions may be imposed to meet the requirements of the IRC or of an employer plan.
Following is a brief description of the types of tax-qualified retirement plans for which the Contracts are available.
Individual Retirement Annuities. IRC Sections 219 and 408 permit certain individuals or their employers to contribute to an individual retirement arrangement known as an “Individual Retirement Annuity” or “IRA”. Under applicable limitations, an individual may claim a tax deduction for certain contributions to an IRA. Contributions made to an IRA for an employee under a Simplified Employee Pension (SEP) Plan or Savings Incentive Match Plan for Employees (SIMPLE) established by an employer are not includable in the gross income of the employee until distributed from the IRA. Distributions from an IRA are taxable to the extent that they represent contributions for which a tax deduction was claimed, contributions made under a SEP plan or SIMPLE, or income earned within the IRA.
Roth IRAs. IRC Section 408A permits certain individuals to contribute to a Roth IRA. Contributions to a Roth IRA are not tax deductible. Tax-free distributions of contributions may be made at any time. Distributions of earnings are tax-free following the five-year period beginning with the first year for which a Roth IRA contribution was made if the Owner has attained age 59 1/2, become disabled, or died, or for qualified first-time homebuyer expenses.
Tax-Sheltered Annuities. IRC Section 403(b) of permits public schools and charitable, religious, educational, and scientific organizations described in IRC Section 501(c)(3) to establish “tax-sheltered annuity” or “TSA” plans for their employees. TSA contributions and Contract earnings are generally not included in the gross income of the employee until distributed from the TSA. Amounts attributable to contributions made under a salary reduction agreement cannot be distributed until the employee attains age 59 1/2, severs employment, becomes disabled, incurs a hardship, is eligible for a qualified reservist distribution, or dies. The IRC and the plan may impose additional restrictions on distributions.
Pension, Profit-Sharing, and 401(k) Plans. IRC Section 401 permits employers to establish various types of retirement plans for employees, and permits self-employed individuals to establish such plans for themselves and their employees. These plans may use annuity contracts to fund plan benefits. Generally, contributions are deductible to the employer in the year made, and contributions and earnings are generally not included in the gross income of the employee until distributed from the plan. The IRC and the plan may impose restrictions on distributions. Purchasers of a Contract for use with such plans should seek competent advice regarding the suitability of the Contract under the particular plan.
Governmental Eligible Deferred Compensation Plans. State and local government employers may purchase annuity contracts to fund eligible deferred compensation plans for their employees, as described in IRC Section 457(b). Contributions and earnings are generally not included in the gross income of the employee until the employee receives distributions from the plan. Amounts cannot be distributed until the employee attains age 70 1/2, severs employment, becomes disabled, incurs an unforeseeable emergency, or dies. The plan may impose additional restrictions on distributions.
Roth TSAs, Roth 401(k)s, and Roth 457(b)s. IRC Section 402A permits TSA plans, 401(k) plans, and governmental 457(b) plans to allow participating employees to designate some part or all of their future elective contributions as Roth contributions. Roth contributions to a TSA plan, 401(k) plan, or governmental 457(b) plan are included in the employee’s taxable income as earned. Amounts attributable to Roth TSA, Roth 401(k), or Roth 457(b) contributions must be held in a separate account from amounts attributable to traditional pre-tax TSA, 401(k), or 457(b) contributions. Distributions from a Roth TSA, Roth 401(k), or Roth 457(b) account are considered to come proportionally from contributions and earnings. Distributions attributable to Roth
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account contributions are tax-free. Distributions attributable to Roth account earnings are tax-free following the five-year period beginning with the first year for which Roth contributions are made to the plan if the employee has attained age 59 1/2, become disabled, or died. A Roth TSA, Roth 401(k), or Roth 457(b) account is subject to the same distribution restrictions that apply to amounts attributable to traditional pre-tax TSA, 401(k), or 457(b) contributions made under a salary reduction agreement. The plan may impose additional restrictions on distributions.
Nonqualified Deferred Compensation Plans
Employers may invest in annuity contracts in connection with unfunded deferred compensation plans for their employees. Such plans may include eligible deferred compensation plans of non-governmental tax-exempt employers, as described in IRC Section 457(b); deferred compensation plans of both governmental and nongovernmental tax-exempt employers that are taxed under IRC Section 457(f) and subject to Section 409A; and nonqualified deferred compensation plans of for-profit employers subject to Section 409A. In most cases, these plans are designed so that amounts credited under the plan will not be includable in the employees’ gross income until paid under the plan. In these situations, the annuity contracts are not plan assets and are subject to the claims of the employer’s general creditors. Whether or not made from the Contract, plan benefit payments are subject to restrictions imposed by the IRC and the plan.
Summary of Income Tax Rules
The following chart summarizes the basic income tax rules governing tax-qualified retirement plans, nonqualified deferred compensation plans, and other non-tax-qualified Contracts.
Tax-Qualified Contracts and Plans | Nonqualified Deferred Compensation Plans | Other Non-Tax-Qualified | ||||
| Plan Types | • IRC §408 (IRA, SEP, SIMPLE IRA)
• IRC §408A (Roth IRA)
• IRC §403(b) (Tax-Sheltered Annuity)
• IRC §401 (Pension, Profit– Sharing, 401(k))
• Governmental IRC §457(b)
• IRC §402A (Roth TSA, Roth 401(k), or Roth 457(b)) | • IRC §409A
• Nongovernmental IRC §457(b)
• IRC §457(f) | • IRC §72 only | |||
| Who May Purchase a Contract | Eligible employee, employer, or employer plan. | Employer on behalf of eligible employee. Employer generally loses tax-deferred status of Contract itself. | Anyone. Non-natural person will generally lose tax-deferred status. | |||
| Contribution Limits | Contributions are limited by IRC and/or plan requirements. | None. | ||||
| Distribution Restrictions | Distributions from Contract and/or plan may be restricted to meet IRC and/or plan requirements. | None. | ||||
| Taxation of Withdrawals, Surrenders, and Lump Sum Death Benefit | Generally, 100% of distributions must be included in taxable income. However, the portion that represents an after-tax investment is not taxable. Distributions from Roth IRA are deemed to come first from after- tax contributions. Distributions from other plans are generally deemed to come from income and after-tax investment (if any) on a pro-rata basis. Distributions from §408A Roth IRA or §402A Roth TSA, Roth 401(k), or Roth 457(b) are completely tax free if certain requirements are met.
For tax purposes, all IRAs and SEP IRAs of an owner are treated as a single IRA, and all Roth IRAs of an owner are treated as a single Roth IRA. | Generally, distributions must be included in taxable income until all accumulated earnings are paid out. Thereafter, distributions are tax-free return of the original investment. However, distributions are tax-free until any investment made before August 14, 1982 is returned.
For tax purposes, all non-tax-qualified annuity contracts issued to the same owner by the same insurer in the same calendar year are treated as one contract. | ||||
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Tax-Qualified Contracts and Plans | Nonqualified Deferred | Other Non-Tax-Qualified | ||||
| Taxation of Payout Option Payments (Annuity Benefit or Death Benefit) | A percentage of each payment is tax free equal to the ratio of after-tax investment (if any) to the total expected payments, and the balance is included in taxable income. Once the after-tax investment has been recovered, the full amount of each benefit payment is included in taxable income. Distributions from a Roth IRA, Roth TSA, Roth 401(k), or Roth 457(b) are completely tax free if certain requirements are met. | |||||
| Possible Penalty Taxes for Distributions Before Age 59 1/2 | Taxable portion of payments made before age 59 1/2 may be subject to 10% penalty tax (or 25% for a SIMPLE IRA during the first two years of participation). Penalty taxes do not apply to payments after the participant’s death, or to §457 plans. Other exceptions may apply. | None. | Taxable portion of payments made before age 59 1/2 may be subject to a 10% penalty tax. Penalty taxes do not apply to payments after the Owner’s death. Other exceptions may apply. | |||
| Assignment/ Transfer of Contract | Assignment and transfer of Ownership generally not permitted. | Generally, deferred earnings taxable to transferor upon transfer or assignment. Gift tax consequences are not discussed herein. | ||||
| Federal Income Tax Withholding | Eligible rollover distributions from §401, §403(b), and governmental §457(b) plans are subject to 20% mandatory withholding on taxable portion unless direct rollover. For other payments, Payee may generally elect to have taxes withheld or not. | Generally subject to wage withholding. | Generally, Payee may elect to have taxes withheld or not. | |||
Rollovers, Transfers, and Exchanges
Amounts from a tax-qualified Contract may be rolled over, transferred, or exchanged into another tax-qualified account or retirement plan as permitted by the IRC and plan(s). Amounts may be rolled over, transferred, or exchanged into a tax-qualified Contract from another tax-qualified account or retirement plan as permitted by the IRC and plan(s). In most cases, such a rollover, transfer, or exchange is not taxable, unless the rollover of pre-tax amounts is made into a Roth IRA, a Roth TSA, Roth 401(k), or Roth 457(b). Rollovers, transfers, and exchanges are not subject to normal contribution limits. The IRC or plan may require that rollovers be held in a separate Contract from other plan funds.
Amounts from a non-tax-qualified Contract may be transferred to another non-tax-qualified annuity or to a qualified long-term care policy as a tax-free exchange as permitted by the IRC Section 1035. Amounts from another non-tax-qualified annuity or from a life insurance or endowment policy may be transferred to a Contract as a tax-free exchange under IRC Section 1035.
Required Distributions
The Contracts are subject to the required distribution rules of federal tax law. These rules vary based on the tax qualification of the Contract or the plan under which it is issued.
For a tax-qualified Contract other than a Roth IRA, required minimum distributions must generally begin by April 1 following the year the participant attains age 73 (age 75 if born after December 31, 1960, or age 72 if born after June 30, 1949, but before January 1, 1951, or age 70 1/2 if born before July 1, 1949). However, for a 403(b) Tax-Sheltered Annuity Plan, a 401 Pension, Profit-Sharing, or 401(k) Plan, or a 457(b) Governmental Deferred Compensation Plan, a participant who is not a 5% owner of the employer may delay required minimum distributions until April 1 following the year in which the participant retires from that employer. The required minimum distributions during life are calculated based on standard life expectancy tables adopted under federal tax law.
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For a Roth IRA or for a Contract that is not tax-qualified, there are no required distributions during life.
A tax-qualified Contract must make required distributions after death. The required distributions vary depending on the type of beneficiary. Some beneficiaries may take payments over life or life expectancy, and others must receive all benefits within five or ten years after death. A non-tax-qualified Contract that has begun making payments under a payout option during the Owner’s life must make any remaining payments at least as rapidly after death. If payments from a non-tax-qualified Contract have not begun, then the death benefit must be paid out in full within five years after death, or must be paid out in substantially equal payments beginning within one year of death over a period not exceeding the life expectancy of the designated beneficiary.
For a traditional IRA, a Roth IRA, or a Contract that is not tax-qualified, a beneficiary who is a surviving spouse may elect out of these requirements, and apply the required distribution rules as if the Contract were his or her own. For this purpose, federal tax law recognizes as married any two people whose marriage is valid in the state in which it was celebrated. A civil union or domestic partnership is not considered a marriage.
We reserve the right to deduct from the Purchase Payment or Account Value any taxes relating to the Contract paid by us to any government entity (including, but not limited to, premium taxes, additional taxes, and maintenance taxes on insurers, Federal, state and local withholding of income, estate, inheritance, or other taxes required by law from annuity purchase payments, and any new or increased taxes on insurers or annuity purchase payments that may be enacted into law).
Currently some state governments impose premium taxes, additional taxes, and maintenance taxes on insurers based on annuity purchase payments received or applied to an annuity payout benefit. These taxes currently range from zero to 3.5% depending upon the jurisdiction and the tax qualification of the Contract. A federal premium tax has been proposed but not enacted. We may deduct any such premium or other taxes from the Purchase Payments or the Account Value at the time that the tax is imposed. We may also deduct any such tax not previously deducted from the Annuity Payout Value or Death Benefit Value.
We reserve the right to deduct from the Contract for any income taxes that we incur because of the Contract. At the present time, however, we are not incurring any such income tax or making any such deductions.
MM Ascend Life Investor Services, LLC (“MMALIS”) is the principal underwriter and distributor of the securities offered through this prospectus. MMALIC and MMALIS are affiliated because MMALIS is a subsidiary of MMALIC. MMALIS also acts as the principal underwriter and distributor of the variable annuity contracts that are issued by one of our subsidiaries.
MMALIS’s principal executive offices are located at 191 Rosa Parks Street, Cincinnati, Ohio 45202. MMALIS is registered as a broker- dealer with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as well as the securities regulators in the states in which it operates and registration is required. MMALIS is a member of the Financial Industry Regulatory Authority (“FINRA”).
Contracts are sold by licensed insurance agents (the “Selling Agents”) in those states where the Contract may be lawfully sold. Such Selling Agents will be appointed agents of MMALIC and will be registered representatives of broker-dealer firms (the “Selling Broker-Dealers”) that have entered into selling agreements with us and MMALIS. Selling Broker-Dealers will be registered under the Securities Exchange Act of 1934 and will be members of FINRA.
FINRA provides background information about broker-dealers and their registered representatives through FINRA BrokerCheck. You may contact the FINRA BrokerCheck Hotline at 1-800-289-9999, or log on to www.finra.org to learn more about MMALIS, your Selling Agent, and his or her Selling Broker Dealer.
MMALIS receives no compensation for acting as underwriter of the Contracts; however, MMALIC pays for some of MMALIS’s operating and other expenses, including overhead and legal and accounting fees. MMALIC may reimburse MMALIS for certain sales expenses, such as marketing materials and advertising expenses, and other expenses of distributing the Contracts.
MMALIC or MMALIS pay the Selling Broker-Dealers compensation for the promotion and sale of the Contract. The Selling Agents who solicit sales of the Contract typically receive a portion of the compensation paid to the Selling Broker-Dealers in the form of commissions or other compensation, depending on the agreement between the Selling Broker-Dealer and the Selling Agent.
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The amount and timing of commissions paid to Selling Broker-Dealers may vary depending on the selling agreement but is not expected to be more than 9.2% of each Purchase Payment. In most cases, such amounts paid to a Selling Broker-Dealer will be divided between the Selling Agent and the Selling Broker-Dealer. Some Selling Broker-Dealers may elect to receive a lower commission when a Purchase Payment is made, along with annual trail commissions up to 1.5% of Account Value for so long as a contract remains in effect or as agreed in the selling agreement. MMALIC may pay or allow other promotional incentives or payments in the form of cash or other compensation to the extent permitted by FINRA rules and other applicable laws and regulations.
MMALIC also may pay compensation to wholesaling broker-dealers or other firms or intermediaries in return for wholesaling services such as providing marketing and sales support, product training, and administrative services to the Selling Agents of the Selling Broker-Dealers. These allowances may be based on a percentage of a Purchase Payment.
In addition to the compensation described above, MMALIC may make additional cash payments, in certain circumstances referred to as “override” compensations, or reimbursements to Selling Broker-Dealers in recognition of their marketing and distribution, transaction processing and/or administrative services support. These payments are not offered to all Selling Broker-Dealers, and the terms of any particular agreement governing the payments may vary among Selling Broker-Dealers depending on, among other things, the level and type of marketing and distribution support provided. Marketing and distribution support services may include, among other services, placement of MMALIC’s products on the Selling Broker-Dealers’ preferred or recommended list, increased access to the Selling Broker-Dealers’ registered representatives for purposes of promoting sales of MMALIC products, assistance in training and education of the Selling Agents, and opportunities for MMALIC and MMALIS to participate in sales conferences and educational seminars. The payments or reimbursements may be calculated as a percentage of the particular Selling Broker-Dealer’s actual or expected aggregate sales of our indexed annuity contracts (including the Contract) and/or may be a fixed dollar amount. Broker-dealers receiving these additional payments may pass on some or all of the payments to the Selling Agents.
You should ask your Selling Agent for further information about the commissions or other compensation that he or she, or the Selling Broker-Dealer for which he or she works, may receive in connection with your purchase of a Contract.
There is no front-end sales load deducted from the Purchase Payment(s) to pay sales commissions. Commissions and other incentives or payments described above are not charged directly to you. We intend to recoup at least a portion of the sales commissions and other sales expenses through fees and charges deducted under the Contract.
MassMutual Ascend Life’s General Account
Our general account (the “General Account”) holds all our assets other than assets in our insulated separate accounts. We own our General Account assets, and, subject to applicable law, have sole investment discretion over them. The assets are subject to our general business operation liabilities and claims of our creditors and may lose value. Our General Account assets fund the guarantees provided in the Contracts.
We must invest our assets according to applicable state laws regarding the nature, quality and diversification of investments that may be made by life insurance companies. In general, these laws permit investments, within specified limits and subject to certain qualifications, in Federal, state and municipal obligations, corporate bonds, preferred and common stocks, real estate mortgages, real estate and certain other investments.
We place a majority of the Purchase Payments made under the Contract in our General Account where we primarily invest the assets in a variety of fixed income securities.
We place a portion of the Purchase Payments made under the Contract in a non-unitized separate account (the “Separate Account”) that is not registered with the Securities and Exchange Commission. We established and maintain the Separate Account pursuant to the laws of our domiciliary state for the purpose of supporting our obligation to adjust Indexed Strategy values for Vested Gains and Losses associated with the Indexed Strategies. The assets of the Separate Account are held in our name on behalf of the Separate Account and legally belong to us. The assets in the Separate Account are not chargeable with liabilities arising out of any other business that we conduct. We may invest these assets in hedging instruments, including derivative contracts as well as other assets permitted under state law. To support our obligations to adjust Indexed Strategy values for Vested Gains and Losses associated with the Indexed Strategies, we may move money between the Separate Account and our General Account.
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Contract owners do not have any interest in or claim on the assets in the Separate Account nor do Contract owners participate in any way in the performance of assets held in the Separate Account.
Reliance on Rule 12h-7
MassMutual Ascend Life relies on the exemption provided by Rule 12h-7 under the Securities Exchange Act of the 1934 Act from the requirement to file reports pursuant to Section 15(d) of that Act.
Legal Proceedings
MassMutual Ascend Life and its subsidiaries are involved in litigation from time to time, generally arising in the ordinary course of business. This litigation may include, but is not limited to, general commercial disputes, lawsuits brought by contract owners and policyholders, employment matters, reinsurance collection matters and actions challenging certain business practices of insurance subsidiaries. Also, from time to time, state and federal regulators or other officials conduct formal and informal examinations or undertake other actions dealing with various aspects of the financial services and insurance industries. It is not possible to predict with certainty the ultimate outcome of any pending legal proceeding or regulatory action. However, MassMutual Ascend Life does not believe any such action or proceeding will have a material adverse effect upon its ability to meet its obligations under the Contracts.
Legal Opinion on Contracts
Legal matters in connection with federal laws and regulations affecting the issue and sale of the Contracts described in this prospectus and the organization of MassMutual Ascend Life, its authority to issue such Contracts under Ohio law, and the validity of the forms of the Contracts under Ohio law have been passed on by John P. Gruber, General Counsel of MassMutual Ascend Life.
Securities and Exchange Commission Position on Indemnification
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling MassMutual Ascend Life pursuant to its articles of incorporation or its code of regulations or pursuant to any insurance coverage or otherwise, MassMutual Ascend Life has been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable.
The statutory financial statements and financial statement schedules of MassMutual Ascend Life Insurance Company (formerly known as Great American Life Insurance Company) at December 31, 2023, 2022, and 2021 and for each of the years in the three year period ended December 31, 2023, have been included herein in reliance upon the reports of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.
The KPMG LLP report dated April 23, 2024 of MassMutual Ascend Life Insurance Company includes explanatory language that states that the financial statements are prepared by MassMutual Ascend Life Insurance Company using statutory accounting practices prescribed or permitted by the Ohio Department of Insurance, which is a basis of accounting other than U.S. generally accepted accounting principles. Accordingly, the KPMG LLP audit report states that the financial statements are not presented fairly in accordance with U.S. generally accepted accounting principles and further states that those statements are presented fairly, in all material respects, in accordance with statutory accounting practices prescribed or permitted by the Ohio Department of Insurance.
The KPMG LLP report dated April 23, 2024 of MassMutual Ascend Life Insurance Company includes an emphasis of matter paragraph that states that MassMutual Ascend Life Insurance Company elected to apply a prescribed practice promulgated under Ohio Administrative Code Section 3901-1-67 (“OAC 3901-1-67”) to its derivative instruments hedging indexed products and indexed annuity reserve liabilities. The opinion was not modified with respect to this matter.
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We filed a Registration Statement with the Securities and Exchange Commission under the Securities Act of 1933 relating to the Contracts offered by this prospectus. This prospectus was filed as a part of the Registration Statement, but it does not constitute the complete Registration Statement. The Registration Statement contains further information relating to the Company and the Contracts. The Registration Statement and the exhibits thereto may be inspected and copied at the office of the Securities and Exchange Commission, located at 100 F Street, N.E., Washington, D.C., and may also be accessed at www.sec.gov. The Securities and Exchange Commission file number for the Contract is 333-278199.
Statements in this prospectus discussing the content of the Contracts and other legal instruments are summaries. The actual documents are filed as exhibits to the Registration Statement. For a complete statement of the terms of the Contracts or any other legal document, refer to the appropriate exhibit to the Registration Statement.
| • | The Contract is not insured by the FDIC (Federal Deposit Insurance Corporation) or the NCUSIF (National Credit Union Share Insurance Fund). |
| • | Although the Contract may be sold through relationships with banks or other financial institutions, the Contract is not a deposit or obligation of, or guaranteed by, such institutions or any federal regulatory agency. |
The Contract doesn’t invest in any equity, debt, or other investments.
Dealer Prospectus Delivery Obligations. All dealers that effect transactions in these securities are required to deliver a prospectus.
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MASSMUTUAL ASCEND LIFE INFORMATION
Overview
MassMutual Ascend Life is a stock insurance company incorporated in 1961. We are domiciled in the state of Ohio and have been continuously engaged in the insurance business since that time. We are licensed to conduct life insurance business in all states of the United States except New York, as well as the District of Columbia and Puerto Rico. Our principal executive offices are located at 191 Rosa Parks Street, Cincinnati, Ohio 45202.
We are a wholly-owned subsidiary of Massachusetts Mutual Life Insurance Company (“MassMutual”), a mutual life insurance company. MassMutual and its domestic life insurance subsidiaries provide individual and group life insurance, disability insurance, individual and group annuities and guaranteed interest contracts to individual and institutional customers in all 50 states of the U.S., the District of Columbia and Puerto Rico.
Below is a chart that shows the relationships among MassMutual, MassMutual Ascend Life, and other MassMutual subsidiaries that are mentioned in this Section II of this prospectus. Each subsidiary in the chart is wholly-owned by its immediate parent.
Massachusetts Mutual Life Insurance Company (“MassMutual”)
| • | Glidepath Holdings Inc. (“Glidepath”) is a subsidiary of MassMutual. It is a financial services holding company. |
| • | MassMutual Ascend Life Insurance Company (“MMALIC”) is a subsidiary of Glidepath. It is the issuer of the annuities that are the subject of this Registration Statement and other annuity products. |
| • | MM Ascend Life Investor Services, LLC (“MMALIS”) is a subsidiary of MMALIC. It is the principal underwriter and distributor of the annuities that are the subject of this Registration Statement. |
| • | MM Asset Management Holding LLC is a subsidiary of MassMutual. It is a financial services holding company. |
| • | Barings LLC (“Barings”) is a subsidiary of MM Asset Management Holding LLC. It provides investment services for MassMutual and certain of its affiliated companies, including MMALIC. |
Prior to October 3, 2022, MMALIC’s name was Great American Life Insurance Company (“GALIC”) and MMALIS’ name was Great American Advisors, LLC (“GAA”). On May 28, 2021, American Financial Group, Inc. sold its annuity business consisting of GALIC and its two insurance subsidiaries, Annuity Investors Life Insurance Company and Manhattan National Life Insurance Company, as well as a broker-dealer affiliate, GAA, and insurance distributor, AAG Insurance Agency, Inc. to MassMutual.
No company other than MMALIC has any legal responsibility to pay amounts owed under the Contract. You should look to the financial strength of MMALIC for its claims-paying ability.
Directors and Executive Officers of MassMutual Ascend Life
Below is a list of the names and ages of the individuals who will serve as directors and executive officers of MMALIC, and a description of the business experience of each of the respective individuals.
Name | Year of Birth | Position(s) with MassMutual Ascend Life | Served in Position(s) Since | |||
Dominic L. Blue | 1976 | Director and Chief Executive Officer | May 2021/ June 2023 | |||
Donna Carrelli | 1974 | Head of Insurance Operations | February 2022 | |||
Susan M. Cicco | 1971 | Director | May 2021 | |||
Geoffrey J. Craddock | 1959 | Director | May 2021 | |||
Roger W. Crandall | 1964 | Director, Chairman of the Board | May 2021 | |||
John P. Gruber | 1962 | Senior Vice President, Secretary, Chief Compliance Officer and General Counsel | November 2005 | |||
Paul A. LaPiana | 1969 | Director | May 2021 |
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Name | Year of Birth | Position(s) with MassMutual Ascend Life | Served in Position(s) Since | |||
Sears Merritt | 1981 | Director | May 2022 | |||
Mark F. Muething | 1959 | Director President | October 1993 April 2018 | |||
Michael J. O’Connor | 1969 | Director | May 2021 | |||
Eric W. Partlan | 1973 | Director, Chief Investment Officer | May 2021 | |||
Brian P. Sponaugle | 1969 | Senior Vice President and Treasurer | May 2022 | |||
Arthur W. Wallace | 1974 | Director | May 2021 | |||
Elizabeth A. Ward | 1964 | Director | May 2021 |
Dominic L. Blue
Mr. Blue has served as Chief Executive Officer of MMALIC since June, 2023 and as the Head of MassMutual Strategic Distributors since October 2020. Mr. Blue has served in various positions with MassMutual since August 2011.
Donna Carrelli
Ms. Carrelli has served as MMALIC’s Head of Insurance Operations since February 2022. Ms. Carrelli has served in various positions with the Company since March 1998.
Susan M. Cicco
Ms. Cicco has served as the Head of Human Resources & Employee Experience since January 2017 and also has served since July 2020 as the Chief of Staff to the CEO. Ms. Cicco has served in various positions with MassMutual since 1993.
Geoffrey J. Craddock
Mr. Craddock has served as the Chief Risk Officer of MassMutual since October 2017. Previously, Mr. Craddock served as the leader of risk management and asset allocation at MassMutual’s former subsidiary, OppenheimerFunds, Inc., from 2008 through September 2017.
Roger W. Crandall
Mr. Crandall has served as Chairman of the Board of MMALIC since May 28, 2021. Mr. Crandall has served as Chairman, President and Chief Executive Officer of MassMutual since December 2010. Mr. Crandall has served in various positions with MassMutual since 1988.
John P. Gruber
Mr. Gruber has served as MMALIC’s Senior Vice President, General Counsel and Secretary since November 2005. He also serves as Chief Compliance Officer of MMALIC. Mr. Gruber has served in various positions with the Company since July 1993.
Paul A. LaPiana
Mr. LaPiana has served as Head of MMUS Product since February of 2019. Mr. LaPiana joined MassMutual in July of 2016 and served as the Head of Field Management until he assumed his current role.
Sears Merritt
Mr. Merritt has served as the Head of Enterprise Technology & Experience since May 2022. Mr. Merritt has served in various positions with MassMutual since 2014.
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Mark F. Muething
Mr. Muething has served as President of MMALIC since April 2018. Mr. Muething served in various positions with MMALIC since October 1993.
Michael J. O’Connor
Mr. O’Connor has served as the General Counsel of MassMutual since February 2017. Mr. O’Connor has served in various positions with MassMutual since he joined the company in 2005, including as the Chief of Staff to the CEO.
Eric W. Partlan
Mr. Partlan has served as MMALIC’s Chief Investment Officer since May 28, 2021. Mr. Partlan has served as the Head of Portfolio Management at MassMutual since January 2013. He joined MassMutual in January of 2010 as the Head of Investment Risk and served in that office until he assumed his current role.
Brian P. Sponaugle
Mr. Sponaugle has served as Senior Vice President and Treasurer of MMALIC since June 2022. Mr. Sponaugle served in various positions with MMALIC since June 1993.
Arthur W. Wallace
Mr. Wallace has served as MassMutual’s Chief Actuary since he joined MassMutual in October of 2019. Previously, Mr. Wallace was Chief Actuary at Prudential Financial from November 2014 until joining MassMutual.
Elizabeth A. Ward
Ms. Ward has served as the Chief Financial Officer of MassMutual since June 2016. Ms. Ward has served in various positions since joining MassMutual in 2007, including as Chief Actuary and as Chief Enterprise Risk Officer.
Executive Compensation
MMALIC does not have any employees. Its parent, Glidepath, provides personnel to MMALIC pursuant to a Services Agreement between MMALIC and Glidepath.
As a result, MMALIC does not determine or pay any compensation to its executive officers or additional personnel provided by Glidepath. Glidepath determines and pays salaries, bonuses and other compensation to its executive officers and additional personnel provided by Glidepath commensurate with their positions, tenure and levels of responsibility. Glidepath also determines whether and to what extent it will provide employee benefits plans to such persons.
See “Transactions with Related Persons” for more information about the Services Agreement.
Director Compensation
Mark Muething is the only director who is an employee of Glidepath. No director receives any additional compensation for serving as a director.
Director Independence
No director is considered independent under independence standards applicable to MMALIC. MMALIC does not have a separately designated audit, nominating or compensation committee, but MassMutual’s audit committee performs a similar function for MMALIC.
Compensation Committee Interlocks and Insider Participation
MMALIC does not have a compensation committee.
Security Ownership of Certain Beneficial Owners and Management
MassMutual indirectly owns 100% of the voting securities of MMALIC. MassMutual’s principal executive offices are located at 1295 State Street, Springfield, Massachusetts 01111-0001.
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Transactions with Related Persons
Transactions between MMALIC and Glidepath
Pursuant to a Leased Employee Agreement between MMALIC and Glidepath, Glidepath furnishes MMALIC with personnel as requested by MMALIC. MMALIC pays for these services on the basis of cost, which must be fair and reasonable. Payments for these services by MMALIC to Glidepath were approximately $109 million in 2023 and $98 million in 2022.
Transactions between MMALIC and MassMutual or Other MassMutual Subsidiaries
MMALIC and Barings are parties to an Investment Services Agreement under which Barings provides investment services to MMALIC in accordance with guidelines. MMALIC pays Barings a fee based on Barings’s cost of providing these services.
Pursuant to an Administrative Services Agreement between MMALIC and MassMutual, MassMutual furnishes MMALIC with office, data processing, telecommunications, and administrative and support services, including enterprise risk management services, corporate finance services, actuarial services, legal services, internal audit services, corporate compliance services and procurement services, as agreed upon by the parties. Payments for these services by MMALIC to MassMutual were approximately $4.4 million in 2023 and $4.4 million in 2022.
MMALIC and its subsidiaries have entered into an intercompany tax allocation agreement. Pursuant to the agreement, each company’s tax expense is determined based upon its inclusion in the consolidated tax return of MMALIC and its includable subsidiaries. Estimated payments are made quarterly during the year. Following year-end, additional settlements are made on the original due date of the return and, when extended, at the time the return is filed. The method of allocation among the companies under the agreement is based upon separate return calculations with current credit for losses to the extent the losses provide a benefit in the consolidated return.
Transactions Involving Immediate Family Members of MMALIC’s Directors and Executive Officers
A brother of MMALIC’s President is a partner and Chairman of the Board of Keating Muething & Klekamp PLL. MMALIC and its related entities paid Keating Muething & Klekamp approximately $5,300 in 2023, $0.4 million in 2022, and $1.1 million in 2021.
Review, Approval or Ratification of Transactions with Related Persons
MMALIC’s senior management team approves all related party transactions involving directors and executive officers of MMALIC, including relevant transactions described in “Transactions Involving Immediate Family Members of MMALIC’s Directors and Executive Officers” above. In considering the transaction, MMALIC’s senior management team may consider all relevant factors, including as applicable: the business rationale for entering into the transaction; the alternatives to entering into a related person transaction; whether the transaction is on terms comparable to those available to third parties, or in the case of employment relationships, to employees generally; the potential for the transaction to lead to an actual or apparent conflict of interest and any safeguards imposed to prevent such actual or apparent conflicts; and the overall fairness of the transaction to MMALIC. Potential related party transactions are covered by MMALIC’s Code of Conduct policy. Approval of such related person transactions would be evidenced by resolutions of the Finance committee of the MMALIC Board of Directors in accordance with its practice of reviewing and approving transactions in this manner.
Information on MMALIC’s Business and Property
Competition
MMALIC’s annuity businesses operate in highly competitive markets. They compete with other insurers and financial institutions based on many factors, including: (i) ratings; (ii) financial strength; (iii) reputation; (iv) service to policyholders and agents; (v) product design (including interest rates credited, bonus features and index participation); and (vi) commissions. Because most policies are marketed and distributed through independent agents, the insurance companies must also compete for agents.
No single insurer dominates the markets in which MMALIC’s annuity businesses compete. See Risks Primarily Related to MMALIC’s Financial Strength and Claims-Paying Ability. MMALIC’s competitors include (i) individual insurers and insurance groups, (ii) mutual funds and (iii) other financial institutions. In a broader sense, MMALIC’s annuity businesses compete for retirement savings with a variety of financial institutions offering a full range of financial services. In the financial institution annuity market, MMALIC’s annuities compete directly against competitors’ annuities, certificates of deposit and other investment alternatives at the point of sale.
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Sales of annuities, including renewal premiums, are affected by many factors, including: (i) competitive annuity products and rates; (ii) the general level and volatility of interest rates, including the slope of the yield curve; (iii) the favorable tax treatment of annuities; (iv) commissions paid to agents; (v) services offered; (vi) ratings from independent insurance rating agencies; (vii) other alternative investments; (viii) performance and volatility of the equity markets; (ix) media coverage of annuities; (x) regulatory developments regarding suitability and the sales process; and (xi) general economic conditions.
Financial Strength Ratings
MMALIC believes that the ratings assigned by independent insurance rating agencies are an important competitive factor because agents, potential policyholders and financial institutions often use a company’s rating as an initial screening device in considering annuity products. MMALIC believes that a rating in the “A” category by at least one rating agency is necessary to successfully compete in its primary annuity markets. In 2023, MMALIC was rated A++ (Superior) by A.M. Best and A+ by Standard & Poor’s.
Regulation
MMALIC is subject to regulation in the jurisdictions where MMALIC does business. In general, the insurance laws of the various states establish regulatory agencies with broad administrative powers governing, among other things, premium rates, solvency standards, licensing of insurers, agents and brokers, trade practices, forms of policies, maintenance of specified reserves and capital for the protection of policyholders, deposits of securities for the benefit of policyholders, investment activities and relationships between insurance subsidiaries and their parents and affiliates. Material transactions between insurance subsidiaries and their parents and affiliates generally must receive prior approval of the applicable insurance regulatory authorities and be disclosed.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”), among other things, established a Federal Insurance Office (“FIO”) within the U.S. Treasury. Under this law, the regulatory framework for the FIO to carry out its mandate to focus on systemic risk oversight continues to evolve. Since its formation, the FIO has worked with the National Association of Insurance Commissioners (“NAIC”) and other stakeholders to explore a hybrid approach to regulation of the insurance industry; however, the state-based system of regulation has largely been retained. MMALIC cannot predict the future role of the FIO and its role in regulation of the insurance industry and how that might ultimately affect MMALIC’s operations.
Most states have created insurance guaranty associations that assess solvent insurers to pay claims of insurance companies that become insolvent. Annual guaranty assessments for MMALIC have not been material.
Risks Primarily Related to MMALIC’s Financial Strength and Claims-Paying Ability
We make annuity payout benefit payments and pay death benefits for this Contract from our general account. We also pay benefits for other insurance contracts from our general account, and our general account is subject to claims by our creditors. Our ability to make payments from our general account is subject to our financial strength. Set out below are the most significant factors that may negatively impact our financial strength and claims-paying ability.
Financial losses could adversely affect our financial strength and claims-paying ability.
Owners of MMALIC’s insurance products do not share in the profits and losses generated by our business. However, if we were to experience significant losses, we might not have sufficient assets in our general account to satisfy all of the guarantees provided in our insurance contracts. Events that may result in financial losses are listed below. We cannot predict the impact that any of these events may ultimately have on our financial strength and claims-paying ability.
Adverse developments in financial markets and deterioration in global economic conditions.
Worldwide financial markets have, from time to time, experienced significant and unpredictable disruption. For example, a prolonged economic downturn may result in heightened credit risk, reduction in the valuation of certain investments and decreased economic activity. Our financial position is materially impacted by the global economy and capital markets. During an economic downturn, we could experience a drop in the demand for our insurance products. In addition, surrenders and
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withdrawals from MMALIC’s insurance products might also increase during an economic downturn, and owners of MMALIC’s insurance products might opt to discontinue or delay paying insurance premiums or additional purchase payments. In recent years, the financial markets have experienced periods of significant volatility and negative returns, contributing to an uncertain and evolving economic environment. The performance of the markets in recent years has been impacted by several interrelating factors such as, but not limited to, the COVID-19 pandemic, rising inflation, changes in interest rates, geopolitical turmoil, and actions by governmental authorities. In addition, multiple bank failures in 2023 resulted in periods of market disruption and volatility and reduced confidence in depository institutions. While such bank failures did not significantly impact our business, if banks or other financial institutions with whom we do business were to enter into receivership or become insolvent in the future, there could be an adverse effect on our business and financial condition. It is not possible to predict the future performance of the markets with any certainty.
Unfavorable interest rate environments.
During periods of declining interest rates, we may experience losses as the spread tightens between crediting rates that we pay to owners of our insurance contracts and returns on our investments. During periods of increasing rates, we may experience financial losses due to increases in surrenders and withdrawals under our insurance contracts as owners of those contracts choose to seek higher returns. In an attempt to curb rising inflation, the Federal Reserve and other central banks raised interest rates multiple times in recent years. It is unclear whether and how interest rates will change in future periods. Although we take measures to manage economic risks associated with different interest rate environments, we may not be able to fully mitigate those risks.
Losses on our investment portfolio.
A significant majority of MMALIC’s investment portfolio consists of fixed maturity investments, which are subject to both interest rate risk and credit risk. Interest rate risk refers to how the values of our fixed maturity investments fluctuate in response to changes in market interest rates. Increases in market interest rates generally result in decreases in the value of our fixed maturity investment portfolio. On the other hand, decreases in rates generally result in increases in the portfolio value. Credit risk refers to the risk that certain investments may default or become impaired due to deterioration in the financial condition of the issuers of those investments.
A portion of MMALIC’s investment portfolio consists of equity investments that are generally valued based on quoted market prices and subject to market risk. Market risk refers to how market prices for equity investments are subject to fluctuation due to general market conditions or changes in the actual or perceived attractiveness of an investment. A decrease in the market price for an equity investment could result in losses upon the sale of that investment.
MMALIC’s investment portfolio also includes investments that lack liquidity, such as privately placed fixed maturity investments, mortgage loans, collateralized debt obligations, commercial mortgage-backed securities, real estate and limited partnership interests. The value of our real estate investments may be negatively impacted by general, regional, and local economic conditions in the real estate sector, such as supply and demand, market volatility, interest rate fluctuations, vacancy rates, and geographic and extreme weather conditions, as well as the creditworthiness of obligors. If we were required to sell illiquid investments on short notice, we might have difficulty doing so and may be forced to sell them for less than fair value.
Loss of market share due to intense competition.
There is strong competition among individual insurers and insurance groups, mutual funds and other financial institutions seeking clients for the products we provide. Competition is based on numerous factors including the ability to recruit and retain key personnel, quality of service, reputation, product design, crediting rates, insurance product performance and pricing, scope of distribution, perceived financial strength and credit ratings. If competition limits MMALIC’s ability to write new or renewal business at adequate rates, its results of operations will be adversely affected.
Ineffectiveness of risk management policies.
Our risk management policies and procedures, which are intended to identify, monitor and manage economic risks, may not be fully effective at mitigating risk exposures in all market conditions or against all types of risk. For instance, we use derivatives to alleviate risks related to floating-rate investments as well as annuity products that credit interest or provide a return based, in part, on the change in a referenced index. Our use of derivatives may not accurately counterbalance the actual risk exposure,
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and any derivatives held may not be sufficient to completely hedge the associated risks. In addition, counterparties may fail to perform under the derivative financial instruments. We may also decide not to hedge, or fail to identify, certain risks to which we are exposed. Ultimately, our use of derivatives and other risk management strategies may be inadequate to protect against the full extent of the exposure or losses we seek to mitigate.
Changes in applicable law and regulations may affect our financial strength and claims-paying ability.
We are subject to comprehensive regulation and supervision by government agencies in all the jurisdictions in which we operate. Our operations, products and services are subject to a variety of state and federal laws. We are regulated by various regulatory authorities and self-regulatory authorities including state insurance departments, state securities administrators, the Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority (“FINRA”), the Internal Revenue Service (“IRS”) and the Department of Labor (“DOL”).
Changes to state and federal laws and regulations and regulatory interpretations thereof may materially impact the way we conduct business. For example, a change in U.S. federal tax policy that would modify the favorable tax treatment of annuities could make our products less attractive to consumers. Moreover, the pace of changes to the regulatory environment continues to increase. Federal and state governments, including federal and state regulatory authorities, are active in the regulation of the manufacture, sale and administration of annuity products. We cannot predict the potential effects that any new laws or regulations, changes in existing laws and regulations, or the interpretation or enforcement of laws and regulations may have on our business, but such changes may increase our compliance costs and negatively impact our financial strength and claims-paying ability. Below, we summarize areas of applicable law that have been subject to substantial change in recent years.
Cybersecurity and Data Privacy.
We are subject to federal and state laws, regulations, and directives that require financial institutions and other businesses to protect the security of computer systems and the confidentiality of personal information. Financial regulators continue to focus on data privacy and cybersecurity, have communicated heightened expectations with respect to security and regulatory compliance, and have increased emphasis in this area in their examinations of regulated entities. Recently, the SEC proposed new rules that would require registered separate accounts to adopt and implement comprehensive cybersecurity policies and procedures and disclose significant cybersecurity incidents in the prospectuses for variable contracts. Also, many states have adopted comprehensive privacy and data protection laws, and insurance regulatory activity related to privacy, data protection and cybersecurity also continues to increase. For example, the NAIC is considering a new Consumer Privacy Protection Model Law (to replace the corresponding existing model law) that would include stronger provisions related to consumer rights, consent, and notification, as well as third-party service agreements, data retention and deletion policies, and data sharing agreements. We actively monitor regulatory developments in this area, and may be subject to increased compliance costs, regulatory requirements, and legal proceedings as new laws become effective.
Standards of Care.
The SEC adopted a series of rules related to the standard of care owed by a broker-dealer and an investment adviser to its customers (“Regulation BI”), and the creation of a Form CRS Relationship Summary. The obligations of Regulation BI and Form CRS became effective on June 30, 2020. Among other things, Regulation BI imposes a “best interest” standard of care on broker-dealers making a recommendation to their customers, and provides certain new disclosure requirements for broker-dealers with respect to, among other things, their compensation and conflicts. Broker-dealers and investment advisers are required to provide the Form CRS Relationship Summary to their customers. The Form is designed to provide information about the broker-dealer or investment adviser to their customers. Since its adoption, Regulation BI has been a focus of SEC examinations and enforcement activity. The changes under Regulation BI and the Form CRS have increased overall compliance costs. In addition, these changes may lead to greater exposure to legal claims in certain circumstances, including an increased risk of regulatory enforcement actions or potentially private claims.
The NAIC adopted revisions to its Suitability in Annuity Transactions Model Regulation that would impose a requirement that any recommendation of an annuity product be in the consumer’s best interest in 2020. To date, at least 40 states have adopted revisions to their suitability laws to generally track the NAIC’s revised model regulation. As a result, as changes are adopted by state insurance regulator(s) and made applicable to insurers or the third-party firms that distribute insurer products, they could have an adverse impact on business.
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In addition, sales of annuities to employee benefit plans governed by provisions of the Employee Retirement Income Security Act (“ERISA”) and to IRAs governed by similar provisions under the Internal Revenue Code are subject to restrictions that require ERISA fiduciaries to perform their duties solely in the interests of ERISA plan participants and beneficiaries, and that prohibit ERISA fiduciaries from causing a covered plan or retirement account to engage in certain prohibited transactions absent an exemption. The definition of a “fiduciary” as it relates to ERISA plans and IRAs has been the subject of multiple DOL rulemaking initiatives, interpretive guidance releases, and subsequent legal challenges in recent years. On October 31, 2023, the DOL proposed rule amendments that would broaden the circumstances under which fiduciary duties are imposed, particularly with regard to recommendations to “rollover” assets from a qualified retirement plan to an IRA or from an IRA to another IRA.
We continue to closely monitor these ongoing regulatory developments. It remains unclear the extent to which these regulatory initiatives and the evolving nature of enforcement and interpretation of them could ultimately affect how our annuities are marketed and distributed. Any of the foregoing regulatory and legislative measures (or judicial matters on those measures), or the reaction to such activity by consumers or other members of the insurance industry could have an adverse impact on our ability to sell annuities and to retain in-force business. Inconsistencies among the rules adopted by the SEC, the DOL, and state insurance regulators could increase this impact.
Artificial Intelligence.
State regulators and the NAIC are evaluating existing regulatory frameworks for insurance industry use of artificial intelligence, machine learning, and large language models (“AI”). Regulators are concerned about the privacy and protection of individual consumer data and about bias and discrimination resulting from the use of AI in algorithms and predictive models, as may be used either directly by insurance companies or indirectly through third party service providers. For example, in December 2023, the NAIC adopted a model bulletin on the use of AI by insurers, which was intended to remind insurance companies that decisions impacting consumers that are made or supported by advanced analytical and computational technologies, including AI, must comply with all applicable insurance laws and regulations, including unfair trade practices. The bulletin also sets forth state insurance regulators’ expectations on how insurers should govern the use of such technologies by or on behalf of the insurer to make or support such decisions. Our adoption of new AI technologies may be inhibited by the emergence of industry-wide standards, a changing legislative and regulatory environment, and other factors. In addition, our adoption of new AI technologies may expose us to increased compliance costs and heightened regulatory risks.
The evolving landscape of environmental, social and governance standards could adversely affect our reputation or business results and could lead to litigation or regulatory proceedings that harm our financial condition.
Customers, regulators, and other market participants may evaluate our business or other practices according to a variety of environmental, social and governance (“ESG”) standards, expectations, or metrics, all of which may evolve, may be subjective or underdeveloped in nature, and may reflect contrasting or conflicting values. Standard-setting organizations and regulators including, but not limited to, the NAIC, SEC, and state insurance regulators, have proposed or adopted, or may propose or adopt, ESG rules or standards applicable to us. For example, the NAIC has generally modified the Insurer Climate Risk Disclosure survey to align with aspects of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures framework, a recognized framework of recommendations that were developed to enhance climate-related disclosures. The SEC has also adopted new disclosure rules that generally require a wide range of registered companies to provide extensive disclosures and financial information on climate-related risk in their registration statements and periodic reports filed with the SEC. In October 2023, the Governor of California signed two bills into law that will require significant climate-related disclosures (in some cases beyond the disclosures required by the SEC’s new rules) by large entities doing business in that state. In addition, certain organizations that provide information to investors have developed ratings for evaluating companies on their approach to different ESG matters. Due to the sometimes conflicting, uncertain, and subjective ESG regulatory and market environment, we may be seen as acting inconsistently with ESG standards or values from the perspective of certain customers, regulators, or other constituents. As a result, we may face adverse regulatory, customer, media, or public scrutiny related to ESG that potentially could have a negative impact on our business or reputation or lead to legal challenges.
The inability to obtain or collect on reinsurance could adversely affect our financial strength and claims-paying ability.
We use reinsurance for various business segments as part of our risk management strategy. While reinsurance agreements typically bind the reinsurer for the life of the business reinsured at specific pricing, market conditions may determine the availability and cost of the reinsurance for new business. Our risk of loss increases if we are unable to purchase reinsurance at acceptable terms. We are also subject to credit risk related to the ability of a reinsurer to meet its obligations. If we are unable to purchase reinsurance at acceptable terms or if the financial condition of our reinsurers is impaired, it may impact our ability to meet our financial obligations.
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A downgrade or potential downgrade in MMALIC’s financial strength ratings by one or more rating agencies could adversely affect its financial strength and claims-paying ability.
MMALIC’s claims-paying and financial strength is rated A++ (Superior) by A.M. Best and A+ by Standard & Poor’s. We believe a rating in the “A” category by at least one rating agency is important for us to successfully compete in our primary annuity markets. We also believe the ratings assigned by these independent insurance rating agencies are an important competitive factor because agents, potential contract owners and financial institutions often use a company’s rating as an initial screening device in considering annuity products. A downgrade in MMALIC’s claims-paying and financial strength ratings could adversely impact MMALIC’s financial strength and claims-paying ability by causing financial losses to our business. Such losses may be due to:
| • | Reduction in new sales of annuity products; |
| • | Harm to our relationships with distributors of our annuity products; |
| • | Increases to the cost of capital or limitation on our access to sources of capital; |
| • | Harm to our ability to obtain reinsurance or reasonable terms for reinsurance; |
| • | Significant increases in the number and amount of surrenders of, or withdrawals from, our annuity products; and |
| • | Pressure to increase the crediting rates for our annuity products. |
Credit rating agencies also evaluate the insurance industry as a whole and may change our claims-paying and financial strength rating based on their overall view of our industry.
Variations from actual experience and management’s estimates and assumptions could result in inadequate reserves.
We establish and maintain reserves to pay future benefits and claims of our policyholders and contract holders. The reserves we establish are estimates, primarily based on actuarial assumptions with regard to our future experience, which involve the exercise of significant judgment. Our future financial results depend on the extent to which our actual future experience is consistent with the assumptions we have used in pricing our products and determining our reserves. Many factors can affect future experience, including investment yields (and spreads over fixed annuity crediting rates), benefit utilization rates, equity market performance, the cost of call and put options used in the indexed annuity business, persistency, mortality, surrenders, annuity benefit payments, withdrawals, expenses incurred and changes in regulations. Developing such assumptions is complex and involves information obtained from company-specific and industry-wide data, as well as general economic information. We cannot precisely predict the ultimate amounts we will pay for actual benefits or the timing of those payments. We use actuarial models to assist us in establishing reserves. If actual results differ significantly from our estimates and assumptions, our claim costs could increase significantly and our reserves could be inadequate. If so, we will be required to increase reserves or accelerate amortization of deferred acquisition costs. We cannot be certain that our reserves will ultimately be sufficient to pay future benefit and claims of policyholders and contract holders.
The amount of capital that we must hold to meet our statutory capital requirements can vary significantly from time to time.
Statutory capital requirements are set by applicable state insurance regulators and the NAIC. State insurance regulators have established regulations that govern reserving requirements and provide minimum capitalization requirements based on risk-based capital (“RBC”) ratios for life insurance companies. Statutory surplus and RBC ratios may change in a given year based on a number of factors, including statutory income or losses, reserve changes, excess capital held to support growth, changes in equity market levels, interest rate changes, the value of certain fixed-income and equity securities, and changes to the RBC formulas. Additionally, state insurance regulators have significant leeway in interpreting existing regulations, which could further impact the amount of statutory capital or reserves that we must maintain. There is no guarantee that we will be able to maintain our current RBC ratio in the future or that our RBC ratio will not fall to a level that could have a material adverse effect on our business. If we are unable to maintain minimum capitalization requirements, our business may be subject to significant increases in supervision or control by state insurance regulators.
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Legal actions and regulatory proceedings may adversely affect our financial strength and claims-paying ability.
We have been named as defendant in lawsuits. We have also been involved in regulatory investigations and examinations. We may be involved in lawsuits and regulatory actions in the future. Lawsuits and regulatory actions arise in various contexts, including MMALIC’s roles as an insurer, investor, securities issuer and taxpaying entity. These actions may result in material amounts of damages or fines that we must pay and may involve certain regulatory authorities that have substantial power over our business operations. A negative outcome in any legal action or regulatory proceeding that results in significant financial losses or operational burdens may adversely impact MMALIC’s financial position and claims-paying ability.
We may experience difficulties with technology or data security, which could have an adverse effect on our business.
We use computer systems and services to process, store, retrieve, evaluate and utilize company and customer data and information. Systems failures or outages could compromise our ability to perform business functions in a timely manner, which could harm our ability to conduct business and hurt our relationships with business partners and customers. In the event of a disaster such as a natural catastrophe, an industrial accident, a blackout, a malicious software attack, a terrorist attack or war, our systems may be inaccessible to employees, customers or business partners for an extended period of time. As a result, our employees may be unable to perform their duties for an extended period of time if our data or systems are disabled or destroyed.
Our computer systems are subject to cyber-attacks, viruses, malware, ransomware, denial of service, hackers and other external hazards, as well as inadvertent errors, equipment and system failures and to unauthorized or illegitimate actions by employees, consultants, agents and other persons with legitimate access to our systems. Publicly-reported cyber-security threats and incidents have dramatically increased in recent years, and financial services companies and their third-party service providers are increasingly the targets of cyber-attacks. The techniques used to attack systems and networks change frequently and can originate from a wide variety of sources. In addition, over time, the sophistication of these threats continues to increase. It is possible that a cyber-security incident could persist for an extended period of time without detection. The use of remote or flexible work arrangements, remote access tools, and mobile technology have expanded potential targets for cyber-attacks. Our administrative and technical controls as well as other preventative actions used to reduce the risk of cyber incidents and protect our information may be insufficient to detect or prevent future unauthorized access, other physical and electronic break-ins, cyber-attacks or other security breaches to our computer systems or those of third parties with whom we transact business.
We have increasingly outsourced certain technology and business process functions to third parties and may continue to do so in the future. Outsourcing of certain technology and business process functions to third parties may expose us to increased risk related to data security or service disruptions. If we do not effectively develop, implement and monitor these relationships, third-party providers do not perform as anticipated, technological or other problems are incurred with a transition, or outsourcing relationships relevant to our business process functions are terminated, we may not realize expected productivity improvements or cost efficiencies and may experience operational difficulties, increased costs and a loss of business.
The increased risks identified above could expose us to data loss, disruption of service, monetary and reputational damages, competitive disadvantage and significant increases in compliance costs, and costs to improve the security and resiliency of our computer systems. The compromise of personal, confidential or proprietary information could also subject us to legal liability or regulatory action under evolving cyber-security, data protection and privacy laws and regulations enacted by the U.S. federal and state governments, or by various regulatory organizations. As a result, our ability to conduct business and our results of operations might be materially and adversely affected. We could also suffer harm to our business and reputation if attempted cyber-attacks are publicized. The regulatory trend toward broad consumer and general public notification of such incidents could exacerbate the harm.
Any failure to protect the confidentiality of customer information could have a material adverse effect on our business and financial condition.
We are subject to privacy regulations and confidentiality obligations, including the Gramm-Leach-Bliley Act and state privacy laws and regulations, that restrict the use and dissemination of, and access to, the information we produce, store or maintain in the course of our business. We also have contractual obligations to protect certain confidential information received through various business relationships. The obligations generally include protecting such information in the same manner and to the same extent as we protect our own confidential information, and, in some instances, may impose indemnity obligations on us relating to unlawful or unauthorized disclosure of any such information.
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If we do not properly comply with privacy regulations or fail to protect confidential information, we could experience adverse consequences, including reputational damage, possible litigation, and regulatory sanctions, such as penalties, fines and loss of license. This could have adverse impact on our image or customer relationships and, consequently, result in loss of business partners, lower sales, lapses of existing business or increased expenses. While we may maintain insurance to mitigate or offset these risks, we cannot be certain that any such insurance coverage would be sufficient in amount or scope to fully address any resulting losses or liability.
Failure to maintain effective and efficient information systems could adversely affect our business.
Our various lines of business depend greatly on the use of effective information systems. Maintaining and updating current information systems and the development of new systems to match emerging technology, regulatory standards and customer expectations requires a substantial commitment of resources. We must maintain adequate information systems in order to perform necessary business functions, including processing premium and purchase payments, administering our products, providing customer support and paying claims. We also use systems for investment management, financial reporting and data analysis to support our reserves and other actuarial estimates. Any interruptions may reduce our revenues or increase our expenses, and may adversely impact our reputation, business partnerships and customer relationships. In addition, system interruptions may impair our ability to timely and accurately complete our financial reporting and other regulatory obligations, and may impact the effectiveness of our internal controls over financial reporting.
The occurrence of catastrophic events, pandemics, terrorism or military actions could adversely affect our business operations.
The occurrence of natural or man-made disasters and catastrophes, including but not limited to pandemics such as COVID-19, acts of terrorism, floods, earthquakes, industrial accident, blackout, cyberattack, malicious software, insider threat, insurrections and military actions and the resulting response by the United States and other countries, unanticipated problems with our business continuity plans and disaster recovery systems, or a support failure from a third party vendor, could adversely affect our business operations and business results. In addition to impacting our normal business operations, such disasters and catastrophes may impact us indirectly by changing the condition and behavior of our customers, business counterparties and regulators, as well as by causing declines or volatility in the economic and financial markets. We maintain business continuity plans for our operations, but we cannot predict with certainty when normal operations would resume if such an event occurred.
The failure of third parties to perform contracted services or the inadequate policies and procedures of third parties with whom we transact business could adversely affect our business operations and financial results.
The Company contracts with third parties to deliver certain services, including administrative, operational, technology, financial, investment, and actuarial services. There is a risk that we will fail to meet legal, regulatory, financial, or customer obligations in the event that our third party service providers fail to deliver contracted services, fail to comply with applicable laws and regulations, fail to provide material information on a timely basis, or suffer a cyber-attack or other security breach. We may also be exposed to reputational damage due to the actions or inactions of our third party service providers. In addition, if we transition to new third party service providers, we may incur unanticipated expenses or experience service delays or interruptions.
Forward-Looking Statements
The disclosures in this Form S-1 contain certain forward-looking statements that are subject to numerous assumptions, risks or uncertainties. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Some of the forward-looking statements can be identified by the use of words such as “anticipates”, “believes”, “expects”, “projects”, “estimates”, “intends”, “plans”, “seeks”, “could”, “may”, “should”, “will” or the negative version of those words or other comparable terminology. Such forward-looking statements include statements relating to: expectations concerning market and other conditions and their effect on future premiums, revenues, earnings and investment activities; recoverability of asset values; and rate changes.
Actual results and/or financial condition could differ materially from those contained in or implied by such forward-looking statements for a variety of reasons including but not limited to the following and those discussed in Risk Factors.
| • | changes in financial, political and economic conditions, including changes in interest and inflation rates, currency fluctuations and extended economic recessions or expansions in the U.S. and/or abroad; |
| • | performance of securities markets, including the cost of equity index options; |
| • | new legislation or declines in credit quality or credit ratings that could have a material impact on the valuation of securities in MMALIC’s investment portfolio; |
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| • | the availability of capital; |
| • | regulatory actions (including changes in statutory accounting rules); |
| • | changes in the legal environment affecting MMALIC or its customers; |
| • | tax law and accounting changes; |
| • | terrorist activities (including any nuclear, biological, chemical or radiological events), incidents of war or losses resulting from civil unrest and other major losses; |
| • | disruption caused by cyber-attacks or other technology breaches or failures by MMALIC or its business partners and service providers, which could negatively impact MMALIC’s business and/or expose MMALIC to litigation; |
| • | availability of reinsurance and ability of reinsurers to pay their obligations; |
| • | trends in persistency and mortality; |
| • | competitive pressures; |
| • | the ability to obtain adequate rates and policy terms; and |
| • | changes in MMALIC’s financial strength ratings assigned by major ratings agencies. |
The forward-looking statements herein are made only as of the date of this report. MMALIC assumes no obligation to publicly update any forward-looking statements.
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Management’s Discussion and Analysis of Financial Conditions and Results of Operations
The following discussion provides an assessment of the financial position and results of operations on a statutory basis of MassMutual Ascend Life Insurance Company (“MMALIC” or “Company”) operations. Statutory accounting practices (“SAP”) financial information is prepared and presented in accordance with accounting practices prescribed or permitted by the National Association of Insurance Commissioners (“NAIC”) and the Ohio Department of Insurance. Certain differences exist between SAP and U.S. generally accepted accounting principles (“GAAP”). See Note B of MMALIC’s statutory basis audited financial statements, which are included elsewhere in this document, for a discussion of these differences.
OVERVIEW
In the fourth quarter of 2022, the Company’s name was changed to MassMutual Ascend Life Insurance Company, formerly known as Great American Life Insurance Company (“GALIC”). MMALIC, a stock life insurance company domiciled in the state of Ohio, is a direct, wholly-owned subsidiary of Glidepath Holdings Inc., a financial services holding company wholly-owned by Massachusetts Mutual Life Insurance Company (“MassMutual”).
MMALIC predominantly markets traditional fixed, fixed-indexed, and registered index-linked annuities nationwide to the savings and retirement markets and maintains term and universal life in-force business, which the Company manages as one operating segment. MMALIC is licensed to write life, annuity and accident & health insurance in forty-nine states, District of Columbia and Puerto Rico (effective February 8th, 2024).
CHANGE OF OWNERSHIP
On May 28, 2021, MassMutual purchased MMALIC, formerly known as GALIC, and its two insurance subsidiaries, Annuity Investors Life Insurance Company and Manhattan National Life Insurance Company, as well as a broker-dealer affiliate, MM Ascend Life Investor Services, LLC (formerly known as Great American Advisors, LLC) and insurance distributor AAG Insurance Agency, LLC from American Financial Group, Inc. (“AFG”). Total proceeds for the sale were $3.57 billion. MMALIC and its subsidiaries at that date became a direct wholly-owned subsidiary of Glidepath Holdings Inc., a financial services holding company wholly-owned by MassMutual.
NOTABLE TRANSACTIONS
On February 17, 2022, MMALIC entered into a Funds Withheld Coinsurance agreement, effective February 1, 2022, with Martello Re Limited, a Bermuda-domiciled Class E life and annuity reinsurer launched in 2022. MMALIC ceded statutory reserves of approximately $14.2 billion on a closed block of fixed, fixed-indexed and payout annuity policies, in exchange for a $320.0 million ceding commission paid by Martello Re. The transaction resulted in a significant increase to MMALIC’s Risk Based Capital ratio.
Effective January 1, 2022, the Company recaptured the fixed-indexed annuity policies ceded to Hannover Life Reassurance Company of America pursuant to an Indemnity Reinsurance Agreement, dated December 31, 2018. The financial impact of the reinsurance recapture was a decrease to statutory capital of $140.6 million and reported as a change in policyholder reserves.
In 2021 the Ohio Department of Insurance promulgated Ohio Administrative Code Section 3901-1-67, Alternative Derivative and Reserve Accounting Practices (OAC 3901-1-67). This regulation allows Ohio-domiciled insurance companies to utilize certain alternative derivative and reserve accounting practices for eligible derivative instruments and indexed products, respectively, in order to better align the measurement of indexed product reserves and the derivatives that hedge them. Effective January 1, 2022, the Company elected to apply OAC 3901-1-67 to its derivative instruments hedging fixed-indexed annuity products and fixed-indexed reserve liabilities.
Under OAC 3901-1-67, derivative instruments will be carried on the statutory balance sheet at amortized cost with the initial hedge cost amortized over the term and asset payoffs realized at the end of the term being reported through net investment income. Additionally, the cash surrender value reserves for fixed-indexed annuity products will only reflect index interest credits at the end of the crediting term as compared to partial index interest credits accumulating throughout the crediting term as an increase in aggregate reserves for life and accident and health contracts. As a result of the Company’s election to apply OAC 3901-1-67 as of January 1, 2022, total statutory admitted assets decreased $393.6 million, total statutory liabilities decreased $236.2 million and total statutory capital and surplus decreased $157.4 million. The following table summarizes the components of the total decrease in statutory surplus as of the adoption date of January 1, 2022 (in millions):
Change in reserve on account of change in valuation basis | $ | 236.2 | ||
Cumulative effect of change in accounting principle | (454.4 | ) | ||
Change in net deferred tax asset | 46.2 | |||
Change in nonadmitted assets | 14.6 | |||
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Total decrease in statutory surplus | $ | (157.4 | ) | |
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A-13
In August 2023, the NAIC adopted INT 23-01T — Disallowed IMR (“INT 23-01T”). INT 23-01T provides optional, limited-term guidance for the assessment of disallowed IMR for up to 10% of adjusted general account capital and surplus. An insurer’s capital and surplus must first be adjusted to exclude certain “soft assets” including net positive goodwill, electronic data processing equipment and operating system software, net deferred tax assets and admitted disallowed IMR. An insurer will only be able to admit the negative IMR if the insurer’s risk-based capital is over 300% authorized control level after adjusting to remove the assets described above.
As adopted, negative IMR may be admitted first in the insurer’s general account and then, if all disallowed IMR in the general account is admitted and the percentage limit is not reached, to the separate account proportionately between insulated and noninsulated accounts. If the insurer can demonstrate historical practice in which acquired gains from derivatives were also reversed to IMR (as liabilities) and amortized, there is no exclusion for derivatives losses. INT 23-01T was adopted by the Company as of September 30, 2023 and will be effective through December 31, 2025. To the extent the Company’s IMR balance is a net negative, the effects of INT 23-01T will be reflected in the Company’s financial position, results of operations, and financial statement disclosures. The Company has adopted this guidance and the adoption resulted in an admitted disallowed IMR of $271.5 million.
ANALYIS OF RESULTS OF OPERATIONS – YEARS ENDED DECEMBER 31, 2023 AND 2022
The following table presents MMALIC’s statutory results of operations for the periods indicated:
| Year Ended December 31 | ||||||||||||
| 2023 | 2022 | % Change | ||||||||||
Revenues: | ||||||||||||
Premiums and annuity considerations | $ | 8,506.8 | $ | (7,198.3 | ) | 218 | % | |||||
Net investment income | 1,918.4 | 1,019.0 | 88 | % | ||||||||
Other income | 139.8 | 581.0 | -76 | % | ||||||||
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Total premiums and other revenues | 10,565.0 | (5,598.3 | ) | 289 | % | |||||||
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Benefits and Expenses: | ||||||||||||
Policyholder benefits | 748.1 | 505.8 | 48 | % | ||||||||
Surrender benefits | 2,434.7 | 1,460.5 | 67 | % | ||||||||
Change in policyholder reserves | 5,901.8 | (8,743.9 | ) | 167 | % | |||||||
Direct commissions and commissions and expense allowances on reinsurance assumed | 394.2 | 364.6 | 8 | % | ||||||||
Other expenses | 695.8 | 610.5 | 14 | % | ||||||||
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Total benefits and expenses | 10,174.6 | (5,802.5 | ) | 275 | % | |||||||
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Operating results before federal income taxes and realized capital gains (losses) | 390.4 | 204.2 | 91 | % | ||||||||
Federal income taxes on operations | (241.8 | ) | (13.6 | ) | 1678 | % | ||||||
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Operating results before realized gains (losses) | 148.6 | 190.6 | -22 | % | ||||||||
Realized losses net of federal income taxes | (153.7 | ) | (32.6 | ) | 371 | % | ||||||
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Net income | $ | (5.1 | ) | $ | 158.0 | -103 | % | |||||
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Operating results before federal income taxes and realized capital gains (losses) increased by 91% for the 12 months ended December 31, 2023, compared to the 12 months ended December 31, 2022. This increase was primarily attributable to higher net investment income in 2023 partially offset by the Hannover reinsurance treaty recapture in 2022.
Net income decreased 103% in 2023 compared to 2022. This decrease was largely driven by federal income taxes on operations and realized losses primarily related to option mark to market gains (partially offset in change in deferred tax asset). In addition, impairments increased by $48.4 million in 2023 compared to 2022 primarily related to Silicon Valley Bank and Signature Bank.
A-14
Revenues
Total revenues increased to $10,565.0 million in the 12 months ended December 31, 2023 from ($5,598.3) million for the 12 months ended December 31, 2022. Following is a discussion of the primary contributors to this increase.
This increase is primarily attributable to the Martello Re transaction recorded through premium and annuity considerations in 2022 (offset in change in policyholder reserves). Excluding the initial Martello Re ceded premium of $14.2 billion, premium and annuity considerations increased 23%. This increase is due to record premium sales in 2023 primarily attributable to higher traditional fixed annuity sales. Net investment income increased 88% in the 2023 compared to 2022, primarily due to higher investment income from higher yields, ceded investment income related to reimbursement of capital losses, and higher income on derivative instruments. Gross investment income, excluding derivative instruments, increased 35% primarily due to growth in annuity sales.
The following table provides a summary of the components of net investment income:
| Year Ended December 31 | ||||||||
| 2023 | 2022 | |||||||
Investment income: | ||||||||
Bonds | $ | 1,803.2 | $ | 1,436.1 | ||||
Equity securities | 23.7 | 9.3 | ||||||
Mortgage loans | 200.3 | 116.5 | ||||||
Policy loans | 3.8 | 4.1 | ||||||
Cash and short-term investments | 109.7 | 17.5 | ||||||
Other invested assets | 131.9 | 96.1 | ||||||
Derivative instruments | (41.3 | ) | (174.6 | ) | ||||
Other | — | 2.9 | ||||||
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Gross investment income | 2,231.3 | 1,507.9 | ||||||
Investment expenses | (72.2 | ) | (35.6 | ) | ||||
Ceded investment income | (240.7 | ) | (453.3 | ) | ||||
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Net investment income | $ | 1,918.4 | $ | 1,019.0 | ||||
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Other income decreased 76% from 2022 to 2023, primarily due to the $320.0 million ceding commission paid by Martello Re in 2022. In accordance with statutory accounting practices, ceding commissions representing gains on the reinsurance of in-force blocks of business are deferred in surplus and amortized over the reinsurance contract period. The offsetting impact of ceding commissions is recorded in other income with a corresponding increase in surplus representing the deferred gain that will be amortized over the reinsurance contract.
Benefits and Expenses
Policyholder benefits increased 48% in 2023 compared to 2022. This increase was primarily attributable to the initial ceded annuity claim liability related to the Martello Re transaction in 2022. Surrender benefits increased 67% in 2023 compared to the prior year due to the higher interest rate environment in 2023 and aging of the business. Net Surrender and withdrawal benefits are offset by a corresponding change in policyholder reserves. The death benefits paid pursuant to life insurance policies resulted in an impact to operating earnings by the amount of benefits paid above the amount of policyholder reserves released, net of reinsurance.
Change in policyholder reserves increased 167% in 2023 compared to 2022. This increase was primarily the result of the initial Martello Re transaction recorded through Change in policyholder reserves (offset in Premiums and annuity considerations) in 2022 and record annuity sales in 2023 partially offset by surrenders.
Commissions related expenses – direct commissions and expense allowances on reinsurance assumed increased 8% in 2023 compared to 2022, primarily due to higher commissions on record gross annuity sales in 2023. Other expenses increased 14% from 2023 to 2022 primarily due to a litigation accrual and net transfer to separate accounts in 2023 partially offset by the amortization of the ceding commission paid by Martello Re in 2022. The amortization of the ceding commission is offset by the ceding commission reported in Other income.
A-15
Realized Gains (Losses) Net of Federal Income Taxes
Realized losses net of federal income taxes in 2023 were ($153.7) million compared to losses of ($32.6) million in 2022. For statutory reporting purposes, realized gains (losses) reported on the statement of operations are net of gains and losses transferred to the Interest Maintenance Reserve (“IMR”). Amounts transferred to IMR, which is a liability reported in the statement of financial position, are the portion of gains and losses for securities sold that relates to gains and losses resulting from changes in interest rates and are amortized into operations over the estimated remaining lives of the securities sold. Gains and losses reported in the statement of operations are credit and non-interest related. The increase in realized losses (net of federal income taxes) relates to option mark to market gains (partially offset in change in deferred tax asset). In addition, impairments increased by $48.4 million in 2023 compared to 2022 primarily related to Silicon Valley Bank and Signature Bank.
ANALYIS OF RESULTS OF OPERATIONS – YEARS ENDED DECEMBER 31, 2022 AND 2021
The following table presents the statutory results of operations for the periods indicated:
| Year Ended December 31 | ||||||||||||
| 2022 | 2021 | % Change | ||||||||||
Revenues: | ||||||||||||
Premiums and annuity considerations | $ | (7,198.3 | ) | $ | 5,027.0 | -243 | % | |||||
Net investment income | 1,019.0 | 1,951.0 | -48 | % | ||||||||
Other income | 581.0 | 97.0 | 499 | % | ||||||||
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Total premiums and other revenues | (5,598.3 | ) | 7,075.0 | -179 | % | |||||||
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Benefits and Expenses: | ||||||||||||
Policyholder benefits | 505.8 | 901.2 | -44 | % | ||||||||
Surrender benefits | 1,460.5 | 2,208.0 | -34 | % | ||||||||
Change in policyholder reserves | (8,743.9 | ) | 3,107.8 | -381 | % | |||||||
Direct commissions and commissions and expense allowances on reinsurance assumed | 364.6 | 285.2 | 28 | % | ||||||||
Other expenses | 610.5 | 317.0 | 93 | % | ||||||||
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Total benefits and expenses | (5,802.5 | ) | 6,819.2 | -185 | % | |||||||
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Operating results before federal income taxes and realized capital gains (losses) | 204.2 | 255.8 | -20 | % | ||||||||
Federal income taxes on operations | (13.6 | ) | (45.5 | ) | -70 | % | ||||||
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Operating results before realized gains (losses) | 190.6 | 210.3 | -9 | % | ||||||||
Realized gains (losses) net of federal income taxes | (32.6 | ) | 118.7 | -127 | % | |||||||
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Net income | $ | 158.0 | $ | 329.0 | -52 | % | ||||||
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Operating results before federal income taxes and realized capital gains (losses) decreased by 20% for the 12 months ended December 31, 2022 compared to the 12 months ended December 31, 2021. This decrease was primarily attributable to the Hannover reinsurance treaty recapture and the impact from the Martello Re reinsurance transaction.
Net income decreased 52% in 2022 compared to 2021. This decrease was largely driven by items mentioned above, along with realized losses in 2022 compared to realized gains in 2021. The realized losses in 2022 were primarily related to sales of fixed maturities, equities, and derivative instruments. The realized gains in 2021 were primarily related to sales of fixed maturities, equities, and other invested assets.
A-16
Revenues
Total revenues decreased to ($5,598.3) million in the 12 months ended December 31, 2022 from $7,075.0 million for the 12 months ended December 31, 2021. Following is a discussion of the primary contributors to this decrease.
This decrease is primarily attributable to the initial Martello Re transaction recorded through premium and annuity considerations (offset in change in policyholder reserves). Excluding the initial Martello Re ceded premium of $14.2 billion, premium and annuity considerations increased 39%. This increase is primarily attributable to higher traditional fixed, fixed-indexed and registered index-linked annuity sales in 2022. Net investment income decreased 48% in the 2022 period compared to 2021, primarily due to ceded investment income related to the Martello Re reinsurance transaction, and lower income on derivative instruments. Gross investment income, excluding derivative instruments, increased 16% primarily due to growth in annuity sales.
The following table provides a summary of the components of net investment income:
| Year Ended December 31 | ||||||||
| 2022 | 2021 | |||||||
Investment income: | ||||||||
Bonds | $ | 1,436.1 | $ | 1,240.2 | ||||
Equity securities | 9.3 | 28.5 | ||||||
Mortgage loans | 116.5 | 74.6 | ||||||
Real estate | — | 11.9 | ||||||
Policy loans | 4.1 | 4.7 | ||||||
Cash and short-term investments | 17.5 | 18.8 | ||||||
Other invested assets | 96.1 | 75.8 | ||||||
Derivative instruments | (174.6 | ) | 543.7 | |||||
Other | 2.9 | 2.0 | ||||||
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Gross investment income | 1,507.9 | 2,000.2 | ||||||
Investment expenses | (35.6 | ) | (49.2 | ) | ||||
Ceded investment income | (453.3 | ) | — | |||||
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Net investment income | $ | 1,019.0 | $ | 1,951.0 | ||||
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Other income increased 499% from 2021 to 2022, primarily due to the $320.0 million ceding commission paid by Martello Re. In accordance with statutory accounting practices, ceding commissions representing gains on the reinsurance of in-force blocks of business are deferred in surplus and amortized over the reinsurance contract period. The offsetting impact of ceding commissions is recorded in other income with a corresponding increase in surplus representing the deferred gain that will be amortized over the reinsurance contract.
Benefits and Expenses
Policyholder benefits decreased 44% in 2022 compared to 2021. This decrease was primarily attributable to ceded annuity benefits related to the Martello Re transaction. Surrender benefits decreased 34% in 2022 compared to the prior year due to ceded surrenders related to the Martello Re transaction. Net Surrender and withdrawal benefits were offset by a corresponding change in policyholder reserves. The death benefits paid pursuant to life insurance policies resulted in an impact to operating earnings by the amount of benefits paid above the amount of policyholder reserves released, net of reinsurance.
Change in policyholder reserves decreased 381% in 2022 compared to 2021. This decrease was primarily the result of the initial Martello Re transaction recorded through Change in policyholder reserves (offset in Premiums and annuity considerations). The initial Martello Re transaction in the first quarter of 2022 resulted in a reduction of annuity reserves of approximately $14.2 billion.
Commissions related expenses – direct commissions and expense allowances on reinsurance assumed increased 28% in 2022 compared to 2021, primarily due to higher commissions on record gross annuity sales in 2022. Other expenses increased 93% from 2021 to 2022 primarily due to the amortization of the ceding commission paid by Martello Re. The amortization of the ceding commission is offset by the ceding commission reported in Other income.
A-17
Realized Gains (Losses) Net of Federal Income Taxes
Realized losses net of federal income taxes in 2022 were ($32.6) million compared to gains of $118.7 million in 2021. For statutory reporting purposes, realized gains (losses) reported on the statement of operations are net of gains and losses transferred to the Interest Maintenance Reserve (“IMR”). Amounts transferred to IMR, which is a liability reported in the statement of financial position, are the portion of gains and losses for securities sold that relates to gains and losses resulting from changes in interest rates and are amortized into operations over the estimated remaining lives of the securities sold. Gains and losses reported in the statement of operations are credit and non-interest related. The decrease is mainly due to the net gain recognized by MMALIC in 2021 related to the sale of Schedule BA assets to AFG prior to MassMutual’s acquisition of MMALIC and its subsidiaries.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Management believes MMALIC has sufficient resources to meet its liquidity requirements. MMALIC’s liquidity requirements relate primarily to the liabilities associated with its annuity and life products as well as operating costs and expenses, taxes, and contributions of capital to its subsidiaries. Historically, cash flows from premiums and investment income have provided more than sufficient funds to meet these requirements. Funds received in excess of cash requirements are generally invested in additional marketable securities. In addition, MMALIC generally holds a significant amount of highly liquid, short-term investments. If funds generated from operations are insufficient to meet liquidity requirements for any period, MassMutual may contribute funds to MMALIC.
MMALIC’s annuity operations typically produce positive net operating cash flows as investment income exceeds acquisition costs and operating expenses. Interest credited on annuity policyholder funds is a non-cash increase in MMALIC’s annuity reserves, and annuity premiums, benefits and withdrawals are considered financing activities due to the deposit-type nature of annuities. For the full year, net cash provided by operating activities was $6.82 billion in 2023 and net cash provided by operating activities was $5.76 billion in 2022.
MMALIC’s financing activities consist primarily of transactions with annuity policyholders and dividend payments to its former parent company. Net cash used in financing activities was $2,619.3 million in 2023 compared to $1,121.8 million in 2022, an increase of $1,497.5 million. Net withdrawals on deposit-type contracts were $136.5 million in 2023 compared to deposits of $50.4 million in 2022, an increase of $186.9 million. In addition, MMALIC paid $200.0 million of cash dividends to its parent in 2023 compared to no dividend in 2022. The additional increase primarily relates to the change in funds held under reinsurance treaties partially offset by derivative collateral.
The Company is a member of the Federal Home Loan Bank (“FHLB”). The FHLB makes advances and provides other banking services to member institutions. The Company owned $20.0 million of FHLB Class B membership stock at December 31, 2023 and 2022. The Company has no membership stock eligible for redemption. Through its association with the FHLB and by purchasing a set amount of FHLB stock, the Company can enter into deposit-type contracts with the FHLB known as funding agreements.
In 2022, the FHLB advanced MMALIC $300.0 million. At December 31, 2023 and 2022, MMALIC had $500.0 million in outstanding advances from the FHLB (included in Liability for deposit-type contracts), bearing interest at rates ranging from 1.35% to 1.97% (average rate of 1.72% at December 31, 2023). The Company paid interest of approximately $8.6 million and $8.4 million on these advances in 2023 and 2022, respectively. These advances must be repaid between 2025 and 2030 ($200.0 million in 2025 and $300.0 million in 2030). The Company has invested the proceeds from the advances in bonds for the purpose of earning a spread over the interest payments due to the FHLB. As required by the funding agreement, the Company purchased 215,252 shares ($21.5 million) of FHLB activity and excess stock.
The Company also posted collateral to the FHLB of assets with a fair value and carrying value of approximately $1,204.1 million and $1,279.2 million, respectively, as of December 31, 2023. The Company’s FHLB borrowing capacity is based on the Company’s estimate of collateral eligible to be pledged with the FHLB. The deposit contract liabilities, reported in liability for deposit-type contracts in the balance sheet, and related assets are accounted for in the Company’s general account.
MMALIC has no material contractual purchase obligations or other long-term liabilities at December 31, 2023 or 2022.
A-18
Policyholder Liabilities
Liquidity needs vary by annuity and life product. Factors that impact a product’s need for liquidity include interest rate levels, contract size, competitive products, termination or surrender charges, market value adjustments, federal income taxes, and benefit levels. To help assure that obligations will be met when they fall due, the Company uses asset/liability cash flow management techniques that take into consideration current and total investment return requirements, asset and liability durations, risk tolerance, and cash flow requirements. The fair values for liabilities under all insurance contracts are taken into consideration in the overall management of interest rate risk.
The Company’s products include features that enhance the Company’s liquidity position. Virtually all individual deferred annuity products contain surrender charges of varying durations, reducing the risk that customers will request a full surrender during the period charges are in effect. Surrender charges allow the Company to better plan the maturities of its invested assets by reducing the risk that future cash outflows will exceed anticipated levels. Also, 49% of the Company’s in-force annuity products (measured by reserves) at December 31, 2023 had a market value adjustment (“MVA”) that protects the Company when surrenders occur as a result of changes in market interest rates.
The following table provides a summary of statutory annuity reserves at December 31, 2023 by withdrawal characteristics:(1)
| Annuity Reserves Amount | % of Total | |||||||
Subject to discretionary withdrawal: | ||||||||
a. With market value adjustment | $ | 22,517.3 | 48.6 | % | ||||
b. At book value less current surrender charge of 5% or more | 5,395.5 | 11.7 | % | |||||
c. At fair value | 387.5 | 0.8 | % | |||||
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d. Total with market value adjustment or at fair value (total of a through c) | 28,300.3 | 61.1 | % | |||||
e. At book value without adjustment (minimal or no charge or adjustment) | 14,108.8 | 30.5 | % | |||||
Not subject to discretionary withdrawal | 3,865.2 | 8.4 | % | |||||
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Total (gross: direct + assumed) | 46,274.3 | 100.0 | % | |||||
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Reinsurance ceded | 15,069.3 | |||||||
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Total (net) | $ | 31,205.0 | ||||||
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| (1) | Annuity contract reserves and deposit fund liabilities are monetary amounts that an insurer must have available to provide for future obligations with respect to annuities and deposit funds. Reserves are liabilities on the balance sheets of financial statements prepared in conformity with statutory accounting practices. These amounts are at least equal to the value to be withdrawn by policyholders. |
As indicated in the table above, 8.4% of policyholder funds at December 31, 2023 were not subject to discretionary withdrawal and another 61.1% were subject to adjustments and charges that are designed to protect the Company from early withdrawals in the event that they occur. We believe that this structure provides the Company with a relatively stable block of deposit liabilities which helps reduce the risk of unexpected cash withdrawals and the adverse financial effects cash withdrawals could cause.
Some MMALIC annuity products include guaranteed benefits, including guaranteed minimum death benefits and guaranteed minimum withdrawal benefits. These guarantees are designed to protect contract holders against significant downturns in securities markets and fluctuations in interest rates. Periods of significant and sustained downturns in securities markets, increased equity volatility, or reduced interest rates could result in an increase in the valuation of liabilities associated with products with guaranteed benefits. An increase in these liabilities would result in a decrease in MMALIC’s net income.
MMALIC manages market risks by utilizing a comprehensive asset/liability management process involving the monitoring of asset and liability interest rate sensitivities for its various products. This process includes cash flow testing under various interest rate scenarios, including severe stress tests. Although cash flow testing includes many different scenarios, cash flow requirements are inherently unpredictable, as they are affected by external factors, such as changes in interest rates.
MMALIC also utilizes a variety of financial instruments as part of its efforts to efficiently hedge and manage fluctuations in the fair value of its investment portfolio attributable to changes in general interest rate levels and to manage duration mismatch of assets and liabilities. Those instruments may include interest rate exchange agreements, equity index options purchased in either the over-the-counter market or on the Chicago Board Options Exchange, payer swaptions, and commitments to extend credit. All instruments involve elements of credit and market risks in excess of the amounts recognized in the accompanying financial statements at a given point of time. The contract or notional amounts reflect the extent of involvement in the various types of financial instruments.
A-19
There can be no assurance that future experience regarding benefit payments and surrenders will be similar to historic experience because withdrawal and surrender levels are influenced by factors such as the interest rate environment and the Company’s claims-paying and financial strength ratings.
Capital Resources
The NAIC’s model law for risk based capital (“RBC”) applies to life, accident and health companies. RBC formulas determine the amount of capital that an insurance company needs so that it has an acceptable expectation of not becoming financially impaired. At December 31, 2023, the capital ratios of MMALIC and its insurance subsidiaries substantially exceeded the applicable RBC requirements.
The maximum amount of dividends which can be paid to stockholders of life insurance companies domiciled in the State of Ohio without prior approval of the Ohio Insurance Director is the greater of 10% of surplus as regards to policyholders or net income as of the preceding December 31, but only to the extent of earned surplus as of the preceding December 31. The maximum amount of dividends payable by MMALIC in 2024 without prior approval is $304.9 million based on 10% of surplus as regards to policyholders as of the preceding December 31. At December 31, 2023, surplus as regards policyholders was $3,049.4 million, earned surplus was $1,962.7 million, and 2023 net loss was $5.1 million.
INVESTMENTS
MMALIC had total cash and invested assets of $44,732.1 million and $41,690.4 million at December 31, 2023 and 2022, respectively, as illustrated below (in millions):
| 2023 | 2022 | |||||||||||||||
| Carrying Value | % of Carrying Value | Carrying Value | % of Carrying Value | |||||||||||||
Cash and invested assets: | ||||||||||||||||
Bonds | $ | 34,972.3 | 78.2 | % | $ | 33,331.9 | 79.9 | % | ||||||||
Preferred stocks | 201.0 | 0.5 | % | 185.0 | 0.4 | % | ||||||||||
Common stocks | 271.2 | 0.6 | % | 281.4 | 0.7 | % | ||||||||||
Investments in affiliates and subsidiaries | 445.2 | 1.0 | % | 401.9 | 1.0 | % | ||||||||||
Mortgage loans | 4,256.5 | 9.5 | % | 3,088.8 | 7.4 | % | ||||||||||
Cash, cash equivalents and short-term investments | 2,211.3 | 4.9 | % | 1,991.2 | 4.8 | % | ||||||||||
Policy loans | 30.0 | 0.1 | % | 31.5 | 0.1 | % | ||||||||||
Derivative instruments | 771.4 | 1.7 | % | 873.0 | 2.1 | % | ||||||||||
Other invested assets | 1,573.2 | 3.5 | % | 1,505.7 | 3.6 | % | ||||||||||
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Total cash and invested assets | $ | 44,732.1 | 100.0 | % | $ | 41,690.4 | 100.0 | % | ||||||||
|
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|
| |||||||||||||
All investments held by the Company are monitored for conformity with the qualitative and quantitative limits prescribed by the applicable Ohio laws and regulations. MMALIC attempts to optimize investment income while building the value of its portfolio, placing emphasis upon total long-term performance. Management believes that a high quality investment portfolio should generate a stable and predictable investment return.
The following table summarizes the carrying values and estimated fair values of the Company’s bond portfolio for the year ended December 31, 2023 (in millions):
| 2023 | ||||||||||||
| Carrying Value | Fair Value | Unrealized Gain (Losses) | ||||||||||
U.S. Government and agencies | $ | 186.7 | $ | 156.8 | $ | (29.9 | ) | |||||
All other governments | 19.2 | 18.2 | (1.0 | ) | ||||||||
States, territories and possessions | 180.4 | 175.5 | (4.9 | ) | ||||||||
Political subdivisions | 231.5 | 228.7 | (2.8 | ) | ||||||||
Special Revenue | 1,920.8 | 1,800.2 | (120.6 | ) | ||||||||
Industrial and miscellaneous | 31,688.5 | 29,809.8 | (1,878.7 | ) | ||||||||
Parent, subsidiaries and affiliates | 745.2 | 722.2 | (23.0 | ) | ||||||||
|
|
|
|
|
| |||||||
Total bonds | $ | 34,972.3 | $ | 32,911.4 | $ | (2,060.9 | ) | |||||
|
|
|
|
|
| |||||||
A-20
The following table summarizes the carrying values and estimated fair values of the Company’s bond portfolio for the year ended December 31, 2022 (in millions):
| 2022 | ||||||||||||
| Carrying Value | Fair Value | Unrealized Gain (Losses) | ||||||||||
U.S. Government and agencies | $ | 98.9 | $ | 64.0 | $ | (34.9 | ) | |||||
All other governments | 19.2 | 17.8 | (1.4 | ) | ||||||||
States, territories and possessions | 190.7 | 183.1 | (7.6 | ) | ||||||||
Political subdivisions | 272.7 | 268.7 | (4.0 | ) | ||||||||
Special Revenue | 1,691.6 | 1,537.0 | (154.6 | ) | ||||||||
Industrial and miscellaneous | 30,538.0 | 27,421.0 | (3,117.0 | ) | ||||||||
Parent, subsidiaries and affiliates | 520.8 | 468.3 | (52.5 | ) | ||||||||
|
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|
|
|
| |||||||
Total bonds | $ | 33,331.9 | $ | 29,959.9 | $ | (3,372.0 | ) | |||||
|
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| |||||||
The Company’s bond portfolio consisted of 94% investment grade securities at December 31, 2023 and 2022. The NAIC Securities Valuation Office (“SVO”) is responsible for the day-to-day credit quality assessment and valuation of securities owned by state-regulated insurance companies. The NAIC assigns securities quality ratings and uniform valuations, which are used by insurers when preparing their annual statements to their state insurance regulators. The NAIC ratings are similar to the rating agency designations of the Nationally Recognized Statistical Rating Organizations (“NRSRO”) for marketable bonds. NAIC ratings 1 and 2 include bonds generally considered investment grade. NAIC ratings 3 through 6 include bonds generally considered below investment grade. Typically, if a security has been rated by an NRSRO, the SVO utilizes that rating and assigns an NAIC designation based on the following system:
NAIC Rating | NRSRO Equivalent | |
| 1 | Aaa/Aa/A | |
| 2 | Baa | |
| 3 | Ba | |
| 4 | B | |
| 5 | Caa and Lower | |
| 6 | In or near default |
The following table summarizes MMALIC’s bond portfolio by NAIC ratings (in millions):
| 2023 | 2022 | |||||||||||||||
| Carrying Value | % of Carrying Value | Carrying Value | % of Carrying Value | |||||||||||||
NAIC Rating | ||||||||||||||||
1 | $ | 20,190.9 | 57.7 | % | $ | 17,725.2 | 53.2 | % | ||||||||
2 | 12,704.0 | 36.3 | % | 13,435.6 | 40.3 | % | ||||||||||
3 | 1,253.2 | 3.6 | % | 1,475.9 | 4.4 | % | ||||||||||
4 | 495.3 | 1.4 | % | 454.6 | 1.4 | % | ||||||||||
5 | 287.0 | 0.8 | % | 209.4 | 0.6 | % | ||||||||||
6 | 41.9 | 0.1 | % | 31.2 | 0.1 | % | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Bonds | $ | 34,972.3 | 100.0 | % | $ | 33,331.9 | 100.0 | % | ||||||||
|
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|
| |||||||||||||
The table below sets out the expected maturities of MMALIC’s bonds as of December 31, 2023 and 2022, respectively (in millions):
| 2023 | 2022 | |||||||||||||||
| Carrying Value | % of Carrying Value | Carrying Value | % of Carrying Value | |||||||||||||
Maturity: | ||||||||||||||||
One year or less | $ | 2,522.4 | 7.2 | % | $ | 2,834.3 | 8.5 | % | ||||||||
After one year through five years | 14,032.5 | 40.1 | % | 12,227.3 | 36.7 | % | ||||||||||
After five years through ten years | 10,975.9 | 31.4 | % | 10,341.3 | 31.0 | % | ||||||||||
After ten years | 7,441.5 | 21.3 | % | 7,929.0 | 23.8 | % | ||||||||||
|
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|
|
| |||||||||
Total bonds by maturity | $ | 34,972.3 | 100.0 | % | 33,331.9 | 100.0 | % | |||||||||
|
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A-21
The expected maturities in the foregoing tables may differ from the contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties.
Fair values for MMALIC’s portfolio are determined by MMALIC’s internal investment professionals using data from nationally recognized pricing services as well as non-binding broker quotes. Fair values of equity securities are generally based on published closing prices. When prices obtained for the same security vary, MMALIC’s internal investment professionals select the price they believe is most indicative of an exit price.
The pricing services engaged by MMALIC’s investment professionals use a variety of observable inputs to estimate fair value of bonds that do not trade on a daily basis. These inputs include, but are not limited to, recent reported trades, benchmark yields, issuer spreads, bids or offers, reference data, and measures of volatility.
The pricing of mortgage backed securities (“MBS”) is unique as fair value includes estimates of the rate of future prepayments and defaults of principal over the remaining life of the underlying collateral. Due to the lack of transparency in the process that brokers use to develop MBS prices, valuations based on brokers’ prices are classified as Level 3 in the hierarchy unless the price can be corroborated, for example, by comparison to similar securities priced using observable inputs.
Valuation techniques utilized by pricing services and prices obtained from external sources are reviewed by MMALIC’s internal investment professionals who are familiar with the securities being priced and the markets in which they trade to ensure the fair value determination is representative of an exit price. To validate the appropriateness of the prices obtained, these investment professionals consider widely published indices (as benchmarks), recent trades, changes in interest rates, general economic conditions, and the credit quality of the specific issuers. In addition, MMALIC communicates directly with pricing services regarding the methods and assumptions used in pricing, including verifying, on a test basis, the inputs used by the services to value specific securities.
MBS are subject to significant prepayment risk because, in periods of declining interest rates, mortgages may be repaid more rapidly than scheduled as borrowers refinance higher rate mortgages to take advantage of lower rates. MBS represented approximately 12% and 13% of MMALIC’s bond portfolio at December 31, 2023 and 2022, respectively.
Municipal bonds represented approximately 5% of MMALIC’s fixed maturity portfolio at December 31, 2023 and 2022. MMALIC’s municipal bond portfolio is high quality, with the majority of the securities rated investment grade as of year-end 2023 and 2022. The portfolio is well diversified across the states of issuance and individual issuers.
When a decline in the value of a specific investment is considered to be other-than-temporary, an allowance for credit losses (impairment) is charged to earnings (accounted for as a realized loss). The determination of whether unrealized losses are other-than-temporary requires judgment based on subjective as well as objective factors. Factors considered and resources used by management include:
| a) | whether the unrealized loss is credit-driven or a result of changes in market interest rates, |
| b) | the extent to which fair value is less than cost basis, |
| c) | cash flow projections received from independent sources, |
| d) | historical operating, balance sheet and cash flow data, |
| e) | near-term prospects for improvement in the issuer or its industry, |
| f) | third-party research and communications with industry specialists, |
| g) | financial models and forecasts, |
| h) | the continuity of interest payments, maintenance of investment grade ratings and hybrid nature of certain investments, |
| i) | discussions with issuer management, and |
| j) | ability and intent to hold the investment for a period sufficient to allow for anticipated recovery in fair value. |
Based on its analysis of the factors listed above, management believes MMALIC will recover its cost basis in the bond securities with unrealized losses and that MMALIC has the ability to hold the securities until they recover in value and had no intent to sell them at December 31, 2023. Although MMALIC can continue holding its bond investments with unrealized losses, its intent to hold them may change due to deterioration in the issuers’ creditworthiness, decisions to lessen exposure to a particular issuer or industry, asset/liability management decisions, market movements, changes in views about appropriate asset allocation or the desire to offset taxable realized gains. Should MMALIC’s ability or intent change regarding a particular security, a charge for impairment would likely be required. Significant declines in the fair value of MMALIC’s investment portfolio could have a significant adverse effect on MMALIC’s liquidity. For information on MMALIC’s realized gains (losses) on securities, see “Realized Gains (Losses) Net of Federal Income Taxes.”
A-22
OTHER FINANCIAL INSTRUMENTS
The Company’s derivative strategy employs a variety of derivative financial instruments including interest rate and currency swaps, options, financial futures, and forward contracts. Investment risk is assessed on a portfolio basis and individual derivative financial instruments are not generally designated in hedging relationships; therefore, as allowed by statutory accounting practices, the Company intentionally has not applied hedge accounting.
MMALIC utilizes a variety of financial instruments as part of its efforts to economically hedge and manage fluctuations in the fair value of its investment portfolio attributable to changes in general interest rate levels and to manage duration mismatch of assets and liabilities. Those instruments may include interest rate exchange agreements, equity index options purchased in either over-the-counter market or on the Chicago Board Options Exchange, payer swaptions, and commitments to extend credit. All instruments involve elements of credit and market risks in excess of the amounts recognized in the accompanying financial statements at a given point of time. The contract or notional amounts of those instruments reflect the extent of involvement in the various types of financial instruments.
The following table presents the estimated fair value and admitted value for assets and reported value for liabilities of derivatives as of December 31, 2023 and 2022:
| (dollars in millions) | ||||||||||||||||
| Derivative instruments: | 2023 | 2022 | ||||||||||||||
| Assets: | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | ||||||||||||
Options* | $ | 723.8 | $ | 822.9 | $ | 846.8 | $ | 287.4 | ||||||||
Interest rate swaps | 26.6 | 26.6 | 25.2 | 25.2 | ||||||||||||
Financial futures | 21.0 | 21.0 | — | — | ||||||||||||
Currency swaps | — | — | 0.9 | 0.9 | ||||||||||||
Forward contracts | — | — | 0.1 | 0.1 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total derivative instruments assets | $ | 771.4 | $ | 870.5 | $ | 873.0 | $ | 313.6 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| Liabilities: | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | ||||||||||||
Options* | $ | 418.1 | $ | — | $ | 598.6 | $ | — | ||||||||
Interest rate swaps | 66.3 | 95.0 | 95.0 | 95.0 | ||||||||||||
Currency swaps | 38.8 | 4.8 | 4.8 | 4.8 | ||||||||||||
Forward contracts | �� | 5.0 | 2.5 | 2.5 | 2.5 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total derivative instruments liabilities | $ | 528.2 | $ | 102.3 | $ | 700.9 | $ | 102.3 | ||||||||
|
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|
|
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| |||||||||
| * | Effective 1/1/2022, Fixed-indexed options are carried at amortized cost per OAC 3901-1-67. Estimated Fair Value of options is reported net in the asset section for disclosure. |
A-23
CRITICAL ACCOUNTING POLICIES
Significant accounting policies are summarized in Note B — “Significant Accounting Policies” to the financial statements. The preparation of financial statements in conformity with accounting practices prescribed or permitted by the NAIC and the Ohio Department of Insurance, which vary in some respects from GAAP. As more information becomes known, these estimates and assumptions will likely change and may impact amounts reported in the future. The areas where management believes the degree of judgment required to determine amounts recorded in the financial statements is most significant are as follows:
| • | calculation of statutory reserves, and |
| • | the valuation of investments. |
Qualitative and Quantitative Disclosures about Market Risk
Market risk represents the potential economic loss arising from adverse changes in the fair value of financial instruments. MMALIC’s exposures to market risk relate primarily to its investment portfolio and annuity contracts, which are exposed to interest rate risk and, to a lesser extent, equity price risk.
MMALIC’s exposures to interest rate risk relate primarily to the fair value of MMALIC’s bond securities, which are inversely correlated to changes in interest rates. MMALIC’s bond portfolio is comprised of primarily fixed-rate investments with intermediate-term maturities. Structuring the bond portfolio in this manner provides MMALIC with flexibility in reacting to interest rate fluctuations.
MMALIC’s portfolios are managed with an objective of achieving an adequate risk-adjusted return while maintaining sufficient liquidity to meet policyholder obligations. The portfolios are managed in an effort to adequately position the duration and interest rate sensitivity of the assets against the projected cash flows of policyholder liabilities.
A-24
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
Statutory-Basis Financial Statements
As of December 31, 2023 and 2022 and for each of the three years
ended December 31, 2023, 2022 and 2021
with Independent Auditors’ Report
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
Statutory-Basis Financial Statements
As of December 31, 2023 and 2022 and for each of the three years ended
December 31, 2023, 2022 and 2021
Contents
| F-1 | ||||
Statutory-Basis Financial Statements | ||||
| F-4 | ||||
| F-5 | ||||
Statements of Changes in Capital and Surplus - Statutory-Basis | F-6 | |||
| F-7 | ||||
| F-8 | ||||
KPMG LLP
Suite 3400
312 Walnut Street
Cincinnati, OH 45202
The Board of Directors
MassMutual Ascend Life Insurance Company:
Opinions
We have audited the financial statements of MassMutual Ascend Life Insurance Company (the Company), which comprise the balance sheets statutory-basis as of December 31, 2023 and 2022, and the related statements of operations statutory-basis, statements of changes in capital and surplus statutory-basis, and statements of cash flow statutory-basis for the years then ended, and the related notes to the financial statements (collectively, financial statements).
Unmodified Opinion on Statutory Basis of Accounting
In our opinion, the accompanying financial statements present fairly, in all material respects, the balance sheets statutory-basis of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flow for the years then ended in accordance with accounting practices prescribed or permitted by the Ohio Department of Insurance described in Note B.
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 section of our report, the financial statements do not present fairly, in accordance with U.S. generally accepted accounting principles, the financial position of the Company as of December 31, 2023 and 2022, or the results of its operations or its cash flows for the years then ended.
Basis for Opinions
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles
As described in Note B to the financial statements, the financial statements are prepared by the Company using accounting practices prescribed or permitted by the Ohio Department of Insurance, which is a basis of accounting other than U.S. generally accepted accounting principles. Accordingly, the financial statements are not intended to be presented in accordance with U.S. generally accepted accounting principles. The effects on the financial statements of the variances between the statutory accounting practices described in Note B and U.S. generally accepted accounting principles, although not reasonably determinable, are presumed to be material and pervasive.
Emphasis of Matter
As discussed in Note B to the financial statements, in 2022, the Company elected to apply a prescribed practice promulgated under Ohio Administrative Code Section 3901-1-67 (“OAC 3901-1-67”) to its derivative
KPMG LLP, a Delaware limited liability partnership and a member firm of
the KPMG global organization of independent member firms affiliated with
KPMG International Limited, a private English company limited by guarantee.
F-1
instruments hedging indexed products and indexed annuity reserve liabilities. Our opinions are not modified with respect to this matter.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting practices prescribed or permitted by the Ohio Department of Insurance. 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.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that the financial statements are issued.
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
| • | Exercise professional judgment and maintain professional skepticism throughout the audit. |
| • | Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. |
| • | Obtain an understanding of internal control relevant to the audit 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, no such opinion is expressed. |
| • | Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. |
| • | Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time. |
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
F-2
Supplementary Information
Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The supplementary information included in the supplemental schedule of selected statutory-basis financial data, supplemental investment disclosures, and supplemental schedule of life and health reinsurance disclosures is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Ohio Department of Insurance. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audits of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.
/s/ KPMG LLP
Cincinnati, Ohio
April 23, 2024
F-3
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
STATUTORY-BASIS
(Dollars in millions, except share data)
| December 31 | ||||||||
| 2023 | 2022 | |||||||
ADMITTED ASSETS | ||||||||
Cash and invested assets: | ||||||||
Bonds - at amortized cost (fair value: $32,911.4 and $29,959.9) | $ | 34,972.3 | $ | 33,331.9 | ||||
Preferred stocks - principally at fair value (cost: $212.2 and $165.5) | 201.0 | 185.0 | ||||||
Common stocks - at fair value (cost: $195.6 and $220.5) | 271.2 | 281.4 | ||||||
Investments in affiliates and subsidiaries - at subsidiary capital and surplus (cost: $242.8 and $242.1) | 445.2 | 401.9 | ||||||
Mortgage loans | 4,256.5 | 3,088.8 | ||||||
Cash, cash equivalents and short-term investments | 2,211.3 | 1,991.2 | ||||||
Policy loans | 30.0 | 31.5 | ||||||
Derivatives | 771.4 | 873.0 | ||||||
Other invested assets | 1,573.2 | 1,505.7 | ||||||
|
|
|
| |||||
Total cash and invested assets | 44,732.1 | 41,690.4 | ||||||
Net deferred federal income tax asset | 272.8 | 72.2 | ||||||
Deferred and uncollected premiums | 5.6 | 7.7 | ||||||
Current federal income tax recoverable | 16.0 | 89.6 | ||||||
Investment income due and accrued | 528.5 | 414.7 | ||||||
Company-owned life insurance | 223.1 | 218.7 | ||||||
Admitted disallowed interest maintenance reserve | 271.5 | — | ||||||
Other admitted assets | 495.8 | 286.0 | ||||||
|
|
|
| |||||
Total general account admitted assets | 46,545.4 | 42,779.3 | ||||||
Separate account assets | 443.3 | 103.7 | ||||||
|
|
|
| |||||
Total admitted assets | $ | 46,988.7 | $ | 42,883.0 | ||||
|
|
|
| |||||
LIABILITIES, CAPITAL AND SURPLUS | ||||||||
Liabilities: | ||||||||
Policy benefit reserves | $ | 30,212.2 | $ | 24,310.4 | ||||
Liability for deposit-type contracts | 788.0 | 779.8 | ||||||
Policy and contract claims | 165.3 | 140.6 | ||||||
Asset valuation reserve | 528.4 | 577.1 | ||||||
Funds held under reinsurance treaties | 9,968.0 | 12,677.3 | ||||||
Interest maintenance reserve | — | 93.3 | ||||||
Commissions, general expenses, taxes, licenses and fees due or accrued | 63.3 | 59.4 | ||||||
Payable for securities | 315.1 | 120.1 | ||||||
Collateral | 763.9 | 209.5 | ||||||
Derivatives | 528.2 | 700.9 | ||||||
Other liabilities | 162.0 | 278.3 | ||||||
|
|
|
| |||||
Total general account liabilities | 43,494.4 | 39,946.7 | ||||||
Separate account liabilities | 443.3 | 103.7 | ||||||
|
|
|
| |||||
Total liabilities | 43,937.7 | 40,050.4 | ||||||
Capital and surplus: | ||||||||
Common stock - $7.50 par value; 1,200,000 shares authorized; 201,000 shares issued and outstanding | 1.5 | 1.5 | ||||||
Gross paid-in and contributed surplus | 815.2 | 815.2 | ||||||
Unassigned funds | 1,962.8 | 2,015.9 | ||||||
Aggregate write-in for special surplus funds | 271.5 | — | ||||||
|
|
|
| |||||
Total capital and surplus | 3,051.0 | 2,832.6 | ||||||
|
|
|
| |||||
Total liabilities, capital and surplus | $ | 46,988.7 | $ | 42,883.0 | ||||
|
|
|
| |||||
See accompanying notes to statutory-basis financial statements.
F-4
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
STATUTORY-BASIS
(Dollars in millions)
| Year Ended December 31 | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
Premiums and other revenues: | ||||||||||||
Premiums and annuity considerations | $ | 8,506.8 | $ | (7,198.3 | ) | $ | 5,027.0 | |||||
Net investment income | 1,918.4 | 1,019.0 | 1,951.0 | |||||||||
Amortization of interest maintenance reserve | 10.4 | 36.4 | 23.5 | |||||||||
Commissions and expense allowances and reserve adjustments on reinsurance ceded | 70.2 | 496.8 | (50.8 | ) | ||||||||
Charges and fees for deposit-type contracts and miscellaneous income | 59.2 | 47.8 | 124.3 | |||||||||
|
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|
|
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| |||||||
Total premiums and other revenues | 10,565.0 | (5,598.3 | ) | 7,075.0 | ||||||||
|
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|
| |||||||
Benefits and expenses: | ||||||||||||
Policyholders’ benefits | 748.1 | 505.8 | 901.2 | |||||||||
Surrender benefits | 2,434.7 | 1,460.5 | 2,208.0 | |||||||||
Change in policy and contract reserves | 5,901.8 | (8,743.9 | ) | 3,107.8 | ||||||||
Interest and adjustments on deposit-type contracts | 156.9 | 142.3 | 118.7 | |||||||||
Direct commissions and commissions and expense allowances on reinsurance assumed | 394.2 | 364.6 | 285.2 | |||||||||
General insurance expenses | 169.8 | 158.7 | 145.3 | |||||||||
Insurance taxes, licenses and fees | 12.7 | 12.2 | 12.6 | |||||||||
Net transfers to or (from) separate accounts | 356.8 | (22.0 | ) | 36.8 | ||||||||
Other | (0.4 | ) | 319.3 | 3.6 | ||||||||
|
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|
|
| |||||||
Total benefits and expenses | 10,174.6 | (5,802.5 | ) | 6,819.2 | ||||||||
|
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|
|
|
| |||||||
Income from operations before federal income taxes and net realized capital gains and losses | 390.4 | 204.2 | 255.8 | |||||||||
Federal income tax (expense) benefit on operations | (241.8 | ) | (13.6 | ) | (45.5 | ) | ||||||
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| |||||||
Income from operations before net realized capital gains and losses | 148.6 | 190.6 | 210.3 | |||||||||
Net realized capital (losses) gains: | ||||||||||||
Net realized capital (losses) gains before related federal income taxes and transfers to interest maintenance reserve | (531.5 | ) | (12.6 | ) | 301.1 | |||||||
Federal income tax benefit (expense) on net realized capital gains | 23.4 | 14.3 | (118.3 | ) | ||||||||
Interest maintenance reserve transfers, net of tax | 354.4 | (34.3 | ) | (64.0 | ) | |||||||
|
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|
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| |||||||
Net realized capital (losses) gains | (153.7 | ) | (32.6 | ) | 118.7 | |||||||
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| |||||||
Net (loss) income | $ | (5.1 | ) | $ | 158.0 | $ | 329.0 | |||||
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|
|
| |||||||
See accompanying notes to statutory-basis financial statements.
F-5
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
STATUTORY-BASIS
(Dollars in millions)
| Year Ended December 31 | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
Common stock: | ||||||||||||
Balance at beginning of year | $ | 1.5 | $ | 1.5 | $ | 1.5 | ||||||
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Balance at end of year | $ | 1.5 | $ | 1.5 | $ | 1.5 | ||||||
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Gross paid-in and contributed surplus: | ||||||||||||
Balance at beginning of year | $ | 815.2 | $ | 815.2 | $ | 814.0 | ||||||
Contributions from parent | — | — | 1.2 | |||||||||
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Balance at end of year | $ | 815.2 | $ | 815.2 | $ | 815.2 | ||||||
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Unassigned funds: | ||||||||||||
Balance at end of prior year | $ | 2,015.9 | $ | 2,061.4 | $ | 2,081.7 | ||||||
Change in reserve on account of change in valuation basis* | — | 236.2 | — | |||||||||
Cumulative effect of change in accounting principle* | — | (454.4 | ) | — | ||||||||
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Adjusted beginning balance | 2,015.9 | 1,843.2 | 2,081.7 | |||||||||
Net income | (5.1 | ) | 158.0 | 329.0 | ||||||||
Change in net unrealized gains (losses) on derivatives | 217.1 | (204.1 | ) | (67.7 | ) | |||||||
Change in net unrealized foreign exchange capital gains | 19.9 | 8.8 | — | |||||||||
Change in net unrealized capital (losses) gains, net of deferred taxes | (51.8 | ) | 3.5 | 93.1 | ||||||||
Change in net deferred tax asset* | 214.6 | (33.1 | ) | 39.4 | ||||||||
Change in nonadmitted assets* | (22.8 | ) | (4.6 | ) | (20.7 | ) | ||||||
Change in admitted disallowed interest maintenance reserve | (271.5 | ) | — | — | ||||||||
Change in asset valuation reserve | 48.7 | (73.0 | ) | (93.4 | ) | |||||||
Change in surplus as a result of reinsurance | — | 317.2 | — | |||||||||
Dividends to parent | (200.0 | ) | — | (300.0 | ) | |||||||
Correction of error, net of tax | (2.2 | ) | — | — | ||||||||
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Balance at end of year | $ | 1,962.8 | $ | 2,015.9 | $ | 2,061.4 | ||||||
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Special surplus funds: | ||||||||||||
Balance at end of prior year | $ | — | $ | — | $ | — | ||||||
Change in admitted disallowed interest maintenance reserve | 271.5 | — | — | |||||||||
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Balance at end of year | $ | 271.5 | $ | — | $ | — | ||||||
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Total capital and surplus | $ | 3,051.0 | $ | 2,832.6 | $ | 2,878.1 | ||||||
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| * | Effective January 1, 2022, the Company elected to apply Ohio Administrative Code 3901-1-67, Alternative Derivative and Reserve Accounting Practices (OAC 3901-1-67) to its derivative instruments hedging fixed-indexed products and fixed-indexed annuity reserve liabilities. At adoption, the decrease in statutory surplus of ($157.4 million) was comprised of $236.2 million in change in reserve on account of change in valuation basis, ($454.4 million) in cumulative effect of change in accounting principle, $46.2 million in change in net deferred income tax and $14.6 million in change in nonadmitted assets. |
See accompanying notes to statutory-basis financial statements.
F-6
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
STATUTORY-BASIS
(Dollars in millions)
| Year Ended December 31 | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
Operations: | ||||||||||||
Premiums and annuity considerations | $ | 8,509.2 | $ | 6,877.6 | $ | 5,028.1 | ||||||
Net investment income | 2,279.3 | 1,244.9 | 2,392.4 | |||||||||
Benefits paid | (3,375.1 | ) | (2,266.8 | ) | (3,052.6 | ) | ||||||
Commissions, expenses and other deductions | (570.4 | ) | (551.5 | ) | (408.9 | ) | ||||||
Federal income taxes paid | (144.6 | ) | (103.8 | ) | (140.3 | ) | ||||||
Other | 119.1 | 562.2 | 33.1 | |||||||||
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Net cash provided by operations | 6,817.5 | 5,762.6 | 3,851.8 | |||||||||
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Investing activities: | ||||||||||||
Sales, maturities or repayments of investments, net: | ||||||||||||
Bonds | 8,046.0 | 14,058.5 | 6,454.7 | |||||||||
Stocks | 131.1 | 18.2 | 338.1 | |||||||||
Mortgage loans | 715.1 | 537.0 | 506.8 | |||||||||
Real estate | — | — | 65.8 | |||||||||
Other invested assets | 322.1 | 274.0 | 716.5 | |||||||||
Net gains or (losses) on cash, cash equivalents and short-term investments | — | (0.1 | ) | 2.6 | ||||||||
Miscellaneous proceeds | 56.7 | (22.3 | ) | — | ||||||||
Purchases of investments: | ||||||||||||
Bonds | (10,104.1 | ) | (16,364.8 | ) | (9,899.7 | ) | ||||||
Stocks | (128.7 | ) | (109.2 | ) | (78.6 | ) | ||||||
Mortgage loans | (1,881.1 | ) | (1,107.7 | ) | (1,074.4 | ) | ||||||
Real estate | — | — | (1.1 | ) | ||||||||
Other invested assets | (340.0 | ) | (300.9 | ) | (232.4 | ) | ||||||
Miscellaneous applications | (796.7 | ) | (673.9 | ) | (389.3 | ) | ||||||
Net decrease in policy loans | 1.5 | 32.7 | 5.8 | |||||||||
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Net cash used in investing activities | (3,978.1 | ) | (3,658.5 | ) | (3,585.2 | ) | ||||||
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Financing and miscellaneous activities: | ||||||||||||
Net (withdrawals) deposits on deposit-type contracts | (136.5 | ) | 50.4 | (1,056.1 | ) | |||||||
Dividends to parent | (200.0 | ) | — | (300.0 | ) | |||||||
Other | (2,282.8 | ) | (1,172.2 | ) | 51.0 | |||||||
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Net cash used in financing and miscellaneous activities | (2,619.3 | ) | (1,121.8 | ) | (1,305.1 | ) | ||||||
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Net increase (decrease) in cash and short-term investments | 220.1 | 982.3 | (1,038.5 | ) | ||||||||
Cash and short-term investments at beginning of year | 1,991.2 | 1,008.9 | 2,047.4 | |||||||||
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Cash and short-term investments at end of year | $ | 2,211.3 | $ | 1,991.2 | $ | 1,008.9 | ||||||
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Cash flow information for non-cash transactions: | ||||||||||||
Bond conversions and refinancing | $ | 255.4 | $ | 453.1 | $ | — | ||||||
Common stock conversions | 34.4 | 0.2 | — | |||||||||
Bonds transferred to other invested assets | 18.6 | 119.7 | — | |||||||||
Other invested assets transferred to common stocks | 15.5 | — | — | |||||||||
Common stocks transferred to other invested assets | 6.4 | — | — | |||||||||
Perferred stock conversions | 0.4 | — | — | |||||||||
Bonds transferred to mortgage loans | — | 362.7 | — | |||||||||
Other invested assets transferred to bonds | — | 17.1 | — | |||||||||
Net investment income payment-in-kind for bonds | — | 1.1 | — | |||||||||
Maturity extensions | — | — | 385.9 | |||||||||
Exchanges | — | — | 162.0 | |||||||||
Transfers | — | — | 30.0 | |||||||||
Securities acquired from dividends/return of capital distribution | — | — | 7.1 | |||||||||
Capitalized interest | — | — | 5.6 | |||||||||
Securities acquired as capital contributions | — | — | 0.7 | |||||||||
See accompanying notes to statutory-basis financial statements.
F-7
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
A. ORGANIZATION AND NATURE OF OPERATIONS
As of May 28, 2021, Great American Life Insurance Company (“GALIC” or “the Company”), a stock life insurance company domiciled in the State of Ohio, is a direct, wholly-owned subsidiary of Glidepath Holdings, Inc. (“Glidepath”), a financial services holding company wholly-owned by Massachusetts Mutual Life Insurance Company (“MassMutual”). Prior to that date, GALIC was a direct wholly-owned subsidiary of Great American Financial Resources, Inc. (“GAFRI”), a financial services holding company wholly-owned by American Financial Group, Inc. (“AFG”). In the fourth quarter of 2022 the Company’s name was changed to MassMutual Ascend Life Insurance Company (“MMALIC”). MMALIC predominantly markets traditional fixed, fixed-indexed and registered index-linked annuities (“RILA”) in the retail, financial institutions, broker-dealer and registered investment advisor markets, and maintains pension risk transfer business (“PRT”), which is a run-off block of business. MMALIC also has small blocks of long-term care products (“LTC”), other accident and health business, term and universal life in-force business, much of which is reinsured to third parties and are run-off blocks of business. MMALIC is licensed to write life, annuity and accident & health insurance in forty-nine states and the District of Columbia.
B. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements have been prepared in conformity with accounting practices prescribed or permitted by the National Association of Insurance Commissioners (“NAIC”) and the Ohio Department of Insurance, which vary in some respects from U.S. generally accepted accounting principles (“GAAP”). Although the differences to GAAP have not been quantified, they are presumed to be material. The more significant of the differences using these statutory policies versus GAAP are as follows:
| (a) | annuity receipts are accounted for as revenues versus liabilities for GAAP, |
| (b) | costs incurred in the acquisition of new business such as commissions, underwriting and policy issuance costs are expensed at the time incurred versus being capitalized for GAAP, |
| (c) | reserves established for future policy benefits are calculated using more conservative assumptions for mortality and interest rates than would be used under GAAP. Beginning on January 1, 2022, certain indexed annuity reserves are calculated in accordance with a prescribed practice under the Ohio Administrative Code discussed elsewhere in this footnote, |
| (d) | for statutory reporting, an Interest Maintenance Reserve (“IMR”) is provided whereby portions of certain realized gains and losses from fixed income investments are deferred and amortized into investment income as prescribed by the NAIC, |
| (e) | investments in bonds considered “available for sale” (as defined under GAAP) are generally recorded at amortized cost versus fair value for GAAP, except those with an NAIC designation of “6,” which are stated at the lower of amortized cost or fair value, |
| (f) | investments in non-affiliated common stocks are carried at fair value. Redeemable preferred stocks rated RP1 through RP3 are stated at book value. All other redeemable preferred stocks are stated at the lower of book value or fair value. Perpetual preferred stocks are stated at fair value, not to exceed any effective call price. GAAP requires that equity securities are carried at fair value with holding gains and losses reported in realized gains, |
| (g) | for statutory reporting, surplus notes are carried at book value. Under GAAP, surplus notes are considered investments in bonds “available for sale” recorded at fair value, |
| (h) | investments in equity securities of wholly-owned subsidiaries are carried at statutory and GAAP equity, in accordance with Statement of Statutory Accounting Principle No. 97, Investments in Subsidiary, Controlled and Affiliated Entities (“SSAP No. 97”), versus being consolidated for GAAP, |
| (i) | for statutory reporting, an Asset Valuation Reserve (“AVR”) is provided under a formula prescribed by the NAIC as a valuation allowance for invested assets, which reclassifies a portion of surplus to liabilities, |
| (j) | the cost of certain assets designated as “nonadmitted assets” (principally advance commissions paid to agents, inventory and prepaid assets on real estate holdings, deferred tax assets (“DTA”) and certain investment income due and accrued in excess of statutory limitations) is charged against surplus, |
| (k) | policy liabilities and accruals in the statutory-basis balance sheets are reported net of reinsurance credits and recoverable unpaid losses. Under GAAP, balance sheet amounts are reported gross of reinsurance, |
| (l) | commissions allowed by reinsurers on business ceded are reported as income when incurred rather than being deferred and amortized with deferred policy acquisition costs as required under GAAP. Gains on reinsurance transactions are recorded to surplus when incurred rather than being deferred as required under GAAP, |
F-8
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
B. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
| (m) | for statutory reporting, reinsurance agreements are reported in accordance with Statement of Statutory Accounting Principle No. 61R, Life, Deposit-Type and Accident and Health Reinsurance; certain reinsurance agreements are accounted for using deposit accounting for GAAP, |
| (n) | the mark to market on RILA options, forward contracts, currency swaps and interest rate swaps is included as an unrealized gain/(loss) in unassigned surplus versus income for GAAP. Prior to January 1, 2022, fixed-indexed annuity options were carried at fair value and the mark to market was included as an unrealized gain/(loss) in unassigned funds versus income for GAAP, |
| (o) | the fixed-indexed annuity options are carried at amortized cost versus fair value for GAAP. Prior to January 1, 2022, fixed-indexed annuity options were carried at fair value, |
| (p) | in accordance with SSAP No. 101 – Income Taxes, DTAs are limited to: 1) the amount of federal income taxes paid in prior years that can be recovered through loss carrybacks for existing temporary differences that reverse during a timeframe corresponding with Internal Revenue Service (“IRS”) tax loss carryback provisions, not to exceed three years, including amounts established in accordance with the provision of SSAP No. 5R, plus 2) for entities who meet the required realization threshold in SSAP No. 101, the lesser of the remaining gross DTAs expected to be realized within three years of the balance sheet date or 15% of capital and surplus excluding any net DTAs, EDP equipment and operating software and any net positive goodwill, plus 3) the amount of remaining gross DTAs that can be offset against existing gross deferred tax liabilities (“DTL”). The remaining DTAs are nonadmitted. Deferred taxes do not include amounts for state taxes. Under GAAP, a DTA is recorded for the amount of gross DTAs expected to be realized in future years, and a valuation allowance is established for DTAs not realizable, |
| (q) | for statutory reporting, cash, cash equivalents, and short-term investments represent cash balances and investments with initial maturities of one year or less. Under GAAP, cash and cash equivalents include cash balances and investments with initial maturities of three months or less, and negative cash balances are reported as negative assets, |
| (r) | changes in deferred taxes are recognized in operations under GAAP versus a change in surplus for statutory reporting, |
| (s) | statutory financial statements are prepared using language and groupings substantially the same as the annual statements of the Company filed with the Ohio Department of Insurance, |
| (t) | statutory statements of cash flows are presented on the basis prescribed by the NAIC, and |
| (u) | statutory financial statements do not include accumulated other comprehensive income. |
INTEREST RATE RISK
Significant changes in interest rates expose the Company to the risk of not earning income or experiencing losses based on the differences between the interest rates earned on investments and the credited interest rates paid on outstanding fixed annuity contracts and life insurance products with account values. Significant changes in interest rates may affect:
| • | the unrealized gains and losses in the investment portfolio; |
| • | the book yield of the investment portfolio; and |
| • | the ability of the Company to maintain appropriate interest rate spreads over the fixed rates guaranteed in life and annuity products. |
CREDIT RISK
Third party debtors may not pay or perform their obligations. These parties may include the issuers of securities, customers, reinsurers, and other financial intermediaries.
F-9
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
B. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PRESCRIBED OR PERMITTED PRACTICES
The Ohio Department of Insurance recognizes only statutory accounting practices prescribed or permitted by the State of Ohio for determining and reporting the financial condition and results of operations of an insurance company, for determining its solvency under the Ohio Insurance Law. The NAIC’s Accounting Practices and Procedures Manual (“NAIC SAP”) has been adopted as a component of prescribed or permitted practices by the State of Ohio. The Company has no prescribed practices or permitted practices that would result in differences between NAIC SAP and the State of Ohio with the exception of OAC 3901-1-67.
Effective January 1, 2022, the Company elected to apply OAC 3901-1-67 to its derivative instruments hedging fixed-indexed products and fixed-indexed reserve liabilities. Under OAC 3901-1-67, derivative instruments are carried at amortized cost with the initial hedge cost amortized over the term and asset payoffs realized at the end of the term being reported through net investment income. Additionally, the cash surrender value reserves for fixed-indexed products only reflect index interest credits at the end of the crediting term as compared to partial index interest credits accumulating throughout the crediting term through change in policy and contract reserves.
If the prescribed practices were not applied, the Company’s risk-based capital would continue to be above regulatory action levels. A reconciliation of the Company’s net income (loss) between NAIC SAP and prescribed practice is shown below:
| Year Ended December 31 | ||||||||||||||||||||
Net Income (in millions ) | SSAP # | F/S Page | State of | 2023 | 2022 | 2021 | ||||||||||||||
| (1) | State basis | XXX | XXX | XXX | $ | (5.1 | ) | $ | 158.0 | $ | 329.0 | |||||||||
| (2) | State prescribed practices that are an increase/(decrease) from NAIC SAP | XXX | XXX | XXX | ||||||||||||||||
OAC 3901-1-67: | ||||||||||||||||||||
Derivative instruments | 86 | 4 | OH | (49.3 | ) | (26.4 | ) | — | ||||||||||||
Reserves for fixed indexed annuities | 51 | 4 | OH | 306.6 | (188.0 | ) | — | |||||||||||||
Tax impact | 101 | 4 | OH | 0.7 | 0.4 | — | ||||||||||||||
| (3) | State permitted practices that are an increase/(decrease) from NAIC SAP | XXX | XXX | XXX | — | — | — | |||||||||||||
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| (4) | NAIC SAP (1-2-3=4) | XXX | XXX | XXX | $ | (263.1 | ) | $ | 372.0 | $ | 329.0 | |||||||||
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A reconciliation of the Company’s capital and surplus between the NAIC SAP and prescribed practice is shown below:
| Year Ended December 31 | ||||||||||||||||||||
Surplus (in millions ) | SSAP # | F/S Page | State of | 2023 | 2022 | 2021 | ||||||||||||||
| (5) | Statutory surplus state basis | XXX | XXX | XXX | $ | 3,051.0 | $ | 2,832.6 | $ | 2,878.1 | ||||||||||
| (6) | State prescribed practices that are an increase/(decrease) from NAIC SAP | |||||||||||||||||||
OAC 3901-1-67: | ||||||||||||||||||||
Derivative instruments | 86 | 2, 4 | OH | (525.3 | ) | (39.2 | ) | — | ||||||||||||
Reserves for fixed indexed annuities | 51 | 3, 4 | OH | 354.8 | 48.2 | — | ||||||||||||||
Tax impact | 101 | 2, 4 | OH | 50.8 | 13.1 | — | ||||||||||||||
| (7) | State permitted practices that are an increase/(decrease) from NAIC SAP | XXX | XXX | XXX | — | — | — | |||||||||||||
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| (8) | NAIC SAP (5-6-7=8) | XXX | XXX | XXX | $ | 3,170.7 | $ | 2,810.5 | $ | 2,878.1 | ||||||||||
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On February 17, 2022, MMALIC entered into a Funds Withheld Coinsurance agreement effective February 1, 2022, with Martello Re Limited, a Bermuda-domiciled Class E life and annuity reinsurer launched in 2022. MMALIC ceded statutory reserves of approximately $14.2 billion on a closed block of fixed, fixed-indexed and payout annuity policies, in exchange for a $320 million ceding commission paid by Martello Re. The transaction resulted in a significant increase to MMALIC’s Risk Based Capital ratio. See “Note F - Reinsurance” for additional disclosure.
Preparation of the statutory-basis financial statements requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein.
F-10
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
B. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVESTMENTS
Investments are generally stated as follows:
| a) | bonds with a NAIC rating 1 through 5 are stated at amortized cost using the interest method; all others are stated at the lower of amortized cost or fair value. For residential mortgage-backed securities (“MBS”), commercial MBS and loan-backed and structured securities (“LBASS”), the NAIC has retained a third-party investment management firm to assist in the determination of the appropriate NAIC designations and Book Adjusted Carrying Values based on not only the probability of loss, but also the severity of loss. Those residential MBS, commercial MBS and LBASS securities that are not modeled but receive a current year NAIC Credit Rating Provider rating equal to NAIC 1 and 2 are stated at amortized cost and NAIC 3-6 are stated at lower of amortized cost or fair value. Dealer modeled prepayment assumptions are used for mortgage-backed and asset-backed securities at the date of purchase to determine effective yields; significant changes in estimated cash flows from the original purchase assumptions are accounted for on a prospective basis, |
| b) | short-term investments are carried at cost, |
| c) | redeemable preferred stocks rated RP1 through RP3 are stated at book value. All other redeemable preferred stocks are stated at the lower of book value or fair value. Perpetual preferred stocks are stated at fair value, not to exceed any effective call price, |
| d) | common stocks are carried at fair value except investments in stocks of unconsolidated subsidiaries and affiliates in which the Company has an interest of 10% or more are carried on the equity basis in accordance with SSAP No. 97, |
| e) | RILA options, forward contracts, financial futures, currency swaps and interest rate swaps are carried at fair value, |
| f) | fixed-indexed annuity options are carried at amortized cost. Prior to adoption of OAC 3901-1-67, fixed-indexed annuity options were carried at fair value, |
| g) | other invested assets include limited partnerships, limited liability companies and surplus notes. Surplus notes are stated at the lower of amortized cost or fair value. Investments in limited partnerships and limited liability companies are accounted for using the equity method, |
| h) | mortgage loans on real estate are carried at amortized cost less an allowance, and |
| i) | policy loans are stated at the aggregate unpaid balance. |
If it is determined that a decline in fair value of a specific investment is other-than-temporary, an impairment is recognized as a realized capital loss. Investments that are in an unrealized loss position that the Company intends to sell, or does not have the intent and ability to hold until recovery, are written down to fair value. Loan-backed and structured securities (included in bonds) that are in an unrealized loss position that the Company has the intent and ability to hold until recovery, are written down only to the extent the present value of expected future cash flows using the security’s effective yield is lower than the amortized cost. All other bonds that are in an unrealized loss position that the Company has the intent and ability to hold until recovery are written down to fair value if declines are credit-related and not written down for interest-related declines. When a decline in the value of a specific investment is considered to be other-than-temporary, a provision for impairment is charged to earnings (included in net realized capital gains (losses)) and the cost basis of that investment is reduced by the amount of the charge.
The Company’s derivative strategy employs a variety of derivative financial instruments including interest rate and currency swaps, options, financial futures, and forward contracts. Investment risk is assessed on a portfolio basis and individual derivative financial instruments are not generally designated in hedging relationships; therefore, as allowed by statutory accounting practices, the Company intentionally has not applied hedge accounting. Subsequent to the adoption of OAC on January 1, 2022, options related to fixed-indexed annuities are recorded at amortized cost with amortization and expirations recorded in Net investment income. All other derivative instruments are recorded at fair value with the related changes reported in Unassigned funds and settlements and expirations reported in Net realized capital gains (losses).
F-11
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
B. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Counterparties to financial instruments expose the Company to credit-related losses in the event of nonperformance, but the Company does not expect any counterparties to fail to meet their obligations and expects any nonperformance to not have a material impact on the Company’s financial statements. The Company receives collateral from certain counterparties to support its purchased equity index call option assets (net of collateral required under put option contracts with the same counterparties).
Investments having maturities of three months or less when purchased are considered to be cash equivalents for purposes of the statutory-basis financial statements. The carrying values of cash and short-term investments approximate their fair values.
Gains or losses on sales of securities are recognized at the time of disposition with the amount of gain or loss determined on the specific identification basis.
The IMR applies to interest-related realized capital gains and losses (net of tax) and is intended to defer realized gains and losses resulting from changes in the general level of interest rates. Gains and losses deferred from realized capital gains and losses are reported in interest maintenance reserve transfers, net of tax on the Statement of Operations. The IMR is amortized into investment income over the approximate remaining life of the investments sold.
The AVR provides for possible credit-related losses on securities and is calculated according to a specified formula as prescribed by the NAIC for the purpose of stabilizing surplus against fluctuations in the fair value of investment securities. Changes in the required reserve balances are made by direct credits or charges to surplus.
During 2023 and 2022, the Company did not reduce the interest rates on any of the outstanding mortgage loans due to credit concerns. Fire insurance, at least equal to the excess of the loan over the maximum loan that would be permitted by law on the land without the buildings, is required on all properties covered by mortgage loans.
Investments in the capital stock of MMALIC’s wholly-owned insurance subsidiaries, Annuity Investors Life Insurance Company (“AILIC”) and Manhattan National Life Insurance Company (“MNLIC”), are carried at the subsidiary’s statutory equity in accordance with SSAP No. 97.
PREMIUMS
Annuity premiums and considerations are recognized as revenue when received. Life and accident and health premiums are recognized as revenue when due and premiums over 90 days past due are nonadmitted and charged against surplus. Additionally, life and accident and health premiums include deferred premiums on in-force business.
SEPARATE ACCOUNT
Separate account assets and liabilities reported in the accompanying statutory-basis balance sheet represent funds that are separately administered to hedge the Company’s registered index-linked annuity contracts. Separate account assets are reported at fair value and include equity index call options. Separate account liabilities are reported at fair value and include equity index put options and registered index-linked annuity reserves. The operations of the separate account are not included in the accompanying statutory-basis financial statements.
F-12
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
B. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
POLICY BENEFIT RESERVES
Life, annuity, and accident and health disability benefit reserves are developed by actuarial methods and are determined based on published tables using statutorily specified interest rates and valuation methods that will provide, in the aggregate, reserves that are greater than or equal to the minimum or guaranteed policy cash values or the amounts required by the Ohio Department of Insurance. MMALIC waives deduction of deferred fractional premiums on the death of life and annuity policy insureds and returns any premium beyond the date of death. Surrender values on policies do not exceed the corresponding benefit reserves.
For life insurance policies extra premiums are charged for substandard lives. Additional reserves are established when the results of cash flow testing under various interest rate scenarios indicate the need for such reserves or, where required by the valuation standards, when the net premiums exceed the gross premiums. The net deficiency reserve at December 31, 2023 and December 31, 2022, was $1.7 million and $1.9 million, respectively. The net amount of insurance in force for these reserves at December 31, 2023 and December 31, 2022 was approximately $13.9 million and $16.1 million, respectively. Much of the deficiency reserve is related to a cash endowment rider.
The valuation mortality table and interest assumptions being used on the vast majority of life policies in force is the 1980 Commissioners Standard Ordinary Table with 2.0% to 6.0% interest. Approximately one-sixth of the future life insurance benefits are based on a net level reserve basis and the remaining are based on a modified reserve basis. The effect of using a modified reserve basis is to partially offset the effect of immediately expensing acquisition costs by providing a reserve increase in the first policy year which is less than the increase in the renewal years.
For life insurance policies the mean reserve method is used to adjust the calculated terminal reserve to the appropriate reserve at December 31. Mean reserves for substandard lives are determined by computing the regular mean reserve for the plan at the rated age and holding, in addition, one-half of the extra premium charge for the year. An asset is recorded for deferred premiums net of loading to adjust the reserve for modal premium payments.
Life insurance deferred and uncollected premiums represent annual or fractional premiums, either due and uncollected or not yet due, whereby policy reserves have been provided on the assumption that the full premium for the current policy year has been collected.
Annuity policy and deposit fund reserves are based on principles underlying the Commissioners Annuity Reserve Valuation Method. Valuation interest rates range from 0.75% to 11.25%. Valuation mortality rates are from the 1971 Individual Annuity Mortality (“IAM”) table, the 1983 IAM table, 1994 Group Annuity Mortality table, Annuity 2000 mortality table and the 2012 Individual Annuity Reserving mortality table. Reserves for fixed-indexed annuities are calculated using the market value reserve method as defined in NAIC Actuarial Guideline 35, adjusted in accordance with OAC 3901-1-67. The fixed-indexed reserves will only reflect index interest credits at the end of the crediting term as compared to partially reflecting the index interest credits throughout the crediting term in aggregate reserves for life and accident and health contracts. Prior to 2022, reserves for fixed-indexed annuities were calculated using the market value reserve method as defined in NAIC Actuarial Guideline 35. Reserves for registered index-linked annuities are calculated using the reserve method defined in the Valuation Manual (VM-21), including the use of the Alternative Methodology for calculating the Conditional Tail Expectation Amount. Rates determined by section VM-22 of the Valuation Manual were used for pension risk transfer contracts and single premium immediate annuities with issue years after 2017 and payout annuities issued as an annuitization of a deferred annuity originally issued after 2017.
Tabular interest, tabular less actual reserves released and tabular costs have been determined by formula. Tabular interest on funds not involving life contingencies is calculated as the product of such valuation rate of interest times the mean of the amount of funds subject to such valuation rate of interest held at the beginning and end of the year of valuation.
The nature of significant other reserve changes primarily relates to annuity reserves ceded to both Martello Re Limited and Commonwealth Annuity and Life Insurance Company (“Commonwealth”). The Company has ceded approximately $15.0 billion and $18.3 billion of annuity reserves in aggregate to Martello Re Limited and Commonwealth at December 31, 2023 and 2022, respectively.
F-13
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
B. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The liability for unreported claims is based on actual, recent Company experience of unreported life and annuity claim development. This experience is monitored and the liability is adjusted accordingly each quarter.
The Company is required to perform an annual asset adequacy test of reserves, to determine if they are adequate under moderately adverse conditions. The Appointed Actuary oversees the analysis and determines if and how much additional reserves are required. As of December 31, 2023 and 2022 additional reserves were not required.
FEDERAL INCOME TAXES
Through the first five months of 2021, the Company had an intercompany tax allocation agreement with AFG. Pursuant to the agreement, the Company’s tax expense was determined based upon its inclusion in the consolidated tax return of AFG and its includable subsidiaries. Estimated payments were made quarterly during the year. Following year-end, additional settlements would be made on the original due date of the return and, when extended, at the time the return was filed. The method of allocation among the companies under the agreement was based upon separate return calculations with current credit for net losses to the extent the losses provide a benefit in the consolidated return.
Beginning in June of 2021, MMALIC and its subsidiaries entered into a separate intercompany tax allocation agreement (the Tax Agreement). The Tax Agreement sets forth the manner in which the total combined federal income is allocated among the subsidiaries. The Tax Agreement provides MMALIC with the enforceable right to recoup federal income taxes paid in prior years in the event of future net capital losses, which it may incur. Further, the Tax Agreement provides MMALIC with the enforceable right to utilize its net losses carried forward as an offset to future net income subject to federal income taxes. Estimated payments are made quarterly during the year. Following year-end, additional settlements are made on the original due date of the return and, when extended, at the time the return is filed.
ADOPTION OF NEW ACCOUNTING STANDARDS
In June 2022, the NAIC adopted modifications to SSAP No. 25, Affiliates and Other Related Parties and SSAP No. 43R, Loan-Backed and Structured Securities, effective December 31, 2022. The modifications clarify application of the existing affiliate definition and incorporate disclosure requirements for all investments that involve related parties, regardless of whether they meet the affiliate definition. The revisions to SSAP No. 43R also included additional clarifications that the investments from any arrangements that results in direct or indirect control, which include but are not limited to control through a servicer, shall be reported as affiliated investments. The modifications did not have a material effect on the Company’s financial statements.
In August 2023, the NAIC adopted INT 23-01T — Disallowed IMR (“INT 23-01T”). INT 23-01T provides optional, limited-term guidance for the assessment of disallowed IMR for up to 10% of adjusted general account capital and surplus. An insurer’s capital and surplus must first be adjusted to exclude certain “soft assets” including net positive goodwill, electronic data processing equipment and operating system software, net deferred tax assets and admitted disallowed IMR. An insurer will only be able to admit the negative IMR if the insurer’s risk-based capital is over 300% authorized control level after adjusting to remove the assets described above.
As adopted, negative IMR may be admitted first in the insurer’s general account and then, if all disallowed IMR in the general account is admitted and the percentage limit is not reached, to the separate account proportionately between insulated and noninsulated accounts. If the insurer can demonstrate historical practice in which acquired gains from derivatives were also reversed to IMR (as liabilities) and amortized, there is no exclusion for derivatives losses. INT 23-01T was adopted by the Company as of September 30, 2023 and will be effective through December 31, 2025. To the extent the Company’s IMR balance is a net negative, the effects of INT 23-01T will be reflected in the Company’s financial position, results of operations, and financial statement disclosures. The Company has adopted this guidance and the adoption resulted in an admitted disallowed IMR of $271.5 million.
F-14
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
B. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In March 2023, the NAIC adopted modifications to SSAP No. 34 – Investment Income Due and Accrued, effective December 31, 2023. The modifications require additional disclosures and data capture related to gross, non-admitted and admitted amounts for interest income due and accrued, deferred interest, and paid-in-kind (“PIK”) interest.
In August 2023, the NAIC adopted revisions to further clarify the PIK interest disclosure in SSAP No. 34, effective December 31, 2023. The revisions clarify that decreasing amounts to principal balances are first applied to any PIK interest included in the principal balance. The original principal would not be reduced until the PIK interest had been fully eliminated from the balance. The revisions also provide a practical expedient for determining the PIK interest in the cumulative balance by subtracting the original principal/ par value from the current principal/ par value, with the resulting PIK interest not to go less than zero. The modifications did not have a material effect on the Company’s impact of PIK in relation to the financial statements.
In August 2023, the NAIC adopted revisions to clarify and incorporate a new bond definition within disclosures SSAP No. 26 – Bonds, SSAP No. 43 – Asset-Backed Securities, and other related SSAPs, effective January 1, 2025. The revisions were issued in connection with its principle-based bond definition project, the Bond Project.
The Bond Project began in October 2020 through the development of a principle-based bond definition to be used for all securities in determining whether they qualify for reporting on the statutory annual statement Schedule D. Within the new bond definition, bonds are classified as an “issuer credit obligation” or an “asset-backed security.” An “issuer credit obligation” is defined as a bond where repayment is supported by the general creditworthiness of an operating entity, and an “asset-backed security” is defined as a bond issued by an entity created for the primary purpose of raising capital through debt backed by financial assets. The revisions to SSAP No. 26 reflect the principle-based bond definition, and SSAP No. 43 provides accounting and reporting guidance for investments that qualify as asset-backed securities under the new bond definition. Upon adoption, investments that do not qualify as bonds will not be permitted to be reported as bonds on Schedule D, Part 1 thereafter as there will be no grandfathering for existing investments that do not qualify under the revised SSAPs. The Company is currently assessing the impacts of the adopted SSAP No. 26, SSAP No. 43 and other related SSAPs in relation to the financial statements.
SUBSEQUENT EVENTS
Management has evaluated all events occurring after December 31, 2023, through the date the financial statements were available to be issued, to determine whether any event required either recognition or disclosure in the financial statements.
F-15
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
C. FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s view of market assumptions in the absence of observable market information. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. In determining fair value, the Company uses various methods, including market, income and cost approaches.
The Company categorizes its financial instruments into a three-level hierarchy based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument in its entirety.
The three levels of the hierarchy are as follows:
Level 1 - Quoted prices for identical assets or liabilities in active markets (markets in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis). MMALIC’s Level 1 financial instruments consist primarily of cash, cash equivalents and short-term investments and publicly traded equity securities for which quoted market prices in active markets are available.
Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar assets or liabilities in inactive markets (markets in which there are few transactions, the prices are not current, price quotations vary substantially over time or among market makers, or in which little information is released publicly); and valuations based on other significant inputs that are observable in active markets. MMALIC’s Level 2 financial instruments include fixed maturities, non-affiliated preferred stocks, separate account assets and liabilities, funds held as collateral and derivative instruments priced using observable inputs. Level 2 inputs include benchmark yields, reported trades, corroborated broker/dealer quotes, issuer spreads and benchmark securities. When non-binding broker quotes can be corroborated by comparison to similar securities priced using observable inputs, they are classified as Level 2.
Level 3 - Valuations derived from market valuation techniques generally consistent with those used to estimate the fair value of Level 2 financial instruments in which one or more significant inputs are unobservable or when the market for a security exhibits significantly less liquidity relative to markets supporting the Level 2 fair value measurements. The unobservable inputs may include management’s own assumptions about the assumptions market participants would use based on the best information available in the circumstances. MMALIC’s Level 3 is comprised of financial instruments whose fair value is estimated based on non-binding broker quotes or internally developed using significant inputs not based on, or corroborated by, observable market information.
Management is responsible for the valuation process and uses data from outside sources (including nationally recognized pricing services and broker/dealers) in establishing fair value. Valuation techniques utilized by pricing services and prices obtained from external sources are reviewed by internal investment professionals who are familiar with the securities being priced and the markets in which they trade to ensure the fair value determination is representative of an exit price. To validate the appropriateness of the prices obtained, the investment manager considers widely published indices (as benchmarks), recent trades, changes in interest rates, general economic conditions and the credit quality of the specific issuers. In addition, management communicates directly with the pricing service regarding the methods and assumptions used in pricing, including verifying, on a test basis, the inputs used by the service to value specific securities. See “Note D - Investments” for fair value of investment securities.
F-16
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
C. FAIR VALUE MEASUREMENTS (CONTINUED)
Financial assets and liabilities measured at fair value on a recurring basis categorized into the three-level fair value hierarchy at December 31, 2023 are summarized below (in millions):
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | ||||||||||||||||
Bonds: | ||||||||||||||||
Industrial and miscellaneous | $ | — | $ | 8.0 | $ | 6.3 | $ | 14.3 | ||||||||
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Total bonds | — | 8.0 | 6.3 | 14.3 | ||||||||||||
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Non-affiliated preferred stocks | 45.2 | 16.4 | 67.7 | 129.3 | ||||||||||||
Non-affiliated common stocks | 113.0 | — | 158.2 | 271.2 | ||||||||||||
Financial Futures | 21.0 | — | — | 21.0 | ||||||||||||
Interest rate swaps | — | 26.6 | — | 26.6 | ||||||||||||
Separate account assets | 5.2 | 438.1 | — | 443.3 | ||||||||||||
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Total assets accounted for at fair value | $ | 184.4 | $ | 489.1 | $ | 232.2 | $ | 905.7 | ||||||||
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Liabilities: | ||||||||||||||||
Currency swaps | $ | — | $ | 38.8 | $ | — | $ | 38.8 | ||||||||
Currency forwards | — | 5.0 | — | 5.0 | ||||||||||||
Interest rate swaps | — | 66.3 | — | 66.3 | ||||||||||||
Separate account liabilities | 5.2 | 438.1 | — | 443.3 | ||||||||||||
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Total liabilities accounted for at fair value | $ | 5.2 | $ | 548.2 | $ | — | $ | 553.4 | ||||||||
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Financial assets and liabilities measured at fair value on a recurring basis categorized into the three-level fair value hierarchy at December 31, 2022 are summarized below (in millions):
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | ||||||||||||||||
Bonds: | ||||||||||||||||
Industrial and miscellaneous | $ | — | $ | 8.6 | $ | 12.7 | $ | 21.3 | ||||||||
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Total bonds | — | 8.6 | 12.7 | 21.3 | ||||||||||||
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Non-affiliated preferred stocks | 24.0 | — | 127.3 | 151.3 | ||||||||||||
Non-affiliated common stocks | 142.3 | — | 139.1 | 281.4 | ||||||||||||
Currency swaps | — | 1.0 | — | 1.0 | ||||||||||||
Currency forwards | — | 0.1 | — | 0.1 | ||||||||||||
Interest rate swaps | — | 25.2 | — | 25.2 | ||||||||||||
Separate account assets | 1.1 | 102.6 | — | 103.7 | ||||||||||||
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Total assets accounted for at fair value | $ | 167.4 | $ | 137.5 | $ | 279.1 | $ | 584.0 | ||||||||
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Liabilities: | ||||||||||||||||
Currency swaps | $ | — | $ | 4.8 | $ | — | $ | 4.8 | ||||||||
Currency forwards | — | 2.5 | — | 2.5 | ||||||||||||
Interest rate swaps | — | 95.0 | — | 95.0 | ||||||||||||
Separate account liabilities | 1.1 | 102.6 | — | 103.7 | ||||||||||||
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Total liabilities accounted for at fair value | $ | 1.1 | $ | 204.9 | $ | — | $ | 206.0 | ||||||||
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The Company had no material assets or liabilities measured at fair value on a nonrecurring basis as of December 31, 2023 and 2022.
F-17
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
C. FAIR VALUE MEASUREMENTS (CONTINUED)
The Company recognizes and records the transfer of securities into and out of Level 3 due to changes in availability of market observable inputs. All transfers are reflected in the tables below at fair values as of the end of the reporting periods (in millions):
| Balance | Gain | Losses | Balance | |||||||||||||||||||||||||||||||||||||||||
| as of | (Losses) | (Gains) | Transfers | as of | ||||||||||||||||||||||||||||||||||||||||
| 1/1/2023 | in Net Income | in Surplus | Purchases | Issuances | Settlements | Sales | In | Out | Other | 12/31/2023 | ||||||||||||||||||||||||||||||||||
Financial assets: | ||||||||||||||||||||||||||||||||||||||||||||
Industial and miscellaneous | $ | 12.7 | $ | 2.7 | $ | (6.8 | ) | $ | 0.8 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (3.1 | ) | $ | 6.3 | ||||||||||||||||||||
Preferred stocks - unaffiliated | 127.3 | — | (10.9 | ) | — | 0.9 | (0.5 | ) | — | — | — | (49.1 | ) | 67.7 | ||||||||||||||||||||||||||||||
Common stocks - unaffiliated | 139.1 | 6.1 | (15.9 | ) | — | — | (40.7 | ) | (0.3 | ) | — | — | 69.9 | 158.2 | ||||||||||||||||||||||||||||||
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Total financial assets | $ | 279.1 | $ | 8.8 | $ | (33.6 | ) | $ | 0.8 | $ | 0.9 | $ | (41.2 | ) | $ | (0.3 | ) | $ | — | $ | — | $ | 17.7 | $ | 232.2 | |||||||||||||||||||
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| Balance | Gain | Losses | Balance | |||||||||||||||||||||||||||||||||||||||||
| as of | (Losses) | (Gains) | Transfers | as of | ||||||||||||||||||||||||||||||||||||||||
| 1/1/2022 | in Net Income | in Surplus | Purchases | Issuances | Settlements | Sales | In | Out | Other | 12/31/2022 | ||||||||||||||||||||||||||||||||||
Financial assets: | ||||||||||||||||||||||||||||||||||||||||||||
Industial and miscellaneous | $ | 8.4 | $ | (9.3 | ) | $ | (3.0 | ) | $ | — | $ | — | $ | (4.9 | ) | $ | — | $ | — | $ | — | $ | 21.5 | $ | 12.7 | |||||||||||||||||||
Preferred stocks - unaffiliated | 143.4 | — | 59.8 | — | — | — | — | — | — | (75.9 | ) | 127.3 | ||||||||||||||||||||||||||||||||
Common stocks - unaffiliated | 172.0 | (0.6 | ) | 83.8 | 6.4 | 48.3 | (52.5 | ) | — | 9.0 | — | (127.3 | ) | 139.1 | ||||||||||||||||||||||||||||||
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Total financial assets | $ | 323.8 | $ | (9.9 | ) | $ | 140.6 | $ | 6.4 | $ | 48.3 | $ | (57.4 | ) | $ | — | $ | 9.0 | $ | — | $ | (181.7 | ) | $ | 279.1 | |||||||||||||||||||
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F-18
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
C. FAIR VALUE MEASUREMENTS (CONTINUED)
The following table categorizes all the financial assets and liabilities in the financial statements into the three-level fair value hierarchy at December 31, 2023 (in millions):
Description | Fair Value | Carrying Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
Financial assets: | ||||||||||||||||||||
Bonds: | ||||||||||||||||||||
U.S. Government and agencies | $ | 156.8 | $ | 186.7 | $ | — | $ | 156.8 | $ | — | ||||||||||
All other governments | 18.2 | 19.2 | — | 18.2 | — | |||||||||||||||
States, territories and possessions | 175.5 | 180.4 | — | 175.5 | — | |||||||||||||||
Political subdivisions | 228.7 | 231.5 | — | 228.7 | — | |||||||||||||||
Special Revenue | 1,800.2 | 1,920.8 | — | 1,784.9 | 15.3 | |||||||||||||||
Industrial and miscellaneous | 29,809.8 | 31,688.5 | — | 21,914.2 | 7,895.6 | |||||||||||||||
Parent, subsidiaries and affiliates | 722.2 | 745.2 | — | 583.4 | 138.8 | |||||||||||||||
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Total bonds | $ | 32,911.4 | $ | 34,972.3 | $ | — | $ | 24,861.7 | $ | 8,049.7 | ||||||||||
Non-affiliated preferred stocks | 217.9 | 201.0 | 89.8 | 16.4 | 111.7 | |||||||||||||||
Non-affiliated common stocks | 271.2 | 271.2 | 113.0 | — | 158.2 | |||||||||||||||
Mortgage loans | 4,053.2 | 4,256.5 | — | — | 4,053.2 | |||||||||||||||
Fixed-indexed annuity options** | 822.9 | 723.8 | 317.9 | 505.0 | — | |||||||||||||||
Interest rate swaps | 26.6 | 26.6 | — | 26.6 | — | |||||||||||||||
Financial futures | 21.0 | 21.0 | — | 21.0 | — | |||||||||||||||
Separate account assets | 443.3 | 443.3 | 5.2 | 438.1 | — | |||||||||||||||
Cash, cash equivalents and short-term investments | 2,211.3 | 2,211.3 | 2,211.3 | — | — | |||||||||||||||
Policy loans | 30.0 | 30.0 | — | — | 30.0 | |||||||||||||||
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Total financial assets | $ | 41,008.8 | $ | 43,157.0 | $ | 2,737.2 | $ | 25,868.8 | $ | 12,402.8 | ||||||||||
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Financial liabilities: | ||||||||||||||||||||
Currency swaps | $ | 38.8 | $ | 38.8 | $ | — | $ | 38.8 | $ | — | ||||||||||
Currency forwards | 5.0 | 5.0 | — | 5.0 | — | |||||||||||||||
Interest rate swaps | 66.3 | 66.3 | — | 66.3 | — | |||||||||||||||
Fixed-indexed annuity options** | — | 418.1 | — | — | — | |||||||||||||||
Separate account liabilities | 443.3 | 443.3 | 5.2 | 438.1 | — | |||||||||||||||
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Total financial liabilities | $ | 553.4 | $ | 971.5 | $ | 5.2 | $ | 548.2 | $ | — | ||||||||||
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| * | Separate account liabilities incorporates the fair value of the separate account reserve and equity index put options. |
| ** | Effective 1/1/2022, Fixed-indexed annuity options are carried at amortized cost per OAC 3901-1-67. Fair Value of options is reported net in the asset section for disclosure. |
F-19
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
C. FAIR VALUE MEASUREMENTS (CONTINUED)
The following table categorizes all the financial assets and liabilities in the financial statements into the three-level fair value hierarchy at December 31, 2022 (in millions):
Description | Fair Value | Carrying Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
Financial assets: | ||||||||||||||||||||
Bonds: | ||||||||||||||||||||
U.S. Government and agencies | $ | 64.0 | $ | 98.9 | $ | — | $ | 64.0 | $ | — | ||||||||||
All other governments | 17.8 | 19.2 | — | 17.8 | — | |||||||||||||||
States, territories and possessions | 183.1 | 190.7 | — | 183.1 | — | |||||||||||||||
Political subdivisions | 268.7 | 272.7 | — | 268.7 | — | |||||||||||||||
Special Revenue | 1,537.0 | 1,691.6 | — | 1,537.0 | — | |||||||||||||||
Industrial and miscellaneous | 27,421.0 | 30,538.0 | — | 20,029.5 | 7,391.5 | |||||||||||||||
Parent, subsidiaries and affiliates | 468.3 | 520.8 | — | 347.8 | 120.5 | |||||||||||||||
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Total bonds | $ | 29,959.9 | $ | 33,331.9 | $ | — | $ | 22,447.9 | $ | 7,512.0 | ||||||||||
Non-affiliated preferred stocks | 198.3 | 185.0 | 38.5 | — | 159.8 | |||||||||||||||
Non-affiliated common stocks | 281.4 | 281.4 | 142.3 | — | 139.1 | |||||||||||||||
Mortgage loans | 2,846.5 | 3,088.8 | — | — | 2,846.5 | |||||||||||||||
Currency forwards | 0.1 | 0.1 | — | 0.1 | — | |||||||||||||||
Fixed-indexed annuity options** | 287.4 | 846.8 | 102.6 | 184.8 | — | |||||||||||||||
Interest rate swaps | 25.2 | 25.2 | — | 25.2 | — | |||||||||||||||
Currency swaps | 0.9 | 0.9 | — | 0.9 | — | |||||||||||||||
Separate account assets | 103.7 | 103.7 | 1.1 | 102.6 | — | |||||||||||||||
Cash, cash equivalents and short-term investments | 1,991.2 | 1,991.2 | 1,991.2 | — | — | |||||||||||||||
Policy loans | 31.5 | 31.5 | — | — | 31.5 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total financial assets | $ | 35,726.1 | $ | 39,886.5 | $ | 2,275.7 | $ | 22,761.5 | $ | 10,688.9 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Financial liabilities: | ||||||||||||||||||||
Currency swaps | $ | 4.8 | $ | 4.8 | $ | — | $ | 4.8 | $ | — | ||||||||||
Currency forwards | 2.5 | 2.5 | — | 2.5 | — | |||||||||||||||
Interest rate swaps | 95.0 | 95.0 | — | 95.0 | — | |||||||||||||||
Fixed-indexed annuity options** | — | 598.6 | — | — | — | |||||||||||||||
Separate account liabilities | 103.7 | 103.7 | 1.1 | 102.6 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total financial liabilities | $ | 206.0 | $ | 804.6 | $ | 1.1 | $ | 204.9 | $ | — | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| * | Separate account liabilities incorporates the fair value of the separate account reserve and equity index put options. |
| ** | Effective 1/1/2022, Fixed-indexed annuity options are carried at amortized cost per OAC 3901-1-67. Fair Value of options is reported net in the asset section for disclosure. |
F-20
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
C. FAIR VALUE MEASUREMENTS (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair values of financial instruments:
Bonds: Fair values for investments in publicly traded bonds are obtained from nationally recognized pricing services. Fair values for privately placed investment grade bonds are obtained from broker quotes or determined internally by security analysts of the Company’s affiliated investment portfolio manager.
Non-affiliated preferred and common stock: Fair values of equity securities are generally based on closing prices obtained from the exchanges on which the securities are traded. For the remainder of these securities, fair values are determined by management’s internal investment professionals using data from nationally recognized pricing services as well as non-binding broker quotes.
Mortgage Loans: The fair values for the Company’s mortgage loans are estimated by discounting the future contractual cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings.
Derivative instruments: The fair values for MMALIC’s derivative instruments are based on settlement values, quoted market prices of comparable instruments, fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing (guarantees, loan commitments), or, if there are no relevant comparables, on pricing models or formulas using current assumptions.
Separate Account: The separate account consists of derivative instruments in both asset and liability positions and registered index-linked annuity reserves. The reserves are set equal to the net fair value of the separate account derivative instruments. The methods and assumptions used for the separate account derivatives and reserves are described in more detail above.
Policy Loans: The Company states policy loans at the aggregate unpaid balance, which approximates fair value.
Cash, cash equivalents and short-term investments: Cash and cash equivalents, which are carried at amortized cost, consist of all highly liquid investments purchased with original maturities of three months or less. Short-term investments, which are carried at amortized cost, consist of short-term bonds, money market mutual funds and all highly liquid investments purchased with maturities of greater than three months and less than or equal to 12 months. The carrying value reported in the Statutory Balance Sheet for cash, cash equivalents and short-term investment instruments approximates the fair value.
F-21
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS
Bonds at December 31 consisted of the following (in millions):
| 2023 | ||||||||||||||||
| Carrying | Fair | Gross Unrealized | ||||||||||||||
| Value | Value | Gains | Losses | |||||||||||||
U.S. Government and agencies | $ | 186.7 | $ | 156.8 | $ | 3.9 | $ | 33.8 | ||||||||
All other governments | 19.2 | 18.2 | — | 1.0 | ||||||||||||
States, territories and possessions | 180.4 | 175.5 | 0.5 | 5.4 | ||||||||||||
Political subdivisions | 231.5 | 228.7 | 3.7 | 6.5 | ||||||||||||
Special Revenue | 1,920.8 | 1,800.2 | 10.5 | 131.1 | ||||||||||||
Industrial and miscellaneous | 31,688.5 | 29,809.8 | 247.6 | 2,126.3 | ||||||||||||
Parent, subsidiaries and affiliates | 745.2 | 722.2 | 4.2 | 27.2 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total bonds | $ | 34,972.3 | $ | 32,911.4 | $ | 270.4 | $ | 2,331.3 | ||||||||
|
|
|
|
|
|
|
| |||||||||
The December 31, 2023 gross unrealized losses exclude $12.8 million of losses included in the carrying value. These losses include $12.5 million from NAIC Class 6 bonds and $0.3 million from residential mortgage-backed securities (RMBS) whose ratings were obtained from outside modelers. These losses were primarily included in industrial and miscellaneous.
Bonds at December 31 consisted of the following (in millions):
| 2022 | ||||||||||||||||
| Carrying | Fair | Gross Unrealized | ||||||||||||||
| Value | Value | Gains | Losses | |||||||||||||
U.S. Government and agencies | $ | 98.9 | $ | 64.0 | $ | 0.9 | $ | 35.8 | ||||||||
All other governments | 19.2 | 17.8 | — | 1.4 | ||||||||||||
States, territories and possessions | 190.7 | 183.1 | 0.6 | 8 | ||||||||||||
Political subdivisions | 272.7 | 268.7 | 4.9 | 8.9 | ||||||||||||
Special Revenue | 1,691.6 | 1,537.0 | 4.0 | 158.6 | ||||||||||||
Industrial and miscellaneous | 30,538.0 | 27,421.0 | 99.6 | 3,216.6 | ||||||||||||
Parent, subsidiaries and affiliates | 520.8 | 468.3 | 3.6 | 56.1 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total bonds | $ | 33,331.9 | $ | 29,959.9 | $ | 113.6 | $ | 3,485.6 | ||||||||
|
|
|
|
|
|
|
| |||||||||
The December 31, 2022 gross unrealized losses exclude $15.7 million of losses included in the carrying value. These losses include $15.4 million from NAIC Class 6 bonds and $0.3 million from residential mortgage-backed securities (RMBS) whose ratings were obtained from outside modelers. These losses were primarily included in industrial and miscellaneous.
At December 31, 2023 and 2022, the Company held unrated or less-than-investment grade bonds of $2,077.4 million and $2,171.2 million, respectively, with an aggregate fair value of $1,950.7 million and $1,968.2 million, respectively. Those holdings amounted to 5.9% and 6.5% of the Company’s investments in bonds and approximately 4.4% and 5.1% of the Company’s total admitted assets at December 31, 2023 and 2022, respectively. The Company performs periodic evaluations of the relative credit standing of the issuers of these bonds.
Mortgage loans are collateralized by underlying real estate properties, with geographic diversification across the United States. The Company monitors loan-to-value ratios and debt-service coverage ratios in assessing the credit quality of the underlying mortgage loans. There have been no material losses related to commercial mortgage loans historically or in 2023, 2022 or 2021.
F-22
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
The carrying value and fair value of the Company’s mortgage loans at December 31 were as follows (in millions):
| 2023 | 2022 | |||||||||||||||
| Carrying | Fair | Carrying | Fair | |||||||||||||
| Value | Value | Value | Value | |||||||||||||
Commercial mortgage loans: | ||||||||||||||||
Primary lender | $ | 1,431.9 | $ | 1,343.4 | $ | 1,263.5 | $ | 1,160.4 | ||||||||
Mezzanine loans | 47.6 | 47.6 | 22.6 | 22.6 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total commercial mortgage loans | 1,479.5 | 1,391.0 | 1,286.1 | 1,183.0 | ||||||||||||
Residential mortgage loans: | ||||||||||||||||
FHA insured and VA guranteed | 428.1 | 393.0 | 486.6 | 439.5 | ||||||||||||
Other residential mortgage loans | 2,348.9 | 2,269.2 | 1,316.1 | 1,224.0 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total residential mortgage loans | 2,777.0 | 2,662.2 | 1,802.7 | 1,663.5 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total mortgage loans | $ | 4,256.5 | $ | 4,053.2 | $ | 3,088.8 | $ | 2,846.5 | ||||||||
|
|
|
|
|
|
|
| |||||||||
The loan-to-value ratios by property type of the Company’s commercial mortgage loans at December 31 were as follows (in millions):
| 2023 | ||||||||||||||||||||
| Less Than | 81% to | Above | % of | |||||||||||||||||
| 81% | 95% | 95% | Total | Total | ||||||||||||||||
Office | $ | 53.5 | $ | 17.6 | $ | 25.1 | $ | 96.2 | 7 | % | ||||||||||
Apartments | 597.8 | 65.5 | — | 663.3 | 45 | % | ||||||||||||||
Industrial and other | 238.9 | — | — | 238.9 | 16 | % | ||||||||||||||
Hotels | 382.1 | 47.4 | 51.6 | 481.1 | 32 | % | ||||||||||||||
Retail | — | — | — | — | 0 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 1,272.3 | $ | 130.5 | $ | 76.7 | $ | 1,479.5 | 100 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
More than 85% of the Company’s commercial mortgage loans’ loan-to-value ratios are below 81% for the year ended December 31, 2023.
| 2022 | ||||||||||||||||||||
| Less Than | 81% to | Above | % of | |||||||||||||||||
| 81% | 95% | 95% | Total | Total | ||||||||||||||||
Office | $ | 79.1 | $ | — | $ | 30.8 | $ | 109.9 | 9 | % | ||||||||||
Apartments | 441.5 | 82.9 | — | 524.4 | 41 | % | ||||||||||||||
Industrial and other | 224.7 | — | — | 224.7 | 17 | % | ||||||||||||||
Hotels | 351.3 | 75.8 | — | 427.1 | 33 | % | ||||||||||||||
Retail | — | — | — | — | 0 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 1,096.6 | $ | 158.7 | $ | 30.8 | $ | 1,286.1 | 100 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
More than 85% of the Company’s commercial mortgage loans’ loan-to-value ratios were below 81% for the year ended December 31, 2022.
F-23
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
The Company uses an internal rating system as its primary method of monitoring credit quality. The following illustrates the Company’s mortgage loan portfolio rating at December 31, translated into the equivalent rating agency designation (in millions):
| 2023 | ||||||||||||||||||||||||
| CCC and | ||||||||||||||||||||||||
| AAA/AA/A | BBB | BB | B | Lower | Total | |||||||||||||||||||
Commercial mortgage loans: | ||||||||||||||||||||||||
Primary lender | $ | 178.0 | $ | 947.7 | $ | 288.5 | $ | 17.7 | $ | — | $ | 1,431.9 | ||||||||||||
Mezzanine loans | — | 22.6 | 25.0 | — | — | 47.6 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total commercial mortgage loans | 178.0 | 970.3 | 313.5 | 17.7 | — | 1,479.5 | ||||||||||||||||||
Residential mortgage loans: | ||||||||||||||||||||||||
FHA insured and VA guranteed | 428.1 | — | — | — | — | 428.1 | ||||||||||||||||||
Other residential mortgage loans | — | 2,325.1 | 23.8 | — | — | 2,348.9 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total residential mortgage loans | 428.1 | 2,325.1 | 23.8 | — | — | 2,777.0 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total mortgage loans | $ | 606.1 | $ | 3,295.4 | $ | 337.3 | $ | 17.7 | $ | — | $ | 4,256.5 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 2022 | ||||||||||||||||||||||||
| CCC and | ||||||||||||||||||||||||
| AAA/AA/A | BBB | BB | B | Lower | Total | |||||||||||||||||||
Commercial mortgage loans: | ||||||||||||||||||||||||
Primary lender | $ | 174.8 | $ | 798.4 | $ | 276.1 | $ | — | $ | 14.2 | $ | 1,263.5 | ||||||||||||
Mezzanine loans | — | 22.6 | — | — | — | 22.6 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total commercial mortgage loans | 174.8 | 821.0 | 276.1 | — | 14.2 | 1,286.1 | ||||||||||||||||||
Residential mortgage loans: | ||||||||||||||||||||||||
FHA insured and VA guranteed | 481.6 | 5.0 | — | — | — | 486.6 | ||||||||||||||||||
Other residential mortgage loans | 56.3 | 1,259.8 | — | — | — | 1,316.1 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total residential mortgage loans | 537.9 | 1,264.8 | — | — | — | 1,802.7 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total mortgage loans | $ | 712.7 | $ | 2,085.8 | $ | 276.1 | $ | — | $ | 14.2 | $ | 3,088.8 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
The maximum percentage of any one commercial mortgage loan to the estimated value of secured collateral at the time the loan was originated, exclusive of mezzanine, insured, guaranteed or purchase money mortgages, was 100% as of December 31, 2023 and 100% as of December 31, 2022.
F-24
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
The geographic distribution of commercial mortgage loans as of December 31 was as follows (in millions):
| 2023 | ||||||||
| Average | ||||||||
| Carrying | Loan-to-Value | |||||||
| Value | Ratio | |||||||
Colorado | $ | 175.8 | 68 | % | ||||
Florida | 170.5 | 67 | % | |||||
New York | 142.3 | 50 | % | |||||
Texas | 128.8 | 61 | % | |||||
California | 126.2 | 51 | % | |||||
Virginia | 104.7 | 61 | % | |||||
All other | 631.2 | 69 | % | |||||
|
| |||||||
Total commercial mortgage loans | $ | 1,479.5 | 64 | % | ||||
|
| |||||||
All other consists of 19 jurisdictions, with no individual exposure exceeding $83.1 million.
The geographic distribution of commercial mortgage loans as of December 31 was as follows (in millions):
| 2022 | ||||||||
| Average | ||||||||
| Carrying | Loan-to-Value | |||||||
| Value | Ratio | |||||||
Florida | $ | 194.3 | 76 | % | ||||
Colorado | 175.8 | 67 | % | |||||
Texas | 174.1 | 54 | % | |||||
New York | 104.1 | 43 | % | |||||
Virginia | 87.3 | 64 | % | |||||
Indiana | 70.4 | 60 | % | |||||
All other | 480.1 | 60 | % | |||||
|
| |||||||
Total commercial mortgage loans | $ | 1,286.1 | 61 | % | ||||
|
| |||||||
All other consists of 18 jurisdictions, with no individual exposure exceeding $70.4 million.
F-25
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
Interest rates, including fixed and variable, on the Company’s portfolio of mortgage loans at December 31 were:
| 2023 | 2022 | |||||||||||||||
| Low | High | Low | High | |||||||||||||
Commercial mortgage loans: | 2.6 | % | 12.9 | % | 2.6 | % | 11.7 | % | ||||||||
Residential mortgage loans | 4.8 | % | 11.8 | % | 2.2 | % | 11.7 | % | ||||||||
Mezzanine mortgage loans | 11.0 | % | 14.4 | % | 10.0 | % | 13.3 | % | ||||||||
Interest rates, including fixed and variable, on new mortgage loans at December 31 were:
| 2023 | 2022 | |||||||||||||||
| Low | High | Low | High | |||||||||||||
Commercial mortgage loans: | 4.7 | % | 11.0 | % | 2.6 | % | 11.7 | % | ||||||||
Residential mortgage loans | 7.1 | % | 11.8 | % | 2.5 | % | 11.7 | % | ||||||||
Mezzanine mortgage loans | 11.0 | % | 11.0 | % | 10.0 | % | 13.3 | % | ||||||||
As of December 31, 2023 and 2022, the Company had no impaired mortgage loans with or without a valuation allowance or mortgage loans derecognized as a result of foreclosure, including mortgage loans subject to a participant or co-lender mortgage loan agreement with a unilateral mortgage loan foreclosure restriction or mortgage loan derecognized as a result of a foreclosure.
F-26
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
Unrealized gains and losses on investments in non-affiliated preferred and common stocks are reported directly in unassigned funds and do not affect operations. The cost, gross unrealized gains and losses and fair value of those investments are summarized as follows (in millions):
| Fair | Gross Unrealized | |||||||||||||||
| Cost | Value | Gains | Losses | |||||||||||||
At December 31, 2023 | ||||||||||||||||
Non-affiliated preferred stocks | $ | 212.2 | $ | 217.9 | $ | 31.2 | $ | 25.5 | ||||||||
Non-affiliated common stocks | 195.6 | 271.2 | 102.4 | 26.8 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 407.8 | $ | 489.1 | $ | 133.6 | $ | 52.3 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| Fair | Gross Unrealized | |||||||||||||||
| Cost | Value | Gains | Losses | |||||||||||||
At December 31, 2022 | ||||||||||||||||
Non-affiliated preferred stocks | $ | 165.5 | $ | 198.3 | $ | 58.5 | $ | 25.7 | ||||||||
Non-affiliated common stocks | 220.5 | 281.4 | 87.8 | 26.9 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 386.0 | $ | 479.7 | $ | 146.3 | $ | 52.6 | ||||||||
|
|
|
|
|
|
|
| |||||||||
F-27
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
The following tables present gross unrealized losses and fair values on bonds and non-affiliated preferred and common stocks by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31 (in millions):
| 2023 | ||||||||||||||||||||||||
| Twelve Months or Less | More Than Twelve Months | |||||||||||||||||||||||
| Fair Value | Gross Unrealized Loss | Number of Issuers | Fair Value | Gross Unrealized Loss | Number of Issuers | |||||||||||||||||||
U.S. Government and agencies | $ | 24.6 | $ | 0.2 | 2 | $ | 45.4 | $ | 33.6 | 3 | ||||||||||||||
All other governments | — | — | 0 | 18.2 | 1.0 | 11 | ||||||||||||||||||
States, territories and possessions | 17.8 | 0.1 | 3 | 120.8 | 5.3 | 8 | ||||||||||||||||||
Political subdivisions | 25.5 | 0.5 | 5 | 113.0 | 6.0 | 13 | ||||||||||||||||||
Special Revenue | 134.5 | 2.1 | 25 | 1,132.3 | 129.0 | 104 | ||||||||||||||||||
Industrial and miscellaneous | 2,181.0 | 55.7 | 322 | 16,931.4 | 2,083.4 | 1,585 | ||||||||||||||||||
Parent, subsidiaries and affiliates | 132.7 | 0.4 | 6 | 369.4 | 26.8 | 10 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total bonds | $ | 2,516.1 | $ | 59.0 | 363 | $ | 18,730.5 | $ | 2,285.1 | 1,734 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Non-affiliated preferred stocks | $ | 11.6 | $ | 22.1 | 3 | $ | — | $ | 3.4 | — | ||||||||||||||
Non-affiliated common stocks | 5.0 | 4.6 | 31 | 9.0 | 22.2 | 18 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total non-affiliated preferred and common stocks | $ | 16.6 | $ | 26.7 | 34 | $ | 9.0 | $ | 25.6 | 18 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
The December 31, 2023 gross unrealized losses exclude $12.8 million of losses included in the carrying value. These losses include $12.5 million from NAIC Class 6 bonds and $0.3 million from residential mortgage-backed securities (RMBS) whose ratings were obtained from outside modelers. These losses were primarily included in industrial and miscellaneous.
| 2022 | ||||||||||||||||||||||||
| Twelve Months or Less | More Than Twelve Months | |||||||||||||||||||||||
| Fair Value | Gross Unrealized Loss | Number of Issuers | Fair Value | Gross Unrealized Loss | Number of Issuers | |||||||||||||||||||
U.S. Government and agencies | $ | 49.5 | $ | 35.8 | 2 | $ | — | $ | — | — | ||||||||||||||
All other governments | 17.8 | 1.4 | 11 | — | — | — | ||||||||||||||||||
States, territories and possessions | 160.6 | 8.2 | 10 | — | — | — | ||||||||||||||||||
Political subdivisions | 157.9 | 8.9 | 22 | — | — | — | ||||||||||||||||||
Special Revenue | 1,378.7 | 158.6 | 118 | — | — | — | ||||||||||||||||||
Industrial and miscellaneous | 23,786.8 | 3,212.8 | 2,170 | 101.2 | 19.4 | 28 | ||||||||||||||||||
Parent, subsidiaries and affiliates | 444.6 | 56.1 | 13 | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total bonds | $ | 25,995.9 | $ | 3,481.8 | 2,346 | $ | 101.2 | $ | 19.4 | 28 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Non-affiliated preferred stocks | $ | 1.3 | $ | 25.7 | 2 | $ | — | $ | — | — | ||||||||||||||
Non-affiliated common stocks | 36.8 | 26.9 | 53 | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total non-affiliated preferred and common stocks | $ | 38.1 | $ | 52.6 | 55 | $ | — | $ | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
The December 31, 2022, gross unrealized losses include $15.7 million of losses included in the carrying value. These losses include $15.4 million from NAIC Class 6 bonds and $0.3 million from RMBS whose ratings were obtained from outside modelers. These losses were primarily included in industrial and miscellaneous.
F-28
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
The quality of the bond portfolio is determined by the use of SVO ratings and the equivalent rating agency designations, except for RMBS and CMBS that use third-party modelers. The following sets forth the NAIC class ratings for the bond portfolio (in millions):
| 2023 | 2022 | |||||||||||||||||
| NAIC Class | Equivalent Rating Agency Designation | Carrying Value | % of Total | Carrying Value | % of Total | |||||||||||||
| 1 | Aaa/Aa/A | $ | 20,190.9 | 57.8 | % | $ | 17,729.1 | 53.2 | % | |||||||||
| 2 | Baa | 12,704.0 | 36.3 | % | 13,435.0 | 40.3 | % | |||||||||||
| 3 | Ba | 1,253.2 | 3.6 | % | 1,473.9 | 4.4 | % | |||||||||||
| 4 | B | 495.3 | 1.4 | % | 454.6 | 1.4 | % | |||||||||||
| 5 | Caa and lower | 287.0 | 0.8 | % | 209.4 | 0.6 | % | |||||||||||
| 6 | In or near default | 41.9 | 0.1 | % | 29.9 | 0.1 | % | |||||||||||
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Total | $ | 34,972.3 | 100.0 | % | $ | 33,331.9 | 100.0 | % | ||||||||||
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When a decline in the fair value of a specific investment is considered to be other-than-temporary, a provision for impairment is charged to earnings (accounted for as realized capital loss) and the cost basis of that investment is reduced by the amount of the charge. The determination of whether unrealized losses are other-than-temporary requires judgment based on subjective as well as objective factors. Factors considered and resources used by management include:
| (a) | whether the unrealized loss is credit-driven or a result of changes in market interest rates, |
| (b) | the extent to which fair value is less than cost basis, |
| (c) | cash flow projections received from independent sources, |
| (d) | historical operating, balance sheet and cash flow data contained in issuer Securities and Exchange Commission filings and news releases, |
| (e) | near-term prospects for improvement in the issuer and/or its industry, |
| (f) | third party research and communications with industry specialists, |
| (g) | financial models and forecasts, |
| (h) | the continuity of dividend payments, maintenance of investment grade ratings and hybrid nature of certain investments, |
| (i) | discussions with issuer management, and |
| (j) | the ability and intent to hold investment for a period of time sufficient to allow for any anticipated recovery in fair value. |
Based on its analysis of the factors enumerated above, management believes (i) MMALIC will recover its cost basis in the securities with unrealized losses and (ii) that MMALIC has the ability and intent to hold securities until they recover in value. Although MMALIC has the ability to continue holding its investments with unrealized losses, its intent to hold them may change due to deterioration in the issuers’ creditworthiness, decisions to lessen exposure to a particular issuer or industry, asset/liability management decisions, market movements, changes in views about appropriate asset allocation or the desire to offset taxable realized gains. Should MMALIC’s ability or intent change with regard to a particular security, a charge for impairment would likely be required. While it is not possible to accurately predict if or when a specific security will become impaired, charges for other-than-temporary impairment (“OTTI”) could be material to results of operations in future periods.
Net realized gains (losses) on investments sold and charges for OTTI on investments held were as follows for the years ended December 31 (dollars in millions):
Year | Net Realized (Losses) Gains (Net of IMR Transfers and Taxes) | Charges for Impairment | Total | Number of Investments with Impairment Charges | ||||||||||||
2023 | $ | (64.3 | ) | $ | (89.4 | ) | $ | (153.7 | ) | 137 | ||||||
2022 | $ | 8.4 | $ | (41.0 | ) | $ | (32.6 | ) | 138 | |||||||
2021 | $ | 170.7 | $ | (52.0 | ) | $ | 118.7 | 31 | ||||||||
F-29
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
The following is a summary of the carrying value and fair value of bonds as of December 31, 2023 and 2022 (in millions) by contractual maturity. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without prepayment penalties. Securities with more than one maturity date are included in the table using the final maturity date:
| 2023 | 2022 | |||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
Maturity: | ||||||||||||||||
One year or less | $ | 477.7 | $ | 461.8 | $ | 662.3 | $ | 657.9 | ||||||||
After one year through five years | 7,313.4 | 7,226.3 | 5,118.2 | 4,925.2 | ||||||||||||
After five years through ten years | 10,259.6 | 9,804.4 | 9,902.5 | 9,068.6 | ||||||||||||
After ten years | 16,921.6 | 15,418.9 | 17,648.9 | 15,308.2 | ||||||||||||
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Total bonds by maturity | $ | 34,972.3 | $ | 32,911.4 | $ | 33,331.9 | $ | 29,959.9 | ||||||||
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The aggregate amount of investment income generated as a result of prepayment penalties and acceleration fees was $0.0 million, $0.6 million, and $35.9 million during 2023, 2022, and 2021, respectively.
Proceeds from sales of bonds were $5,146.6 million, $10,640.3 million, and $686.8 million for 2023, 2022, and 2021, respectively. Gross realized gains of $21.3 million, $282.1 million, and $87.4 million and gross realized losses of $491.4 million, $232.4 million, and $11.9 million were realized on bonds during 2023, 2022, and 2021, respectively. The number of securities disposed of with a callable feature in 2023 and 2022 was 136 and 182, respectively.
MMALIC’s $4,365.1 million investment in MBS represents approximately 12% of the carrying value of its bonds at December 31, 2023. The Company’s indirect exposure to subprime mortgage risk as of December 31, 2023 had a total actual cost and book adjusted carrying value of approximately $1,185.0 million and $1,184.6 million, respectively, and a total fair value of approximately $1,083.9 million. MMALIC’s $4,253.5 million investment in MBS represents approximately 13% of the carrying value of its bonds at December 31, 2022. The Company’s indirect exposure to subprime mortgage risk as of December 31, 2022 had a total actual cost and book adjusted carrying value of approximately $551.0 million and $546.9 million, respectively, and a total fair value of approximately $515.7 million.
The Company has no aggregate loan-backed securities with an OTTI in which the Company has the intent to sell or the inability or lack of intent to retain the investment in the security for a period of time to recover the amortized cost basis.
F-30
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
The following table shows each loan-backed security with an OTTI recognized in 2023, as the present value of cash flows expected to be collected is less than the amortized cost basis of the security (in whole dollars):
CUSIP | Amortized Cost Before OTTI | Present Value of Projected Cash Flows | OTTI Charge Recognized in Statement of Operations | Amortized Cost After OTTI | Fair Value at Time of OTTI | Date Reported | ||||||||||||||||||
00176BAM5 | $ | 202,546 | $ | 110,277 | $ | 92,269 | $ | 110,277 | $ | 116,065 | 03/31/2023 | |||||||||||||
001406AA5 | 1,763,035 | 1,274,229 | 488,807 | 1,274,229 | 1,285,767 | 03/31/2023 | ||||||||||||||||||
26827EAC9 | 9,193,316 | 4,723,119 | 4,470,196 | 4,723,119 | 6,207,776 | 03/31/2023 | ||||||||||||||||||
3622EAAA8 | 3,756,795 | 3,647,858 | 108,936 | 3,647,858 | 3,611,452 | 03/31/2023 | ||||||||||||||||||
61751DAE4 | 1,645,601 | 1,578,836 | 66,764 | 1,578,836 | 1,967,072 | 03/31/2023 | ||||||||||||||||||
617526AD0 | 2,356,207 | 2,115,198 | 241,009 | 2,115,198 | 2,354,557 | 03/31/2023 | ||||||||||||||||||
86358RXZ5 | 421,445 | 412,256 | 9,189 | 412,256 | 413,530 | 03/31/2023 | ||||||||||||||||||
05951KAN3 | 622,182 | 623,350 | (1,169 | ) | 623,350 | 601,336 | 03/31/2023 | |||||||||||||||||
059522AU6 | 2,269,369 | 2,102,631 | 166,738 | 2,102,631 | 2,176,835 | 03/31/2023 | ||||||||||||||||||
12628LAD2 | 785,041 | 763,053 | 21,988 | 763,053 | 660,429 | 03/31/2023 | ||||||||||||||||||
12667F4N2 | 2,210,900 | 2,186,739 | 24,161 | 2,186,739 | 2,182,686 | 03/31/2023 | ||||||||||||||||||
12667F5E1 | 1,062,067 | 1,059,207 | 2,860 | 1,059,207 | 995,081 | 03/31/2023 | ||||||||||||||||||
12668APC3 | 896,073 | 883,009 | 13,065 | 883,009 | 857,687 | 03/31/2023 | ||||||||||||||||||
17307GED6 | 1,409,643 | 1,393,308 | 16,335 | 1,393,308 | 1,455,502 | 03/31/2023 | ||||||||||||||||||
17309BAB3 | 220,495 | 214,662 | 5,834 | 214,662 | 195,222 | 03/31/2023 | ||||||||||||||||||
32051GSQ9 | 1,814,597 | 1,786,038 | 28,559 | 1,786,038 | 1,836,075 | 03/31/2023 | ||||||||||||||||||
32051GT70 | 663,419 | 662,609 | 810 | 662,609 | 596,313 | 03/31/2023 | ||||||||||||||||||
46627MAD9 | 589,002 | 581,089 | 7,914 | 581,089 | 518,389 | 03/31/2023 | ||||||||||||||||||
46627MEJ2 | 1,138,638 | 1,136,631 | 2,006 | 1,136,631 | 957,220 | 03/31/2023 | ||||||||||||||||||
59020UW43 | 223,543 | 223,584 | (41 | ) | 223,584 | 245,108 | 03/31/2023 | |||||||||||||||||
643529AC4 | 537,761 | 506,075 | 31,686 | 506,075 | 563,770 | 03/31/2023 | ||||||||||||||||||
74923GAC7 | 1,432,936 | 1,431,302 | 1,634 | 1,431,302 | 1,521,208 | 03/31/2023 | ||||||||||||||||||
74923HAQ4 | 538,028 | 538,123 | (95 | ) | 538,123 | 480,166 | 03/31/2023 | |||||||||||||||||
74928RAB0 | 248,088 | 241,996 | 6,091 | 241,996 | 266,975 | 03/31/2023 | ||||||||||||||||||
74928XBB6 | 4,436,827 | 3,886,418 | 550,409 | 3,886,418 | 4,352,809 | 03/31/2023 | ||||||||||||||||||
75115BAC3 | 1,010,823 | 1,015,108 | (4,285 | ) | 1,015,108 | 1,087,275 | 03/31/2023 | |||||||||||||||||
75115DAA3 | 195,780 | 193,598 | 2,183 | 193,598 | 182,546 | 03/31/2023 | ||||||||||||||||||
761118BU1 | 717,506 | 688,322 | 29,183 | 688,322 | 756,457 | 03/31/2023 | ||||||||||||||||||
761118FM5 | 2,089,659 | 1,852,770 | 236,889 | 1,852,770 | 1,945,475 | 03/31/2023 | ||||||||||||||||||
761118GS1 | 1,139,848 | 1,138,816 | 1,032 | 1,138,816 | 1,041,063 | 03/31/2023 | ||||||||||||||||||
761118SC3 | 1,581,486 | 1,581,588 | (103 | ) | 1,581,588 | 1,360,351 | 03/31/2023 | |||||||||||||||||
761118UG1 | 506,268 | 503,201 | 3,067 | 503,201 | 428,316 | 03/31/2023 | ||||||||||||||||||
76112BNM8 | 4,707,569 | 4,708,889 | (1,320 | ) | 4,708,889 | 4,941,288 | 03/31/2023 | |||||||||||||||||
855541AC2 | 854,276 | 851,419 | 2,857 | 851,419 | 808,830 | 03/31/2023 | ||||||||||||||||||
863579J90 | 344,828 | 339,476 | 5,352 | 339,476 | 355,595 | 03/31/2023 | ||||||||||||||||||
86360BAG3 | 1,782,553 | 1,688,545 | 94,008 | 1,688,545 | 1,858,413 | 03/31/2023 | ||||||||||||||||||
86360BAJ7 | 684,793 | 671,937 | 12,855 | 671,937 | 700,892 | 03/31/2023 | ||||||||||||||||||
87222EAB4 | 838,918 | 811,788 | 27,130 | 811,788 | 736,793 | 03/31/2023 | ||||||||||||||||||
87222EAC2 | 971,562 | 933,068 | 38,494 | 933,068 | 795,832 | 03/31/2023 | ||||||||||||||||||
45660LCK3 | 2,673,423 | 2,598,842 | 74,581 | 2,598,842 | 2,689,571 | 03/31/2023 | ||||||||||||||||||
F-31
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
CUSIP | Amortized Cost Before OTTI | Present Value of Projected Cash Flows | OTTI Charge Recognized in Statement of Operations | Amortized Cost After OTTI | Fair Value at Time of OTTI | Date Reported | ||||||||||||||||||
939336X99 | 1,829,627 | 1,670,689 | 158,938 | 1,670,689 | 1,792,660 | 03/31/2023 | ||||||||||||||||||
05949CHM1 | 768,548 | 755,812 | 12,736 | 755,812 | 773,623 | 03/31/2023 | ||||||||||||||||||
05949CKX3 | 1,213,201 | 1,188,146 | 25,055 | 1,188,146 | 1,243,199 | 03/31/2023 | ||||||||||||||||||
05990HAT0 | 934,146 | 930,177 | 3,969 | 930,177 | 940,458 | 03/31/2023 | ||||||||||||||||||
073880AD8 | 1,121,205 | 1,122,339 | (1,134 | ) | 1,122,339 | 1,064,409 | 03/31/2023 | |||||||||||||||||
07401CAS2 | 3,138,214 | 3,078,739 | 59,474 | 3,078,739 | 3,132,170 | 03/31/2023 | ||||||||||||||||||
12543XAD8 | 1,165,771 | 1,150,483 | 15,288 | 1,150,483 | 1,070,971 | 03/31/2023 | ||||||||||||||||||
12544DAG4 | 85,474 | 83,364 | 2,109 | 83,364 | 73,861 | 03/31/2023 | ||||||||||||||||||
12545EAK2 | 1,406,029 | 1,363,895 | 42,134 | 1,363,895 | 1,226,917 | 03/31/2023 | ||||||||||||||||||
12638PAB5 | 719,347 | 697,335 | 22,011 | 697,335 | 549,668 | 03/31/2023 | ||||||||||||||||||
126694CS5 | 2,842,754 | 2,832,174 | 10,581 | 2,832,174 | 2,292,959 | 03/31/2023 | ||||||||||||||||||
126694HP6 | 421,087 | 419,930 | 1,157 | 419,930 | 402,076 | 03/31/2023 | ||||||||||||||||||
12669G3S8 | 1,254,365 | 1,250,349 | 4,015 | 1,250,349 | 1,124,398 | 03/31/2023 | ||||||||||||||||||
16165MAG3 | 1,841,254 | 1,776,091 | 65,163 | 1,776,091 | 1,597,907 | 03/31/2023 | ||||||||||||||||||
2254582Y3 | 1,208,346 | 1,200,002 | 8,344 | 1,200,002 | 1,082,976 | 03/31/2023 | ||||||||||||||||||
225458L55 | 539,692 | 536,533 | 3,159 | 536,533 | 500,154 | 03/31/2023 | ||||||||||||||||||
225470VF7 | 1,460,576 | 1,422,984 | 37,592 | 1,422,984 | 1,400,985 | 03/31/2023 | ||||||||||||||||||
36185N6N5 | 4,571,722 | 4,071,935 | 499,788 | 4,071,935 | 4,514,039 | 03/31/2023 | ||||||||||||||||||
362341FN4 | 774,099 | 765,095 | 9,005 | 765,095 | 702,117 | 03/31/2023 | ||||||||||||||||||
362341XC8 | 857,596 | 848,675 | 8,921 | 848,675 | 768,173 | 03/31/2023 | ||||||||||||||||||
36242DQY2 | 99,752 | 97,979 | 1,772 | 97,979 | 93,530 | 03/31/2023 | ||||||||||||||||||
41161PCX9 | 191,672 | 191,284 | 388 | 191,284 | 190,228 | 03/31/2023 | ||||||||||||||||||
466247J46 | 74,610 | 73,055 | 1,554 | 73,055 | 73,519 | 03/31/2023 | ||||||||||||||||||
466247UG6 | 526,361 | 514,800 | 11,561 | 514,800 | 510,820 | 03/31/2023 | ||||||||||||||||||
46630WAB6 | 872,431 | 866,888 | 5,543 | 866,888 | 808,108 | 03/31/2023 | ||||||||||||||||||
46630WAL4 | 506,494 | 500,786 | 5,709 | 500,786 | 479,625 | 03/31/2023 | ||||||||||||||||||
46631NAA7 | 719,259 | 693,483 | 25,776 | 693,483 | 569,822 | 03/31/2023 | ||||||||||||||||||
576433D52 | 503,578 | 493,400 | 10,178 | 493,400 | 450,563 | 03/31/2023 | ||||||||||||||||||
57643MLZ5 | 284,150 | 280,753 | 3,397 | 280,753 | 269,995 | 03/31/2023 | ||||||||||||||||||
59023PAB9 | 508,302 | 498,819 | 9,484 | 498,819 | 517,983 | 03/31/2023 | ||||||||||||||||||
74958YAE2 | 287,181 | 287,688 | (507 | ) | 287,688 | 287,680 | 03/31/2023 | |||||||||||||||||
78473TAJ9 | 198,841 | 177,853 | 20,989 | 177,853 | 154,392 | 03/31/2023 | ||||||||||||||||||
863579RP5 | 609,579 | 590,361 | 19,218 | 590,361 | 577,909 | 03/31/2023 | ||||||||||||||||||
863579UL0 | 263,373 | 261,997 | 1,377 | 261,997 | 256,211 | 03/31/2023 | ||||||||||||||||||
92979DAC9 | 2,710,529 | 2,629,297 | 81,232 | 2,629,297 | 2,800,364 | 03/31/2023 | ||||||||||||||||||
94984DAC8 | 342,454 | 342,081 | 373 | 342,081 | 345,646 | 03/31/2023 | ||||||||||||||||||
94986CAA2 | 264,625 | 265,827 | (1,202 | ) | 265,827 | 262,986 | 03/31/2023 | |||||||||||||||||
001406AA55 | 27,755 | — | 27,755 | — | — | 06/30/2023 | ||||||||||||||||||
61751DAE4 | 1,614,822 | 1,548,177 | 66,645 | 1,548,177 | 1,908,732 | 06/30/2023 | ||||||||||||||||||
86358RXZ5 | 381,361 | 332,609 | 48,752 | 332,609 | 337,433 | 06/30/2023 | ||||||||||||||||||
02146TAL1 | 361,912 | 345,869 | 16,042 | 345,869 | 366,804 | 06/30/2023 | ||||||||||||||||||
02147XAR8 | 617,209 | 612,988 | 4,221 | 612,988 | 505,733 | 06/30/2023 | ||||||||||||||||||
059522AU6 | 2,107,010 | 2,107,010 | — | 2,107,010 | 2,147,399 | 06/30/2023 | ||||||||||||||||||
F-32
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
CUSIP | Amortized Cost Before OTTI | Present Value of Projected Cash Flows | OTTI Charge Recognized in Statement of Operations | Amortized Cost After OTTI | Fair Value at Time of OTTI | Date Reported | ||||||||||||||||||
07386XAH9 | 984,857 | 984,374 | 483 | 984,374 | 807,325 | 06/30/2023 | ||||||||||||||||||
12566UAN4 | 572,055 | 570,484 | 1,571 | 570,484 | 586,599 | 06/30/2023 | ||||||||||||||||||
12628LAD2 | 766,444 | 716,904 | 49,540 | 716,904 | 624,798 | 06/30/2023 | ||||||||||||||||||
12667F5E1 | 1,039,544 | 1,031,360 | 8,184 | 1,031,360 | 960,648 | 06/30/2023 | ||||||||||||||||||
12667GAC7 | 662,986 | 611,428 | 51,558 | 611,428 | 628,342 | 06/30/2023 | ||||||||||||||||||
12668APC3 | 845,763 | 838,619 | 7,144 | 838,619 | 804,549 | 06/30/2023 | ||||||||||||||||||
17309BAB3 | 213,365 | 208,774 | 4,591 | 208,774 | 183,775 | 06/30/2023 | ||||||||||||||||||
32051GSQ9 | 1,688,266 | 1,682,972 | 5,294 | 1,682,972 | 1,728,278 | 06/30/2023 | ||||||||||||||||||
32051GT70 | 654,707 | 650,913 | 3,793 | 650,913 | 584,241 | 06/30/2023 | ||||||||||||||||||
36244SAD0 | 2,252,386 | 2,071,962 | 180,424 | 2,071,962 | 2,271,187 | 06/30/2023 | ||||||||||||||||||
43739EAP2 | 616,209 | 611,759 | 4,449 | 611,759 | 570,177 | 06/30/2023 | ||||||||||||||||||
46627MAD9 | 572,129 | 572,115 | 13 | 572,115 | 503,882 | 06/30/2023 | ||||||||||||||||||
46627MEC7 | 377,567 | 371,830 | 5,737 | 371,830 | 339,925 | 06/30/2023 | ||||||||||||||||||
46627MEJ2 | 1,118,100 | 1,113,603 | 4,497 | 1,113,603 | 921,828 | 06/30/2023 | ||||||||||||||||||
643529AC4 | 520,520 | 491,053 | 29,467 | 491,053 | 557,549 | 06/30/2023 | ||||||||||||||||||
65535VNL8 | 2,089,478 | 2,081,888 | 7,590 | 2,081,888 | 2,063,447 | 06/30/2023 | ||||||||||||||||||
65535VSJ8 | 1,285,712 | 1,246,997 | 38,715 | 1,246,997 | 1,115,827 | 06/30/2023 | ||||||||||||||||||
74923HAQ4 | 525,772 | 519,269 | 6,502 | 519,269 | 443,687 | 06/30/2023 | ||||||||||||||||||
75116FBH1 | 1,485,771 | 1,465,650 | 20,121 | 1,465,650 | 1,253,422 | 06/30/2023 | ||||||||||||||||||
761118SC3 | 1,528,680 | 1,515,672 | 13,008 | 1,515,672 | 1,309,921 | 06/30/2023 | ||||||||||||||||||
761118UG1 | 485,611 | 483,232 | 2,379 | 483,232 | 409,243 | 06/30/2023 | ||||||||||||||||||
863579J90 | 326,147 | 321,439 | 4,707 | 321,439 | 331,247 | 06/30/2023 | ||||||||||||||||||
86360BAJ7 | 664,426 | 663,728 | 698 | 663,728 | 678,337 | 06/30/2023 | ||||||||||||||||||
87222EAB4 | 814,203 | 791,937 | 22,266 | 791,937 | 715,293 | 06/30/2023 | ||||||||||||||||||
87222EAC2 | 944,500 | 906,175 | 38,325 | 906,175 | 780,900 | 06/30/2023 | ||||||||||||||||||
05949CHM1 | 754,991 | 752,303 | 2,689 | 752,303 | 770,786 | 06/30/2023 | ||||||||||||||||||
05949CKX3 | 1,233,035 | 1,190,687 | 42,348 | 1,190,687 | 1,225,158 | 06/30/2023 | ||||||||||||||||||
07386YAE4 | 1,919,895 | 1,890,046 | 29,849 | 1,890,046 | 1,717,512 | 06/30/2023 | ||||||||||||||||||
073880AD8 | 1,095,079 | 1,087,921 | 7,158 | 1,087,921 | 1,010,811 | 06/30/2023 | ||||||||||||||||||
12543XAD8 | 1,146,866 | 1,132,734 | 14,132 | 1,132,734 | 1,025,398 | 06/30/2023 | ||||||||||||||||||
12544DAG4 | 82,048 | 82,482 | (434 | ) | 82,482 | 72,144 | 06/30/2023 | |||||||||||||||||
12638PAB5 | 704,325 | 687,341 | 16,984 | 687,341 | 538,077 | 06/30/2023 | ||||||||||||||||||
12669G3S8 | 1,216,352 | 1,205,920 | 10,432 | 1,205,920 | 1,077,627 | 06/30/2023 | ||||||||||||||||||
16165MAG3 | 1,698,141 | 1,698,815 | (675 | ) | 1,698,815 | 1,501,094 | 06/30/2023 | |||||||||||||||||
17025AAH5 | 866,588 | 804,309 | 62,279 | 804,309 | 831,165 | 06/30/2023 | ||||||||||||||||||
2254582Y3 | 239,471 | 239,472 | (2 | ) | 239,472 | 214,686 | 06/30/2023 | |||||||||||||||||
225458L55 | 535,805 | 532,092 | 3,713 | 532,092 | 459,983 | 06/30/2023 | ||||||||||||||||||
225470VF7 | 1,403,814 | 1,403,895 | (81 | ) | 1,403,895 | 1,341,332 | 06/30/2023 | |||||||||||||||||
45669AAD6 | 3,387,280 | 3,358,005 | 29,274 | 3,358,005 | 3,217,657 | 06/30/2023 | ||||||||||||||||||
466247J46 | 71,231 | 71,237 | (5 | ) | 71,237 | 69,271 | 06/30/2023 | |||||||||||||||||
466247ZP1 | 550,885 | 540,659 | 10,226 | 540,659 | 482,855 | 06/30/2023 | ||||||||||||||||||
46628LAB4 | 41,586 | 40,556 | 1,030 | 40,556 | 41,521 | 06/30/2023 | ||||||||||||||||||
46630WAL4 | 515,281 | 485,878 | 29,403 | 485,878 | 468,594 | 06/30/2023 | ||||||||||||||||||
F-33
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
CUSIP | Amortized Cost Before OTTI | Present Value of Projected Cash Flows | OTTI Charge Recognized in Statement of Operations | Amortized Cost After OTTI | Fair Value at Time of OTTI | Date Reported | ||||||||||||||||||
46631NAA7 | 691,427 | 678,636 | 12,791 | 678,636 | 532,232 | 06/30/2023 | ||||||||||||||||||
46631NDT3 | 6,223,773 | 6,162,743 | 61,029 | 6,162,743 | 6,052,651 | 06/30/2023 | ||||||||||||||||||
576433D52 | 492,252 | 487,446 | 4,806 | 487,446 | 417,672 | 06/30/2023 | ||||||||||||||||||
57643MLZ5 | 269,334 | 264,924 | 4,410 | 264,924 | 253,589 | 06/30/2023 | ||||||||||||||||||
59023PAB9 | 497,202 | 495,714 | 1,488 | 495,714 | 511,575 | 06/30/2023 | ||||||||||||||||||
74958YAE2 | 281,262 | 262,418 | 18,844 | 262,418 | 270,970 | 06/30/2023 | ||||||||||||||||||
863579XC7 | 1,084,387 | 1,062,034 | 22,353 | 1,062,034 | 1,101,633 | 06/30/2023 | ||||||||||||||||||
863579XR4 | 2,120,615 | 2,023,213 | 97,402 | 2,023,213 | 2,051,084 | 06/30/2023 | ||||||||||||||||||
86363GAF1 | 1,315,519 | 1,224,816 | 90,703 | 1,224,816 | 1,244,515 | 06/30/2023 | ||||||||||||||||||
885220KW2 | 1,906,234 | 1,901,275 | 4,960 | 1,901,275 | 1,823,623 | 06/30/2023 | ||||||||||||||||||
00176BAM54 | 101,071 | 71 | 101,000 | 71 | 78,651 | 09/30/2023 | ||||||||||||||||||
57430U301 | 1,207,914 | 922,371 | 285,543 | 922,371 | 815,210 | 09/30/2023 | ||||||||||||||||||
07325DAF1 | 214,725 | 211,984 | 2,742 | 211,984 | 195,404 | 09/30/2023 | ||||||||||||||||||
3622EAAA8 | 3,564,775 | 3,424,094 | 140,681 | 3,424,094 | 3,261,277 | 09/30/2023 | ||||||||||||||||||
61751DAE4 | 1,569,635 | 1,508,933 | 60,702 | 1,508,933 | 1,731,342 | 09/30/2023 | ||||||||||||||||||
86358RXY8 | 199,869 | 182,391 | 17,478 | 182,391 | 196,421 | 09/30/2023 | ||||||||||||||||||
86358RXZ5 | 297,911 | 283,221 | 14,691 | 283,221 | 280,466 | 09/30/2023 | ||||||||||||||||||
02146TAL1 | 356,025 | 334,459 | 21,566 | 334,459 | 347,841 | 09/30/2023 | ||||||||||||||||||
02147XAR8 | 595,098 | 598,203 | (3,104 | ) | 598,203 | 483,800 | 09/30/2023 | |||||||||||||||||
058933AN2 | 801,762 | 795,980 | 5,782 | 795,980 | 738,147 | 09/30/2023 | ||||||||||||||||||
059522AU6 | 2,113,373 | 2,046,846 | 66,528 | 2,046,846 | 2,043,226 | 09/30/2023 | ||||||||||||||||||
07386XAH9 | 967,729 | 884,778 | 82,951 | 884,778 | 783,965 | 09/30/2023 | ||||||||||||||||||
12628LAD2 | 722,914 | 702,073 | 20,842 | 702,073 | 584,662 | 09/30/2023 | ||||||||||||||||||
12667F4N2 | 2,131,981 | 2,102,525 | 29,456 | 2,102,525 | 2,003,869 | 09/30/2023 | ||||||||||||||||||
12667F5E1 | 998,934 | 999,062 | (128 | ) | 999,062 | 919,366 | 09/30/2023 | |||||||||||||||||
12667GAC7 | 641,949 | 642,107 | (158 | ) | 642,107 | 605,263 | 09/30/2023 | |||||||||||||||||
12668APC3 | 811,652 | 812,953 | (1,300 | ) | 812,953 | 775,662 | 09/30/2023 | |||||||||||||||||
17307GED6 | 1,383,968 | 1,370,895 | 13,074 | 1,370,895 | 1,414,213 | 09/30/2023 | ||||||||||||||||||
17309BAB3 | 205,994 | 202,794 | 3,201 | 202,794 | 171,985 | 09/30/2023 | ||||||||||||||||||
32051GSQ9 | 1,609,003 | 1,603,331 | 5,672 | 1,603,331 | 1,656,065 | 09/30/2023 | ||||||||||||||||||
32051GT70 | 638,394 | 635,227 | 3,166 | 635,227 | 561,409 | 09/30/2023 | ||||||||||||||||||
36244SAD0 | 2,086,866 | 2,091,595 | (4,729 | ) | 2,091,595 | 2,092,913 | 09/30/2023 | |||||||||||||||||
43739EAP2 | 600,361 | 591,499 | 8,862 | 591,499 | 566,842 | 09/30/2023 | ||||||||||||||||||
46627MAD9 | 551,967 | 541,058 | 10,909 | 541,058 | 474,792 | 09/30/2023 | ||||||||||||||||||
46627MEC7 | 364,017 | 360,581 | 3,437 | 360,581 | 323,064 | 09/30/2023 | ||||||||||||||||||
46627MEJ2 | 1,097,236 | 1,094,239 | 2,997 | 1,094,239 | 888,082 | 09/30/2023 | ||||||||||||||||||
643529AC4 | 504,332 | 491,904 | 12,428 | 491,904 | 538,114 | 09/30/2023 | ||||||||||||||||||
65535VNL8 | 2,075,144 | 2,055,698 | 19,446 | 2,055,698 | 2,078,429 | 09/30/2023 | ||||||||||||||||||
65535VSJ8 | 1,256,596 | 1,234,664 | 21,931 | 1,234,664 | 1,073,207 | 09/30/2023 | ||||||||||||||||||
69337BAH7 | 1,342,250 | 1,324,870 | 17,380 | 1,324,870 | 1,128,015 | 09/30/2023 | ||||||||||||||||||
74923HAQ4 | 509,767 | 510,394 | (627 | ) | 510,394 | 429,265 | 09/30/2023 | |||||||||||||||||
75115DAA3 | 188,747 | 185,664 | 3,083 | 185,664 | 182,465 | 09/30/2023 | ||||||||||||||||||
761118GS1 | 1,085,700 | 1,072,281 | 13,419 | 1,072,281 | 1,007,009 | 09/30/2023 | ||||||||||||||||||
F-34
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
CUSIP | Amortized Cost Before OTTI | Present Value of Projected Cash Flows | OTTI Charge Recognized in Statement of Operations | Amortized Cost After OTTI | Fair Value at Time of OTTI | Date Reported | ||||||||||||||||||
761118SC3 | 1,483,628 | 1,492,604 | (8,976 | ) | 1,492,604 | 1,269,597 | 09/30/2023 | |||||||||||||||||
761118UG1 | 468,938 | 469,663 | (725 | ) | 469,663 | 393,703 | 09/30/2023 | |||||||||||||||||
863579J90 | 308,602 | 305,810 | 2,792 | 305,810 | 317,961 | 09/30/2023 | ||||||||||||||||||
86360BAJ7 | 651,289 | 649,170 | 2,119 | 649,170 | 663,487 | 09/30/2023 | ||||||||||||||||||
87222EAB4 | 794,273 | 757,539 | 36,733 | 757,539 | 695,006 | 09/30/2023 | ||||||||||||||||||
87222EAC2 | 917,429 | 875,091 | 42,338 | 875,091 | 735,483 | 09/30/2023 | ||||||||||||||||||
41161PTN3 | 331,804 | 277,221 | 54,583 | 277,221 | 311,042 | 09/30/2023 | ||||||||||||||||||
45660LCK3 | 2,616,065 | 2,518,214 | 97,852 | 2,518,214 | 2,766,498 | 09/30/2023 | ||||||||||||||||||
05946XY72 | 1,018,663 | 1,014,239 | 4,424 | 1,014,239 | 947,595 | 09/30/2023 | ||||||||||||||||||
05949CHM1 | 666,490 | 660,363 | 6,127 | 660,363 | 690,602 | 09/30/2023 | ||||||||||||||||||
07386YAE4 | 1,885,974 | 1,866,881 | 19,093 | 1,866,881 | 1,705,295 | 09/30/2023 | ||||||||||||||||||
073880AD8 | 1,076,505 | 1,037,154 | 39,351 | 1,037,154 | 987,684 | 09/30/2023 | ||||||||||||||||||
12543XAD8 | 1,101,148 | 1,105,980 | (4,831 | ) | 1,105,980 | 936,389 | 09/30/2023 | |||||||||||||||||
12638PAB5 | 694,351 | 675,173 | 19,178 | 675,173 | 512,071 | 09/30/2023 | ||||||||||||||||||
12669G4K4 | 2,601,658 | 2,601,146 | 511 | 2,601,146 | 2,396,294 | 09/30/2023 | ||||||||||||||||||
12669GR45 | 498,496 | 476,051 | 22,445 | 476,051 | 430,865 | 09/30/2023 | ||||||||||||||||||
170257AE9 | 2,360,086 | 2,294,691 | 65,396 | 2,294,691 | 1,706,184 | 09/30/2023 | ||||||||||||||||||
17025AAH5 | 753,396 | 787,624 | (34,228 | ) | 787,624 | 795,445 | 09/30/2023 | |||||||||||||||||
225458L55 | 495,061 | 491,459 | 3,602 | 491,459 | 425,644 | 09/30/2023 | ||||||||||||||||||
225470VF7 | 1,387,201 | 1,333,114 | 54,088 | 1,333,114 | 1,298,598 | 09/30/2023 | ||||||||||||||||||
32052EAA7 | 46,567 | 43,785 | 2,782 | 43,785 | 40,679 | 09/30/2023 | ||||||||||||||||||
362341FN4 | 754,611 | 747,216 | 7,395 | 747,216 | 669,320 | 09/30/2023 | ||||||||||||||||||
362341XC8 | 827,434 | 812,370 | 15,063 | 812,370 | 684,900 | 09/30/2023 | ||||||||||||||||||
41161PCX9 | 180,773 | 179,982 | 791 | 179,982 | 176,391 | 09/30/2023 | ||||||||||||||||||
46631NDT3 | 5,999,611 | 6,009,390 | (9,779 | ) | 6,009,390 | 5,617,945 | 09/30/2023 | |||||||||||||||||
47233DAB7 | 595,329 | 204,708 | 390,622 | 204,708 | 681,585 | 09/30/2023 | ||||||||||||||||||
576433D52 | 486,384 | 480,875 | 5,509 | 480,875 | 413,266 | 09/30/2023 | ||||||||||||||||||
57643MLZ5 | 248,993 | 244,183 | 4,811 | 244,183 | 230,150 | 09/30/2023 | ||||||||||||||||||
59023PAB9 | 483,479 | 478,356 | 5,122 | 478,356 | 492,971 | 09/30/2023 | ||||||||||||||||||
74958TAB9 | 519,216 | 508,266 | 10,950 | 508,266 | 470,425 | 09/30/2023 | ||||||||||||||||||
863579RP5 | 591,272 | 566,391 | 24,881 | 566,391 | 560,020 | 09/30/2023 | ||||||||||||||||||
863579UL0 | 259,923 | 258,399 | 1,523 | 258,399 | 245,880 | 09/30/2023 | ||||||||||||||||||
863579UU0 | 1,016,080 | 963,663 | 52,416 | 963,663 | 990,946 | 09/30/2023 | ||||||||||||||||||
863579XC7 | 1,037,796 | 981,054 | 56,742 | 981,054 | 1,022,671 | 09/30/2023 | ||||||||||||||||||
86363GAF1 | 1,179,527 | 1,182,146 | (2,619 | ) | 1,182,146 | 1,193,014 | 09/30/2023 | |||||||||||||||||
885220KW2 | 1,896,532 | 1,874,254 | 22,278 | 1,874,254 | 1,835,343 | 09/30/2023 | ||||||||||||||||||
07325DAF1 | 193,552 | 193,679 | (127 | ) | 193,679 | 183,083 | 12/31/2023 | |||||||||||||||||
3622EAAA8 | 3,286,278 | 3,237,272 | 49,006 | 3,237,272 | 3,255,864 | 12/31/2023 | ||||||||||||||||||
61751DAE4 | 1,543,361 | 1,498,683 | 44,678 | 1,498,683 | 1,797,931 | 12/31/2023 | ||||||||||||||||||
75156VAD7 | 2,959,112 | 2,496,716 | 462,396 | 2,496,716 | 2,973,028 | 12/31/2023 | ||||||||||||||||||
86358RDX2 | 963,691 | 945,774 | 17,917 | 945,774 | 795,532 | 12/31/2023 | ||||||||||||||||||
86358RXY8 | 191,518 | 165,259 | 26,259 | 165,259 | 165,808 | 12/31/2023 | ||||||||||||||||||
86358RXZ5 | 327,597 | 248,323 | 79,275 | 248,323 | 244,869 | 12/31/2023 | ||||||||||||||||||
F-35
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
CUSIP | Amortized Cost Before OTTI | Present Value of Projected Cash Flows | OTTI Charge Recognized in Statement of Operations | Amortized Cost After OTTI | Fair Value at Time of OTTI | Date Reported | ||||||||||||||||||
00703QAD4 | 2,455,266 | 2,403,956 | 51,310 | 2,403,956 | 2,362,111 | 12/31/2023 | ||||||||||||||||||
02147XAR8 | 582,086 | 581,667 | 419 | 581,667 | 475,448 | 12/31/2023 | ||||||||||||||||||
02152AAS8 | 1,839,976 | 1,736,745 | 103,231 | 1,736,745 | 1,709,492 | 12/31/2023 | ||||||||||||||||||
058933AN2 | 794,268 | 793,985 | 283 | 793,985 | 750,932 | 12/31/2023 | ||||||||||||||||||
05951KAN3 | 580,528 | 579,964 | 564 | 579,964 | 514,479 | 12/31/2023 | ||||||||||||||||||
07386XAH9 | 876,767 | 875,510 | 1,257 | 875,510 | 782,619 | 12/31/2023 | ||||||||||||||||||
12628LAD2 | 708,617 | 661,150 | 47,467 | 661,150 | 587,483 | 12/31/2023 | ||||||||||||||||||
12667F4N2 | 2,025,464 | 2,012,088 | 13,376 | 2,012,088 | 1,984,305 | 12/31/2023 | ||||||||||||||||||
12667F5E1 | 983,360 | 978,296 | 5,064 | 978,296 | 909,176 | 12/31/2023 | ||||||||||||||||||
12667GAC7 | 619,616 | 613,153 | 6,463 | 613,153 | 585,116 | 12/31/2023 | ||||||||||||||||||
17307GED6 | 1,341,806 | 1,336,284 | 5,522 | 1,336,284 | 1,400,985 | 12/31/2023 | ||||||||||||||||||
17309BAB3 | 201,958 | 198,201 | 3,757 | 198,201 | 176,462 | 12/31/2023 | ||||||||||||||||||
32051GSQ9 | 1,522,783 | 1,512,933 | 9,850 | 1,512,933 | 1,515,991 | 12/31/2023 | ||||||||||||||||||
32051GT70 | 619,138 | 612,519 | 6,618 | 612,519 | 534,842 | 12/31/2023 | ||||||||||||||||||
36244SAD0 | 2,148,368 | 1,989,448 | 158,920 | 1,989,448 | 2,137,247 | 12/31/2023 | ||||||||||||||||||
43739EAP2 | 561,096 | 556,890 | 4,206 | 556,890 | 538,989 | 12/31/2023 | ||||||||||||||||||
46627MAD9 | 524,569 | 524,569 | (0 | ) | 524,569 | 468,198 | 12/31/2023 | |||||||||||||||||
46627MCY1 | 3,947,612 | 3,784,942 | 162,670 | 3,784,942 | 3,845,527 | 12/31/2023 | ||||||||||||||||||
46627MEC7 | 353,579 | 351,690 | 1,889 | 351,690 | 326,489 | 12/31/2023 | ||||||||||||||||||
643529AC4 | 505,690 | 486,982 | 18,708 | 486,982 | 551,521 | 12/31/2023 | ||||||||||||||||||
65535VNL8 | 1,947,633 | 1,933,908 | 13,724 | 1,933,908 | 2,036,022 | 12/31/2023 | ||||||||||||||||||
65535VSJ8 | 1,230,484 | 1,232,758 | (2,274 | ) | 1,232,758 | 989,929 | 12/31/2023 | |||||||||||||||||
69337BAH7 | 1,311,917 | 1,303,815 | 8,102 | 1,303,815 | 1,159,687 | 12/31/2023 | ||||||||||||||||||
74928RAB0 | 239,342 | 216,651 | 22,691 | 216,651 | 238,268 | 12/31/2023 | ||||||||||||||||||
74928XBB6 | 3,183,555 | 3,039,107 | 144,448 | 3,039,107 | 3,430,881 | 12/31/2023 | ||||||||||||||||||
75115BAC3 | 1,030,772 | 916,005 | 114,767 | 916,005 | 1,035,843 | 12/31/2023 | ||||||||||||||||||
75115DAA3 | 186,218 | 186,790 | (572 | ) | 186,790 | 164,206 | 12/31/2023 | |||||||||||||||||
75116FBH1 | 1,377,535 | 1,361,078 | 16,456 | 1,361,078 | 1,145,682 | 12/31/2023 | ||||||||||||||||||
76110HT90 | 840,834 | 582,373 | 258,461 | 582,373 | 917,175 | 12/31/2023 | ||||||||||||||||||
761118SC3 | 1,431,534 | 1,428,103 | 3,431 | 1,428,103 | 1,242,244 | 12/31/2023 | ||||||||||||||||||
855541AC2 | 750,496 | 745,072 | 5,424 | 745,072 | 691,191 | 12/31/2023 | ||||||||||||||||||
863579J90 | 303,000 | 300,072 | 2,928 | 300,072 | 306,643 | 12/31/2023 | ||||||||||||||||||
86360BAJ7 | 680,750 | 643,758 | 36,993 | 643,758 | 672,067 | 12/31/2023 | ||||||||||||||||||
87222EAB4 | 834,894 | 822,502 | 12,392 | 822,502 | 694,825 | 12/31/2023 | ||||||||||||||||||
87222EAC2 | 882,066 | 857,058 | 25,008 | 857,058 | 695,801 | 12/31/2023 | ||||||||||||||||||
45660LCK3 | 3,167,425 | 2,938,420 | 229,005 | 2,938,420 | 2,780,987 | 12/31/2023 | ||||||||||||||||||
058931AT3 | 1,095,711 | 1,095,714 | (3 | ) | 1,095,714 | 918,016 | 12/31/2023 | |||||||||||||||||
05946XY72 | 977,968 | 978,683 | (715 | ) | 978,683 | 937,593 | 12/31/2023 | |||||||||||||||||
05949CHM1 | 663,718 | 655,328 | 8,390 | 655,328 | 662,826 | 12/31/2023 | ||||||||||||||||||
05949CKX3 | 1,187,717 | 1,150,126 | 37,591 | 1,150,126 | 1,168,876 | 12/31/2023 | ||||||||||||||||||
073880AD8 | 1,030,655 | 1,019,083 | 11,571 | 1,019,083 | 930,752 | 12/31/2023 | ||||||||||||||||||
12544DAG4 | 78,643 | 78,571 | 72 | 78,571 | 64,456 | 12/31/2023 | ||||||||||||||||||
12638PAB5 | 679,907 | 659,700 | 20,206 | 659,700 | 486,778 | 12/31/2023 | ||||||||||||||||||
F-36
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
CUSIP | Amortized Cost Before OTTI | Present Value of Projected Cash Flows | OTTI Charge Recognized in Statement of Operations | Amortized Cost After OTTI | Fair Value at Time of OTTI | Date Reported | ||||||||||||||||||
1266942H0 | 512,111 | 510,107 | 2,004 | 510,107 | 423,601 | 12/31/2023 | ||||||||||||||||||
12669G4K4 | 2,556,809 | 2,555,364 | 1,445 | 2,555,364 | 2,427,811 | 12/31/2023 | ||||||||||||||||||
12669GR45 | 470,597 | 467,135 | 3,462 | 467,135 | 435,906 | 12/31/2023 | ||||||||||||||||||
2254582Y3 | 1,077,827 | 1,066,955 | 10,873 | 1,066,955 | 959,317 | 12/31/2023 | ||||||||||||||||||
225458L55 | 491,469 | 487,840 | 3,628 | 487,840 | 406,462 | 12/31/2023 | ||||||||||||||||||
32052EAA7 | 43,448 | 42,472 | 976 | 42,472 | 41,090 | 12/31/2023 | ||||||||||||||||||
362341FN4 | 733,600 | 729,603 | 3,996 | 729,603 | 662,609 | 12/31/2023 | ||||||||||||||||||
362341XC8 | 795,518 | 795,302 | 217 | 795,302 | 720,040 | 12/31/2023 | ||||||||||||||||||
466247UG6 | 427,081 | 426,051 | 1,029 | 426,051 | 391,055 | 12/31/2023 | ||||||||||||||||||
46628LAB4 | 37,967 | 37,273 | 694 | 37,273 | 37,689 | 12/31/2023 | ||||||||||||||||||
46630WAL4 | 455,687 | 451,993 | 3,694 | 451,993 | 302,703 | 12/31/2023 | ||||||||||||||||||
46631NDT3 | 5,867,333 | 5,886,670 | (19,337 | ) | 5,886,670 | 5,731,594 | 12/31/2023 | |||||||||||||||||
57643MLZ5 | 229,612 | 225,458 | 4,154 | 225,458 | 205,035 | 12/31/2023 | ||||||||||||||||||
59023PAB9 | 475,891 | 473,619 | 2,272 | 473,619 | 481,056 | 12/31/2023 | ||||||||||||||||||
863579RP5 | 600,470 | 597,146 | 3,324 | 597,146 | 549,353 | 12/31/2023 | ||||||||||||||||||
863579UL0 | 258,471 | 257,405 | 1,065 | 257,405 | 242,466 | 12/31/2023 | ||||||||||||||||||
863579UU0 | 958,195 | 945,112 | 13,083 | 945,112 | 980,662 | 12/31/2023 | ||||||||||||||||||
863579XC7 | 980,418 | 980,418 | — | 980,418 | 1,038,343 | 12/31/2023 | ||||||||||||||||||
863579XR4 | 1,957,805 | 1,957,254 | 552 | 1,957,254 | 2,023,487 | 12/31/2023 | ||||||||||||||||||
86363GAF1 | 1,167,594 | 1,159,765 | 7,829 | 1,159,765 | 1,173,720 | 12/31/2023 | ||||||||||||||||||
885220KW2 | 1,840,344 | 1,731,006 | 109,338 | 1,731,006 | 1,616,956 | 12/31/2023 | ||||||||||||||||||
92979DAC9 | 2,388,453 | 2,324,573 | 63,880 | 2,324,573 | 2,467,969 | 12/31/2023 | ||||||||||||||||||
94984DAC8 | 277,596 | 275,841 | 1,755 | 275,841 | 284,511 | 12/31/2023 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total | $ | 13,772,890 | ||||||||||||||||||||||
|
| |||||||||||||||||||||||
F-37
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
The following table shows each loan-backed security with an OTTI recognized in 2022, as the present value of cash flows expected to be collected is less than the amortized cost basis of the security (in whole dollars):
| Present Value | OTTI Charge | |||||||||||||||||||||||
| Amortized Cost | of Projected | Recognized in | Amortized Cost | Fair Value at | Date | |||||||||||||||||||
CUSIP | Before OTTI | Cash Flows | Statement of Operations | After OTTI | Time of OTTI | Reported | ||||||||||||||||||
00256DAA0 | $ | 5,028,172 | $ | 3,890,891 | $ | 1,137,281 | $ | 3,890,891 | $ | 3,201,439 | 3/31/2022 | |||||||||||||
05535DBG8 | 270,320 | 226,054 | 44,266 | 226,054 | 146,322 | 3/31/2022 | ||||||||||||||||||
36157NFL3 | 63,101 | 48,296 | 14,805 | 48,296 | 65,578 | 3/31/2022 | ||||||||||||||||||
86358RXZ5 | 730,465 | 680,597 | 49,868 | 680,597 | 653,004 | 3/31/2022 | ||||||||||||||||||
05951KAN3 | 769,516 | 727,854 | 41,662 | 727,854 | 725,932 | 3/31/2022 | ||||||||||||||||||
17309AAD1 | 1,178,157 | 1,157,862 | 20,295 | 1,157,862 | 1,143,417 | 3/31/2022 | ||||||||||||||||||
41161PMV2 | 381,790 | 294,193 | 87,597 | 294,193 | 400,491 | 3/31/2022 | ||||||||||||||||||
65535VNL8 | 2,434,448 | 2,223,472 | 210,976 | 2,223,472 | 2,443,775 | 3/31/2022 | ||||||||||||||||||
74928XBB6 | 5,618,112 | 4,942,615 | 675,497 | 4,942,615 | 6,168,357 | 3/31/2022 | ||||||||||||||||||
05949CHM1 | 951,691 | 869,857 | 81,834 | 869,857 | 894,663 | 3/31/2022 | ||||||||||||||||||
57643MLZ5 | 391,660 | 375,540 | 16,120 | 375,540 | 376,146 | 3/31/2022 | ||||||||||||||||||
59020UV77 | 84,020 | 82,288 | 1,732 | 82,288 | 80,945 | 3/31/2022 | ||||||||||||||||||
863579RP5 | 736,920 | 685,020 | 51,900 | 685,020 | 711,770 | 3/31/2022 | ||||||||||||||||||
885220KW2 | 2,541,472 | 2,529,769 | 11,703 | 2,529,769 | 2,530,102 | 3/31/2022 | ||||||||||||||||||
94984DAC8 | 474,157 | 426,688 | 47,469 | 426,688 | 439,204 | 3/31/2022 | ||||||||||||||||||
07325DAF1 | 351,756 | 298,754 | 53,002 | 298,754 | 308,547 | 6/30/2022 | ||||||||||||||||||
759676AF6 | 467,062 | 389,330 | 77,732 | 389,330 | 403,998 | 6/30/2022 | ||||||||||||||||||
02147WAT6 | 1,833,809 | 1,810,984 | 22,825 | 1,810,984 | 1,647,430 | 6/30/2022 | ||||||||||||||||||
02147XAR8 | 722,783 | 716,983 | 5,800 | 716,983 | 616,400 | 6/30/2022 | ||||||||||||||||||
05951KAN3 | 727,416 | 726,755 | 661 | 726,755 | 709,393 | 6/30/2022 | ||||||||||||||||||
12566UAE4 | 484,546 | 479,517 | 5,029 | 479,517 | 428,794 | 6/30/2022 | ||||||||||||||||||
12566UAN4 | 745,695 | 687,455 | 58,239 | 687,455 | 680,275 | 6/30/2022 | ||||||||||||||||||
12566XAM0 | 762,429 | 749,321 | 13,107 | 749,321 | 711,263 | 6/30/2022 | ||||||||||||||||||
12628LAD2 | 939,894 | 917,685 | 22,210 | 917,685 | 775,478 | 6/30/2022 | ||||||||||||||||||
12668APC3 | 1,053,742 | 1,028,969 | 24,773 | 1,028,969 | 1,023,156 | 6/30/2022 | ||||||||||||||||||
17309BAB3 | 231,697 | 229,910 | 1,787 | 229,910 | 212,294 | 6/30/2022 | ||||||||||||||||||
17309VAH6 | 883,901 | 881,260 | 2,641 | 881,260 | 828,464 | 6/30/2022 | ||||||||||||||||||
225470Q89 | 639,198 | 566,017 | 73,181 | 566,017 | 434,433 | 6/30/2022 | ||||||||||||||||||
32051GSQ9 | 2,150,300 | 2,111,315 | 38,985 | 2,111,315 | 2,136,944 | 6/30/2022 | ||||||||||||||||||
59020UW43 | 484,507 | 422,353 | 62,154 | 422,353 | 438,518 | 6/30/2022 | ||||||||||||||||||
65535VSJ8 | 1,382,487 | 1,368,659 | 13,828 | 1,368,659 | 1,226,910 | 6/30/2022 | ||||||||||||||||||
69337BAH7 | 1,615,840 | 1,597,892 | 17,947 | 1,597,892 | 1,468,643 | 6/30/2022 | ||||||||||||||||||
74923HAQ4 | 591,952 | 582,904 | 9,048 | 582,904 | 527,598 | 6/30/2022 | ||||||||||||||||||
74928RAB0 | 299,181 | 295,529 | 3,652 | 295,529 | 312,097 | 6/30/2022 | ||||||||||||||||||
75115BAC3 | 1,263,859 | 1,260,657 | 3,203 | 1,260,657 | 1,287,590 | 6/30/2022 | ||||||||||||||||||
75116FBH1 | 1,660,615 | 1,655,476 | 5,139 | 1,655,476 | 1,511,249 | 6/30/2022 | ||||||||||||||||||
761118SC3 | 1,738,294 | 1,735,436 | 2,859 | 1,735,436 | 1,583,504 | 6/30/2022 | ||||||||||||||||||
863579J90 | 408,035 | 404,919 | 3,116 | 404,919 | 410,645 | 6/30/2022 | ||||||||||||||||||
87222EAB4 | 989,431 | 964,435 | 24,996 | 964,435 | 915,285 | 6/30/2022 | ||||||||||||||||||
87222EAC2 | 1,069,037 | 1,046,433 | 22,604 | 1,046,433 | 954,115 | 6/30/2022 | ||||||||||||||||||
F-38
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
| Present Value | OTTI Charge | |||||||||||||||||||||||
| Amortized Cost | of Projected | Recognized in | Amortized Cost | Fair Value at | Date | |||||||||||||||||||
CUSIP | Before OTTI | Cash Flows | Statement of Operations | After OTTI | Time of OTTI | Reported | ||||||||||||||||||
93934NAC9 | 550,457 | 525,641 | 24,815 | 525,641 | 469,111 | 6/30/2022 | ||||||||||||||||||
058931AT3 | 1,243,463 | 1,240,130 | 3,333 | 1,240,130 | 1,198,967 | 6/30/2022 | ||||||||||||||||||
073880AD8 | 1,276,813 | 1,222,687 | 54,126 | 1,222,687 | 1,154,766 | 6/30/2022 | ||||||||||||||||||
12544DAG4 | 95,844 | 90,011 | 5,833 | 90,011 | 85,172 | 6/30/2022 | ||||||||||||||||||
12545EAK2 | 1,550,474 | 1,490,197 | 60,276 | 1,490,197 | 1,329,130 | 6/30/2022 | ||||||||||||||||||
12638PAB5 | 744,092 | 736,605 | 7,487 | 736,605 | 600,312 | 6/30/2022 | ||||||||||||||||||
1266942H0 | 606,740 | 599,651 | 7,089 | 599,651 | 501,690 | 6/30/2022 | ||||||||||||||||||
126694HP6 | 655,886 | 535,926 | 119,960 | 535,926 | 506,396 | 6/30/2022 | ||||||||||||||||||
12669G3S8 | 1,421,943 | 1,403,926 | 18,017 | 1,403,926 | 1,272,912 | 6/30/2022 | ||||||||||||||||||
12669G4K4 | 2,882,965 | 2,860,499 | 22,466 | 2,860,499 | 2,654,538 | 6/30/2022 | ||||||||||||||||||
16162YAL9 | 406,596 | 387,094 | 19,502 | 387,094 | 351,124 | 6/30/2022 | ||||||||||||||||||
16165MAG3 | 2,063,370 | 2,039,505 | 23,865 | 2,039,505 | 1,824,783 | 6/30/2022 | ||||||||||||||||||
170257AE9 | 3,090,905 | 2,877,625 | 213,279 | 2,877,625 | 2,454,654 | 6/30/2022 | ||||||||||||||||||
17025AAH5 | 1,119,104 | 1,045,677 | 73,427 | 1,045,677 | 993,451 | 6/30/2022 | ||||||||||||||||||
225458L55 | 554,354 | 551,293 | 3,060 | 551,293 | 495,964 | 6/30/2022 | ||||||||||||||||||
362341XC8 | 963,117 | 959,504 | 3,613 | 959,504 | 830,593 | 6/30/2022 | ||||||||||||||||||
46631NAA7 | 819,190 | 805,803 | 13,387 | 805,803 | 733,833 | 6/30/2022 | ||||||||||||||||||
46631NDT3 | 7,735,758 | 7,037,790 | 697,968 | 7,037,790 | 7,196,047 | 6/30/2022 | ||||||||||||||||||
74958YAE2 | 335,485 | 319,458 | 16,027 | 319,458 | 327,784 | 6/30/2022 | ||||||||||||||||||
78473TAJ9 | 275,754 | 245,411 | 30,343 | 245,411 | 214,919 | 6/30/2022 | ||||||||||||||||||
863579XC7 | 1,415,676 | 1,337,580 | 78,096 | 1,337,580 | 1,408,287 | 6/30/2022 | ||||||||||||||||||
86363GAF1 | 1,733,928 | 1,673,515 | 60,413 | 1,673,515 | 1,636,845 | 6/30/2022 | ||||||||||||||||||
94985AAA7 | 227,339 | 217,876 | 9,463 | 217,876 | 211,415 | 6/30/2022 | ||||||||||||||||||
94986CAA2 | 328,420 | 320,452 | 7,968 | 320,452 | 302,929 | 6/30/2022 | ||||||||||||||||||
57430U301 | 1,330,669 | 1,004,371 | 326,298 | 1,004,371 | 803,430 | 9/30/2022 | ||||||||||||||||||
07325DAF1 | 291,282 | 290,354 | 928 | 290,354 | 286,720 | 9/30/2022 | ||||||||||||||||||
3622EAAA8 | 3,999,702 | 3,929,491 | 70,212 | 3,929,491 | 3,739,585 | 9/30/2022 | ||||||||||||||||||
61751DAE4 | 1,716,986 | 1,604,835 | 112,151 | 1,604,835 | 2,251,814 | 9/30/2022 | ||||||||||||||||||
617526AD0 | 2,717,720 | 2,314,163 | 403,557 | 2,314,163 | 2,489,016 | 9/30/2022 | ||||||||||||||||||
86358RXZ5 | 573,712 | 503,846 | 69,866 | 503,846 | 532,119 | 9/30/2022 | ||||||||||||||||||
07386XAH9 | 1,136,200 | 1,060,380 | 75,820 | 1,060,380 | 920,227 | 9/30/2022 | ||||||||||||||||||
12566UAE4 | 469,028 | 437,575 | 31,453 | 437,575 | 395,514 | 9/30/2022 | ||||||||||||||||||
12566UAN4 | 659,320 | 581,671 | 77,649 | 581,671 | 613,196 | 9/30/2022 | ||||||||||||||||||
12566XAM0 | 724,102 | 706,097 | 18,005 | 706,097 | 652,607 | 9/30/2022 | ||||||||||||||||||
12628LAD2 | 944,313 | 837,560 | 106,754 | 837,560 | 715,627 | 9/30/2022 | ||||||||||||||||||
126670JP4 | 799,425 | 751,737 | 47,688 | 751,737 | 748,985 | 9/30/2022 | ||||||||||||||||||
12667F4N2 | 2,337,848 | 2,296,401 | 41,448 | 2,296,401 | 2,234,566 | 9/30/2022 | ||||||||||||||||||
12668APC3 | 991,327 | 950,477 | 40,850 | 950,477 | 944,519 | 9/30/2022 | ||||||||||||||||||
17307GED6 | 1,519,753 | 1,448,105 | 71,648 | 1,448,105 | 1,466,554 | 9/30/2022 | ||||||||||||||||||
17309BAB3 | 228,895 | 224,462 | 4,433 | 224,462 | 201,398 | 9/30/2022 | ||||||||||||||||||
17309VAH6 | 845,828 | 839,340 | 6,488 | 839,340 | 792,523 | 9/30/2022 | ||||||||||||||||||
225470Q89 | 554,757 | 534,935 | 19,822 | 534,935 | 418,987 | 9/30/2022 | ||||||||||||||||||
32051GSQ9 | 2,037,561 | 1,989,697 | 47,865 | 1,989,697 | 2,018,934 | 9/30/2022 | ||||||||||||||||||
F-39
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
| Present Value | OTTI Charge | |||||||||||||||||||||||
| Amortized Cost | of Projected | Recognized in | Amortized Cost | Fair Value at | Date | |||||||||||||||||||
CUSIP | Before OTTI | Cash Flows | Statement of Operations | After OTTI | Time of OTTI | Reported | ||||||||||||||||||
46627MAD9 | 641,414 | 620,422 | 20,992 | 620,422 | 598,910 | 9/30/2022 | ||||||||||||||||||
46627MEJ2 | 1,290,004 | 1,214,983 | 75,022 | 1,214,983 | 1,045,674 | 9/30/2022 | ||||||||||||||||||
47232CAH7 | 1,899,848 | 1,899,428 | 420 | 1,899,428 | 2,091,390 | 9/30/2022 | ||||||||||||||||||
576434W59 | 231,800 | 180,887 | 50,912 | 180,887 | 133,506 | 9/30/2022 | ||||||||||||||||||
59020UW43 | 402,012 | 374,574 | 27,438 | 374,574 | 282,946 | 9/30/2022 | ||||||||||||||||||
643529AC4 | 566,063 | 512,432 | 53,631 | 512,432 | 615,937 | 9/30/2022 | ||||||||||||||||||
65535VMJ4 | 654,212 | 604,134 | 50,077 | 604,134 | 606,472 | 9/30/2022 | ||||||||||||||||||
65535VNL8 | 2,216,330 | 2,128,294 | 88,036 | 2,128,294 | 2,136,155 | 9/30/2022 | ||||||||||||||||||
65535VSJ8 | 1,353,591 | 1,314,301 | 39,290 | 1,314,301 | 1,150,059 | 9/30/2022 | ||||||||||||||||||
69337BAH7 | 1,588,255 | 1,531,076 | 57,179 | 1,531,076 | 1,357,354 | 9/30/2022 | ||||||||||||||||||
74923HAQ4 | 563,728 | 561,272 | 2,456 | 561,272 | 491,746 | 9/30/2022 | ||||||||||||||||||
74928RAB0 | 293,120 | 262,538 | 30,582 | 262,538 | 285,136 | 9/30/2022 | ||||||||||||||||||
75116CET9 | 263,844 | 166,578 | 97,266 | 166,578 | 229,893 | 9/30/2022 | ||||||||||||||||||
761118SC3 | 1,692,139 | 1,684,385 | 7,754 | 1,684,385 | 1,439,667 | 9/30/2022 | ||||||||||||||||||
863579J90 | 399,903 | 373,319 | 26,584 | 373,319 | 387,475 | 9/30/2022 | ||||||||||||||||||
87222EAB4 | 960,274 | 864,706 | 95,569 | 864,706 | 855,078 | 9/30/2022 | ||||||||||||||||||
87222EAC2 | 1,041,136 | 968,565 | 72,571 | 968,565 | 884,062 | 9/30/2022 | ||||||||||||||||||
93934FMD1 | 1,850,357 | 1,613,441 | 236,916 | 1,613,441 | 1,651,078 | 9/30/2022 | ||||||||||||||||||
45660LCK3 | 2,987,283 | 2,747,927 | 239,356 | 2,747,927 | 2,828,661 | 9/30/2022 | ||||||||||||||||||
05946XY72 | 1,121,255 | 1,064,056 | 57,199 | 1,064,056 | 1,039,216 | 9/30/2022 | ||||||||||||||||||
05949CHM1 | 788,146 | 770,794 | 17,352 | 770,794 | 776,150 | 9/30/2022 | ||||||||||||||||||
05949CKX3 | 1,593,696 | 1,495,795 | 97,900 | 1,495,795 | 1,483,476 | 9/30/2022 | ||||||||||||||||||
073880AD8 | 1,165,906 | 1,163,805 | 2,101 | 1,163,805 | 1,066,603 | 9/30/2022 | ||||||||||||||||||
12544DAG4 | 87,957 | 88,141 | (184 | ) | 88,141 | 76,266 | 9/30/2022 | |||||||||||||||||
12545EAK2 | 1,470,040 | 1,423,980 | 46,060 | 1,423,980 | 1,225,499 | 9/30/2022 | ||||||||||||||||||
12638PAB5 | 730,343 | 719,668 | 10,676 | 719,668 | 561,272 | 9/30/2022 | ||||||||||||||||||
1266942H0 | 586,626 | 561,203 | 25,423 | 561,203 | 472,137 | 9/30/2022 | ||||||||||||||||||
126694BE7 | 332,557 | 306,506 | 26,051 | 306,506 | 311,536 | 9/30/2022 | ||||||||||||||||||
126694CS5 | 3,094,276 | 3,091,476 | 2,800 | 3,091,476 | 2,504,248 | 9/30/2022 | ||||||||||||||||||
126694HP6 | 515,419 | 474,981 | 40,438 | 474,981 | 462,478 | 9/30/2022 | ||||||||||||||||||
12669DUS5 | 773,797 | 772,715 | 1,082 | 772,715 | 742,780 | 9/30/2022 | ||||||||||||||||||
12669G3S8 | 1,387,574 | 1,375,347 | 12,226 | 1,375,347 | 1,217,425 | 9/30/2022 | ||||||||||||||||||
12669G4K4 | 2,834,361 | 2,781,521 | 52,840 | 2,781,521 | 2,545,994 | 9/30/2022 | ||||||||||||||||||
12669GR45 | 534,792 | 525,148 | 9,644 | 525,148 | 485,346 | 9/30/2022 | ||||||||||||||||||
16162YAL9 | 380,468 | 361,472 | 18,995 | 361,472 | 327,514 | 9/30/2022 | ||||||||||||||||||
16165MAG3 | 1,961,306 | 1,944,718 | 16,588 | 1,944,718 | 1,661,310 | 9/30/2022 | ||||||||||||||||||
170257AE9 | 2,828,331 | 2,633,857 | 194,474 | 2,633,857 | 2,354,786 | 9/30/2022 | ||||||||||||||||||
17025AAH5 | 996,965 | 955,555 | 41,410 | 955,555 | 872,118 | 9/30/2022 | ||||||||||||||||||
2254582Y3 | 1,262,710 | 1,223,508 | 39,202 | 1,223,508 | 1,083,348 | 9/30/2022 | ||||||||||||||||||
362341XC8 | 925,615 | 890,329 | 35,286 | 890,329 | 775,076 | 9/30/2022 | ||||||||||||||||||
41161PCX9 | 222,673 | 219,523 | 3,150 | 219,523 | 217,809 | 9/30/2022 | ||||||||||||||||||
466247UG6 | 543,666 | 541,554 | 2,112 | 541,554 | 492,253 | 9/30/2022 | ||||||||||||||||||
466247ZP1 | 597,232 | 578,858 | 18,375 | 578,858 | 551,434 | 9/30/2022 | ||||||||||||||||||
F-40
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
| Present Value | OTTI Charge | |||||||||||||||||||||||
| Amortized Cost | of Projected | Recognized in | Amortized Cost | Fair Value at | Date | |||||||||||||||||||
CUSIP | Before OTTI | Cash Flows | Statement of Operations | After OTTI | Time of OTTI | Reported | ||||||||||||||||||
46628LAB4 | 52,197 | 43,653 | 8,544 | 43,653 | 46,321 | 9/30/2022 | ||||||||||||||||||
46631NAA7 | 787,350 | 768,303 | 19,047 | 768,303 | 654,423 | 9/30/2022 | ||||||||||||||||||
46631NDT3 | 6,957,695 | 6,448,656 | 509,039 | 6,448,656 | 6,565,975 | 9/30/2022 | ||||||||||||||||||
57643MLZ5 | 322,070 | 311,840 | 10,230 | 311,840 | 295,793 | 9/30/2022 | ||||||||||||||||||
59023PAB9 | 550,151 | 530,517 | 19,633 | 530,517 | 549,074 | 9/30/2022 | ||||||||||||||||||
863579RP5 | 630,863 | 612,560 | 18,302 | 612,560 | 593,202 | 9/30/2022 | ||||||||||||||||||
863579XC7 | 1,202,538 | 1,169,250 | 33,288 | 1,169,250 | 1,184,462 | 9/30/2022 | ||||||||||||||||||
86363GAF1 | 1,622,996 | 1,511,763 | 111,233 | 1,511,763 | 1,431,479 | 9/30/2022 | ||||||||||||||||||
885220KW2 | 2,336,973 | 2,265,171 | 71,802 | 2,265,171 | 2,217,726 | 9/30/2022 | ||||||||||||||||||
92979DAC9 | 2,889,617 | 2,736,750 | 152,866 | 2,736,750 | 2,880,781 | 9/30/2022 | ||||||||||||||||||
94984DAC8 | 391,725 | 391,939 | (214 | ) | 391,939 | 377,184 | 9/30/2022 | |||||||||||||||||
94986CAA2 | 319,103 | 297,142 | 21,962 | 297,142 | 281,932 | 9/30/2022 | ||||||||||||||||||
00176BAM54 | 221,912 | 204,829 | 17,083 | 204,829 | 145,456 | 12/31/2022 | ||||||||||||||||||
36157NFL3 | 34,787 | 33,507 | 1,280 | 33,507 | 49,479 | 12/31/2022 | ||||||||||||||||||
3622EAAA8 | 3,923,762 | 3,761,791 | 161,971 | 3,761,791 | 3,650,746 | 12/31/2022 | ||||||||||||||||||
61751DAE4 | 1,629,194 | 1,602,771 | 26,423 | 1,602,771 | 1,949,256 | 12/31/2022 | ||||||||||||||||||
759676AF6 | 379,733 | 378,947 | 785 | 378,947 | 359,320 | 12/31/2022 | ||||||||||||||||||
86358RXZ5 | 465,267 | 455,171 | 10,096 | 455,171 | 471,122 | 12/31/2022 | ||||||||||||||||||
02147XAR8 | 680,181 | 643,751 | 36,430 | 643,751 | 528,126 | 12/31/2022 | ||||||||||||||||||
058933AN2 | 919,353 | 889,825 | 29,529 | 889,825 | 821,517 | 12/31/2022 | ||||||||||||||||||
05951KAN3 | 696,878 | 683,150 | 13,728 | 683,150 | 647,406 | 12/31/2022 | ||||||||||||||||||
07386XAH9 | 1,011,656 | 911,593 | 100,063 | 911,593 | 863,150 | 12/31/2022 | ||||||||||||||||||
12566UAE4 | 337,542 | 337,076 | 465 | 337,076 | 317,476 | 12/31/2022 | ||||||||||||||||||
12566UAN4 | 576,035 | 576,010 | 25 | 576,010 | 628,281 | 12/31/2022 | ||||||||||||||||||
12566XAM0 | 699,177 | 699,339 | (162 | ) | 699,339 | 655,865 | 12/31/2022 | |||||||||||||||||
12628LAD2 | 834,249 | 776,091 | 58,158 | 776,091 | 675,639 | 12/31/2022 | ||||||||||||||||||
126670JP4 | 743,653 | 722,674 | 20,979 | 722,674 | 725,258 | 12/31/2022 | ||||||||||||||||||
12667F4N2 | 2,266,231 | 2,246,591 | 19,640 | 2,246,591 | 2,214,064 | 12/31/2022 | ||||||||||||||||||
12667GAC7 | 693,373 | 685,397 | 7,976 | 685,397 | 654,562 | 12/31/2022 | ||||||||||||||||||
12668APC3 | 924,868 | 924,886 | (18 | ) | 924,886 | 878,754 | 12/31/2022 | |||||||||||||||||
17025RAA3 | 1,550,324 | 1,306,829 | 243,495 | 1,306,829 | 1,552,445 | 12/31/2022 | ||||||||||||||||||
17307GED6 | 1,443,837 | 1,417,702 | 26,135 | 1,417,702 | 1,463,475 | 12/31/2022 | ||||||||||||||||||
17309BAB3 | 222,437 | 220,151 | 2,285 | 220,151 | 198,606 | 12/31/2022 | ||||||||||||||||||
17309VAH6 | 805,883 | 803,877 | 2,006 | 803,877 | 758,730 | 12/31/2022 | ||||||||||||||||||
225470Q89 | 521,333 | 522,356 | (1,023 | ) | 522,356 | 415,017 | 12/31/2022 | |||||||||||||||||
32051GT70 | 735,886 | 675,158 | 60,728 | 675,158 | 601,220 | 12/31/2022 | ||||||||||||||||||
36244SAD0 | 2,376,922 | 2,199,302 | 177,620 | 2,199,302 | 2,397,505 | 12/31/2022 | ||||||||||||||||||
43739EAP2 | 705,506 | 689,473 | 16,033 | 689,473 | 669,168 | 12/31/2022 | ||||||||||||||||||
46627MAD9 | 604,558 | 593,543 | 11,016 | 593,543 | 524,404 | 12/31/2022 | ||||||||||||||||||
46627MCY1 | 5,194,888 | 4,953,702 | 241,186 | 4,953,702 | 5,130,647 | 12/31/2022 | ||||||||||||||||||
46627MEJ2 | 1,195,047 | 1,170,943 | 24,104 | 1,170,943 | 982,410 | 12/31/2022 | ||||||||||||||||||
47232CAH7 | 1,899,914 | 1,890,225 | 9,689 | 1,890,225 | 2,006,775 | 12/31/2022 | ||||||||||||||||||
F-41
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
| Present Value | OTTI Charge | |||||||||||||||||||||||
| Amortized Cost | of Projected | Recognized in | Amortized Cost | Fair Value at | Date | |||||||||||||||||||
CUSIP | Before OTTI | Cash Flows | Statement of Operations | After OTTI | Time of OTTI | Reported | ||||||||||||||||||
59020UW43 | 366,342 | 237,303 | 129,039 | 237,303 | 284,957 | 12/31/2022 | ||||||||||||||||||
643529AC4 | 520,909 | 520,857 | 53 | 520,857 | 620,443 | 12/31/2022 | ||||||||||||||||||
65535VSJ8 | 1,311,192 | 1,265,976 | 45,215 | 1,265,976 | 1,124,326 | 12/31/2022 | ||||||||||||||||||
69337BAH7 | 1,434,530 | 1,431,323 | 3,207 | 1,431,323 | 1,273,601 | 12/31/2022 | ||||||||||||||||||
74923GAC7 | 1,755,192 | 1,490,490 | 264,702 | 1,490,490 | 1,608,920 | 12/31/2022 | ||||||||||||||||||
74923HAQ4 | 552,304 | 550,690 | 1,614 | 550,690 | 486,284 | 12/31/2022 | ||||||||||||||||||
74928RAB0 | 264,408 | 256,037 | 8,371 | 256,037 | 280,614 | 12/31/2022 | ||||||||||||||||||
75115BAC3 | 1,262,630 | 1,098,615 | 164,015 | 1,098,615 | 1,195,478 | 12/31/2022 | ||||||||||||||||||
75115DAA3 | 201,854 | 200,413 | 1,441 | 200,413 | 189,024 | 12/31/2022 | ||||||||||||||||||
76110HH85 | 270,810 | 243,642 | 27,169 | 243,642 | 261,417 | 12/31/2022 | ||||||||||||||||||
761118BU1 | 942,962 | 855,567 | 87,395 | 855,567 | 916,638 | 12/31/2022 | ||||||||||||||||||
761118GS1 | 1,175,777 | 1,156,524 | 19,253 | 1,156,524 | 1,119,101 | 12/31/2022 | ||||||||||||||||||
761118SC3 | 1,633,297 | 1,616,573 | 16,724 | 1,616,573 | 1,423,542 | 12/31/2022 | ||||||||||||||||||
761118UG1 | 524,740 | 522,750 | 1,990 | 522,750 | 437,178 | 12/31/2022 | ||||||||||||||||||
76112BNM8 | 5,289,750 | 4,895,126 | 394,624 | 4,895,126 | 5,091,696 | 12/31/2022 | ||||||||||||||||||
863579J90 | 348,530 | 349,527 | (997 | ) | 349,527 | 353,839 | 12/31/2022 | |||||||||||||||||
86360BAJ7 | 747,131 | 721,456 | 25,674 | 721,456 | 766,709 | 12/31/2022 | ||||||||||||||||||
87222EAB4 | 867,402 | 838,871 | 28,530 | 838,871 | 817,668 | 12/31/2022 | ||||||||||||||||||
87222EAC2 | 977,235 | 960,878 | 16,357 | 960,878 | 815,432 | 12/31/2022 | ||||||||||||||||||
93934FMD1 | 1,598,156 | 1,599,666 | (1,510 | ) | 1,599,666 | 1,669,656 | 12/31/2022 | |||||||||||||||||
93934NAC9 | 495,187 | 485,595 | 9,592 | 485,595 | 412,326 | 12/31/2022 | ||||||||||||||||||
026929AA7 | 1,760,841 | 1,592,703 | 168,138 | 1,592,703 | 1,705,416 | 12/31/2022 | ||||||||||||||||||
45660LCK3 | 2,750,918 | 2,656,466 | 94,452 | 2,656,466 | 2,796,920 | 12/31/2022 | ||||||||||||||||||
058931AT3 | 1,225,723 | 1,209,276 | 16,447 | 1,209,276 | 1,154,041 | 12/31/2022 | ||||||||||||||||||
05946XY72 | 1,048,037 | 1,046,371 | 1,666 | 1,046,371 | 1,028,271 | 12/31/2022 | ||||||||||||||||||
05949CKX3 | 1,262,077 | 1,203,570 | 58,507 | 1,203,570 | 1,250,063 | 12/31/2022 | ||||||||||||||||||
07386YAE4 | 2,032,756 | 1,895,938 | 136,818 | 1,895,938 | 1,823,359 | 12/31/2022 | ||||||||||||||||||
073880AD8 | 1,158,830 | 1,127,532 | 31,298 | 1,127,532 | 1,051,875 | 12/31/2022 | ||||||||||||||||||
07401CAS2 | 3,509,364 | 3,262,743 | 246,621 | 3,262,743 | 3,195,561 | 12/31/2022 | ||||||||||||||||||
12543XAD8 | 1,176,300 | 1,172,978 | 3,321 | 1,172,978 | 1,091,000 | 12/31/2022 | ||||||||||||||||||
12545EAK2 | 1,377,454 | 1,391,454 | (14,000 | ) | 1,391,454 | 1,221,449 | 12/31/2022 | |||||||||||||||||
12638PAB5 | 721,090 | 711,902 | 9,188 | 711,902 | 552,531 | 12/31/2022 | ||||||||||||||||||
1266942H0 | 554,299 | 556,124 | (1,824 | ) | 556,124 | 475,653 | 12/31/2022 | |||||||||||||||||
126694HP6 | 472,556 | 469,133 | 3,424 | 469,133 | 458,573 | 12/31/2022 | ||||||||||||||||||
126694UJ5 | 1,182,995 | 1,033,719 | 149,276 | 1,033,719 | 1,173,798 | 12/31/2022 | ||||||||||||||||||
12669DUS5 | 754,525 | 753,847 | 679 | 753,847 | 726,499 | 12/31/2022 | ||||||||||||||||||
12669G3S8 | 1,273,702 | 1,267,299 | 6,403 | 1,267,299 | 1,123,086 | 12/31/2022 | ||||||||||||||||||
12669G4K4 | 2,695,208 | 2,679,394 | 15,815 | 2,679,394 | 2,508,614 | 12/31/2022 | ||||||||||||||||||
12669GR45 | 521,474 | 499,857 | 21,618 | 499,857 | 477,045 | 12/31/2022 | ||||||||||||||||||
16162YAL9 | 353,219 | 351,895 | 1,324 | 351,895 | 327,680 | 12/31/2022 | ||||||||||||||||||
16165MAG3 | 1,899,055 | 1,872,274 | 26,782 | 1,872,274 | 1,610,464 | 12/31/2022 | ||||||||||||||||||
170257AE9 | 2,539,977 | 2,557,671 | (17,695 | ) | 2,557,671 | 2,070,574 | 12/31/2022 | |||||||||||||||||
F-42
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
| Present Value | OTTI Charge | |||||||||||||||||||||||
| Amortized Cost | of Projected | Recognized in | Amortized Cost | Fair Value at | Date | |||||||||||||||||||
CUSIP | Before OTTI | Cash Flows | Statement of Operations | After OTTI | Time of OTTI | Reported | ||||||||||||||||||
17025AAH5 | 938,958 | 899,184 | 39,774 | 899,184 | 873,057 | 12/31/2022 | ||||||||||||||||||
2254582Y3 | 244,640 | 244,638 | 3 | 244,638 | 216,789 | 12/31/2022 | ||||||||||||||||||
225458L55 | 544,944 | 541,599 | 3,344 | 541,599 | 471,470 | 12/31/2022 | ||||||||||||||||||
225470VF7 | 1,564,751 | 1,540,100 | 24,651 | 1,540,100 | 1,484,306 | 12/31/2022 | ||||||||||||||||||
32051GXQ3 | 1,362,980 | 1,279,943 | 83,036 | 1,279,943 | 1,285,425 | 12/31/2022 | ||||||||||||||||||
362341XC8 | 884,539 | 865,321 | 19,218 | 865,321 | 767,933 | 12/31/2022 | ||||||||||||||||||
36242DQY2 | 110,190 | 104,565 | 5,625 | 104,565 | 100,339 | 12/31/2022 | ||||||||||||||||||
466247J46 | 80,370 | 74,449 | 5,922 | 74,449 | 74,585 | 12/31/2022 | ||||||||||||||||||
466247UG6 | 541,686 | 527,981 | 13,705 | 527,981 | 520,360 | 12/31/2022 | ||||||||||||||||||
466247ZP1 | 571,804 | 565,679 | 6,125 | 565,679 | 545,586 | 12/31/2022 | ||||||||||||||||||
46628LAB4 | 43,495 | 42,157 | 1,338 | 42,157 | 44,190 | 12/31/2022 | ||||||||||||||||||
46630WAB6 | 922,039 | 888,065 | 33,974 | 888,065 | 822,318 | 12/31/2022 | ||||||||||||||||||
46630WAL4 | 544,230 | 517,582 | 26,648 | 517,582 | 489,602 | 12/31/2022 | ||||||||||||||||||
46631NAA7 | 754,017 | 754,676 | (659 | ) | 754,676 | 639,770 | 12/31/2022 | |||||||||||||||||
46631NDT3 | 6,401,145 | 6,374,664 | 26,481 | 6,374,664 | 6,427,560 | 12/31/2022 | ||||||||||||||||||
576433C53 | 505,306 | 453,037 | 52,269 | 453,037 | 513,969 | 12/31/2022 | ||||||||||||||||||
576433D52 | 534,258 | 502,735 | 31,523 | 502,735 | 444,494 | 12/31/2022 | ||||||||||||||||||
57643MLZ5 | 289,827 | 286,800 | 3,026 | 286,800 | 270,858 | 12/31/2022 | ||||||||||||||||||
59020UV77 | 34,748 | 33,720 | 1,027 | 33,720 | 33,150 | 12/31/2022 | ||||||||||||||||||
59023PAB9 | 513,508 | 509,687 | 3,821 | 509,687 | 530,373 | 12/31/2022 | ||||||||||||||||||
74958YAE2 | 312,432 | 299,278 | 13,154 | 299,278 | 304,434 | 12/31/2022 | ||||||||||||||||||
863579RP5 | 611,800 | 611,553 | 247 | 611,553 | 595,598 | 12/31/2022 | ||||||||||||||||||
863579XC7 | 1,153,338 | 1,124,061 | 29,277 | 1,124,061 | 1,170,138 | 12/31/2022 | ||||||||||||||||||
86363GAF1 | 1,513,354 | 1,415,604 | 97,750 | 1,415,604 | 1,437,559 | 12/31/2022 | ||||||||||||||||||
885220KW2 | 2,124,251 | 2,082,510 | 41,741 | 2,082,510 | 2,073,599 | 12/31/2022 | ||||||||||||||||||
94984DAC8 | 360,258 | 345,160 | 15,098 | 345,160 | 349,356 | 12/31/2022 | ||||||||||||||||||
94986CAA2 | 295,523 | 289,300 | 6,223 | 289,300 | 276,087 | 12/31/2022 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total | $ | 13,330,036 | ||||||||||||||||||||||
|
| |||||||||||||||||||||||
F-43
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
The following table shows the amount of assets pledged to others as collateral or otherwise restricted for the years ended December 31 (in millions):
| Gross | Restricted to | |||||||||||||||||||
| Restricted | Total | |||||||||||||||||||
| (Decrease)/ | to Total | Admitted | ||||||||||||||||||
Restricted Asset Category | 2023 | 2022 | Increase | Assets | Assets | |||||||||||||||
Letter stock or securities restricted as to sale | $ | 157.4 | $ | 241.4 | $ | (84.0 | ) | 0.3 | % | 0.3 | % | |||||||||
FHLB capital stock | 41.5 | 48.3 | (6.8 | ) | 0.1 | % | 0.1 | % | ||||||||||||
On deposit with states | 6.6 | 6.3 | 0.3 | 0.0 | % | 0.0 | % | |||||||||||||
Pledged as collateral to FHLB (including assets backing funding agreements) | 1,279.2 | 1,102.3 | 176.9 | 2.7 | % | 2.7 | % | |||||||||||||
Pledged as collateral not captured in other categories | 196.4 | 167.6 | 28.8 | 0.4 | % | 0.4 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total restricted assets | $ | 1,681.1 | $ | 1,565.9 | $ | 115.2 | 3.6 | % | 3.6 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net investment income consisted of the following for the years ended December 31 (in millions):
| 2023 | 2022 | 2021 | ||||||||||
Investment income: | ||||||||||||
Bonds | $ | 1,803.2 | $ | 1,436.1 | $ | 1,240.2 | ||||||
Equity securities | 23.7 | 9.3 | 28.5 | |||||||||
Mortgage loans | 200.3 | 116.5 | 74.6 | |||||||||
Real estate | — | — | 11.9 | |||||||||
Policy loans | 3.8 | 4.1 | 4.7 | |||||||||
Cash and short-term investments | 109.7 | 17.5 | 18.8 | |||||||||
Other invested assets | 131.9 | 96.1 | 75.8 | |||||||||
Derivative instruments | (41.3 | ) | (174.6 | ) | 543.7 | |||||||
Other | — | 2.9 | 2.0 | |||||||||
|
|
|
|
|
| |||||||
Gross investment income | 2,231.3 | 1,507.9 | 2,000.2 | |||||||||
Investment expenses | (72.2 | ) | (35.6 | ) | (49.2 | ) | ||||||
Ceded investment income | (240.7 | ) | (453.3 | ) | — | |||||||
|
|
|
|
|
| |||||||
Net investment income | $ | 1,918.4 | $ | 1,019.0 | $ | 1,951.0 | ||||||
|
|
|
|
|
| |||||||
F-44
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
The carrying value of partnership and limited liability company holdings by annual statement category as of December 31 were (in millions):
| 2023 | 2022 | |||||||
Joint venture interests: | ||||||||
Common stocks - subsidiaries and affiliates | $ | 0.1 | $ | 9.4 | ||||
Common stocks - unaffiliated | 717.8 | 774.2 | ||||||
Real estate | 93.3 | 84.4 | ||||||
Bonds/preferred stock | 54.2 | 62.5 | ||||||
Mortgage loans | 172.9 | 117.7 | ||||||
Other | 110.2 | 29.8 | ||||||
Surplus notes | 213.6 | 199.8 | ||||||
Residual tranches | 44.7 | 85.4 | ||||||
Other | 1.0 | 0.2 | ||||||
|
|
|
| |||||
Total | $ | 1,407.8 | $ | 1,363.4 | ||||
|
|
|
| |||||
The Company held one affiliated partnership and limited liability company in a loss position with accumulated losses of less than $0.1 million as of December 31, 2023, and held none in a loss position as of December 31, 2022.
F-45
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
E. OTHER FINANCIAL INSTRUMENTS
The Company’s derivative strategy employs a variety of derivative financial instruments including interest rate and currency swaps, options, financial futures, and forward contracts. Investment risk is assessed on a portfolio basis and individual derivative financial instruments are not generally designated in hedging relationships; therefore, as allowed by statutory accounting practices, the Company intentionally has not applied hedge accounting.
MMALIC primarily utilizes a variety of financial instruments as part of its efforts to economically hedge and manage fluctuations in the fair value of its investment portfolio attributable to changes in general interest rate levels and to manage duration mismatch of assets and liabilities. Those instruments may include interest rate exchange agreements, equity index options purchased in either over-the-counter market or on the Chicago Board Options Exchange, payer swaptions, and commitments to extend credit. All instruments involve elements of credit and market risks in excess of the amounts recognized in the accompanying financial statements at a given point of time. The contract or notional amounts of those instruments reflect the extent of involvement in the various types of financial instruments.
Equity index options are contracts that give the purchaser the right, but not the obligation, to buy or sell securities at a specified price during a specified period. MMALIC’s equity index options backing fixed-indexed and registered index-linked annuities are based on an existing market index (generally the S&P 500). The equity index options expire ratably between 2024 and 2030. Under the indexed annuity products, the crediting rate is linked to changes in the equity indices or Exchanged Traded Funds (ETF) for specified periods and participation rates. The prices of the options purchased are calculated with reference to the underlying index or ETF, participation rates, caps, floors, durations and notional amounts of the underlying contracts. As a purchaser of options, MMALIC pays, at the beginning of the contract, a premium for transferring the risk of an unfavorable change in the price of the underlying financial instrument. As of January 1, 2022, options backing the fixed-indexed annuities for which the company is applying the OAC prescribed practice are now accounted for at amortized cost.
As of December 31, 2023, MMALIC has entered into twenty-three interest rate swaps to more closely match the cash flows of assets and liabilities. Interest rate swaps are also used to mitigate changes in the value of assets anticipated to be purchased and other anticipated transactions and commitments. The notional amounts of the interest rate swaps generally decline over each swap’s respective life (the swaps expire between 2024 and 2042).
The Company uses currency swaps for the purpose of managing currency exchange risks in its assets and liabilities.
The Company utilizes certain other agreements including forward contracts and financial futures. Currency forwards are contracts in which the Company agrees with other parties to exchange specified amounts of identified currencies at a specific future date. Typically, the exchange rate is agreed upon at the time of the contract. The Company’s futures contracts are exchange traded and have credit risk. Margin requirements are met with the deposit of securities. Futures contracts are generally settled with offsetting transactions. Forward contracts and financial futures are used by the Company to reduce exposures to various risks including interest rates and currency rates.
The Company enters derivative transactions through bilateral derivative agreements with counterparties, or through over the counter cleared derivatives with a counterparty and the use of a clearinghouse. To minimize credit risk for bilateral transactions, the Company and its counterparties generally enter into master netting agreements based on agreed upon requirements that outline the framework for how collateral is to be posted in the amount owed under each transaction, subject to certain minimums. For over the counter cleared derivative transactions between the Company and a counterparty, the parties enter into a series of master netting and other agreements that govern, among other things, clearing and collateral requirements. These transactions are cleared through a clearinghouse and each derivative counterparty is only exposed to the default risk of the clearinghouse. Certain interest rate swaps are considered cleared transactions. These cleared transactions require initial and daily variation margin collateral postings. These agreements allow for contracts in a positive position, in which amounts are due to the Company, to be offset by contracts in a negative position. This right of offset, combined with collateral obtained from counterparties, reduces the Company’s credit exposure.
Net collateral pledged by the counterparties was $789.0 million as of December 31, 2023 and $131.1 million as of December 31, 2022. In the event of default, the full market value exposure at risk in a net gain position, net of offsets and collateral, was $425.9 million as of December 31, 2023 and $194.2 million as of December 31, 2022. The statutory net amount at risk, defined as net collateral pledged and statement values excluding accrued interest, was $428.6 million as of December 31, 2023 and $80.4 million as of December 31, 2022.
F-46
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
E. OTHER FINANCIAL INSTRUMENTS (CONTINUED)
The following tables summarize the carrying values and notional amounts of the Company’s derivative financial instruments within the general account:
| December 31, 2023 | ||||||||||||||||
| Assets | Liabilities | |||||||||||||||
| Carrying | Notional | Carrying | Notional | |||||||||||||
| Value | Amount | Value | Amount | |||||||||||||
| (in millions) | ||||||||||||||||
Fixed-indexed options* | $ | 723.8 | $ | 19,765.4 | $ | 418.1 | $ | 16,036.9 | ||||||||
Interest rate swaps | 26.6 | 4,774.8 | 66.3 | 2,451.0 | ||||||||||||
Financial futures | 21.0 | 1,343.1 | — | — | ||||||||||||
Currency swaps | — | — | 38.8 | 443.5 | ||||||||||||
Forward contracts | — | 3.2 | 5.0 | 183.9 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 771.4 | $ | 25,886.5 | $ | 528.2 | $ | 19,115.3 | ||||||||
|
|
|
|
|
|
|
| |||||||||
*Beginning January 1, 2022, fixed-indexed options are held at amortized cost under OAC 3901-1-67. Prior to the adoption of OAC 3901-1-67, fixed-indexed options were carried at fair value. The fair value amount related to fixed-indexed options was $822.9 million as of December 31, 2023.
| December 31, 2022 | ||||||||||||||||
| Assets | Liabilities | |||||||||||||||
| Carrying | Notional | Carrying | Notional | |||||||||||||
| Value | Amount | Value | Amount | |||||||||||||
| (in millions) | ||||||||||||||||
Fixed-indexed options* | $ | 846.8 | $ | 18,948.0 | $ | 598.6 | $ | 17,176.5 | ||||||||
Interest rate swaps | 25.2 | 1,551.8 | 95.0 | 3,930.0 | ||||||||||||
Currency swaps | 0.9 | 38.4 | 4.8 | 142.4 | ||||||||||||
Forward contracts | 0.1 | 7.5 | 2.5 | 69.0 | ||||||||||||
|
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|
|
|
|
|
| |||||||||
Total | $ | 873.0 | $ | 20,545.7 | $ | 700.9 | $ | 21,317.9 | ||||||||
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| * | Beginning January 1, 2022, fixed-indexed options are held at amortized cost under OAC 3901-1-67. Prior to the adoption of OAC 3901-1-67, fixed-indexed options were carried at fair value. The fair value amount related to fixed-indexed options was $287.4 million as of December 31, 2022. |
The following presents the Company’s gross notional interest rate swap positions:
| December 31, 2023 | December 31, 2022 | |||||||
| (in millions) | ||||||||
Open interest rate swaps in a fixed pay position | $ | 2,484.8 | $ | 1,551.8 | ||||
Open interest rate swaps in a fixed receive position | 4,741.0 | 3,930.0 | ||||||
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| |||||
Total interest rate swaps | $ | 7,225.8 | $ | 5,481.8 | ||||
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F-47
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
E. OTHER FINANCIAL INSTRUMENTS (CONTINUED)
The following summarizes the Company’s net realized gains (losses) on closed contracts and change in net unrealized gains (losses) related to market fluctuations on open contracts by derivative type:
| Years Ended December 31, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| Net Realized Gains (Losses) on Closed Contracts | Change In Net Unrealized Gains (Losses) on Open Contracts | Net Realized Gains (Losses) on Closed Contracts | Change In Net Unrealized Gains (Losses) on Open Contracts | |||||||||||||
| (in millions) | ||||||||||||||||
Registered index-linked options | $ | 22.9 | $ | 203.7 | $ | (26.1 | ) | $ | (86.2 | ) | ||||||
Interest rate swaps | — | 30.0 | — | (111.6 | ) | |||||||||||
Currency swaps | (0.1 | ) | (35.0 | ) | — | (3.9 | ) | |||||||||
Forward contracts | 0.3 | (2.6 | ) | 0.7 | (2.4 | ) | ||||||||||
Financial futures | 0.2 | 21.0 | 3.1 | — | ||||||||||||
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Total | $ | 23.3 | $ | 217.1 | $ | (22.3 | ) | $ | (204.1 | ) | ||||||
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Fixed-indexed options are carried at amortized cost with amortization and expirations recorded in Net investment income. The Company recorded gains on expirations of $521.1 million and amortization of $537.7 million in 2023. The Company recorded gains on expirations of $273.9 million and amortization of $457.1 million in 2022.
The Company became a member of the Federal Home Loan Bank (“FHLB”) on August 14, 2009. The FHLB makes advances and provides other banking services to member institutions. The Company owned $20.0 million of FHLB Class B membership stock at December 31, 2023 and 2022. The Company has no membership stock eligible for redemption. Through its association with the FHLB and by purchasing a set amount of FHLB stock, the Company can enter into deposit-type contracts with the FHLB known as funding agreements.
In 2022, FHLB advanced MMALIC $300.0 million. At December 31, 2023 and 2022, MMALIC had $500.0 million (the maximum amount of borrowings, as permitted by the FHLB, during the reporting period was $500.0 million) in outstanding advances from the FHLB (included in liability for deposit-type contracts), bearing interest at rates ranging from 1.35% to 1.97% (average rate of 1.72% at December 31, 2023). The Company paid interest of approximately $8.6 million, $8.4 million, and $4.4 million on FHLB advances in 2023, 2022 and 2021, respectively. These advances must be repaid between 2025 and 2030 ($ 200.0 million in 2025 and $300.0 million in 2030). The Company has invested the proceeds from the advances in bonds for the purpose of earning a spread over the interest payments due to the FHLB. Per the funding agreement, the Company was required to purchase 215,252 shares ($21.5 million) of FHLB activity and excess stock.
The Company posted collateral to the FHLB of assets with a fair value of approximately $1,204.1 million and $1,030.9 million at December 31, 2023 and 2022, respectively. The Company posted collateral to the FHLB of assets with a carrying value of approximately $1,279.2 million and $1,102.3 million at December 31, 2023 and 2022, respectively. The Company’s FHLB borrowing capacity is based on the Company’s estimate of collateral eligible to be pledged with the FHLB. The deposit contract liabilities are reported in liability for deposit-type contracts in the balance sheet, and related assets are accounted for in the Company’s general account. FHLB capital stock is reported in Common stocks in the balance sheet.
F-48
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
E. OTHER FINANCIAL INSTRUMENTS (CONTINUED)
In the normal course of business, the Company enters into commitments to purchase certain investments. The majority of these commitments have funding periods that extend between one and five years. The Company is not required to fund commitments once the commitment period expires.
As of December 31, 2023, the Company had the following outstanding commitments:
| 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total | ||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||
Private Placements | $ | 135.5 | $ | 224.7 | $ | 262.4 | $ | 73.7 | $ | 33.4 | $ | 157.1 | $ | 886.8 | ||||||||||||||
Mortgage Loans | 192.0 | 123.5 | 305.9 | 36.9 | — | — | 658.3 | |||||||||||||||||||||
Real Estate | — | 6.0 | 1.2 | — | — | — | 7.2 | |||||||||||||||||||||
Partnerships and LLC | 27.8 | 10.7 | 38.9 | 13.3 | 19.8 | 160.2 | 270.7 | |||||||||||||||||||||
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Total | $ | 355.3 | $ | 364.9 | $ | 608.4 | $ | 123.9 | $ | 53.2 | $ | 317.3 | $ | 1,823.0 | ||||||||||||||
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In the normal course of business, the Company enters into commitments related to property lease arrangements, certain indemnities, investments and other business obligations. As of December 31, 2023 and 2022, the Company had no outstanding obligations attributable to these commitments.
F-49
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
F. REINSURANCE
The Company is contingently liable with respect to reinsurance ceded in that the liability for such reinsurance would become that of the Company upon failure of any reinsurer to meet its obligations under a particular reinsurance agreement. The Company currently reinsures its ordinary life insurance, LTC, other health products and a portion of fixed and fixed-indexed annuity products. The maximum amount the Company would retain on any single life insurance policy is $15 million.
On February 17, 2022, MMALIC entered into a Funds Withheld Coinsurance agreement effective February 1, 2022, with Martello Re Limited, a Bermuda-domiciled Class E life and annuity reinsurer launched in 2022. MMALIC ceded statutory reserves of approximately $14.2 billion on a closed block of fixed, fixed-indexed and payout annuity policies, in exchange for a $320 million ceding commission paid by Martello Re that was recorded to surplus net of tax. The Company has ceded approximately $10.0 billion and $12.6 billion of statutory annuity reserves at December 31, 2023 and 2022, respectively. The Company’s funds held under reinsurance treaties was approximately $10.0 billion and $12.7 billion at December 31, 2023 and 2022, respectively.
The impact of the Martello Re transaction on MMALIC’s income statement as of December 31, 2022 was as follows (in millions):
| 2022 | ||||
Premiums and other revenues: | ||||
Premiums and annuity considerations | $ | (14,113.4 | ) | |
Net investment income | (451.8 | ) | ||
Commissions and expense allowances and reserve adjustments on reinsurance ceded | 451.6 | |||
Charges and fees for deposit-type contracts and miscellaneous income | (34.6 | ) | ||
|
| |||
Total premiums and other revenues | $ | (14,148.2 | ) | |
|
| |||
Benefits and expenses: | ||||
Policyholders’ benefits | $ | (470.7 | ) | |
Surrender benefits | (1,604.8 | ) | ||
Change in policy and contract reserves | (12,416.6 | ) | ||
Other | 317.2 | |||
|
| |||
Total benefits and expenses | $ | (14,174.9 | ) | |
|
| |||
Effective January 1, 2007, MMALIC entered into a reinsurance agreement with Loyal American Life Insurance Company (“Loyal”), at the time an indirect wholly-owned insurance subsidiary domiciled in Ohio, whereby Loyal cedes 100% of certain fixed-indexed annuity business written to MMALIC. Annuity reserves assumed by MMALIC under this agreement were $10.7 million and $14.5 million at December 31, 2023 and 2022, respectively.
On August 31, 2012, in conjunction with and prior to the sale of certain affiliated insurance companies to Cigna, the Company entered into a reinsurance agreement with Cigna which ceded 100% of all accident and health policies, excluding LTC. Under this agreement, all activity on these policies after existing reinsurance is ceded to Loyal, a Cigna subsidiary and one of the sold companies.
Also, effective August 31, 2012, the Company entered into an agreement to retrocede 90% of the life and annuity business assumed from Loyal to Hannover Life Reassurance Company of America. This business was previously reinsured directly from Loyal to Hannover Life Reassurance of Ireland. This transaction did not have any significant impact on the operations and capital of MMALIC.
The Company entered into a coinsurance agreement with Great American Life Assurance Company (“GALAC”), an affiliated life insurance company domiciled in Ohio, effective June 30, 2011. Under this agreement the Company assumes 100% of GALAC’s life and annuity business, with statutory reserves of approximately $4.3 million and $4.4 million at December 31, 2023 and 2022, respectively. GALAC was sold to an unaffiliated insurance company on July 3, 2012, re-domiciled in Iowa, and is currently named Accordia Life and Annuity Company.
F-50
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
F. REINSURANCE (CONTINUED)
The Company entered into a coinsurance agreement with United Teacher Associates Insurance Company (“UTAIC”), a life insurance company domiciled in Texas, effective October 31, 2015. Under this agreement the Company assumes 100% of UTAIC’s life, annuity, and LTC business issued in the state of Florida. Effective December 31, 2016, UTAIC merged into Continental General Insurance Company, a life insurance company domiciled in Texas. Assumed reserves under this agreement were approximately $55.3 million and $53.7 million at December 31, 2023 and 2022, respectively.
The Company entered into a quota share indemnity reinsurance agreement on fixed-indexed annuity policies with Hannover Life Reassurance Company of America effective December 31, 2018. The reinsurance treaty transfers risk of certain surrender activity in MMALIC’s fixed-indexed annuity business. This treaty reduced statutory capital and surplus volatility related to MMALIC’s fixed-indexed annuity policies from stock market fluctuations, which could impact the Company’s risk-based capital. Effective January 1, 2022 the Company recaptured the fixed-indexed annuity policies ceded to Hannover Life Reassurance Company of America in the agreement that became effective on December 31, 2018. The financial impact of the reinsurance recapture was a decrease to statutory capital of $140.6 million.
The Company entered into a flow coinsurance agreement with Commonwealth, a subsidiary of Global Atlantic Financial Group, effective May 7, 2020. Under this agreement, the Company cedes certain newly issued traditional fixed and fixed-indexed annuities on a quota share coinsurance basis with such quota share percentages being up to 50%. The Company has ceded approximately $1,601.8 million and $1,417.8 million of deferred annuity reserves to Commonwealth under this agreement at December 31, 2023 and 2022, respectively.
The Company entered into a block coinsurance agreement with Commonwealth effective October 1, 2020. Under this agreement the Company ceded approximately $5.7 billion of deferred annuity reserves and transferred investments with a statutory carrying value of approximately $5.7 billion and market value of approximately $6.1 billion to Commonwealth. The Company has ceded approximately $3.6 billion and $4.5 billion of deferred annuity reserves under this agreement at December 31, 2023 and 2022, respectively.
The Company has reinsured with various insurance companies approximately $15,350.1 million and $18,719.6 million of reserves at December 31, 2023 and 2022, respectively.
The effect of reinsurance on premiums and annuity considerations for the years ended December 31 is as follows (in millions):
| 2023 | 2022 | 2021 | ||||||||||
Direct premiums and annuity considerations | $ | 8,775.8 | $ | 7,379.8 | $ | 5,797.3 | ||||||
Reinsurance assumed | 6.6 | 6.7 | 4.2 | |||||||||
Reinsurance ceded | (275.6 | ) | (14,584.8 | ) | (774.5 | ) | ||||||
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Net premium and annuity considerations | $ | 8,506.8 | $ | (7,198.3 | ) | $ | 5,027.0 | |||||
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The effect of reinsurance on benefits paid to policyholders and withdrawals on deposit-type contract funds during the years ended December 31 is as follows (in millions):
| 2023 | 2022 | 2021 | ||||||||||
Direct benefits paid to policyholders and withdrawals on deposit-type contracts | $ | 7,621.5 | $ | 5,063.7 | $ | 3,959.4 | ||||||
Reinsurance assumed | 37.1 | 26.8 | 26.2 | |||||||||
Reinsurance ceded | (4,354.9 | ) | (2,862.0 | ) | (798.9 | ) | ||||||
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Net benefits paid to policyholders and withdrawals on deposit-type contracts | $ | 3,303.7 | $ | 2,228.5 | $ | 3,186.7 | ||||||
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F-51
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
G. FEDERAL INCOME TAXES
On August 16th, 2022, the Inflation Reduction Act (“IRA”) was signed into law and includes certain corporate income tax provisions. Impacts to the Company could include the imposition of a CAMT applicable to tax years beginning after December 31, 2022. The CAMT imposes a 15% minimum tax on adjusted financial statement income on applicable corporations that have an average group wide adjusted financial statement income over $1 billion in the prior three-year period (2020-2022). As of the reporting date, the Company has determined that it is not an applicable corporation and therefore not liable for CAMT in 2023. The United States Treasury Secretary and the IRS have been authorized to issue further guidance and intend to publish proposed regulations in 2024.
The components of the net deferred tax assets at December 31 are as follows (in millions):
| 2023 | 2022 | Change | ||||||||||
DTAs resulting in book/tax differences in: | ||||||||||||
Ordinary: | ||||||||||||
Deferred acquisition costs | $ | 77.6 | $ | 61.6 | $ | 16.0 | ||||||
Reserves | 168.1 | 112.7 | 55.4 | |||||||||
Investment items | 111.7 | — | 111.7 | |||||||||
Deferred compensation | 0.2 | 0.2 | — | |||||||||
Accrued expenses | 5.8 | 4.6 | 1.2 | |||||||||
Other | 5.5 | 8.3 | (2.8 | ) | ||||||||
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Total ordinary DTAs | 368.9 | 187.4 | 181.5 | |||||||||
Capital: | ||||||||||||
Investment items | 78.4 | — | 78.4 | |||||||||
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| |||||||
Total capital DTAs | 78.4 | — | 78.4 | |||||||||
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Total DTAs | 447.3 | 187.4 | 259.9 | |||||||||
Deferred tax assets nonadmitted | (36.1 | ) | (2.2 | ) | (33.9 | ) | ||||||
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Admitted DTAs | 411.2 | 185.2 | 226.0 | |||||||||
DTLs resulting in book/tax differences in: | ||||||||||||
Ordinary: | ||||||||||||
Section 807(f) amortization | 21.7 | 3.9 | 17.8 | |||||||||
Investment items | 55.8 | — | 55.8 | |||||||||
Depreciation/other | 0.3 | 4.6 | (4.3 | ) | ||||||||
Reserve transition adjustment | 22.0 | 33.1 | (11.1 | ) | ||||||||
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Total ordinary DTLs | 99.8 | 41.6 | 58.2 | |||||||||
Capital: | ||||||||||||
Unrealized gains | 38.6 | 54.9 | (16.3 | ) | ||||||||
Investment items | — | 16.5 | (16.5 | ) | ||||||||
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| |||||||
Total capital DTLs | 38.6 | 71.4 | (32.8 | ) | ||||||||
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Total DTLs | 138.4 | 113.0 | 25.4 | |||||||||
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Total net deferred admitted tax assets | $ | 272.8 | $ | 72.2 | $ | 200.6 | ||||||
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Change in deferred tax assets nonadmitted | $ | (33.9 | ) | $ | 12.4 | |||||||
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F-52
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
G. FEDERAL INCOME TAXES (CONTINUED)
The results of the admissibility calculations at December 31 are as follows (in millions):
| 2023 | 2022 | Change | ||||||||||||||||||||||||||||||||||
| Ordinary | Capital | Total | Ordinary | Capital | Total | Ordinary | Capital | Total | ||||||||||||||||||||||||||||
a. Federal income taxes paid in prior years recoverable through loss carrybacks | $ | — | $ | 42.3 | $ | 42.3 | $ | — | $ | — | $ | — | $ | — | $ | 42.3 | $ | 42.3 | ||||||||||||||||||
b. Adjusted gross deferred tax assets expected to be realized (excluding the amount of deferred tax assets from (a) above) after application of the threshold limitation. (The lesser of (b)1 and (b)2 below) | 218.5 | 12.0 | 230.5 | 72.2 | — | 72.2 | 146.3 | 12.0 | 158.3 | |||||||||||||||||||||||||||
1. Adjusted gross deferred tax assets expected to be realized following the balance sheet date | 218.5 | 12.0 | 230.5 | 72.2 | — | 72.2 | 146.3 | 12.0 | 158.3 | |||||||||||||||||||||||||||
2. Adjusted gross deferred tax assets allowed per limitation threshold | XXX | XXX | 416.7 | XXX | XXX | 415.6 | XXX | XXX | 1.1 | |||||||||||||||||||||||||||
c. Adjusted gross deferred tax assets (excluding the amount of deferred tax assets from (a) and (b) above) offset by gross deferred tax liabilities | 114.3 | 24.1 | 138.4 | 41.6 | 71.4 | 113.0 | 72.7 | (47.3 | ) | 25.4 | ||||||||||||||||||||||||||
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d. Deferred tax assets admitted as the result of application of SSAP No. 101 | $ | 332.8 | $ | 78.4 | $ | 411.2 | $ | 113.8 | $ | 71.4 | $ | 185.2 | $ | 219.0 | $ | 7.0 | $ | 226.0 | ||||||||||||||||||
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The other admissibility criteria for the Company are as follows (dollars in millions):
| 2023 | 2022 | 2021 | ||||||||||
a. Ratio percentage used to determine recovery period and threshold limitation amount | 828 | % | 871 | % | 791 | % | ||||||
b. Amount of adjusted capital and surplus used to determine recovery period and threshold limitation in the table above | $ | 2,778.2 | $ | 2,770.8 | $ | 2,788.3 | ||||||
The impact of the Company’s tax planning strategies, which do not include the use of reinsurance, on the adjusted gross DTAs and net admitted adjusted gross DTAs by tax character is as follows:
| 2023 | 2022 | Change | ||||||||||||||||||||||
| Ordinary | Capital | Ordinary | Capital | Ordinary | Capital | |||||||||||||||||||
a. Adjusted gross DTAs | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||||||
b. Net admitted adjusted gross DTAs | 4 | % | 0 | % | 0 | % | 0 | % | 4 | % | 0 | % | ||||||||||||
F-53
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
G. FEDERAL INCOME TAXES (CONTINUED)
The provision for incurred income taxes on operating earnings and capital gains and the change in DTAs and DTLs for the years ended December 31 are as follows (in millions):
| 2023 | 2022 | 2021 | ||||||||||
Current federal income tax expense (benefit) on operations | $ | 241.8 | $ | 13.6 | $ | 45.5 | ||||||
Federal income tax expense (benefit) on net realized capital gains | (23.4 | ) | (14.3 | ) | 118.3 | |||||||
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Total federal income tax expense (benefit) | $ | 218.4 | $ | (0.7 | ) | $ | 163.8 | |||||
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| |||||||
Net DTA(L) | $ | 200.6 | $ | 10.5 | $ | 22.7 | ||||||
Less: Items not recorded in the change in net deferred tax asset: | ||||||||||||
Tax-effect of unrealized gains (losses) | (16.3 | ) | (31.2 | ) | 2.1 | |||||||
Tax-effect of correction of error | (3.6 | ) | — | — | ||||||||
Tax-effect of changes in nonadmitted DTA | 33.9 | (12.4 | ) | 14.6 | ||||||||
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Change in net deferred tax asset | $ | 214.6 | $ | (33.1 | ) | $ | 39.4 | |||||
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The Company’s income tax expense and change in DTA/DTL for the year ended December 31 differs from the amount obtained by applying the federal statutory rate of 21% to income from operations before federal income taxes for the following reasons (in millions):
| 12-2023 | 12-2022 | |||||||
Provision computed at federal statutory rate | $ | (29.6 | ) | $ | 40.3 | |||
Reinsurance items | 11.7 | 54.9 | ||||||
OAC 3901-1-67 adoption | — | (46.2 | ) | |||||
Investment items | (3.8 | ) | (10.4 | ) | ||||
Nonadmitted assets | 2.3 | (3.6 | ) | |||||
Tax credits | — | (0.1 | ) | |||||
Section 481 - change in accounting method | 25.2 | — | ||||||
Other | (2.0 | ) | (2.5 | ) | ||||
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Total statutory income tax expense (benefit) | $ | 3.8 | $ | 32.4 | ||||
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Federal and foreign income tax expense (benefit) | $ | 218.4 | $ | (0.7 | ) | |||
Change in net deferred income taxes | (214.6 | ) | 33.1 | |||||
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Total statutory income tax expense (benefit) | $ | 3.8 | $ | 32.4 | ||||
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F-54
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
G. FEDERAL INCOME TAXES (CONTINUED)
The Company’s income tax expense and change in DTA/DTL for the year ended December 31 differs from the amount obtained by applying the federal statutory rate of 21% to income from operations before federal income taxes for the following reasons (in millions):
| 2021 | ||||
Provision computed at statutory rate (operations and realized gains/losses, excluding amortization of IMR) | $ | 112.0 | ||
Permanent differences: | ||||
Company-owned life insurance | (1.3 | ) | ||
Dividend received deduction | (0.7 | ) | ||
Stock options | (0.2 | ) | ||
Tax exempt interest | (1.8 | ) | ||
Other | 0.6 | |||
|
| |||
Total permanent differences | (3.4 | ) | ||
Timing adjustments: | ||||
Investment differences | (1.4 | ) | ||
Reserves | 43.8 | |||
DAC tax adjustment | 8.5 | |||
Provision to return adjustments | (20.0 | ) | ||
Sale of real estate and subs | 20.1 | |||
Other | 5.7 | |||
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| |||
Total timing adjustments | 56.7 | |||
Other adjustments: | ||||
Unrealized loss on equity index options | (1.6 | ) | ||
Miscellaneous items | 0.1 | |||
|
| |||
Total other adjustments | (1.5 | ) | ||
|
| |||
Federal income tax expense on operations and realized gains | $ | 163.8 | ||
|
| |||
Federal income tax expense on operations and realized gains | $ | 163.8 | ||
Change in net deferred tax assets (excluding unrealized) | (39.4 | ) | ||
|
| |||
Total statutory income tax expense (excluding unrealized) | $ | 124.4 | ||
|
| |||
F-55
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
G. FEDERAL INCOME TAXES (CONTINUED)
As of December 31, 2023 and 2022, the Company does not have any operating loss carryforwards available to offset future net income subject to federal income taxes. As of December 31, 2023 and 2022, the Company does not have a pretax capital loss carryforward.
The following are income taxes incurred in the current and prior years that will be available for recoupment in the event of future net losses (in millions):
Year | Operations | Realized Gains | Total | |||||||||
2023 | $ | — | $ | — | $ | — | ||||||
2022 | $ | — | $ | 13.4 | $ | 13.4 | ||||||
2021 | $ | — | $ | 28.9 | $ | 28.9 | ||||||
As of December 31, 2023, MMALIC’s consolidated federal income tax returns for the 2021 through 2023 tax years remain subject to examination by the IRS.
The consolidated federal income tax returns include the following entities:
AAG Insurance Agency, LLC
Annuity Investors Life Insurance Company
| MM | Ascend Life Investor Services, LLC |
MassMutual Ascend Life Insurance Company
Manhattan National Holding, LLC
Manhattan National Life Insurance Company
The Company has determined that it is more likely than not that gross DTAs will be recoverable through future taxable income and that a valuation allowance is not necessary.
F-56
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
H. RELATED PARTY TRANSACTIONS
Certain administrative, management, accounting, actuarial, data processing, underwriting, claim, collection and investment services are provided under agreements between MMALIC and affiliates at charges not unfavorable to MMALIC or the insurance affiliates. The net amount received from affiliates was $8.4 million in 2023, the net amount received from affiliates was $13.1 million in 2022, and the net amount received from affiliates was $14.4 million in 2021, included in general insurance expenses in the Statement of Operations.
As of May 28, 2021, the Company has an agreement with Barings, LLC, an affiliate, which provides investment advisory services to the Company. MMALIC expensed investment management charges related to Barings, LLC of $34.8 million in 2023, $32.8 million in 2022 and $27.5 million during the last seven months of 2021, included in net investment income in the Statement of Operations. Prior to that agreement and to the sale of the Company to MassMutual, the Company and affiliated insurance companies had contracts with American Money Management Corporation (“AMMC”), which, subject to the direction of the Finance Committee, provided for management and accounting services related to the investment portfolios. MMALIC expensed investment management charges related to AMMC of $4.0 million in 2021, included in net investment income in the Statement of Operations.
For the first five months of 2021, AFG provided retirement benefits to qualified employees of participating companies through the AFG 401(k) Retirement and Savings Plan, a defined contribution plan. AFG made all contributions to the retirement fund portion of the plan and matched a percentage of employee contributions to the savings fund. Company contributions were expensed in the year for which they were declared. Beginning in June of 2021, the Company participates in the retirement plans of MMALIC. MMALIC sponsors funded (qualified 401(k) thrift savings) and unfunded (nonqualified deferred compensation thrift savings) defined contribution plans for its employees and retirees. The qualified 401(k) thrift savings plan’s net assets available for benefits were $58.7 million and $37.4 million as of December 31, 2023 and 2022, respectively. The Company matches a percentage of employee contributions to the qualified 401(k) thrift savings plan. MMALIC expensed approximately $4.5 million, $4.0 million, and $3.4 million in 2023, 2022, and 2021, respectively, for its retirement and employee savings plan.
In contemplation of the sale of MMALIC to Glidepath, effective May 28, 2021, a condition to the sale agreement was that MMALIC sell certain assets to AFG prior to sale, representing approximately $66 million of directly owned real estate and approximately $405 million of Schedule BA assets. The proceeds from these sales were approximately $579 million and the net gain recognized by MMALIC as a result of these sales was approximately $108 million (all on Schedule BA assets) recognized in the accompanying statements of operations statutory-basis.
MMALIC has an agreement with MassMutual Ascend Life Investor Services (“MMALIS,” formerly known as Great American Advisors, Inc.), a wholly-owned subsidiary of MMALIC, whereby MMALIS is the principal underwriter and distributor of MMALIC’s registered index-linked annuity contracts. MMALIC pays MMALIS for acting as underwriter under a distribution agreement. MMALIC paid $69.2 million in 2023 to MMALIS, 99% of which was paid to other broker/dealers as commissions. The remaining 1% of MMALIC commissions were paid to registered representatives of MMALIS. MMALIC paid $71.1 million in 2022 to MMALIS, 99% of which was paid to other broker/dealers as commissions. The remaining 1% of MMALIC commissions were paid to registered representatives of MMALIS. MMALIC paid $32.3 million in 2021 to MMALIS, 97% of which was paid to other broker/dealers as commissions. The remaining 3% of MMALIC commissions were paid to registered representatives of MMALIS. MMALIS exited the retail brokerage business on August 3, 2010 after MMALIC announced a definitive agreement with Lincoln Investment Planning, Inc., an independent broker dealer.
The Company paid $200 million in dividends to Glidepath in 2023, none in 2022 and paid $300.0 million in dividends to GAFRI, its former parent, in 2021.
F-57
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
I. ANNUITY RESERVES AND DEPOSIT-TYPE FUNDS
At December 31, 2023, MMALIC’s annuity (individual and group) reserves and deposit-type funds that are subject to discretionary withdrawal (with adjustment), subject to discretionary withdrawal (without adjustment), and not subject to discretionary withdrawal are summarized as follows (in millions):
A. Individual Annuities:
| General Account | Separate Account with Guarantees | Separate Account Nonguaranteed | Total | % of Total | ||||||||||||||||||
| 1. | Subject to discretionary withdrawal: | |||||||||||||||||||||
a. With market value adjustment | $ | 22,517.3 | $ | — | $ | — | $ | 22,517.3 | 51.5 | % | ||||||||||||
b. At book value less current surrender charge of 5% or more | 5,279.5 | — | — | 5,279.5 | 12.1 | % | ||||||||||||||||
c. At fair value | — | — | 387.5 | 387.5 | 0.9 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
d. Total with market value adjustment or at fair value (total of a through c) | 27,796.8 | — | 387.5 | 28,184.3 | 64.5 | % | ||||||||||||||||
e. At book value without adjustment (minimal or no charge or adjustment) | 13,422.5 | — | — | 13,422.5 | 30.7 | % | ||||||||||||||||
| 2. | Not subject to discretionary withdrawal | 2,063.5 | — | — | 2,063.5 | 4.7 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 3. | Total (gross: direct + assumed) | 43,282.8 | — | 387.5 | 43,670.3 | 100.0 | % | |||||||||||||||
|
| |||||||||||||||||||||
| 4. | Reinsurance ceded | 14,472.5 | — | — | 14,472.5 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 5. | Total (net) (3) - (4) | 28,810.3 | — | 387.5 | 29,197.8 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 6. | Amount included in A(1)b above that will move to A(1)e in the year after the statement date | $ | 970.2 | $ | — | $ | — | $ | 970.2 | |||||||||||||
B. Group Annuities:
| General Account | Separate Account with Guarantees | Separate Account Nonguaranteed | Total | % of Total | ||||||||||||||||||
| 1. | Subject to discretionary withdrawal: | |||||||||||||||||||||
a. With market value adjustment | $ | — | $ | — | $ | — | $ | — | 0.0 | % | ||||||||||||
b. At book value less current surrender charge of 5% or more | 116.0 | — | — | 116.0 | 6.8 | % | ||||||||||||||||
c. At fair value | — | — | — | — | 0.0 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
d. Total with market value adjustment or at fair value (total of a through c) | 116.0 | — | — | 116.0 | 6.8 | % | ||||||||||||||||
e. At book value without adjustment (minimal or no charge or adjustment) | 686.3 | — | — | 686.3 | 40.4 | % | ||||||||||||||||
| 2. | Not subject to discretionary withdrawal | 898.1 | — | — | 898.1 | 52.8 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 3. | Total (gross: direct + assumed) | 1,700.4 | — | — | 1,700.4 | 100.0 | % | |||||||||||||||
|
| |||||||||||||||||||||
| 4. | Reinsurance ceded | 481.2 | — | — | 481.2 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 5. | Total (net) (3) - (4) | 1,219.2 | — | — | 1,219.2 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 6. | Amount included in A(1)b above that will move to A(1)e in the year after the statement date | $ | 2,548.1 | $ | — | $ | — | $ | 2,548.1 | |||||||||||||
F-58
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
I. ANNUITY RESERVES AND DEPOSIT-TYPE FUNDS (CONTINUED)
C. Deposit-Type Funds
(no life contingencies):
| General Account | Separate Account with Guarantees | Separate Account Nonguaranteed | Total | % of Total | ||||||||||||||||||
| 1. | Subject to discretionary withdrawal: | |||||||||||||||||||||
a. With market value adjustment | $ | — | $ | — | $ | — | $ | — | 0.0 | % | ||||||||||||
b. At book value less current surrender charge of 5% or more | — | — | — | — | 0.0 | % | ||||||||||||||||
c. At fair value | — | — | — | — | 0.0 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
d. Total with market value adjustment or at fair value (total of a through c) | — | — | — | — | 0.0 | % | ||||||||||||||||
e. At book value without adjustment (minimal or no charge or adjustment) | — | — | — | — | 0.0 | % | ||||||||||||||||
| 2. | Not subject to discretionary withdrawal | 903.6 | — | — | 903.6 | 100.0 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 3. | Total (gross: direct + assumed) | 903.6 | — | — | 903.6 | 100.0 | % | |||||||||||||||
|
| |||||||||||||||||||||
| 4. | Reinsurance ceded | 115.6 | — | — | 115.6 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 5. | Total (net) (3) - (4) | 788.0 | — | — | 788.0 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 6. | Amount included in A(1)b above that will move to A(1)e in the year after the statement date | $ | — | $ | — | $ | — | $ | — | |||||||||||||
D. Reconciliation to total annuity reserves and deposit-type funds:
Net annuity reserves | $ | 30,028.6 | ||
Net supplementary contracts | 0.9 | |||
Deposit-type funds | 788.0 | |||
Separate account nonguaranteed liabilities | 387.5 | |||
|
| |||
Total | $ | 31,205.0 | ||
|
|
F-59
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
I. ANNUITY RESERVES AND DEPOSIT-TYPE FUNDS (CONTINUED)
At December 31, 2022, MMALIC’s annuity (individual and group) reserves and deposit-type funds that are subject to discretionary withdrawal (with adjustment), subject to discretionary withdrawal (without adjustment), and not subject to discretionary withdrawal are summarized as follows (in millions):
A. Individual Annuities:
| General Account | Separate Account with Guarantees | Separate Account Nonguaranteed | Total | % of Total | ||||||||||||||||||
| 1. | Subject to discretionary withdrawal: | |||||||||||||||||||||
a. With market value adjustment | $ | 17,148.9 | $ | — | $ | — | $ | 17,148.9 | 42.2 | % | ||||||||||||
b. At book value less current surrender charge of 5% or more | 7,044.3 | — | — | 7,044.3 | 17.3 | % | ||||||||||||||||
c. At fair value | — | — | 30.6 | 30.6 | 0.1 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
d. Total with market value adjustment or at fair value (total of a through c) | 24,193.0 | — | 30.6 | 24,223.8 | 59.6 | % | ||||||||||||||||
e. At book value without adjustment (minimal or no charge or adjustment) | 14,464.8 | — | — | 14,464.8 | 35.5 | % | ||||||||||||||||
| 2. | Not subject to discretionary withdrawal | 1,985.4 | — | — | 1,985.4 | 4.9 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 3. | Total (gross: direct + assumed) | 40,643.3 | — | 30.6 | 40,674.0 | 100.0 | % | |||||||||||||||
|
| |||||||||||||||||||||
| 4. | Reinsurance ceded | 17,817.8 | — | — | 17,817.8 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 5. | Total (net) (3) - (4) | 22,825.5 | — | 30.6 | 22,856.2 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 6. | Amount included in A(1)b above that will move to A(1)e in the year after the statement date | $ | 2,241.2 | $ | — | $ | — | $ | — | |||||||||||||
B. Group Annuities:
| General Account | Separate Account with Guarantees | Separate Account Nonguaranteed | Total | % of Total | ||||||||||||||||||
| 1. | Subject to discretionary withdrawal: | |||||||||||||||||||||
a. With market value adjustment | $ | — | $ | — | $ | — | $ | — | 0.0 | % | ||||||||||||
b. At book value less current surrender charge of 5% or more | 118.9 | — | — | 118.9 | 6.7 | % | ||||||||||||||||
c. At fair value | — | — | — | — | 0.0 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
d. Total with market value adjustment or at fair value (total of a through c) | 118.9 | — | — | 118.9 | 6.7 | % | ||||||||||||||||
e. At book value without adjustment (minimal or no charge or adjustment) | 723.0 | — | — | 723.0 | 40.5 | % | ||||||||||||||||
| 2. | Not subject to discretionary withdrawal | 943.3 | — | — | 943.3 | 52.8 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 3. | Total (gross: direct + assumed) | 1,785.2 | — | — | 1,785.2 | 100.0 | % | |||||||||||||||
|
| |||||||||||||||||||||
| 4. | Reinsurance ceded | 496.7 | — | — | 496.7 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 5. | Total (net) (3) - (4) | 1,288.5 | — | — | 1,288.5 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 6. | Amount included in A(1)b above that will move to A(1)e in the year after the statement date | $ | 2.7 | $ | — | $ | — | $ | — | |||||||||||||
F-60
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
I. ANNUITY RESERVES AND DEPOSIT-TYPE FUNDS (CONTINUED)
C. Deposit-Type Funds
(no life contingencies):
| General Account | Separate Account with Guarantees | Separate Account Nonguaranteed | Total | % of Total | ||||||||||||||||||
| 1. | Subject to discretionary withdrawal: | |||||||||||||||||||||
a. With market value adjustment | $ | — | $ | — | $ | — | $ | — | 0.0 | % | ||||||||||||
b. At book value less current surrender charge of 5% or more | — | — | — | — | 0.0 | % | ||||||||||||||||
c. At fair value | — | — | — | — | 0.0 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
d. Total with market value adjustment or at fair value (total of a through c) | — | — | — | — | 0.0 | % | ||||||||||||||||
e. At book value without adjustment (minimal or no charge or adjustment) | — | — | — | — | 0.0 | % | ||||||||||||||||
| 2. | Not subject to discretionary withdrawal | 889.6 | — | — | 889.6 | 100.0 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 3. | Total (gross: direct + assumed) | 889.6 | — | — | 889.6 | 100.0 | % | |||||||||||||||
|
| |||||||||||||||||||||
| 4. | Reinsurance ceded | 109.8 | — | — | 109.8 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 5. | Total (net) (3) - (4) | 779.8 | — | — | 779.8 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 6. | Amount included in A(1)b above that will move to A(1)e in the year after the statement date | $ | — | $ | — | $ | — | $ | — | |||||||||||||
D. Reconciliation to total annuity reserves and deposit-type funds:
Net annuity reserves | $ | 24,113.2 | ||
Net supplementary contracts | 0.9 | |||
Deposit-type funds | 779.8 | |||
Separate account nonguaranteed liabilities | 30.6 | |||
|
| |||
Total | $ | 24,924.5 | ||
|
|
F-61
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
J. LIFE RESERVES
At December 31, 2023, MMALIC’s account value, cash value and reserves for the breakouts of life insurance by withdrawal characteristics for general account products are summarized as follows (in millions):
| December 31, 2023 | ||||||||||||
| General Account | ||||||||||||
| Account Value | Cash Value | Reserve | ||||||||||
A. Subject to discretionary withdrawal, surrender values, or policy loans: | ||||||||||||
Universal Life | $ | 105.4 | $ | 104.6 | $ | 104.6 | ||||||
Other Permanent Cash Value Life Insurance | — | 48.7 | 48.7 | |||||||||
B. Not subject to discretionary withdrawal or no cash values | ||||||||||||
Term Policies without Cash Value | XXX | XXX | 184.2 | |||||||||
Accidental Death Benefits | XXX | XXX | 0.1 | |||||||||
Disability - Active Lives | XXX | XXX | 0.1 | |||||||||
Disability - Disabled Lives | XXX | XXX | 3.4 | |||||||||
Miscellaneous Reserves | XXX | XXX | 5.5 | |||||||||
|
|
|
|
|
| |||||||
C. Total (gross: direct + assumed) | 105.4 | 153.3 | 346.6 | |||||||||
D. Reinsurance ceded | 64.2 | 93.9 | 216.3 | |||||||||
|
|
|
|
|
| |||||||
E. Total (net) (C) - (D) | $ | 41.2 | $ | 59.4 | $ | 130.3 | ||||||
|
|
|
|
|
| |||||||
F. | ||||||||||||
| Amount | ||||
Reconciliation to total life reserves: | ||||
Life insurance, total (net) | $ | 125.2 | ||
Accidental death benefits, total (net) | — | |||
Disability - active lives, total (net) | — | |||
Disability - disabled lives, total (net) | 1.3 | |||
Miscellaneous reserves, total (net) | 3.8 | |||
|
| |||
Total | $ | 130.3 | ||
|
| |||
F-62
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
J. LIFE RESERVES (CONTINUED)
At December 31, 2022, MMALIC’s account value, cash value and reserves for the breakouts of life insurance by withdrawal characteristics for general account products are summarized as follows (in millions):
| December 31, 2022 | ||||||||||||
| General Account | ||||||||||||
| Account Value | Cash Value | Reserve | ||||||||||
A. Subject to discretionary withdrawal, surrender values, or policy loans: | $ | 107.6 | $ | 107.6 | $ | 107.6 | ||||||
Universal Life | ||||||||||||
Other Permanent Cash Value Life Insurance | — | 51.3 | 51.3 | |||||||||
B. Not subject to discretionary withdrawal or no cash values | ||||||||||||
Term Policies without Cash Value | XXX | XXX | 209.6 | |||||||||
Accidental Death Benefits | XXX | XXX | 0.1 | |||||||||
Disability - Active Lives | XXX | XXX | 0.1 | |||||||||
Disability - Disabled Lives | XXX | XXX | 3.6 | |||||||||
Miscellaneous Reserves | XXX | XXX | 5.6 | |||||||||
|
|
|
|
|
| |||||||
C. Total (gross: direct + assumed) | 107.6 | 158.9 | 377.9 | |||||||||
D. Reinsurance ceded | 66.9 | 97.8 | 232.1 | |||||||||
|
|
|
|
|
| |||||||
E. Total (net) (C) - (D) | $ | 40.7 | $ | 61.1 | $ | 145.8 | ||||||
|
|
|
|
|
| |||||||
F. | ||||||||||||
| Amount | ||||
Reconciliation to total life reserves: | ||||
Life insurance, total (net) | $ | 140.2 | ||
Accidental death benefits, total (net) | — | |||
Disability - active lives, total (net) | — | |||
Disability - disabled lives, total (net) | 1.5 | |||
Miscellaneous reserves, total (net) | 4.1 | |||
|
| |||
Total | $ | 145.8 | ||
|
| |||
F-63
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
K. CAPITAL AND SURPLUS
The portion of the Company’s unassigned funds represented or reduced by each item below is as follows at December 31 (in millions):
| 2023 | 2022 | 2021 | ||||||||||
Unrealized gains and losses (excluding subsidiaries) | $ | 339.7 | $ | 213.4 | $ | 678.1 | ||||||
Nonadmitted asset values | $ | (54.7 | ) | $ | (31.9 | ) | $ | (27.2 | ) | |||
Asset valuation reserve | $ | (528.4 | ) | $ | (577.1 | ) | $ | (504.1 | ) | |||
Life/health insurance companies are subject to certain Risk-Based Capital (“RBC”) requirements as specified by the NAIC. Under those requirements, the amount of capital and surplus maintained by a life/health insurance company is to be determined based on the various risk factors related to it. At December 31, 2023 and 2022, MMALIC exceeds the RBC requirements.
The maximum amount of dividends which can be paid to stockholders by life insurance companies domiciled in the State of Ohio without prior approval of the Insurance Commissioner is the greater of 10% of surplus as regards policyholders or net income as of the preceding December 31, but only to the extent of earned surplus as of the preceding December 31. The maximum amount of dividends payable in 2024 without prior approval is $ 304.9 million based on 10% of surplus as regards to policyholders as of the preceding December 31. At December 31, 2023, surplus as regards policyholders was $3,049.4 million, earned surplus was $1,962.7 million, and 2023 net loss was $5.1 million.
F-64
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
L. SEPARATE ACCOUNT
The Company utilizes a non-unitized separate account to record and account for assets and liabilities for individual registered index-linked annuities. MMALIC maintains the separate account pursuant to the laws of Ohio for the purpose of supporting the obligation to adjust the indexed strategy values based on the daily value calculation or rise and fall of the index. The assets of the separate account are held in MMALIC’s name on behalf of the separate account and legally belong to MMALIC. The assets in the separate account are not chargeable with liabilities arising out of any other business the Company conducts. MMALIC may invest these assets in hedging instruments, including derivative contracts as well as other assets permitted under state law (ORC 3907.15). To support the Company’s obligations to adjust the index strategy values, the Company may move funds between the separate account and the general account. MMALIC is not obligated to invest the assets of the separate account according to any particular plan except as the Company may be required to by state insurance laws (MMALIC does have a derivative use plan).
In accordance with the products and transactions recorded within the separate account, all assets are considered legally insulated from the general account and are not chargeable with liabilities incurred in any other business operation of the Company. As of December 31, 2023 and 2022, the Company’s separate account statement included legally insulated registered index-linked annuity assets of $443.3 million and $103.7 million, respectively.
With regard to the products and transactions recorded within the separate account, registered index-linked annuity products have guarantees backed by the general account. The separate account does not remit any risk charges to the general account for guaranteed benefits for the registered index-linked annuity products. The general account has not paid any guarantees for registered index-linked annuity products through December 31, 2023.
Net transfers to or (from) the Company’s separate account for the years ended December 31, 2023, 2022, and 2021 were $356.8 million, ($22.0) million and $36.8 million, respectively.
All separate account reserves are non-guaranteed and subject to discretionary withdrawal at fair value. Investments in the separate account at December 31, 2023 had a cost of $232.6 million and fair value of $387.5 million. The notional amount of these investments at December 31, 2023 was $5,650.5 million. Investments in the separate account at December 31, 2022 had a cost of $79.5 million and fair value of $30.6 million. The notional amount of these investments at December 31, 2022 was $3,800.5 million.
F-65
SUPPLEMENTARY INFORMATION
F-66
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTE TO SUPPLEMENTAL SCHEDULE OF SELECTED STATUTORY-BASIS FINANCIAL DATA
AND SUPPLEMENTAL INVESTMENT DISCLOSURES
DECEMBER 31, 2023
Basis of Presentation
The accompanying supplemental schedules and interrogatories present selected statutory-basis financial data as of December 31, 2023 and for the year then ended for purposes of complying with the National Association of Insurance Commissioners’ (“NAIC”) Annual Statement Instructions and the NAIC’s Accounting Practices and Procedures Manual, and agrees to or is included in the amounts reported in the Company’s 2023 Statutory Annual Statement as amended and filed with the Ohio Department of Insurance.
Captions not presented were not applicable to the Company.
F-67
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
SUPPLEMENTAL SCHEDULE OF SELECTED STATUTORY-BASIS FINANCIAL DATA
DECEMBER 31, 2023
(Dollars in millions)
Investment income earned: | ||||
U.S. Government bonds | $ | 7.8 | ||
Bonds exempt from U.S. tax | — | |||
Other bonds (unaffiliated) | 1,779.1 | |||
Bonds of affiliates | 16.3 | |||
Preferred stocks (unaffiliated) | 11.5 | |||
Common stocks (unaffiliated) | 12.2 | |||
Common stocks (affiliated) | — | |||
Mortgage loans | 200.3 | |||
Real estate | — | |||
Policy loans | 3.8 | |||
Cash, cash equivalents and short-term investments | 109.7 | |||
Derivative instruments | (41.3 | ) | ||
Other invested assets | 131.9 | |||
|
| |||
Gross investment income | $ | 2,231.3 | ||
|
| |||
Real estate owned (book value less encumbrances) | $ | — | ||
|
| |||
Mortgage loans - book value: | ||||
Residential mortgages | $ | 2,777.0 | ||
Commercial mortgages | 1,479.5 | |||
|
| |||
Total mortgage loans | $ | 4,256.5 | ||
|
| |||
Mortgage loans by standing - book value | ||||
Good standing | $ | 4,256.5 | ||
|
| |||
Interest overdue more than 90 days, not in foreclosure | $ | — | ||
|
| |||
Other long term assets - statement value | $ | 1,407.8 | ||
|
| |||
Bonds and stocks of parents, subsidiaries and affiliates - book value | ||||
Bonds | $ | — | ||
|
| |||
Common stocks | $ | 445.2 | ||
|
| |||
Bonds (including short-term investments and cash equivalents) by expected maturity - statement value | ||||
Due within one year or less | $ | 4,463.5 | ||
Over 1 year through 5 years | 14,032.5 | |||
Over 5 years through 10 years | 10,975.9 | |||
Over 10 years through 20 years | 4,761.5 | |||
Over 20 years | 2,680.0 | |||
|
| |||
Total by maturity | $ | 36,913.4 | ||
|
| |||
Bonds (including short-term investments and cash equivalents) by NAIC designation - statement value | ||||
NAIC 1 | $ | 20,587.6 | ||
NAIC 2 | 14,265.4 | |||
NAIC 3 | 1,252.4 | |||
NAIC 4 | 494.4 | |||
NAIC 5 | 271.7 | |||
NAIC 6 | 41.9 | |||
Total by NAIC designation | $ | 36,913.4 | ||
|
| |||
Total bonds publicly traded | $ | 13,705.1 | ||
|
| |||
Total bonds privately placed | $ | 23,208.3 | ||
|
| |||
Preferred stocks - statement value | $ | 201.0 | ||
|
| |||
Common stocks - market value | $ | 716.4 | ||
|
| |||
Short-term investments - book value | $ | 424.2 | ||
|
| |||
Derivative instruments owned - statement value | $ | 243.2 | ||
|
| |||
Cash on deposit | $ | (157.3 | ) | |
|
| |||
Cash equivalents | $ | 1,944.4 | ||
|
|
(Continued)
F-68
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
SUPPLEMENTAL SCHEDULE OF SELECTED STATUTORY-BASIS FINANCIAL DATA
(CONTINUED)
DECEMBER 31, 2023
(Dollars in millions)
Life insurance in force: | ||||
Ordinary | $ | 4,074.2 | ||
|
| |||
Group life | $ | 12.7 | ||
|
| |||
Amount of accidental death insurance in-force under ordinary policies: | $ | 67.6 | ||
|
| |||
Life insurance with disability provisions in-force: | ||||
Ordinary | $ | 75.8 | ||
|
| |||
Group life | $ | — | ||
|
| |||
Annuities: | ||||
Ordinary: | ||||
Immediate - amount of income payable | $ | 178.9 | ||
|
| |||
Deferred - fully paid account balance | $ | 26,918.9 | ||
|
| |||
Deferred - not fully paid - account balance | $ | 13,332.4 | ||
|
| |||
Group | ||||
Amount of income payable | $ | 74.3 | ||
|
| |||
Fully paid account balance | $ | 93.7 | ||
|
| |||
Not fully paid - account balance | $ | 711.0 | ||
|
| |||
Accident and health insurance - premiums in force: | ||||
Ordinary | $ | 3.0 | ||
|
| |||
Claim payments 2023 | ||||
Other accident and health: | ||||
2023 | $ | 3.8 | ||
|
|
See accompanying independent auditors’ report.
68
F-69
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
SUPPLEMENTAL INVESTMENT DISCLOSURES
DECEMBER 31, 2023
(Dollars in millions)
| 1. | MMALIC’s total admitted assets as reported on page two of its Annual Statement excluding separate account assets are $46,545.4 million. |
| 2. | Following are the 10 largest exposures to a single issuer/borrower/investment, by investment category, excluding: (i) U.S. Government, U.S. Government agency securities and those U.S. Government money market funds listed in the appendix to the SVO Practices and Procedures Manual as exempt, (ii) property occupied by MMALIC, and (iii) policy loans. |
Issuer | Amount | Percent of Total Admitted Assets | ||||||
NP Inc/US | $ | 570.8 | 1.2 | % | ||||
Annuity Investors Life (AILIC) Common St | 427.5 | 0.9 | % | |||||
Penny Mac Loan Services LLC | 399.3 | 0.9 | % | |||||
LOAN ASSET ISSUER LLC SER 2021 M-2 | 234.6 | 0.5 | % | |||||
Churchill Finance LLC | 217.5 | 0.5 | % | |||||
Herlan Peak Funding Trust | 192.8 | 0.4 | % | |||||
Deephaven Mortgage LLC | 171.3 | 0.4 | % | |||||
Conrex Corp | 160.4 | 0.3 | % | |||||
ERAC USA Finance LLC | 144.2 | 0.3 | % | |||||
CIP VIII Holdings Spv LP Inc | 136.3 | 0.3 | % | |||||
| 3. | MMALIC’s total admitted assets held in bonds (including short-term investments and cash equivalents) and preferred stocks by NAIC rating, are as follows: |
Bonds | ||||||||
NAIC Rating | Amount | Percentage of Total Admitted Assets | ||||||
NAIC-1 | $ | 20,587.6 | 44.2 | % | ||||
NAIC-2 | 14,265.4 | 30.6 | % | |||||
NAIC-3 | 1,252.4 | 2.7 | % | |||||
NAIC-4 | 494.4 | 1.1 | % | |||||
NAIC-5 | 271.7 | 0.6 | % | |||||
NAIC-6 | 41.9 | 0.1 | % | |||||
|
|
|
| |||||
Total | $ | 36,913.4 | 79.3 | % | ||||
|
|
|
| |||||
Preferred Stocks | ||||||||
NAIC Rating | Amount | Percentage of Total Admitted Assets | ||||||
P/RP-1 | $ | 4.9 | 0.0 | % | ||||
P/RP-2 | 161.9 | 0.3 | % | |||||
P/RP-3 | 7.0 | 0.0 | % | |||||
P/RP-4 | 3.0 | 0.0 | % | |||||
P/RP-5 | 24.1 | 0.1 | % | |||||
P/RP-6 | 0.0 | 0.0 | % | |||||
|
|
|
| |||||
Total | $ | 201.0 | 0.4 | % | ||||
|
|
|
| |||||
| 4. | Assets held in foreign investments: |
| Amount | Percent of Total Admitted Assets | |||||||
Total admitted assets held in foreign investments | $ | 7,789.9 | 16.7 | % | ||||
Foreign-currency-denominated investments | — | 0.0 | % | |||||
Insurance liabilities denominated in that same foreign currency | — | 0.0 | % | |||||
(Continued)
F-70
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
SUPPLEMENTAL INVESTMENT DISCLOSURES (CONTINUED)
DECEMBER 31, 2023
(Dollars in millions)
| 5. | Aggregate foreign investment exposure categorized by NAIC sovereign rating: |
| Amount | Percent of Total Admitted Assets | |||||||
Countries rated NAIC-1 | $ | 5,006.0 | 10.8 | % | ||||
Countries rated NAIC-2 | 1,934.8 | 4.2 | % | |||||
Countries rated NAIC-3 or below | 849.1 | 1.8 | % | |||||
| 6. | Two largest foreign investment exposures to a single country, categorized by the country’s NAIC sovereign rating: |
| Amount | Percent of Total Admitted Assets | |||||||
Countries rated NAIC-1: | ||||||||
Cayman Islands | $ | 3,514.3 | 7.6 | % | ||||
Jersey | 297.0 | 0.6 | % | |||||
Countries rated NAIC-2 | ||||||||
United Kingdom | $ | 429.0 | 0.9 | % | ||||
Cayman Islands | 378.8 | 0.8 | % | |||||
Countries rated NAIC-3 or below | ||||||||
Cayman Islands | $ | 254.8 | 0.5 | % | ||||
United Kingdom | 73.6 | 0.2 | % | |||||
| 7. | The Company does not have any unhedged foreign currency exposure. |
| 8. | The Company does not have any unhedged foreign currency exposure. |
| 9. | The Company does not have any unhedged foreign currency exposure. |
| 10. | Ten largest non-sovereign (i.e. non-governmental) foreign issues: |
Issuer | NAIC Rating | Amount | Percent of Total Admitted Assets | |||||||
NP Inc/ Us | Mortgage Loan | $ | 192.0 | 0.4 | % | |||||
CIP VIII Holdings Spv LP Inc | 1.F PL | 136.3 | 0.3 | % | ||||||
Barings Loan Partners CLO Ltd 3 | 1.A Z | 107.0 | 0.2 | % | ||||||
Barings Clo Ltd 2023-I | 1.C FE | 103.6 | 0.2 | % | ||||||
Elis SA | 2.C PL | 88.0 | 0.2 | % | ||||||
Seaspan Holdco III Ltd | 2.B PL | 80.0 | 0.2 | % | ||||||
Modec Finance B.V. | 2.C PL | 75.0 | 0.2 | % | ||||||
Vodafone Group PLC | 2.B FE | 62.0 | 0.1 | % | ||||||
Zais Clo 6 Ltd | 1.A FE | 55.8 | 0.1 | % | ||||||
Hildene TruPS Financials Note Securitization 2018-1 Ltd | 1.B FE | 54.9 | 0.1 | % | ||||||
| 11. | Assets held in Canadian investments are less than 2.5% of the Company’s total admitted assets. |
| 12. | Assets held with contractual sales restrictions are less than 2.5% of the Company’s total admitted assets. |
(Continued)
F-71
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
SUPPLEMENTAL INVESTMENT DISCLOSURES (CONTINUED)
DECEMBER 31, 2023
(Dollars in millions)
| 13. | Following are MMALIC’s total admitted assets held in the largest 10 equity interests: |
Name of Issuer | Amount | Percentage of Total Admitted Assets | ||||||
Annuity Investors Life (AILIC) Common St | $ | 427.5 | 0.9 | % | ||||
CGL Holdings LLC | 63.9 | 0.1 | % | |||||
FEDERAL HOME LOAN BANK CINCINNATI-R | 41.5 | 0.1 | % | |||||
NexBank Capital Inc Noncumulative Perpet | 39.0 | 0.1 | % | |||||
AT&T Mobility II LLC Preferred Equity | 23.3 | 0.1 | % | |||||
Farm Credit Bank of Texas | 21.7 | 0.0 | % | |||||
Apollo Global Management Inc | 20.0 | 0.0 | % | |||||
TS Opco Holding LLC | 19.7 | 0.0 | % | |||||
MANHATTAN NATIONAL HOLDING LLC | 16.8 | 0.0 | % | |||||
Lincoln National Corp | 16.4 | 0.0 | % | |||||
| 14. | Following are MMALIC’s largest three investments held in nonaffiliated, privately placed equities: |
Name of Issuer | Amount | Percentage of Total Admitted Assets | ||||||
CGL Holdings LLC | $ | 63.9 | 0.1 | % | ||||
FEDERAL HOME LOAN BANK CINCINNATI-R | 41.5 | 0.1 | % | |||||
NexBank Capital Inc | 39.0 | 0.1 | % | |||||
| 15. | Assets held in general partnership interests are less than 2.5% of the Company’s total admitted assets. |
| 16. | Following are MMALIC’s total admitted assets held in the largest 10 mortgage loans: |
Type (Residential, Commercial, Agricultural) | Amount | Percentage of Total Admitted Assets | ||||||
NP Inc (Residential) | $ | 568.8 | 1.2 | % | ||||
PennyMac Loan Services LLC (Residential) | 399.3 | 0.9 | % | |||||
Churchill Finance LLC (Residential) | 217.5 | 0.5 | % | |||||
Herlan Peak Funding Trust (Residential) | 192.8 | 0.4 | % | |||||
Deephaven Mortgage LLC (Residential) | 171.3 | 0.4 | % | |||||
Conrex Corp (Residential) | 160.4 | 0.3 | % | |||||
Quontic Bank (Residential) | 129.5 | 0.3 | % | |||||
Luxury Mortgage Corp (Residential) | 124.5 | 0.3 | % | |||||
Churchill Financial LLC (Residential) | 108.2 | 0.2 | % | |||||
Deephaven Mortgage Trust (Residential) | 100.4 | 0.2 | % | |||||
| 17. | Following are MMALIC’s loan-to-value ratios as determined from the most current appraisal: |
Loan-to-Value | Residential | Commercial | Agricultural | |||||||||||||||||||||
above 95% | $ | 2,770.0 | 5.9 | % | $ | 76.7 | 0.2 | % | $ | — | 0.0 | % | ||||||||||||
91% to 95% | 7.0 | 0.0 | % | — | 0.0 | % | — | 0.0 | % | |||||||||||||||
81% to 90% | — | 0.0 | % | 130.5 | 0.3 | % | — | 0.0 | % | |||||||||||||||
71% to 80% | — | 0.0 | % | 212.3 | 0.5 | % | — | 0.0 | % | |||||||||||||||
below 70% | — | 0.0 | % | 1,060.0 | 2.3 | % | — | 0.0 | % | |||||||||||||||
| 18. | The assets held in real estate are less than 2.5% of the Company’s total admitted assets. |
| 19. | Investments in mezzanine real estate loans are less than 2.5% of the Company’s total admitted assets. |
| 20. | The Company has no admitted assets subject to securities lending agreements, repurchase agreements, reverse repurchase agreements, dollar repurchase agreements, or dollar reverse repurchase agreements. |
(Continued)
F-72
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
SUPPLEMENTAL INVESTMENT DISCLOSURES (CONTINUED)
DECEMBER 31, 2023
(Dollars in millions)
| 21. | The Company owns $305.7 million in hedging options. |
| 22. | The Company’s potential exposure for swaps and forwards is $89.8 million. |
| 23. | The Company’s potential exposure for financial futures is $22.7 million. |
F-73
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
SUPPLEMENTAL INVESTMENT DISCLOSURES (CONTINUED)
DECEMBER 31, 2023
(Dollars in millions)
| Gross Investment Holdings* | Admitted Assets as Reported in the Annual Statement | |||||||||||||||||||||||||||
| Investment Categories | Amount | Percentage of Column 1 Line 13 | Amount | Securities Lending Reinvested Collateral Amount | Total (Col 3 +4) Amount | Percentage of Column 5 Line 13 | ||||||||||||||||||||||
| 1. | Long-Term Bonds: | |||||||||||||||||||||||||||
| 1.01 | U.S. Governments | $ | 186.7 | 0.4 | % | $ | 186.7 | $ | — | $ | 186.7 | 0.4 | % | |||||||||||||||
| 1.02 | All Other Governments | 19.2 | 0.0 | % | 19.2 | — | 19.2 | 0.0 | % | |||||||||||||||||||
| 1.03 | U.S. States, Territories and Possessions etc., Guaranteed | 180.4 | 0.4 | % | 180.4 | — | 180.4 | 0.4 | % | |||||||||||||||||||
| 1.04 | U.S. Political Subdivisions of States, Territories and Possessions, Guaranteed | 231.5 | 0.5 | % | 231.5 | — | 231.5 | 0.5 | % | |||||||||||||||||||
| 1.05 | U.S. Special Revenue and Special Assessment Obligations, etc., Non-Guaranteed | 1,920.8 | 4.3 | % | 1,920.8 | — | 1,920.8 | 4.3 | % | |||||||||||||||||||
| 1.06 | Industrial and Miscellaneous | 27,812.7 | 62.4 | % | 27,812.7 | — | 27,812.7 | 62.4 | % | |||||||||||||||||||
| 1.07 | Hybrid Securities | 772.6 | 1.7 | % | 772.6 | — | 772.6 | 1.7 | % | |||||||||||||||||||
| 1.08 | Parent, Subsidiaries and Affiliates | 745.2 | 1.7 | % | 745.2 | — | 745.2 | 1.7 | % | |||||||||||||||||||
| 1.09 | SVO Identified Funds | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
| 1.10 | Unaffiliated Bank Loans | 3,103.2 | 6.9 | % | 3,103.2 | — | 3,103.2 | 6.9 | % | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
| 1.11 | Total Long-Term Bonds | 34,972.3 | 78.3 | % | 34,972.3 | — | 34,972.3 | 78.3 | % | |||||||||||||||||||
| 2. | Preferred Stocks: | |||||||||||||||||||||||||||
| 2.01 | Industrial and Misc. (Unaffiliated) | 201.0 | 0.4 | % | 201.0 | — | 201.0 | 0.4 | % | |||||||||||||||||||
| 2.02 | Parent, Subsidiaries and Affiliates | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
| 2.03 | Total Preferred Stock | 201.0 | 0.4 | % | 201.0 | — | 201.0 | 0.4 | % | |||||||||||||||||||
| 3. | Common Stocks: | |||||||||||||||||||||||||||
| 3.01 | Industrial and Miscellaneous Publicly Traded (Unaffiliated) | 107.7 | 0.2 | % | 107.7 | — | 107.7 | 0.2 | % | |||||||||||||||||||
| 3.02 | Industrial and Miscellaneous Other (Unaffiliated) | 162.9 | 0.4 | % | 162.9 | — | 162.9 | 0.4 | % | |||||||||||||||||||
| 3.03 | Parent, Subsidiaries and Affiliates Publicly Traded | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
| 3.04 | Parent, Subsidiaries and Affiliates Other | 445.2 | 1.0 | % | 445.2 | — | 445.2 | 1.0 | % | |||||||||||||||||||
| 3.05 | Mutual Funds | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
| 3.06 | Unit Investment Trusts | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
| 3.07 | Closed-End Funds. | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
| 3.08 | Exchange traded funds | 0.6 | 0.0 | % | 0.6 | — | 0.6 | 0.0 | % | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
| 3.09 | Total Common Stocks | 716.4 | 1.6 | % | 716.4 | — | 716.4 | 1.6 | % | |||||||||||||||||||
| 4. | Mortgage Loans: | |||||||||||||||||||||||||||
| 4.01 | Farm Mortgages | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
| 4.02 | Residential Mortgages | 2,777.0 | 6.2 | % | 2,777.0 | — | 2,777.0 | 6.2 | % | |||||||||||||||||||
| 4.03 | Commercial Mortgages | 1,431.9 | 3.2 | % | 1,431.9 | — | 1,431.9 | 3.2 | % | |||||||||||||||||||
| 4.04 | Mezzanine Real Estate Loans | 47.6 | 0.1 | % | 47.6 | — | 47.6 | 0.1 | % | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
| 4.05 | Total Mortgage Loans | 4,256.5 | 9.5 | % | 4,256.5 | — | 4,256.5 | 9.5 | % | |||||||||||||||||||
| 5. | Real estate: | |||||||||||||||||||||||||||
| 5.01 | Properties Occupied by Company | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
| 5.02 | Properties Held for Production of Income | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
| 5.03 | Properties Held for Sale | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
| 5.04 | Total Real Estate | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
| 6. | Cash, Cash Equivalents, and Short-Term Investments: | |||||||||||||||||||||||||||
| 6.01 | Cash | (157.3 | ) | -0.4 | % | (157.3 | ) | — | (157.3 | ) | -0.4 | % | ||||||||||||||||
| 6.02 | Cash Equivalents | 1,944.4 | 4.4 | % | 1,944.4 | — | 1,944.4 | 4.4 | % | |||||||||||||||||||
| 6.03 | Short-Term Investments | 424.2 | 0.9 | % | 424.2 | — | 424.2 | 0.9 | % | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
| 6.04 | Total Cash, Cash Equivalents, and Short-Term Investments | 2,211.3 | 4.9 | % | 2,211.3 | — | 2,211.3 | 4.9 | % | |||||||||||||||||||
| 7. | Contract Loans | 30.0 | 0.1 | % | 30.0 | — | 30.0 | 0.1 | % | |||||||||||||||||||
| 8. | Derivatives | 771.4 | 1.7 | % | 771.4 | — | 771.4 | 1.7 | % | |||||||||||||||||||
| 9. | Other Invested Assets | 1,407.8 | 3.1 | % | 1,407.8 | — | 1,407.8 | 3.1 | % | |||||||||||||||||||
| 10. | Receivables for Securities | 165.4 | 0.4 | % | 165.4 | — | 165.4 | 0.4 | % | |||||||||||||||||||
| 11. | Securities Lending | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
| 12. | Other Invested Assets | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
| 13. | Total Invested Assets | 44,732.1 | 100.0 | % | 44,732.1 | — | 44,732.1 | 100.0 | % | |||||||||||||||||||
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| |||||||||||||||||
| * | Gross investment holdings as valued in compliance with NAIC SAP. |
See accompanying independent auditors’ report.
F-74
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
SUPPLEMENTAL SCHEDULE OF LIFE AND HEALTH REINSURANCE DISCLOSURES
FOR THE YEAR ENDED DECEMBER 31, 2023
(Dollars in millions)
The following information regarding reinsurance contracts is presented to satisfy the disclosure requirements in SSAP No. 61R, Life, Deposit-Type and Accident and Health Reinsurance, which apply to reinsurance contracts entered into, renewed or amended on or after January 1, 1996.
| 1. | Has MassMutual Ascend Life Insurance Company reinsured any risk with any other entity under a reinsurance contract (or multiple contracts with the same reinsurer or its affiliates) that is subject to Appendix A-791, Life and Health Reinsurance Agreements, and includes a provision that limits the reinsurer’s assumption of significant risks identified in Appendix A-791? |
Examples of risk-limiting features include provisions such as a deductible, a loss ratio corridor, a loss cap, an aggregate limit or other provisions that result in similar effects.
Yes ☐ No ☒
If yes, indicate the number of reinsurance contracts to which such provisions apply: |
If yes, indicate if deposit accounting was applied for all contracts subject to Appendix A-791 that limit significant risks.
Yes ☐ No ☐ N/A ☒
| 2. | Has MassMutual Ascend Life Insurance Company reinsured any risk with any other entity under a reinsurance contract (or multiple contracts with the same reinsurer or its affiliates) that is not subject to Appendix A-791, for which reinsurance accounting was applied and includes a provision that limits the reinsurer’s assumption of risk? |
Examples of risk-limiting features include provisions such as a deductible, a loss ratio corridor, a loss cap, an aggregate limit or other provisions that result in similar effects.
Yes ☐ No ☒
If yes, indicate the number of reinsurance contracts to which such provisions apply: |
If yes, indicate whether the reinsurance credit was reduced for the risk-limiting features.
Yes ☐ No ☐ N/A ☒
| 3. | Does MassMutual Ascend Life Insurance Company have any reinsurance contracts (other than reinsurance contracts with a federal or state facility) that contain one or more of the following features which may result in delays in payment in form or in fact: |
| (a) | Provisions that permit the reporting of losses to be made less frequently than quarterly; |
| (b) | Provisions that permit settlements to be made less frequently than quarterly; |
| (c) | Provisions that permit payments due from the reinsurer to not be made in cash within ninety (90) days of the settlement date (unless there is no activity during the period); or |
| (d) | The existence of payment schedules, accumulating retentions from multiple years, or any features inherently designed to delay timing of the reimbursement to the ceding entity. |
Yes ☐ No ☒
(Continued)
F-75
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
SUPPLEMENTAL SCHEDULE OF LIFE AND HEALTH REINSURANCE DISCLOSURES
(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 2023
(Dollars in millions)
| 4. | Has MassMutual Ascend Life Insurance Company reflected reinsurance accounting credit for any contracts that are not subject to Appendix A-791 and not yearly renewable term reinsurance, which meet the risk transfer requirements of SSAP No. 61R? |
Type of contract: | Response: | Identify reinsurance contract(s): | Has the insured | |||
| Assumption reinsurance – new for the reporting period | Yes ☐ No ☒ | N/A | ||||
| Non-proportional reinsurance, which does not result in significant surplus relief | Yes ☐ No ☒ | Yes ☐ No ☐ N/A ☒ | ||||
| 5. | Has MassMutual Ascend Life Insurance Company ceded any risk, which is not subject to Appendix A-791 and not yearly renewable term reinsurance, under any reinsurance contract (or multiple contracts with the same reinsurer or its affiliates) during the period covered by the financial statements, and either: |
| (a) | Accounted for that contract as reinsurance under statutory accounting principles (SAP) and as a deposit under generally accepted accounting principles (GAAP); or |
Yes ☐ No ☒ N/A ☐
| (b) | Accounted for that contract as reinsurance under GAAP and as a deposit under SAP? |
Yes ☐ No ☒ N/A ☐
If the answer to item (a) or item (b) is yes, include relevant information regarding GAAP to SAP differences from the accounting policy footnote to the audited statutory-basis financial statements to explain why the contract(s) is treated differently for GAAP and SAP below:
See accompanying independent auditors’ report
F-76
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
Administrative Office: P.O. Box 5423, Cincinnati OH 45201-5423
Street Address: 191 Rosa Parks Street, Cincinnati OH 45202
Policy Administration: 1-800-789-6771
INDEX FRONTIER® 5 PRO ANNUITY
PROSPECTUS DATED MAY 1, 2024
The Index Frontier® 5 Pro annuity is an Individual Index-linked Modified Single Premium Deferred Annuity (the “Contract”) issued by MassMutual Ascend Life Insurance Company® (“MassMutual Ascend Life,” “we” or “us”). It provides that we will pay annuity payout benefits to you in exchange for your purchase payments. The Contract offers you the opportunity to allocate funds to indexed strategies for one-year periods (a “Term”). Indexed strategies provide returns based, in part, on the change in the value of a market index or the share price of an exchange-traded fund (an “Index”). The returns of an Index do not include reinvestment of any dividends.
The Contract is a modified single premium deferred annuity. This means we will accept Purchase Payments only during the purchase payment period, which ends two months after the Contract Effective Date.
A glossary of defined terms used herein can be found in the Special Terms section starting on page 5 of this prospectus.
The Contract currently offers three Conserve Strategies, three Growth Strategies, and one Buffer Strategy.
| Conserve/0% Floor Strategies | Index | Maximum Loss/Floor of 0% Per Term | ||
| S&P 500 0% Floor | S&P 500® Index | Other than the reduction for the Daily Charge, you cannot lose money allocated to a Conserve Strategy due to a negative change in the Index. | ||
| iShares U.S. Real Estate 0% Floor | iShares U.S. Real Estate ETF | |||
| iShares MSCI EAFE 0% Floor | iShares MSCI EAFE ETF | |||
| Growth/-10% Floor Strategies | Index | Maximum Loss/Floor of 10% Per Term | ||
S&P 500 - 10% Floor iShares U.S. Real Estate -10% Floor iShares MSCI EAFE -10% Floor | S&P 500® Index iShares U.S. Real Estate ETF iShares MSCI EAFE ETF | In addition to the reduction for the Daily Charge, each Term you can lose up to 10% of money allocated to a Growth Strategy due to a negative change in the Index. | ||
| 10% Buffer Strategy | Index | End of Term Buffer of 10% Per Term | ||
| S&P 500 10% Buffer | S&P 500® Index | At the end of the Term, the Buffer protects against the first 10% negative change in the Index, but there is no limit on losses due to a negative change above that Buffer. The Buffer is less than 10% if you withdraw money before the end of the Term. The Buffer does not protect against reduction for the Daily Charge. | ||
At the end of a Term, we may stop offering any particular Indexed Strategy, but we will always offer at least one Conserve/0% Floor Strategy. Consequently, any Indexed Strategy listed above may not be available after the end of the initial Term. Indexed Strategies that may be available in the future may earn a return that is lower than the return your investments would have earned if they had been invested in the other Indexed Strategies listed above. In addition, if we reduce the available number of Index Strategies to just one Conserve/0% Floor Strategy, your ability to increase your Account Value could be significantly reduced.
In general, we will set a higher Maximum Gain for a Growth Strategy than the Maximum Gain for a Conserve Strategy that uses the same Index, and we will set a higher Maximum Gain for the Buffer Strategy than for the Growth Strategy that uses the same Index.
| • | Subject to the Daily Charge, the value of an indexed strategy will increase if there is a positive change in the applicable Index value during a Term. Any increase during a Term is subject to an upper limit called the Maximum Gain. At least 10 days before a Term starts, we will post the Maximum Gain that will apply to an Indexed Strategy for that Term on our website (www.gaig.com/RILArates). We can change the Maximum Gain for each new Term of an indexed strategy. |
| • | Before the end of a Term, any increase in the value of an indexed strategy is also subject to a vesting factor. The vesting factor limits the portion of the positive change in the Index that we take into account when we calculate the increase in the strategy value. The vesting factor varies depending on the day of the Term. It is 25% for any date within the first half of a Term, 50% for any date within the second half of a Term, and 100% at the end of a Term. |
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| • | Each day, we will subtract the Daily Charge from the value of each indexed strategy. The Daily Charge is calculated as a percentage of the amount applied to the strategy, adjusted for withdrawals and prior daily charges. The Daily Charge is a rate that compounds to 0.50% per year. |
| • | The value of a Conserve/0% Floor Strategy will not decrease by more than the Daily Charge even if there is a negative change in the applicable Index value during a Term. The value of each Conserve Strategy is reduced by the Daily Charge. |
| • | The value of a Growth/-10% Floor Strategy will decrease by more than the Daily Charge if there is a negative change in the applicable Index value during a Term. Any decrease during a Term for a Growth Strategy (other than by reason of the Daily Charge) is subject to a lower limit called the Maximum Loss. The Maximum Loss for each Term of a Growth Strategy is 10%. In addition to the Daily Charge, each Growth Strategy includes a risk of potential loss of up to 10% of principal and any prior earnings each Term. |
| • | The value of a 10% Buffer Strategy will decrease if there is a negative change in the applicable Index Value that is larger than the Buffer during a Term. The Buffer is the portion of a negative Index Change for a Term that is disregarded when calculating Buffer Strategy losses. The Buffer varies depending on the day of the Term. The Buffer at the end of a Term is 10%. Before the end of the Term, the Buffer is calculated daily as a prorated share of the annual 10% Buffer. In addition to the Daily Charge, each Buffer Strategy includes a risk of potential loss of principal and any prior earnings. At maximum, the Buffer protects 10% of principal and any prior earnings from loss each Term. |
The Contract is intended for long-term investment purposes and may not be appropriate for investors who plan to take withdrawals (including systematic withdrawals and required minimum distributions) during the first five contract years. An early withdrawal charge may apply if you take a withdrawal or Surrender the Contract during the first five contract years. That charge will reduce strategy values, including the value of a Conserve/0% Floor Strategy. The early withdrawal charge is 8% for withdrawals and Surrenders of the Contract in the first contract year, and falls each contract year during the five-year period. Withdrawals and Surrenders may also be subject to income tax, and withdrawals and Surrenders before age 591/2 may also be subject to an additional 10% penalty tax.
Risk Factors for this Contract appear on pages 13-17 and pages A5-A12. Indexed annuity contracts are complex insurance and investment vehicles. You should speak with a financial advisor about the Index Frontier 5 Pro and its features, benefits, risks, and fees, and whether the Contract is appropriate for you based upon your financial situation and objectives.
Please read this prospectus before investing and keep it for future reference. It contains important information about your annuity and MassMutual Ascend Life that you ought to know before investing. It describes all material rights and obligations under the Contract including material state variations.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
| • | The Contract is not insured by the FDIC (Federal Deposit Insurance Corporation) or the NCUSIF (National Credit Union Share Insurance Fund). |
| • | Although the Contract may be sold through relationships with banks or other financial institutions, the Contract is not a deposit or obligation of, or guaranteed by, such institutions or any federal regulatory agency. |
| • | The Contract is a security. It involves investment risk and may lose value. There is a risk of loss of principal under the Contract and that loss can become greater due to Early Withdrawal Charges. |
All guarantees under the Contract are the obligations of MassMutual Ascend Life and are subject to the credit worthiness and claims-paying ability of MassMutual Ascend Life.
The Contract doesn’t invest in any equity, debt or other investments. If you buy this Contract, you aren’t investing directly in an Index, the stocks included in an Index, or the underlying investments or other assets held by an Index.
The “S&P 500 Index” is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and has been licensed for use by MassMutual Ascend Life Insurance Company. S&P®, S&P 500®, US 500, The 500, iBoxx®, iTraxx® and CDX® are trademarks of S&P Global, Inc. or its affiliates (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow
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Jones”); MassMutual Ascend Life Insurance Company’s Products is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500 Index.
The iShares U.S. Real Estate ETF and the iShares MSCI EAFE ETF are distributed by BlackRock Investments, LLC. iShares®, BLACKROCK®, and the corresponding logos are registered and unregistered trademarks of BlackRock, Inc. and its affiliates (“BlackRock”), and these trademarks have been licensed for certain purposes by MassMutual Ascend Life Insurance Company. MassMutual Ascend Life annuity products are not sponsored, endorsed, sold or promoted by BlackRock, and purchasers of an annuity from MassMutual Ascend Life do not acquire any interest in the iShares U.S. Real Estate ETF or the iShares MSCI EAFE ETF nor enter into any relationship of any kind with BlackRock. BlackRock makes no representation or warranty, express or implied, to the owners of any MassMutual Ascend Life annuity product or any member of the public regarding the advisability of purchasing an annuity, nor does it have any liability for any errors, omissions, interruptions or use of the iShares U.S. Real Estate ETF or the iShares MSCI EAFE ETF or any data related thereto.
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The principal underwriter of the Contract is MM Ascend Life Investor Services, LLC. The offering of the Contract is intended to be continuous. The underwriter will use its best efforts to sell the Contract.
This prospectus is not an offering in any state, country, or jurisdiction in which we are not authorized to sell the Contract.
If you purchase a Contract, you may cancel it within 20 days after you receive it. If you purchase a Contract to replace an existing annuity contract or insurance policy, you have 30 days to cancel the Contract. The right to cancel period may be longer in some states. In many states, you will bear the risk of investment gain or loss before cancellation. The right to cancel is described more fully in the Right to Cancel section of this prospectus.
Our form number for the Contract is P1833421NW. Our form numbers for the strategy endorsements to the Contract are E1322517NW, E1322617NW, E1322717NW, E1322817NW, E1322917NW, E1323017NW, E1829620NW, E1829720NW, and E1829820NW. The form numbers may vary by state. The Securities and Exchange Commission file number for the Contract is 333-278199.
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INDEX FRONTIER® 5 PRO ANNUITY INFORMATION
In this prospectus, the following capitalized terms have the meanings set out below.
ACCOUNT VALUE. The sum of the values of each Indexed Strategy, plus the value of the Purchase Payment Account, if any.
ANNUITANT. The natural person or persons on whose life Annuity Payout Benefit is based.
ANNUITY PAYOUT BENEFIT. A series of periodic payments made under a Payout Option. The terms and conditions are described in the Annuity Payout Benefit section of this prospectus.
ANNUITY PAYOUT INITIATION DATE. The first day of the first payment interval for which payment of an Annuity Payout Benefit is to be made.
BAILOUT TRIGGER. The Maximum Gain for the next Term of an Indexed Strategy that triggers a waiver of Early Withdrawal Charges under the Bailout right of an Indexed Strategy.
BENEFICIARY. A person entitled to receive all or part of a Death Benefit that is to be paid under the Contract on account of a death before the Annuity Payout Initiation Date.
BUFFER. The portion of a negative Index Change for a Term that is disregarded when determining a Vested Loss for a Buffer Strategy. The Buffer varies depending on the day of the Term. Once the final Market Day of the Term has been reached, the Buffer is 10%. Before the final Market Day, the Buffer is equal to: 10% x ((365 – N) / 365), where N is equal to the number of days remaining until the final Market Day of the Term.
CONTRACT. The legally binding agreement between you and MassMutual Ascend Life, including applicable endorsements and riders.
CONTRACT ANNIVERSARY. The date in each year that is the annual anniversary of the Contract Effective Date. That date is set out on your Contract Specifications Page.
CONTRACT EFFECTIVE DATE. The date as of which the initial Purchase Payment is applied to the Contract. That date is set out on your Contract Specifications Page.
CONTRACT SPECIFICATIONS PAGE. The page in your Contract that contains details unique to your Contract.
CONTRACT YEAR. A 12-month period that starts on the Contract Effective Date or on a Contract Anniversary.
DAILY CHARGE. The charge for maintaining your Contract. It is a daily rate that compounds at 0.50% per year. It is calculated daily as a percentage of, and is subtracted from, the then remaining investment base of each Indexed Strategy.
DEATH BENEFIT. An amount that becomes payable if you die before the Annuity Payout Initiation Date and before the date that the Contract is Surrendered. The terms and conditions are described in the Death Benefit section of this prospectus.
EARLY WITHDRAWAL CHARGE. A charge deducted from the Account Value of your Contract if, during the first five Contract Years, you Surrender your Contract or you take a withdrawal in excess of the Free Withdrawal Allowance (including systematic withdrawals and required minimum distributions). The Early Withdrawal Charge does not apply to a withdrawal that qualifies for the Free Withdrawal Allowance or the amount, if any, that qualifies for another waiver. The Early Withdrawal Charge does not apply to an Annuity Payout Benefit or Death Benefit.
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FREE WITHDRAWAL ALLOWANCE. The total amount that may be taken as a withdrawal or Surrendered during a Contract Year without an Early Withdrawal Charge that would otherwise apply. This amount is described in the Free Withdrawal Allowance section of this prospectus. Like any other withdrawal, an amount withdrawn that is covered by the Free Withdrawal Allowance will reduce the value of an Indexed Strategy on a dollar-for dollar basis, and will proportionally reduce the Investment Base of a Strategy.
INDEX. A stock market index or an exchange-traded fund.
INDEX CHANGE. The increase or decrease, if any, in the applicable Index Value over a Term of an Indexed Strategy.
INDEX VALUE. For Indexed Strategies that use the S&P 500 Index, the Index Value is the closing value of the Index. For Indexed Strategies that use, the iShares U.S. Real Estate ETF, or the iShares MSCI EAFE ETF, the Index Value is the fund’s closing share price on the NYSE Arca.
INDEXED STRATEGY. A specified method by which gain or loss is calculated for a Term. Each Indexed Strategy provides a return based, in part, on changes in an Index Value. The Indexed Strategies that are currently available are set out on the first page of this prospectus.
INVESTMENT BASE. The amount applied to an Indexed Strategy at the start of a current Term. The Investment Base is reduced daily by an amount equal to the Daily Charge. A withdrawal and any related Early Withdrawal Charge reduces the Investment Base proportionally to the reduction in the value of that Indexed Strategy due to the withdrawal or charge. For example, if a withdrawal reduces the value of an Indexed Strategy by 15%, then it will reduce the Investment Base of that Strategy by 15%.
MARKET CLOSE. The close of the regular or core trading session on the market used to measure a given Indexed Strategy.
MARKET DAY. Each day that all markets that are used to measure available Indexed Strategies are open for regular trading.
MASSMUTUAL ASCEND LIFE (“WE,” “US,” “OUR,” “MMALIC”). MassMutual Ascend Life Insurance Company.
MAXIMUM GAIN. The largest positive Index Change for a Term that is taken into account to determine the Vested Gain for a given Indexed Strategy. We set the Maximum Gain for each Term of an Indexed Strategy before the first day of that Term. For a given Term, we may set a different Maximum Gain for amounts attributable to Purchase Payments received on different dates. The Maximum Gain can also be called a “Cap”. Daily Charges are not taken into account when calculating Maximum Gains.
MAXIMUM LOSS. The most negative Index Change for a Term that is taken into account to determine a Vested Loss for a given Conserve Strategy or Growth Strategy. The Maximum Loss for a Growth Strategy is a loss of 10% and will apply to all Terms of that Growth Strategy. The Maximum Loss for a Conserve Strategy is 0% and will apply to all Terms of that Conserve Strategy. The Maximum Loss can also be called a “Floor”. Daily Charges are not taken into account when calculating Maximum Losses.
OWNER (“YOU,” “YOURS”). The person(s) who possesses the ownership rights under the Contract. If there is more than one Owner, each Owner will be a joint owner of the Contract and each reference to Owner means joint owners.
PAYOUT OPTION. The form in which an Annuity Payout Benefit or Death Benefit may be paid. Standard options are described in the Payout Options section of this prospectus.
PURCHASE PAYMENT. An amount received by us for the Contract. This amount is after the deduction of any fee charged by the person remitting payment and any taxes withheld from the payment.
PURCHASE PAYMENT ACCOUNT. An account where a Purchase Payment is held from the date it is applied to the Contract until the first Strategy Application Date on or after that date.
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REQUEST IN GOOD ORDER. Information provided or a request made that is:
| • | complete and satisfactory to us; |
| • | sent to us on our form or in a manner satisfactory to us, which may, at our discretion, be by telephone or electronic means; and |
| • | received at our administrative office. |
Information provided or a request made is complete and satisfactory when we have received: (1) all the information and legal documentation that we require to process the information or the request; and (2) instructions that are sufficiently clear that we do not need to exercise any discretion to process the information or the request. If you have any questions, you should contact us or your registered representative before submitting your request.
STRATEGY APPLICATION DATE. The 6th and 20th days of each month.
SURRENDER. The termination of your Contract in exchange for its Surrender Value.
SURRENDER VALUE. The Account Value minus the Early Withdrawal Charge that would apply on a Surrender of the Contract.
TAX-QUALIFIED CONTRACT. An annuity contract that is intended to qualify for special tax treatment for retirement savings. If your Contract is a Tax-Qualified Contract, the cover page of your Contract includes information about its tax qualification. If your Contract is not a Tax-Qualified Contract, the cover page of your Contract will identify it as a “Nonqualified Annuity.”
TERM. The period for which Contract values are allocated to a given Indexed Strategy, and over which gain or loss is calculated. Each Term is one year long, and will start and end on a Strategy Application Date. A new Term will start on the date that the preceding Term ends.
VESTED GAIN. The portion of any positive Index Change for the Term of an Indexed Strategy that is taken into account when determining the value of that Indexed Strategy. For any day of a Term, the Vested Gain is equal to: (1) any positive Index Change for the Term, but not exceeding the Maximum Gain set for that Term; multiplied by (2) the applicable Vesting Factor for that day; and then multiplied by (3) the remaining Investment Base for that Term. Daily Charges are applied prior to calculating Vested Gains.
VESTED LOSS. The portion of any negative Index Change for the Term of an Indexed Strategy that is taken into account when determining the value of that Indexed Strategy. For any day of a Term, the Vested Loss is equal to: (1) any negative Index Change for the Term, after taking into account either the Maximum Loss for each Term of that Indexed Strategy or the Buffer; multiplied by (2) the remaining Investment Base for that Term. Daily Charges are applied prior to calculating Vested Losses.
VESTING FACTOR. A factor used to determine a Vested Gain. Vesting Factors are described in the Vested Gains and Losses section of this prospectus.
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The MassMutual Ascend Life Index Frontier® 5 Pro annuity is a modified single premium deferred annuity contract that may help you accumulate retirement savings. The Contract is intended for long term investment purposes. The Contract is a legal agreement between you as the Owner and MassMutual Ascend Life as the issuing insurance company. In the Contract, you agree to make one or more Purchase Payments to us and we agree to pay the Annuity Payout Benefit to you.
Like all deferred annuities, the Contract has two periods. During the period prior to the Annuity Payout Initiation Date, your Contract may accumulate earnings on a tax-deferred basis. During the period that begins on the Annuity Payout Initiation Date, we will make payments under the selected Payout Option.
The following chart describes the key features of the Contract. Read this prospectus for more detailed information about the Contract.
| Benefits | • The Annuity Payout Benefit is a series of periodic payments made under a Payout Option. This benefit can provide you with income for a fixed period of time or for life. It is based on the Account Value on the Annuity Payout Initiation Date.
• The Cash Benefit lets you take out all of your Account Value (Surrender) or take out part of it (withdrawal). An Early Withdrawal Charge generally applies if you take money out during the first five Contract Years. You can Surrender your Contract or take a withdrawal before the Annuity Payout Initiation Date.
• The Death Benefit is payable if you die before the Annuity Payout Initiation Date. This benefit is paid to your beneficiaries. It is based on the Death Benefit Value, which will never be less than your Purchase Payments, reduced proportionately for withdrawals.
Please see the Annuity Payout Benefit, Cash Benefit, and Death Benefit sections on pages 55, 41, and 56 for more information. | |
| Purchase Payments | The Contract is a modified single premium annuity. This means we will accept Purchase Payments only during the purchase payment period, which ends two months after the Contract Effective Date. The initial Purchase Payment must be at least $25,000. Each additional Purchase Payment must be at least $10,000. You will need our prior approval if:
• you are age 80 or younger and want to make a Purchase Payment(s) of more than $1,000,000; or
• you are over age 80 and want to make a Purchase Payment(s) of more than $750,000.
Please see the Purchase section on page 17 for more information. | |
| Issue Age | Each Owner must be age 80 or younger on the Contract Effective Date. Please see the Purchase section on page 17 for more information. | |
| Indexed Strategies | We currently offer seven Indexed Strategies. | |||
| Conserve/0% Floor Strategies | Index | |||
| S&P 500 0% Floor | S&P 500® Index | |||
| iShares U.S. Real Estate 0% Floor | iShares U.S. Real Estate ETF | |||
| iShares MSCI EAFE 0% Floor | iShares MSCI EAFE ETF | |||
| Growth/-10% Floor Strategies | Index | |||
| S&P 500 -10% Floor | S&P 500® Index | |||
| iShares U.S. Real Estate -10% Floor | iShares U.S. Real Estate ETF | |||
| iShares MSCI EAFE -10% Floor | iShares MSCI EAFE ETF | |||
| 10% Buffer Strategy | Index | |||
| S&P 500 10% Buffer | S&P 500® Index | |||
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Conserve/0% Floor Strategies
• The value of a Conserve Strategy will increase if there is a positive Index Change during a Term. Any positive Index Change is subject to the applicable Maximum Gain for the Term. Before the end of the Term, any positive Index Change is also subject to a Vesting Factor. A Vested Gain can never be more than the Maximum Gain for that Term.
• The value of a Conserve Strategy will never decrease due to a negative Index Change during a Term.
• The value of a Conserve Strategy will be reduced by the Daily Charge. The Daily Charge may result in a reduction in value over a Term equal to the Daily Charge.
• We will always offer at least one Conserve Strategy.
Growth/-10% Floor Strategies
• The value of a Growth Strategy will increase if there is a positive Index Change during a Term. Any positive Index Change is subject to the applicable Maximum Gain for the Term. Before the end of the Term, any positive Index Change is also subject to a Vesting Factor. A Vested Gain can never be more than the Maximum Gain for that Term.
• The value of a Growth Strategy will decrease due to a negative Index Change during a Term. If you allocate money to a Growth Strategy, you can lose up to 10% of that money during the Term due to a negative Index Change.
• The value of a Growth Strategy will be reduced by the Daily Charge. The Daily Charge may result in a reduction in value over a Term equal to the Daily Charge plus any loss due to a negative Index Change.
10% Buffer Strategy
• The value of the Buffer Strategy will increase if there is a positive Index Change during a Term. Any positive Index Change is subject to the applicable Maximum Gain for the Term. Before the end of the Term, any positive Index Change is also subject to a Vesting Factor. A Vested Gain can never be more than the Maximum Gain for that Term.
• The value of the Buffer Strategy will decrease due to a negative Index Change during a Term. If you allocate money to the Buffer Strategy, at the end of the Term you can lose up to 90% of that money due to a negative Index Change. At the end of the Term, 10% of the money you allocated is protected from loss. You can lose more than 90% of that money if you withdraw it before the end of the Term.
• The value of the Buffer Strategy will be reduced by the Daily Charge. The Daily Charge may result in a reduction in value over a Term even if the Buffer protects against any loss due to a negative Index Change.
Please see the Indexed Strategies section on page 19 for more information. | ||
Indexed Strategy Value and Investment Base | At the start of a Term, the value of an Indexed Strategy is equal to the Investment Base for that Term, which is the amount applied to that Strategy for that Term.
During a Term, a Vested Gain increases the Strategy value or a Vested Loss reduces the Strategy value.
The Daily Charge reduces the Investment Base of the Strategy equal to the amount of the charge. The Daily Charge reduces the amount to which Vested Gain or Vested Loss applies. This means that the Daily Charge will increase any losses and decrease any gains
A withdrawal reduces the Strategy value, including the value of any Conserve/0% Floor Strategy, by the amount of the withdrawal and related Early Withdrawal Charge. A withdrawal reduces the Investment Base by the portion of the Investment Base needed to pay for the withdrawal and related Early Withdrawal Charge. The reduction in the Investment Base is proportional to the reduction in the Strategy value. This means that we calculate the percentage of Strategy Value that is being withdrawn and we reduce your Investment Base by the same percentage. If you take a withdrawal when your Strategy Value is less than your Investment Base, the amount of Investment Base | |
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reduction will exceed the dollar amount of your withdrawal. For example, if your Strategy Value is $30,000 and you withdraw $12,000, you have withdrawn 40% of Strategy Value. If your Investment Base was $40,000 before the withdrawal, it would be reduced by $16,000 ($40,000 x .40) and your new Investment Base after the withdrawal would be $24,000 ($40,000 – $16,000). If your Strategy Value is greater than your Investment Base, the amount of the Investment Base reduction will be less than the dollar amount of the withdrawal.
Please see the Indexed Strategies section on page 19 for more information. | ||
| Daily Charge | Each day of this Contract, we will subtract a Daily Charge from the Investment Base of each Indexed Strategy. The Daily Charge is calculated as a percentage of the remaining Investment Base of the Strategy. The Daily Charge is a rate that compounds to 0.50% per year. Please see the Daily Charge section on page 51 for more information. | |
| Vested Gains and Losses | • Each day of a Term, the value of an Indexed Strategy is adjusted for the Vested Gain or Loss since the start of that Term. We use the following formulas to calculate Vested Gains and Losses.
• Vested Gain = any positive Index Change for the Term (but not exceeding the Maximum Gain set for the Term) x applicable Vesting Factor for that day x remaining Investment Base for the current Term.
• Vested Loss = any negative Index Change for the Term (after taking into account either the Maximum Loss for the Term or the Buffer, as applicable) x remaining Investment Base for the current Term.
• Daily Charges are applied prior to calculating Vested Gains and Vested Losses.
Please see the Vested Gains and Losses section on page 22 for more information. | |
| Maximum Gains | We set a Maximum Gain for each Indexed Strategy prior to the start of each Term. This means the Maximum Gain for an Indexed Strategy may change for each Term. At least 10 days before the next Term starts, we will post the Maximum Gain that will apply to an Indexed Strategy for that next Term on our website (www.gaig.com/RILArates). In general, we will set a higher Maximum Gain for a Growth/-10% Floor Strategy than the Maximum Gain for a Conserve/0% Floor Strategy that uses the same Index. In general, we will set a higher Maximum Gain for a 10% Buffer Strategy than the Maximum Gain for a Growth Strategy that uses the same Index.
The Daily Charges will decrease any gains.
Please see the Vested Gains and Losses section on page 22 for more information. | |
| Maximum Losses | The Maximum Loss for each Term of a Conserve Strategy is 0%.
The Maximum Loss for each Term of a Growth Strategy is a loss of 10%.
The Maximum Loss for each Term of the Buffer Strategy is a loss of 90%, or more than 90% if a withdrawal is taken before the end of the Term. In addition, your cumulative loss over Multiple Terms could exceed 90% of your investment.
The Daily Charge will increase any losses.
Please see the Vested Gains and Losses section on page 22 for more information. | |
| Buffer | The Buffer at the end of each Term of a Buffer Strategy is 10%. Before the end of each Term, the Buffer is calculated daily as a prorated share of the annual 10% Buffer. Please see the Vested Gains and Losses section on page 22 for more information. | |
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| Vesting Factors | Vesting Factors for the Indexed Strategies are fixed and are applied as follows:
• For a positive Index Change during a Term, the Vesting Factors are 25% for any date within the first six months of a Term; 50% for any date within the final six months of a Term but before the final Market Date of the Term; and 100% on or after the final Market Date of the Term. A Vesting Factor below 100% limits any positive increase during a Term.
• For a negative Index Change during a Term, there is no Vesting Factor.
Please see the Vested Gains and Losses section on page 22 for more information. | |
| Strategy Renewals | At the end of each Term of a given Indexed Strategy, we will apply the ending value of that Strategy to a new Term of that same Strategy. The amount applied to a new Term will not include any amount that is moved as part of a reallocation at the Term end. Please see the Strategy Renewals and Reallocations at Term End section on page 40 for more information. | |
| Strategy Reallocations | At the end of a Term, you may reallocate the ending values of the Indexed Strategies for that Term among the Strategies. Please see the Strategy Renewals and Reallocations at Term End section on page 40 for more information. | |
| Access to Your Money Through Withdrawals | You may take a withdrawal from your Contract at any time prior to the Annuity Payout Initiation Date.
• During the first five Contract Years, unless you qualify for the Free Withdrawal Allowance or the bailout right as described below, an Early Withdrawal Charge will apply.
• A withdrawal from an Indexed Strategy will reduce the value of that Strategy on a dollar-for-dollar basis. A withdrawal from an Indexed Strategy during a Term will proportionally reduce the Investment Base used to calculate any subsequent Vested Gain or Loss in that Term.
• In addition to any applicable Early Withdrawal Charge, a withdrawal may be subject to income tax, and a withdrawal before age 591/2 may also be subject to an additional 10% penalty tax.
Please see the Early Withdrawal Charge section on page 52 for more information. | |
| Early Withdrawal Charge | An Early Withdrawal Charge applies during the first five Contract Years if you Surrender your Contract or withdraw an amount in excess of the Free Withdrawal Allowance. The charge is equal to the amount subject to the charge multiplied by the applicable rate set out below. | |
Contract Year | 1 | 2 | 3 | 4 | 5 | 6+ | ||||||||||||||||||
Early Withdrawal Charge Rate | 8 | % | 7 | % | 6 | % | 5 | % | 4 | % | 0 | % |
If you take a withdrawal from your Contract, the amount subject to the charge is the amount you withdraw plus any amount needed to pay the Early Withdrawal Charge. If you Surrender your Contract, the amount subject to the charge is your Account Value.
When you request a withdrawal, we will reduce the amount we pay you by the amount of the Early Withdrawal Charge. If you instruct us to pay you the specific withdrawal amount, we will instead reduce your Account Value by both the requested specific withdrawal amount, as well as the amount of the Early Withdrawal Charge. In this case, since you opted not to pay the Early Withdrawal Charge out of your withdrawal proceeds, we treat the Early Withdrawal Charge as an additional requested withdrawal. We will apply the Early Withdrawal Charge to both the specified withdrawal amount, as well as any amounts we withdraw to cover your Early Withdrawal Charges. The Early Withdrawal Charge does not apply to (1) a withdrawal that qualifies for the Free Withdrawal Allowance; (2) any withdrawal under the Bailout right; or (3) the amount, if any, that qualifies for another waiver. Please see the Early Withdrawal Charge section on page 52 for more information.
For example, if after using their Free Withdrawal Allowance a contractholder requested that an additional $10,000 be withdrawn from their Account Value when a 8% Early Withdrawal Charge was in effect, a $800 Early Withdrawal Charge would apply (8% of $10,000 withdrawn). The contractholder would receive $9,200 ($10,000 - $800), minus any income tax withholding.
Similarly, if a contractholder instead requested that they receive a net amount of $10,000 from their account in the same circumstances, we would treat the Early Withdrawal Charge amount as an additional requested withdrawal subject to an Early Withdrawal Charge. This means that we will “gross up” your requested withdrawal to cover applicable Early Withdrawal Charges (and any income |
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| tax withholding). If we assume that no income tax withholding applies, the withdrawal would be grossed up to $10,870, calculated by dividing the net amount requested by 1 minus the Early Withdrawal Charge rate ($10,000 / (1 – 0.08)). The Early Withdrawal Charge would be $870 (8% of the $10,870 withdrawal), and the contractholder would receive $10,000 ($10,870 - $870). | ||
| Free Withdrawal Allowance | The Free Withdrawal Allowance lets you withdraw some money from your Contract without the imposition of the Early Withdrawal Charge. For the first Contract Year, the Free Withdrawal Allowance is an amount equal to 10% of the total Purchase Payments received by us. For each subsequent Contract Year, the Free Withdrawal Allowance is equal to 10% of the Account Value as of the most recent Contract Anniversary. The Free Withdrawal Allowance is non-cumulative and you may not carry over any unused portion to other Contract Years. Like any other withdrawal, an amount withdrawn that is covered by the Free Withdrawal Allowance will reduce the value of an Indexed Strategy on a dollar-for dollar basis, and will proportionally reduce the Investment Base of a Strategy. Please see the Early Withdrawal Charge section on page 52 for more information. | |
| Bailout Right | We will waive the Early Withdrawal Charge on an amount you withdraw if: (1) you withdraw it at the end of a Term from an Indexed Strategy; and (2) either the Maximum Gain for such Indexed Strategy for the next Term is less than the Bailout Trigger for the current Term, or such Indexed Strategy will not be available for the next Term. If the Bailout right will apply at the end of a Term, we will notify you at least 30 days before the end of that Term. The Bailout right does not apply to your initial Term. Please see the Early Withdrawal Charge section on page 52 for more information. | |
| Payout Options | Like all annuity contracts, the Contract offers a range of Payout Options, which provide payments for your lifetime or for a fixed period. After payments begin, you cannot change the Payout Option or any fixed period you selected. The standard Payout Options are listed below.
• Fixed Period Payout
• Life Payout
• Life Payout with Payments for at Least a Fixed Period
• Joint and One-half Survivor Payout
Please see the Payout Options section on page 58 for more information. | |
| Death Benefit | A Death Benefit is payable under the Contract if you die before the Annuity Payout Initiation Date. If the Owner is a non-natural person, such as a trust or a corporation, then a Death Benefit is payable under the Contract if an Annuitant dies before the Annuity Payout Initiation Date.
The Death Benefit Value is the greater of: (1) the Account Value as of the applicable date; or (2) your Purchase Payment(s) reduced proportionally for all withdrawals, but not including amounts applied to pay Early Withdrawal Charges.
Please see the Death Benefit section on page 56 for more information. | |
| Tax Deferral | The Contract is generally tax deferred, which means that you are not taxed on the earnings in your Contract until the money is paid to you. Contracts owned by non-natural owners, such as trusts and corporations, are subject to special rules.
A tax-qualified retirement plan such as an IRA also provides tax deferral. Buying the Contract within a tax-qualified retirement plan does not give you any extra tax benefits. There should be reasons other than tax deferral for buying the Contract within a tax-qualified retirement plan.
Please see the Federal Tax Considerations section on page 70 for more information. | |
| Right to Cancel | If you purchase a Contract, you may cancel it within 20 days after you receive it. If you purchase a Contract to replace an existing annuity contract or insurance policy, you have 30 days to cancel the Contract. The right to cancel period may be longer in some states. In many states, you will bear the risk of investment gain or loss before cancellation.
Please see the Right to Cancel (Free Look) section on page 63 for more information. | |
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The Contract involves certain risks that you should understand before purchasing it. You should carefully consider your income needs and risk tolerance to determine whether the Contract or a particular Indexed Strategy is appropriate for you. The level of risk you bear and your potential investment performance will differ depending on the Indexed Strategies you choose.
| Loss of Principal Related to Growth Strategy and Buffer Strategy due to Negative Index Changes | There is a significant risk of loss of principal and related earnings due to negative Index Changes if you allocate your Purchase Payment(s) to a Growth/-10% Floor Strategy or 10% Buffer Strategy. Such a loss may be substantial.
This risk exists for each Growth Strategy because you agree to absorb any loss in the Index during the Term up to the Maximum Loss of 10%. This risk exists for each Buffer Strategy because you agree to absorb any loss in the Index that exceeds the Buffer. This risk of loss does not exist if you allocate your Purchase Payment(s) to a Conserve/0% Floor Strategy.
If you allocate money to a Growth Strategy, you may lose up to 10% at the end of each Term. If you allocate money to a Growth Strategy over multiple Terms, you may lose up to 10% each Term, which may result in a cumulative loss that is greater than 10%.
If you allocate money to a Buffer Strategy, you may lose up to 90% at the end of each Term. If you allocate money to a Buffer Strategy and withdraw it before the end of the Term, you may lose more than 90% because the Buffer is less than 10% until the end of the Term. If you allocate money to a Buffer Strategy over multiple Terms, you may lose up to 90% at the end of each Term, which may result in a cumulative loss that is greater than 90%. | |
| Loss of Principal Related to Daily Charge | There is a risk of loss of principal and related earnings as a result of the Daily Charge that applies to your Contract values. The Daily Charge reduces your Investment Base and may result in reduced gains and/or increased losses. Strategy values will not include any Vested Gains or Losses attributable to amounts applied to Daily Charges because Daily Charges are applied to the Investment Base prior to calculating Vested Gains and Losses.
You could realize losses even when Index Values increase. This will occur when the amount of Vested Gain is smaller than the Daily Charge.
Even if you invest in the Conserve/0% Floor Strategy, the Daily Charge could cause you to realize losses in excess of the Maximum Loss.
If you invest in a 10% Buffer Strategy and the Index Value decreases but does not exceed the Buffer, the Daily Charge could cause you to experience losses. Any Vested Loss would be in addition to the Daily Charge.
If you invest in a Growth/-10% Floor Strategy and the Index Value decreases, the Daily Charge could cause you to experience losses in excess of the Maximum Loss. | |
| Loss of Principal Related to Early Withdrawal Charge | There is also a risk of loss of principal and related earnings if you take a withdrawal from your Contract or Surrender it during the first five Contract Years. This risk exists for each Strategy because an Early Withdrawal Charge may apply. A withdrawal from any Strategy, including any Conserve/0% Floor Strategy, when an Early Withdrawal Charge applies, will reduce the value of the Strategy. This reduction will occur even if there is a Vested Gain on the date of the withdrawal. An Early Withdrawal Charge may reduce the value of an Indexed Strategy by more than increases in the value of the Indexed Strategy resulting from Vested Gains in the current and prior Terms. | |
| Long-Term Nature of Contract | The Contract is a deferred annuity, which means the Annuity Payout Benefit will begin on a future date. We designed the Contract to be a long-term investment that you can use to help build a retirement nest egg and provide income for retirement. The limitations and charges included in the Contract reflect its long-term nature. | |
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| Limits on Investment Return | Any increase in the value of an Indexed Strategy over a Term is limited by a Maximum Gain. Any increase in the value of an Indexed Strategy before the end of a Term is also limited by a Vesting Factor, which will be less than 100%. Due to these limitations, in many cases the return on money allocated to an Indexed Strategy will not fully reflect the corresponding positive Index Change for a Term.
The value of an Indexed Strategy only captures an Index Value at the applicable Market Close. You will bear the risk that an Index Value might be significantly lower at that Market Close than at another point during the Term.
We measure the Index Change by comparing the Index Value on the first day of the Term to the Index Value on the last day of the Term. This means that if the Index Value is lower on the last day of the Term, you may experience negative or flat performance even if the Index experienced gains through some, or most, of the Term. | |
| Limits on Reallocations | You cannot reallocate money among the Indexed Strategies prior to the end of a Term. If you want to take money out of Strategy during a Term, you must take a withdrawal from that Strategy or Surrender your Contract. | |
| Early Withdrawal Charge | If you withdraw money from or Surrender the Contract during the first five Contract Years, we will deduct an Early Withdrawal Charge unless the Free Withdrawal Allowance or Bailout right applies. Deduction of the Early Withdrawal Charge may result in loss of principal and any prior earnings. An Early Withdrawal Charge will reduce Strategy values, including Conserve/0% Floor Strategy values. | |
| Timing of Withdrawals, Surrender, Annuity Payout Initiation Date, or Death Benefit Claim | You should take into consideration the dates on which the Term(s) of your Indexed Strategies end relative to the timing of a withdrawal or Surrender, the Annuity Payout Initiation Date, or the submission of a Death Benefit claim.
For example, a withdrawal from an Indexed Strategy before the end of a Term will lock in the existing Vested Gain or Loss. In addition, due to the Vesting Factors that we use to calculate Vested Gains, increase in the value of an Indexed Strategy before the end of a Term will be less than the corresponding positive Index Change. | |
| No Ability to Determine Strategy Values in Advance | If you request a withdrawal from an Indexed Strategy, we will process the withdrawal at the first Market Close after receipt of your Request in Good Order. This means you will not be able to determine in advance the value of an Indexed Strategy or the amount of any Vested Gain or Vested Loss. Likewise, you will not be able to determine in advance the amount payable upon Surrender, applied to the Annuity Payout Benefit, or payable as the Death Benefit. | |
| Changes in Maximum Gains | We set a Maximum Gain for each new Term of an Indexed Strategy. The Maximum Gain for a new Term of an Indexed Strategy may be lower than its Maximum Gain for the current Term and may be as low as 1%. You risk the possibility that the Maximum Gain for a new Term may be lower than you would find acceptable. | |
| Unavailable Indexed Strategies | At the end of a Term, we may stop offering any Indexed Strategy and, consequently, an Indexed Strategy you selected may not be available after the end of a Term. An Indexed Strategy you selected also may not be available after the end of a Term due to minimums and maximums that we set. In that case, if you do not withdraw the funds pursuant to your Bailout Right or reallocate them to another Indexed Strategy, then we will reallocate the applicable funds to a default Strategy. The funds allocated to a default Strategy may earn a return that is lower than the return they would have earned if there had been no reallocation, but will not increase the risk of loss of principal and any prior earnings. | |
| Replacement of an Index | We have the right to replace an Index if it is discontinued or we are no longer able to use it, its calculation changes substantially, or we determine that hedging instruments are difficult to acquire or the cost of hedging becomes excessive. We may do so at the end of a Term or during a Term. If we replace an Index during a Term, we will calculate Vested Gains and Losses using the old Index up until the replacement date. After the replacement date, we will calculate Vested Gains and Losses using the new Index. The performance of the new Index may not be as good as the performance of the old Index. As a result, funds allocated to an Indexed Strategy may earn a return that is lower than the return they would have earned if there had been no replacement. | |
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| Involuntary Termination of Contract | If your Account Value falls below the minimum value of $5,000 for any reason, we may terminate your Contract. For example, we may terminate your Contract if a loss on a Growth/-10% Floor Strategy or a 10% Buffer Strategy causes your Account Value to fall below $5,000. | |
| No Direct Investment in the Market | When you allocate money to an Indexed Strategy that uses the S&P 500 Index, you will not be investing in that Index, or in any stock included in that Index. Index Changes for these Strategies are calculated without taking into account dividends paid on stocks that make up the S&P 500 Index.
When you allocate money to an Indexed Strategy that uses the iShares U.S. Real Estate ETF, you will not be investing in that exchange-traded fund, in the securities or other assets that it holds, or in any real estate investment trust. Index Changes for these Strategies are calculated without taking into account dividends paid by the iShares U.S. Real Estate ETF.
When you allocate money to an Indexed Strategy that uses the iShares MSCI EAFE ETF, you will not be investing in that exchange-traded fund or in the securities or other assets that it holds, or in any stock included in the MSCI EAFE Index. Index Changes for these Strategies are calculated without taking into account dividends paid by the iShares MSCI EAFE ETF.
Because changes in the value of an Indexed Strategy are subject to Maximum Gains and either Maximum Losses or a Buffer, as applicable, and may be subject to a Vesting Factor, the performance of an Indexed Strategy may diverge from the performance of the Index. | |
| Market Risk | Money allocated to a Growth/-10% Floor Strategy or 10% Buffer Strategy that uses the S&P 500 Index is subject to the risk that the market value of the underlying securities that comprise the S&P 500 Index may decline. For a Growth Strategy, you will absorb any such market loss up to the amount of the Maximum Loss of 10%. For a Buffer Strategy, you will absorb any such market loss to the extent it exceeds the Buffer. In addition, any positive change in the Index Value over a Term will be lower than the total return on an investment in the stocks that comprise the S&P 500 Index because the total return will reflect dividend payments on those stocks and the Index Values will not reflect those dividend payments. Because the return on an Indexed Strategy that uses the S&P 500 Index will be subject to limitations and will be linked to its performance and not the performance of the underlying stocks, your return may be less than that of a direct investment in such stocks. In addition, due to the same limitations, your return may be less than that of a direct investment in a fund that tracks the S&P 500 Index. Due to the Daily Charge, any positive return will be less than that of a direct investment in such stocks.
Money allocated to a Growth/-10% Floor Strategy that uses the iShares U.S. Real Estate ETF is subject to the risk that its share price may decline. You will absorb any such market loss up to the amount of the Maximum Loss of 10%. The share price of the iShares U.S. Real Estate ETF is tied to the performance of the real estate sector, which is highly sensitive to general and local economic conditions and developments, characterized by intense competition and periodic overbuilding, and subject to risks associated with leverage. The share price may not replicate the performance of the fund, its underlying index, or the components of that index. In addition, because the return on any indexed strategy that uses the iShares U.S. Real Estate ETF will be subject to limitations and will be linked to the performance of the iShares U.S. Real Estate ETF and not the performance of its underlying index or the components of that index, your return may be less than that of another investment linked directly to the performance of the fund, its underlying index, or a direct investment in such components. In addition, due to the same limitations, your return may be less than that of a direct investment in the iShares U.S. Real Estate ETF. Due to the Daily Charge, any positive return will be less than that of a direct investment in such stocks.
Money allocated to a Growth/-10% Floor Strategy that uses the iShares MSCI EAFE ETF is subject to the risk that its share price may decline. You will absorb any such market loss up to the amount of the Maximum Loss of 10%. The share price of the iShares MSCI EAFE ETF is tied to the performance of large- and mid-capitalization developed market equities, excluding the U.S. and Canada. The share price may not replicate the performance of the fund, its underlying index, or the components of that index. In addition, because the return on any indexed strategy that uses the iShares MSCI EAFE ETF will be subject to limitations and will be linked to the performance of the iShares MSCI EAFE ETF and not the performance of its underlying | |
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index or the components of that index, your return may be less than that of another investment linked directly to the performance of the fund, its underlying index, or a direct investment in such components. In addition, due to the same limitations, your return may be less than that of a direct investment in the iShares MSCI EAFE ETF. Due to the Daily Charge, any positive return will be less than that of a direct investment in such stocks.
Geopolitical conflicts could also create economic disruption, including increased market volatility, and presents economic uncertainty. The full impact and duration of these events are difficult to determine in advance. Any such impact could adversely affect the performance of the securities that comprise the Indexes and may lead to losses on your investment in the Indexed Strategies. The historical performance of an Index does not guarantee future results. | ||
| Regulatory Risk | MassMutual Ascend Life is not an investment company and is not registered as an investment company under the Investment Company Act of 1940. The protections provided to investors by that Act are not applicable to the Contract. | |
| Reliance on Our Claims-Paying Ability | No company other than MassMutual Ascend Life has any legal responsibility to pay amounts owed under the Contract. You should look to the financial strength of MassMutual Ascend Life for its claims-paying ability.
Our general account assets fund the guarantees provided in the Contracts. The assets are subject to our general business operation liabilities and claims of our creditors and may lose value. We established a non-unitized separate account for the purpose of supporting our obligation to adjust the Indexed Strategy values. The assets in the non-unitized separate account are not chargeable with liabilities arising out of any other business that we conduct but may lose value. The non-unitized separate account differs from the unitized separate accounts that support our variable annuity contracts. As a result, unlike the owner of a traditional variable annuity who has a beneficial interest in, and participates in the performance of, the assets of the related unitized separate account, you do not have any interest in or claim on the assets in the non-unitized separate account and you will not participate in any way in the performance of assets held in that account.
• Financial losses including those resulting from the following events:
• Adverse developments in financial markets and deterioration in global economic conditions
• Unfavorable interest rate environments
• Losses on our investment portfolio
• Loss of market share due to intense competition
• Ineffectiveness of risk management policies
• Changes in applicable law and regulations
• Inability to obtain or collect on reinsurance
• A downgrade or potential downgrade in our financial strength ratings
• Variations from actual experience and management’s estimates and assumptions that could result in inadequate reserves
• Significant variations in the amount of capital we must hold to meet statutory capital requirements
• Legal actions and regulatory proceedings
• Difficulties with technology or data security
• Failure to protect confidentiality of customer information
• Failure to maintain effective and efficient information systems | |
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• Occurrence of catastrophic events, public health crises (e.g., the Covid-19 pandemic) terrorism or military actions
We continue to be subject to significant state solvency regulations that require us to reserve amounts to pay our contractual guarantees. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risks Primarily Related to MMALIC’s Financial Strength and Claims-Paying Ability,” and “Financial Statements”, and “Regulation” for additional financial information about the company and the state solvency regulations to which we are subject. | ||
| Business Disruption and Cyber Security Risks | We rely on technology, including interconnected computer systems and data storage networks and digital communications, to conduct our business activities. Because our business is highly dependent upon the effective operation of our computer systems and those of our service providers and other business partners, our business is vulnerable to disruptions from utility outages, and susceptible to operational and information security risks resulting from information systems failure (e.g., hardware and software malfunctions) and cyber attacks. Cyber attacks may be systemic (e.g., affecting the internet, cloud services, or other infrastructure) or targeted (e.g., failures in or breach of our systems or those of third parties on whom we rely, including ransomware and malware attacks).
Cyber security risks include, but are not limited to, the loss, theft, misuse, corruption, and destruction of data maintained online or digitally, denial-of-service attacks, attacks on our website (or websites on which we rely), disruption of routine business operations, and unauthorized release of confidential information. The risk of cyber attacks may be higher during periods of geopolitical turmoil. Due to the increasing sophistication of cyber attacks, a cyber security breach could occur and persist for an extended period of time without detection.
Systems failures and cyber security incidents affecting us, our affiliates, intermediaries, service providers, and other third parties on whom we rely may adversely affect your Contract values and interfere with our ability to process transactions and calculate Contract values. Systems failures and cyber security breaches may cause us to be unable to process orders from our website, cause us to be unable to calculate Index values, cause the release or possible destruction of confidential and/or business information, impede order processing or cause other operational issues, subject us and our service providers and intermediaries to regulatory fines, litigation, and financial losses, and/or cause reputational damage.
The preventative actions we take to reduce the frequency and severity of cyber security incidents and protect our computer systems may be insufficient to prevent a cyber security breach from impacting our operations or your Contract values. There can be no assurance that we or our service providers and intermediaries will be able to avoid cyber security breaches affecting your Contract. | |
You may purchase a Contract only through a registered representative of a broker-dealer that has a selling agreement with our affiliated underwriter, MM Ascend Life Investor Services, LLC.
Any Owner or Annuitant must be age 80 or younger on the Contract Effective Date. To determine eligibility, we will use the person’s age on his/her last birthday. We may make exceptions with respect to the maximum issue age in our discretion.
The Contract is not available in all states. To find out if it is available in the state where you live, ask your registered representative. The Contract may not be available for purchase during certain periods. There are a number of reasons why the Contract periodically may not be available, including that we want to limit the volume of sales of the Contract. You may wish to speak to your registered representative about how this may affect your purchase. For example, in order to purchase the Contract, you may be required to submit your application prior to a specific date. In that case, if there is a delay because your
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application is incomplete or otherwise not in good order, you might not be able to purchase the Contract. Your broker-dealer may impose conditions on the purchase of the Contract, such as a lower maximum issue age, than we or other selling firms impose. In addition, Selling Broker-Dealers may not make certain indexed strategies available. If you have any questions, you should contact your Selling Agent or his or her Selling Broker Dealer. We reserve the right to reject any application in our discretion.
Purchase Payments
The Contract is a modified single premium annuity contract. This means you may make one or more Purchase Payments during the purchase payment period. The purchase payment period begins on the Contract Effective Date. It will end two months after the Contract Effective Date.
We must receive your initial Purchase Payment on or before the Contract Effective Date. We must receive each additional Purchase Payment before the last day of the purchase payment period. We will not accept any Purchase Payment that we receive after the date that the Contract is cancelled or Surrendered or after a death for which a Death Benefit is payable.
The initial Purchase Payment must be at least $25,000. Each additional Purchase Payment must be at least $10,000. You will need our prior approval if you are age 80 or younger and want to make a Purchase Payment(s) of more than $1,000,000; or you are over age 80 and want to make a Purchase Payment(s) of more than $750,000.
We reserve the right to refuse a Purchase Payment made in the form of a personal check in excess of $100,000. We may accept a Purchase Payment over $100,000 made in other forms, such as EFT/wire transfers, or certified checks or other checks written by financial institutions. We will not accept a Purchase Payment made with cash, money orders, or traveler’s checks.
Exchanges, Transfers, or Rollovers
If you own an annuity or tax-qualified account, you may be able to exchange it for an Index Frontier annuity, directly transfer it to an Index Frontier annuity, or roll it over to an Index Frontier annuity without paying taxes. Before you do, compare the benefits, features, and costs of each annuity or account. You may pay an early withdrawal charge under the old annuity or account. You may also pay a sales charge under the new annuity or account, or you may pay an early withdrawal charge if you later take withdrawals from the new annuity or account. Please note that some financial professionals may have a financial incentive to offer this Contract in place of the one the investor already owns. Ask your registered representative whether an exchange, transfer, or rollover would be advantageous, based on the features, benefits, and charges of the Index Frontier annuity.
If you purchase your Contract with an exchange, transfer, or rollover, a delay in processing the exchange, transfer, or rollover may delay the issuance of your new Contract or prevent the application of additional Purchase Payments to your existing Contract.
You should only exchange your existing contract for this Contract if you determine after comparing the features, fees, and risks of both contracts that it is preferable for you to purchase this Contract rather than continuing to own your existing contract.
Application of Purchase Payments
Each Purchase Payment will be held in the Purchase Payment Account until it is applied to an Indexed Strategy on a Strategy Application Date. On each Strategy Application Date, we will apply the then current balance of the Purchase Payment Account to the Indexed Strategies you selected.
In certain states, we are required to give back your Purchase Payment(s) if you decide to cancel your Contract during the free look period. If we are required by law to refund your Purchase Payment(s), we reserve the right to hold your Purchase Payment(s) in the Purchase Payment Account until the first Strategy Application Date on or after the end of the free look period.
We will credit interest daily on amounts held in the Purchase Payment Account at the annual effective rate set out in your Contract. This rate will be at least 1%.
Purchase Payment Account Value
On any day, the value of the Purchase Payment Account is equal to:
| • | Purchase Payments received by us plus interest earned daily; minus |
| • | the premium tax or other tax that may apply to the Purchase Payments; and minus |
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| • | each withdrawal and related Early Withdrawal Charge taken from the Purchase Payment Account since the last Strategy Application Date. |
Unforeseen Processing Delays
We are exposed to risks related to natural and man-made disasters and catastrophes, such as (but not limited to) storms, fires, floods, earthquakes, public health crises, malicious acts, and terrorist acts, any of which could adversely affect our ability to conduct business. A natural or man-made disaster or catastrophe, including a pandemic (such as the COVID-19 pandemic), could affect the ability or willingness of our employees or the employees of our service providers to perform their job responsibilities. While many of our employees and the employees of our service providers are able to work remotely, those remote work arrangements may result in our business operations being less efficient than under normal circumstances and could lead to delays in our processing of contract-related transactions, including orders from contract owners. Catastrophic events may negatively affect the computer and other systems on which we rely, impact our ability to calculate values under your Contract, or have other possible negative impacts. There can be no assurance that our service providers will be able to successfully avoid negative impacts associated with natural and man-made disasters and catastrophes.
A processing delay will not affect the effective date as of which we process transactions, including orders from contract owners, the date that a Term begins or ends, or the values used to process the transaction.
You make your initial selection of Indexed Strategies in your purchase application. Your initial selection is set out on your Contract Specifications Page.
Your initial selection will also apply to each subsequent Purchase Payment. If you wish to change your selection for a specific Purchase Payment, we must receive your Request in Good Order with the Indexed Strategies you selected for that Purchase Payment before the Strategy Application Date that applies to that Purchase Payment.
When you select an Indexed Strategy, you must also indicate the percentage of the Purchase Payment that you wish to allocate to that Indexed Strategy. All allocations must be in whole percentages that total 100%. We reserve the right to round amounts up or down to make whole percentages, and to reduce or increase amounts proportionally in order to total 100%.
Currently there are no limitations on the amounts that may be applied to an Indexed Strategy.
We may establish minimum and maximum amounts or percentages that may be applied to a given Indexed Strategy for any future Term in our discretion. We will notify you of any such minimum or maximum. We may limit the availability of a Strategy for a Term that would extend beyond the Annuity Payout Initiation Date. All Strategies may not be available in all states.
The Indexed Strategies provide returns that are based, in part, upon changes in an Index Value. The Indexed Strategies do not earn interest at a fixed rate. Unlike a traditional variable annuity, the values of the Indexed Strategies are not based on the investment performance of underlying portfolios.
Each Indexed Strategy has a Maximum Gain for each Term.
| • | We will set a new Maximum Gain for each Indexed Strategy prior to the start of each Term. In general, the Maximum Gain for a Growth Strategy will be higher than the Maximum Gain for a Conserve Strategy using the same Index, and the Maximum Gain for a Buffer Strategy will be higher than the Maximum Gain for a Growth Strategy using the same Index. |
Each Conserve Strategy and Growth Strategy has a Maximum Loss for each Term.
| • | The Maximum Loss for each Term of a Conserve Strategy is 0%. The Maximum Loss for each Term of a Growth Strategy is a loss of 10%. |
Each Buffer Strategy has a Buffer for each Term.
| • | The Buffer at the end of each Term is 10%. Before the end of each Term, the Buffer is calculated daily as a prorated share of the annual 10% Buffer. |
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Changes in the value of an Indexed Strategy reflect the change in the applicable Index Value since the start of the applicable Term, the Maximum Gain we set for that Indexed Strategy for that Term, the applicable Vesting Factor, and the applicable Buffer or Maximum Loss for that Indexed Strategy. If you select a Growth Strategy or a Buffer Strategy, then each Term it is possible for you to lose a portion of your Purchase Payment(s) and any earnings allocated to that Indexed Strategy.
See Vested Gains and Losses section below for additional details.
The Indexed Strategies that are currently available are listed below. You may allocate your funds to any of the Indexed Strategies, subject to the procedures disclosed in this prospectus.
| Conserve/0% Floor Strategies | Index | Maximum Loss/Floor of 0% | ||
S&P 500 0% Floor iShares U.S. Real Estate 0% Floor iShares MSCI EAFE 0% Floor | S&P 500® Index iShares U.S. Real Estate ETF iShares MSCI EAFE ETF | If you allocate money at the start of a Term to a Conserve Strategy, you cannot lose that money during the Term due to a negative change in the Index. | ||
| Growth/-10% Floor Strategies | Index | Maximum Loss/Floor of 10% | ||
S&P 500 -10% Floor iShares U.S. Real Estate -10% Floor iShares MSCI EAFE -10% Floor | S&P 500® Index iShares U.S. Real Estate ETF iShares MSCI EAFE ETF | If you allocate money at the start of a Term to a Growth Strategy, you can lose up to 10% of that money during the Term due to a negative change in the Index. | ||
| 10% Buffer Strategy | Index | End of Term Buffer of 10% | ||
| S&P 500 10% Buffer | S&P 500® Index | If you allocate money at the start of a Term to a Buffer Strategy, at the end of the Term you can lose up to 90% of that money due to a negative change in the Index. At the end of the Term, 10% of the money you allocated is protected from loss. You can lose more than 90% of that money if you withdraw it before the end of the Term. | ||
An Early Withdrawal Charge may apply if you take a withdrawal during the first five Contract Years. That charge will reduce Strategy values, including the value of a Conserve/0% Floor Strategy.
Term
Each Term of an Indexed Strategy is one year long and will start and end on a Strategy Application Date. A new Term will start at the end of the preceding Term.
If you make only one Purchase Payment or you make all of your Purchase Payments before the initial Strategy Application Date, then each Term of each Indexed Strategy will end on the same date in any given year. If you make a Purchase Payment after the initial Strategy Application Date, then your Purchase Payments will be applied to the Indexed Strategies on different Strategy Application Dates. In this case, an Indexed Strategy may have Terms that end on different dates in any given year.
Examples. These examples show how a Contract with multiple Purchase Payments may have Terms that end on different dates.
| • | You make your initial Purchase Payment on March 10 and another Purchase Payment on March 17. You allocate both payments to the same Indexed Strategy and both payments are applied on March 20. Each Term of that Indexed Strategy will start and end on March 20. |
| • | You make your initial Purchase Payment on May 2 and another Purchase Payment on June 14. You allocate both payments to the same Indexed Strategy. Your initial Purchase Payment is applied on May 6 and the other Purchase Payment is applied on June 20. That Indexed Strategy will have Terms that start and end on May 6 and other Terms that start and end on June 20. |
Indexed Strategy Value
The value of an Indexed Strategy is equal to:
| • | the Investment Base for that Term, which is the amount applied to the Strategy at the start of the current Term; minus |
| • | the sum of the Daily Charges subtracted from the investment base during the current Term; |
| • | the portion of that Investment Base that is taken from the Strategy to pay for each withdrawal and related Early Withdrawal Charge during the current Term; and plus or minus |
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| • | the Vested Gain or Loss for that Term on the remaining portion of the Investment Base. |
The portion of the Investment Base that is taken from an Indexed Strategy to pay for a withdrawal and any related Early Withdrawal Charge is proportional to the reduction in the value of the Indexed Strategy for the withdrawal and any related charge. This means that we calculate the percentage of Strategy Value that is being withdrawn and we reduce the Investment Base by the same percentage.
| • | A withdrawal and any related charge will reduce the value of an Indexed Strategy by an amount equal to the withdrawal and any charge. |
| • | But the reduction in the Investment Base to pay for a withdrawal and any related charge is proportional to the reduction in the value of the Indexed Strategy. For example, if the withdrawal and any related charge reduces the value of an Indexed Strategy by 15%, then it will reduce the Investment Base by 15%. |
| • | If there is a Vested Gain, then the portion of the Investment Base taken will be less than the withdrawal and any related charge. With a Vested Gain, the Indexed Strategy value will be higher than the Investment Base. For example, a 15% reduction in the Investment Base will be less than a 15% reduction in the Strategy value. |
| • | If there is a Vested Loss, then the portion of the Investment Base taken will be greater than the withdrawal and any related charge. With a Vested Loss, the Investment Base will be higher than Indexed Strategy value. For example, a 15% reduction in the Investment Base will be greater than a 15% reduction in the Strategy value. |
Here are the formulas that we use to calculate a proportional reduction in the Investment Base for a withdrawal and the remaining Investment Base.
Percentage reduction in Strategy value = withdrawal plus any related Early Withdrawal Charge / Strategy value immediately before the withdrawal
Proportionate reduction in Investment Base = Investment Base immediately before the withdrawal x percentage reduction in Strategy value
Remaining Investment Base = Investment Base immediately before the withdrawal—reduction in Investment Base
Examples. You allocate $5,000 to an Indexed Strategy at the start of a Term. This means the Investment Base at the start of the Term is $5,000. You take a $1,000 withdrawal on the 291st day of the Term and that amount includes the amount needed to pay any related Early Withdrawal Charge that applies to the withdrawal. On that date, a total of $20 has been subtracted for Daily Charges, and the remaining Investment Base is $4,980 ($5,000 - $20).
Assume at the time of your withdrawal that you have a Vested Gain of 5%.
| • | The Vested Gain is equal to $249 ($4,980 x 0.05). |
| • | The Strategy value on the withdrawal date is $5,229 ($4,980 + $249). |
| • | The withdrawal (including any related Early Withdrawal Charge) reduces the Strategy value by $1,000. |
| • | The Strategy value after the withdrawal is $4,229 ($5,229 - $1,000). |
| • | The percentage reduction in the Strategy value is 19.12% ($1,000 / $5,229). |
| • | The proportionate reduction in the Investment Base is $952 ($4,980 x 0.1912). |
| • | The remaining Investment Base is $4,028 ($4,980 - $952). |
| • | Due to the Vested Gain, the proportionate reduction in the Investment Base ($952) is less than the withdrawal and related charge ($1,000). This means, after the withdrawal, the Investment Base is $4,028 rather than $4,000. |
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Assume at the time of your withdrawal that you have a Vested Loss of 10%.
| • | The Vested Loss is equal to $498 ($4,980 x 0.10). |
| • | The Strategy value on the withdrawal date is $4,482 ($4,980 - $498). |
| • | The withdrawal (including any related Early Withdrawal Charge) reduces the Strategy value by $1,000. |
| • | The Strategy value after the withdrawal is $3,482 ($4,482 - $1,000). |
| • | The percentage reduction in the Strategy value is 22.31% ($1,000 / $4,482). |
| • | The proportionate reduction in the Investment Base is $1,111 ($4,980 x 0.2231). |
| • | The remaining Investment Base is $3,869 ($4,980 - $1,111). |
| • | Due to the Vested Loss, the proportionate reduction in the Investment Base ($1,111) is greater than the withdrawal and related charge ($1,000). This means, after the withdrawal, the Investment Base is $3,869 rather than $3,980. |
Overview
Each day of a Term, the value of an Indexed Strategy includes the Vested Gain or Loss, if any, since the start of that Term. Vested Gain or Loss is calculated on the remaining Investment Base for that Term.
Here is the formula that we use to calculate the amount of the Vested Gain or Loss.
Amount of Vested Gain or Loss = remaining Investment Base x Vested Gain or Loss percentage
Example. At the beginning of a Term in Contract Year 10, your entire Account Value of $100,000 is allocated to a Growth/-10% Floor Strategy. You do not take any withdrawals during that Term. You Surrender your Contract at the end of that Term. No Early Withdrawal Charge applies to a Surrender in Contract Year 10. A total of $500 has been subtracted for Daily Charges, and the remaining Investment Base is $99,500 ($100,000 - $500).
| • | If the Vested Gain is 4%, then the Strategy value includes a $3,980 Vested Gain ($99,500 x 0.04). The amount payable upon Surrender will be $103,480 ($99,500 + $3,980). |
| • | If the Vested Loss is 3%, then the Strategy value includes a $2,985 Vested Loss ($99,500 x 0.03). The amount payable upon Surrender will be $96,515 ($99,500 - $2,985). |
If in this example your Surrender occurs in Contract Year 4 instead, when a 5% Early Withdrawal Charge applies, the amount payable upon Surrender is reduced by applicable Early Withdrawal Charges. For this example, we assume that the Account Value was $100,000 on the most recent Contract Anniversary.
| • | If the Vested Gain is 4%, then the amount payable is reduced by Early Withdrawal Charges of $4,674, calculated as 5% of the Strategy Value minus the Free Withdrawal Allowance (5% x ($103,480 – ($100,000 x 10%))). The amount payable upon Surrender will be $98,806 ($103,480 - $4,674). |
| • | If the Vested Loss is 3%, then the amount payable is reduced by Early Withdrawal Charges of $4,326, calculated as 5% of the Strategy Value minus the Free Withdrawal Allowance (5% x ($96,515 – ($100,000 x 10%))). The amount payable upon Surrender will be $92,189 ($96,515 - $4,326). |
The Daily Charge reduces the Investment Base of the Strategy equal to the amount of the charge. The Daily Charge reduces the amount to which Vested Gain or Vested Loss applies. This means that the Daily Charge will increase any losses and decrease any gains.
Index Change. Before we can calculate the Vested Gain or Loss since the start of a Term, we must determine the Index Change since the start of that Term. The Index Change is the increase or decrease in the applicable Index Value. This increase or decrease is expressed as a percentage of the applicable Index Value at the start of that Term. It is measured from the Index Value at the start of that Term to the Index Value at the last Market Close on or before the date the Index Change is determined.
Example. The Index Value was 1000 at the start of a Term.
| • | If the Index Value at the applicable Market Close is 1065, then there is a positive Index Change of 6.5% ((1065 - 1000) / 1000). |
| • | If the Index Value at the applicable Market Close is 925, then there is a negative Index Change of 7.5% ((925 - 1000) / 1000). |
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Indexes. The S&P 500® Index is designed to reflect the large-cap sector of the U.S. equity market and, due to its composition, it also represents the U.S. equity market in general. It includes 500 leading companies and captures approximately 80% coverage of available market capitalization. The S&P 500 Index does not include dividends declared by any of the companies in this Index. Consequently, any positive change in the Index Value over a Term will be lower than the total return on a direct investment in the stocks that comprise the S&P 500 Index. The S&P 500 Index is a product of S&P Dow Jones Indices LLC. For more information, visit www.US.SPIndices.com.
The iShares U.S. Real Estate ETF is an exchange traded fund that seeks to track the investment performance of the Dow Jones U.S. Real Estate Index. This underlying index measures the performance of the real estate sector in the U.S. equity market. A significant portion of the underlying index is represented by real estate investment trusts (REITs), but the components are likely to change over time. The fund’s adviser uses an indexing strategy that involves investing in a representative sample of securities that collectively has an investment profile similar to that of the underlying index. The fund is subject to certain risks including the risk that it may not replicate the performance of the underlying index and those risks associated with concentrated investment in REITS. The fund’s performance will be reduced by its expenses and fees. The fund’s shares trade on the NYSE Arca under the symbol IYR. For more information, visit www.iShares.com and search ticker symbol IYR.
The iShares MSCI EAFE ETF is an exchange traded fund that seeks to track the investment results of an index composed of large- and mid-capitalization developed market equities, excluding the U.S. and Canada (MSCI EAFE Index). This underlying index includes stocks from Europe, Australasia and the Far East. The components of the underlying index, and the degree to which these components represent certain industries and/or countries, are likely to change over time. The fund’s adviser uses an indexing strategy that involves investing in a representative sample of securities that collectively has an investment profile similar to that of the underlying index. The fund is subject to certain risks including the risk that it may not replicate the performance of the underlying index and those risks associated with investment in non-U.S. issuers. The fund’s performance will be reduced by its expenses and fees. The fund’s shares trade on the NYSE Arca under the symbol EFA. For more information, visit www.iShares.com and search ticker symbol EFA.
Index Values. Index Values are determined at each Market Close. An Index Value at the start of a Term is its value at the last Market Close on or before the first day of that Term. An Index Value at the end of a Term is its value at the Market Close on the last Market Day of that Term. We will use consistent sources to obtain the closing values of an Index. We currently obtain the closing values for the S&P 500 Index from S&P Dow Jones Indices LLC and the closing values for the iShares MSCI EAFE ETF and the iShares U.S. Real Estate ETF from BlackRock, Inc. If those sources are no longer available, we will select an alternative published source(s) to obtain such values.
Market Close. A Market Close is the close of the regular or core trading session on the market used to measure an Index Change for a give Indexed Strategy.
Market Day. A Market Day is each day that all markets that are used to measure Index Changes for available Indexed Strategies are open for regular trading.
Vested Gain
The Vested Gain is the portion of any positive Index Change that is taken into account when determining the value of an Indexed Strategy. Here is the formula that we use to calculate a Vested Gain for any day of a Term.
Vested Gain = any positive Index Change since the start of the current Term (but not exceeding the Maximum Gain set for the Term) x applicable Vesting Factor for that day x remaining Investment Base for the current Term
Maximum Gain. The Maximum Gain for an Indexed Strategy is the largest positive Index Change for a Term that is taken into account to determine the Vested Gain for that Indexed Strategy for that Term. For example, if the Maximum Gain for a Term is 5% and the Index Change at the end of that Term is positive 8%, then the Vested Gain for that Term is 5%.
| • | The Maximum Gain will vary between Indexed Strategies. |
| • | The Maximum Gain for a given Indexed Strategy will vary between Terms. |
| • | We guarantee that the Maximum Gain for a Term of an Indexed Strategy will never be less than 1%. |
| • | For each Term, your return on an Indexed Strategy may be less than any positive Index Change over that Term. |
| • | For each Term, your return on an Indexed Strategy may be less than the Maximum Gain. |
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We set the Maximum Gain for each Indexed Strategy based on the cost of hedging, interest rates, and other market factors, and the Purchase Payments received for a Contract. In general, the Maximum Gain we set for a Growth/-10% Floor Strategy will be higher than the Maximum Gain we set for the corresponding Conserve/0% Floor Strategy, and the Maximum Gain for a 10% Buffer Strategy will be higher than the Maximum Gain for the corresponding Growth Strategy. Likewise, we may set Maximum Gains for Contracts with larger Purchase Payments that are higher than Maximum Gains for Contracts with smaller Purchase Payments.
Each Purchase Payment is applied to an initial Term of a Strategy on the first Strategy Application Date on or after the date that the payment is received. The Maximum Gain for each Strategy Application Date may vary. The Maximum Gain for the first Strategy Application Date will be available on our website (www.massmutualascend.com/RILArates) on the date you signed the application (as long as we receive the application for the Contract within eight days after the date you sign it) and before the date of any Purchase Payment to which the Maximum Gain will apply. If we receive the application for the Contract within eight days after the date you sign it, we will guarantee the Maximum Gain in effect on the date you signed the application for three Strategy Application Dates from the date of the application..
If we receive the signed application within eight days after the date you sign it, then for any Indexed Strategy:
| • | For an initial Term starting on the first Strategy Application Date on or after the application date, the Maximum Gain will be the Maximum Gain in effect on the date you signed the application. |
| • | For an initial Term starting on one of the next two Strategy Application Dates, the Maximum Gain will be the higher of the Maximum Gain in effect on the date you signed the application or the Maximum Gain otherwise in effect for that Strategy Application Date. |
| • | For any initial Term starting on a later Strategy Application Date, the Maximum Gain will be the Maximum Gain in effect for that Strategy Application Date. |
If we receive the signed application more than eight days after the date you sign it, then the guarantee does not apply and the Maximum Gain for each Initial Term will be the Maximum Gain in effect for that Strategy Application Date.
Example : You sign an application for a Contract on May 1 and allocate all of your Purchase Payments to the S&P 500 -10% Floor Strategy. On the date of the application, the Maximum Gain for the first Strategy Application Date (May 6) is 13%. We receive the application and the first Purchase Payment from you on May 8 and the second Purchase Payment from you on May 23. The Maximum Gains for the next two Strategy Application Dates are 14% (May 20) and 12% (June 6).
In this case, the initial 1-year Term for the first Purchase Payment would begin on May 20 and would have a 14% Maximum Gain (the higher of the May 6 rate or the May 20 rate). The initial 1-year Term for the second Purchase Payment would begin on June 6 and would have an 13% Maximum Gain (the higher of the May 6 rate or the June 6 rate).
If we had not received your signed application until May 10 (more than eight days after the date you signed the application), then you would not qualify for the rate guarantee, and the initial 1-year Term for the first Purchase Payment received on May 8 would have a 14% Maximum Gain (the May 20 rate effective for Purchase Payments received between May 7 and May 20), and the initial 1-year Term for the second Purchase Payment received on May 23 would have a 12% Maximum Gain (the June 6 rate effective for Purchase Payments received between May 21 and June 6).
Once your Contract is effective, we will send you a written notice at least 30 days before the end of each Term with information about the Indexed Strategies that will be available for the next Term. At least 10 days before the next Term starts, we will post the Maximum Gain that will apply to an Indexed Strategy for that next Term on our website (www.massmutualascend.com/RILArates).
Because we can change the Maximum Gain that applies to an Indexed Strategy, the Contract has a Bailout right that allows you to take a withdrawal without incurring an Early Withdrawal Charge under certain circumstances. See Bailout Right discussion in the Early Withdrawal Charge section below.
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Vesting Factor. The Vesting Factor varies depending on the day of the Term for which the Vested Gain is calculated. A Vesting Factor limits the portion of a positive Index Change that is taken into account when calculating the Vested Gain for a given Indexed Strategy for a given Term.
| Vesting Factor | ||||
| Dates within first six months of a Term | 25 | % | ||
| Dates within the final six months of a Term but before the final Market Day of that Term | 50 | % | ||
| On the final Market Day of a Term | 100 | % | ||
A Market Day is each day that all markets that are used to measure Index Changes for available Indexes Strategies are open for regular trading.
Months are measured from the first day of the Term. For example, if a Term starts on January 20, the final six months of that Term will begin on July 20.
If any date in a Term is after the final Market Day of that Term, then a 100% Vesting Factor applies on that date when Vested Gain for that Term is calculated. For example, if a Term ends on a Monday when the markets are closed due to a holiday, then the final Market Day of that Term is the Friday before that holiday. If an automatic transaction is scheduled for Saturday, then the 100% Vesting Factor applies to that transaction.
Example. On the date of Surrender, your entire Account Value of $100,000 is allocated to the S&P 500 Growth/-10% Floor Strategy, which has a 12% Maximum Gain for the Term . You Surrender your Contract on day 270 of that Term, which means that Daily Charges have totaled $370 and a Vesting Factor of 50% applies. For this example, we assume that you did not take any withdrawals before you Surrender your Contract. Assume there is a positive Index Change of 15% at the date on which you Surrender your Contract. Because the Index Change exceeds the Maximum Gain, the Maximum Gain applies and limits the Index Change to 12%. As a result, the Vested Gain is 6% (12% x 0.50). The Investment Base on the date of Surrender is $99,630 ($100,000—$370). The Vested Gain that applies upon Surrender will be $5,978 ($99,630 x 0.06) and the amount payable will be $105,607 minus any related Early Withdrawal Charge.
Vested Loss
The Vested Loss is the portion of any negative Index Change that is taken into account when determining the value of an Indexed Strategy. Here is the formula that we use to calculate a Vested Loss for any day of a Term.
Vested Loss = any negative Index Change since the start of the current Term (after taking into account either the Maximum Loss for each Term or the Buffer, as applicable) x remaining Investment Base for the current Term
Maximum Loss. The Maximum Loss for a Conserve/0% Floor Strategy or a Growth/-10% Floor Strategy is the most negative Index Change for a Term that is taken into account to determine the Vested Loss for that Indexed Strategy for that Term. For example, if the Maximum Loss for a Term is 10% and the negative Index Change at the end of that Term is 14%, then the Vested Loss for that Term is 10%.
| • | The Maximum Loss for each Term of a Conserve Strategy is 0%. This means that the value of a Conserve Strategy will not decrease due to a negative Index Change. |
| • | The Maximum Loss for each Term of a Growth Strategy is a loss of 10%. This means that the value of a Growth Strategy will not decrease by more than 10% during a Term due to a negative Index Change. |
| • | The Maximum Loss will not vary depending on the day of the Term. This means that for a Growth Strategy, the Maximum Loss throughout the Term is 10%. |
Buffer. The Buffer is the portion of a negative Index Change for a Term that is disregarded when determining a Vested Loss for a 10% Buffer Strategy. The Buffer varies depending on the day of the Term. The Buffer at the end of a Term is 10%. Before the end of the Term, the Buffer is calculated daily as a prorated share of the annual 10% Buffer. For example, when 40% of a Term has elapsed, the Buffer on that day equals 40% of the Buffer that would apply at the end of the Term. When 80% of a Term has elapsed, the Buffer on that day equals 80% of the Buffer that would apply at the end of the Term. As a result, a negative Index Change of 15% would produce different Vested Losses at the following junctures:
| • | Day 146 of Term: |
Days Remaining to last Market Day of Term: 219
Buffer: 10% x (365-219)/365 = 4%
Vested Loss: 15% - 4% = 11%
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| • | Day 292 of Term: |
Days Remaining to last Market Day of Term: 73
Buffer: 10% x (365-73)/365 = 8%
Vested Loss: 15% - 8% = 7%
| • | End of Term: |
Buffer: 10%
Vested Loss: 15% -10% = 5%
No Vesting Factor. A Vesting Factor does not apply when the Vested Loss is calculated. This means that all of the negative Index Change is taken into account when calculating the Vested Loss for a given Indexed Strategy for a given Term.
Example. On the date of Surrender, your entire Account Value of $100,000 is allocated to the S&P 500 Growth Strategy, which has a 10% Maximum Loss. You Surrender your Contract on day 270 of that Term, which means that Daily Charges have totaled $370. For this example, we assume that you did not take any withdrawals before you Surrender your Contract. Assume there is a negative Index Change of 12.5% on the day that you Surrender your Contract. Because the Index Change exceeds the Maximum Loss, the Maximum Loss applies and limits the Index Change to 10%. As a result, the Vested Loss is 10%. The Investment Base on the date of Surrender is $99,630 ($100,000—$370). The Vested Loss that applies upon Surrender will be $9,963 ($99,630 x 0.10) and the amount payable will be $89,667 minus any related Early Withdrawal Charge.
Effect of Vested Gains and Losses
Here is a summary of the effect of Vested Gains and Losses in various situations.
| Vested Gain | A Vested Gain increases the Indexed Strategy value. | If you take a withdrawal, the Investment Base will be reduced by less than the actual amount of the withdrawal and any related Early Withdrawal Charge because of the Vested Gain. | ||
| Vested Loss | A Vested Loss reduces the Indexed Strategy value. | If you take a withdrawal, the Investment Base will be reduced by more than the actual amount of the withdrawal and any related Early Withdrawal Charge because of the Vested Loss. | ||
| Additional Information | Any change in an Indexed Strategy value will affect the Account Value, which is used to determine the Surrender Value, the Annuity Payout Value and the Death Benefit Value. | If you take a withdrawal, you will receive the amount you requested and the Indexed Strategy value will be reduced by the amount of the withdrawal and any related Early Withdrawal Charge. | ||
Asymmetrical Impact of Index Changes on Growth and Buffer Strategies Using the Same Index
A Growth/-10% Floor Strategy and a 10% Buffer Strategy that use the same Index will often perform differently over identical time periods. These divergent results are produced by variations in the methods used to calculate Vested Gains and Vested Losses for Growth Strategies and Buffer Strategies. You should consider these variations if you are choosing between a Growth Strategy and a Buffer Strategy, and whether either is consistent with your income needs and risk tolerance. Currently, the only Index used by both a Growth Strategy and a Buffer Strategy is the S&P 500 Index.
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Vested Gain Variations
Vested Gains for Growth Strategies and Buffer Strategies are calculated using the same formula, but that formula can produce different results when different Maximum Gains are applied. The Maximum Gain for a Buffer Strategy generally will be higher than the Maximum Gain for a Growth Strategy that uses the same Index. This is because the maximum amount of money you can lose is larger for a Buffer Strategy than a Growth Strategy.
For example, if we set a 12% Maximum Gain for the S&P 500 Growth Strategy and a 14% Maximum Gain for the S&P 500 Buffer Strategy, then the Vested Gains for identical investments in these two strategies would be the same over any period that the Index Value increased up to 12%, but would diverge over any period that the Index Value increased by more than 12%. During any such period, the Vested Gains for the Growth Strategy would be capped at 12%, while the Vested Gains for the Buffer Strategy may reach as high as 14%. As a result, it is possible for the Buffer Strategy to increase in value to a greater extent than the Growth Strategy.
Vested Loss Variations
The formulas used to calculate Vested Losses for Growth Strategies and Buffer Strategies are similar, except Vested Losses for a Growth Strategy are limited by a Maximum Loss, while Vested Losses for a Buffer Strategy are limited by a Buffer. The 10% Maximum Loss for a Growth Strategy does not change throughout the Term, which means that any negative Index Change between 0% and -10% is taken into account whenever Vested Loss is calculated. The amount of the Buffer for a Buffer Strategy increases each day during the course of each Term, culminating with a 10% Buffer at the end of each Term. This means that any a negative Index Change from 0 to -10% is disregarded when calculating Vested Loss at the end of the Term, but a smaller portion of a negative Index Change is disregarded when measuring a Vested Loss before the end of the Term.
The differences in the impact of negative Index Changes on a Growth Strategy and a Buffer Strategy using the same Index over the same Term depends on two variables: the size of the negative Index Change and the size of the Buffer on the date that the Vested Losses are measured.
The following chart illustrates how changes to these two variables impact Vested Losses for a Growth Strategy and a Buffer Strategy using the same Index over the same Term:
| Impact of Negative Index Changes on Growth and Buffer Strategy Values Throughout Term | ||||||||||||||||||||||||||||||||||||||||
| Vested Loss on: | ||||||||||||||||||||||||||||||||||||||||
| Day 73 | Day 146 | Day 219 | Day 292 | End of Term | ||||||||||||||||||||||||||||||||||||
| (20% of Term Elapsed) | (40% of Term Elapsed) | (60% of Term Elapsed) | (80% of Term Elapsed) | (100% of Term Elapsed) | ||||||||||||||||||||||||||||||||||||
Index Change | Growth Strategy | Buffer Strategy 2% Buffer | Growth Strategy | Buffer Strategy 4% Buffer | Growth Strategy | Buffer Strategy 6% Buffer | Growth Strategy | Buffer Strategy 8% Buffer | Growth Strategy | Buffer Strategy 10% Buffer | ||||||||||||||||||||||||||||||
0% | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||||||||||||||
-2% | -2 | % | 0 | % | -2 | % | 0 | % | -2 | % | 0 | % | -2 | % | 0 | % | -2 | % | 0 | % | ||||||||||||||||||||
-4% | -4 | % | -2 | % | -4 | % | 0 | % | -4 | % | 0 | % | -4 | % | 0 | % | -4 | % | 0 | % | ||||||||||||||||||||
-6% | -6 | % | -4 | % | -6 | % | -2 | % | -6 | % | 0 | % | -6 | % | 0 | % | -6 | % | 0 | % | ||||||||||||||||||||
-8% | -8 | % | -6 | % | -8 | % | -4 | % | -8 | % | -2 | % | -8 | % | 0 | % | -8 | % | 0 | % | ||||||||||||||||||||
-10% | -10 | % | -8 | % | -10 | % | -6 | % | -10 | % | -4 | % | -10 | % | -2 | % | -10 | % | 0 | % | ||||||||||||||||||||
-12% | -10 | % | -10 | % | -10 | % | -8 | % | -10 | % | -6 | % | -10 | % | -4 | % | -10 | % | -2 | % | ||||||||||||||||||||
-14% | -10 | % | -12 | % | -10 | % | -10 | % | -10 | % | -8 | % | -10 | % | -6 | % | -10 | % | -4 | % | ||||||||||||||||||||
-16% | -10 | % | -14 | % | -10 | % | -12 | % | -10 | % | -10 | % | -10 | % | -8 | % | -10 | % | -6 | % | ||||||||||||||||||||
-18% | -10 | % | -16 | % | -10 | % | -14 | % | -10 | % | -12 | % | -10 | % | -10 | % | -10 | % | -8 | % | ||||||||||||||||||||
-20% | -10 | % | -18 | % | -10 | % | -16 | % | -10 | % | -14 | % | -10 | % | -12 | % | -10 | % | -10 | % | ||||||||||||||||||||
-22% | -10 | % | -20 | % | -10 | % | -18 | % | -10 | % | -16 | % | -10 | % | -14 | % | -10 | % | -12 | % | ||||||||||||||||||||
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In general, Growth Strategies are designed to protect against larger negative Index Changes, while Buffer Strategies are designed to protect against smaller negative Index Changes. When identical investments are made in a Growth Strategy and a Buffer Strategy using the same Index over the same Term, a negative change in the Index produces the following results:
| • | a negative Index Change between 0% and -10%, measured on any day, would have a greater negative impact on the Growth Strategy |
| • | a negative Index Change between -10% and -20% could have a greater negative impact on either strategy, depending on the Index Change and the size of the Buffer on the day the Index Change is measured |
| • | a negative Index Change below -20%, measured on any day, would have a greater negative impact on the Buffer Strategy |
See Examples - Impact of Withdrawals on Contract Values and Amounts Realized section below for examples that illustrate these concepts.
Examples - Impact of Withdrawals on Contract Values and Amounts Realized
These examples are intended to show you how a withdrawal from an Indexed Strategy before the end of the Term affects the Indexed Strategy values, Vested Gains and Losses, and amounts realized at the end of the Term. These examples assume that you allocate a $50,000 Purchase Payment to the S&P 500 Growth/-10% Floor Strategy and a $50,000 Purchase Payment to the S&P 500 10% Buffer Strategy. The examples assume that the withdrawals are covered by the Free Withdrawal Allowance and therefore no Early Withdrawal Charges apply. If Early Withdrawal Charges did apply, the amounts realized at the end of the Term would be reduced by both the withdrawal and the amount of the Early Withdrawal Charge.
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Example A: Withdrawal When Index Rising Steadily
Impact of $10,000 Withdrawal on Day 146 of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
Investment Base at Term Start | $50,000 | $50,000 | ||
Index Value at Term Start | 1000 | 1000 | ||
Daily Charges through Day 146 | $100 | $100 | ||
Remaining Investment Base on Day 146 | $50,000 - $100 = $49,900 | $50,000 - $100 = $49,900 | ||
Index Value at Date of Withdrawal | 1040 | 1040 | ||
Positive Index Change | (1040 - 1000) / 1000 = 4.00% | (1040 - 1000) / 1000 = 4.00% | ||
Maximum Gain | Gain of 12% | Gain of 14% | ||
Positive Index Change Limited by Maximum Gain | 4.00% | 4.00% | ||
Vesting Factor on Day 146 | 25% | 25% | ||
Vested Gain as a Percentage | 4% x 25% = 1% Vested Gain | 4% x 25% = 1% Vested Gain | ||
Vested Gain in Dollars | $49,900 x 1.00% = $499 Vested Gain | $49,900 x 1.00% = $499 Vested Gain | ||
Strategy Value before Withdrawal | $49,900 + $499 = $50,399 | $49,900 + $499 = $50,399 | ||
Amount Withdrawn | $5,000 | $5,000 | ||
Percentage Reduction in Strategy Value | $5,000 / $50,399 = 9.92% | $5,000 / $50,399 = 9.92% | ||
Proportional Reduction in Investment Base | $49,900 x 0.0992 = $4,950 | $49,900 x 0.0992 = $4,950 | ||
Remaining Investment Base after Withdrawal | $49,900 - $4,950 = $44,949 | $49,900 - $4,950 = $44,949 | ||
Value at End of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
Remaining Investment Base after Withdrawal | $44,949 | $44,949 | ||
Daily Charges from Day 147 to Term End | $135 | $135 | ||
Remaining Investment Base at Term End | $44,949 - $135 = $44,814 | $44,949 - $135 = $44,814 | ||
Index Value at Term Start | 1000 | 1000 | ||
Index Value at Term End | 1130 | 1130 | ||
Positive Index Change | (1130 - 1000) / 1000 = 13.00% | (1130 - 1000) / 1000 = 13.00% | ||
Maximum Gain | Gain of 12% | Gain of 14% | ||
Positive Index Change Limited by Maximum Gain | 12.00% | 13.00% | ||
Vesting Factor at Term End | 100% | 100% | ||
Vested Gain as a Percentage | 12.00% x 100% = 12.00% Vested Gain | 13% x 100% = 13.00% Vested Gain | ||
Vested Gain in Dollars | $44,814 x 12.00% = $5,378 Vested Gain | $44,814 x 13.00% = $5,826 Vested Gain | ||
Strategy Value at Term End | $44,814 + $5,378 = $50,192 | $44,814 + $5,826 = $50,640 | ||
S&P 500 Growth Strategy
In this example, the amount you realized on your $50,000 investment in the S&P 500 Growth Strategy at the end of the Term is $55,192 ($5,000 withdrawal plus the $50,192 Strategy value at the end of the Term).
Had no withdrawal occurred, your S&P 500 Growth Strategy value at the end of the Term would have been $55,720 ($50,000 original Investment Base minus total Daily Charges of $250 and plus $5,970 gain ($49,750 x 12.00%)).
This hypothetical Strategy value of $55,720 exceeds the amount realized of $55,192 because:
| • | the gain at the time of the withdrawal caused the reduction in the Investment Base to be less than the actual amount withdrawn ($5,000 - $4,950 = $50); and |
| • | the subsequent gain at the term end was calculated on a smaller Investment Base, which caused that gain to be smaller than the hypothetical gain ($5,378 - $5,970 = -$592); and |
| • | the Daily Charges from Day 147 to Term End are lower than they would have been without the withdrawal by $15 because they are being applied to a decreased Investment Base. |
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The result for the S&P 500 Growth Strategy ($50 - $592 + $15 = -$528) is equal to the difference between the hypothetical Strategy value and the amount realized ($55,720 - $528 = $55,192).
S&P 500 Buffer Strategy
The amount you realized on your $50,000 investment in the S&P 500 Buffer Strategy at the end of the Term is $55,640 ($5,000 withdrawal plus the $50,640 Strategy value at the end of the Term). Had no withdrawal occurred, your S&P 500 Buffer Strategy value at the end of the Term would have been $56,218 ($50,000 original Investment Base minus total Daily Charges of $250 and plus $6,468 gain ($49,750 x 13.00%)). This hypothetical Strategy value exceeds the amount realized for the same reasons described above for the S&P 500 Growth Strategy.
Your investment in the S&P 500 Buffer Strategy outperformed the S&P 500 Growth Strategy by $448 in this example. The amount you realized under the Buffer Strategy ($55,640) exceeds the amount you realized under the Growth Strategy ($55,192) because the Growth Strategy had a lower Maximum Gain, and the Index Change at the end of the Term exceeded the Growth Strategy’s lower Maximum Gain.
Example B: Withdrawal When Index Falls and Then Rises
Impact of $10,000 Withdrawal on Day 146 of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
Investment Base at Term Start | $50,000 | $50,000 | ||
Daily Charges through Day 146 | $100 | $100 | ||
Remaining Investment Base on Day 146 | $50,000 - $100 = $49,900 | $50,000 - $100 = $49,900 | ||
Index Value at Term Start | 1000 | 1000 | ||
Index Value at Date of Withdrawal | 880 | 880 | ||
Negative Index Change | (880 - 1000) / 1000 = -12.00% | (880 - 1000) / 1000 = -12.00% | ||
Maximum Loss | Loss of 10% | N/A | ||
Negative Index Change Limited by Maximum Loss | -10.00% | N/A | ||
Buffer on Day 146 of Term | N/A | 10% x (365-219)/365 = 4% Buffer | ||
Negative Index Change Absorbed by Buffer | N/A | -4% | ||
Negative Index Change after Buffer | N/A | -12% - -4% = -8% | ||
Vested Loss as a Percentage | -10.00% x 100% = 10.00% Vested Loss | -8.00% x 100% = 8.00% Vested Loss | ||
Vested Loss in Dollars | $49,900 x 10.00% = $4,990 Vested Loss | $49,900 x 8.00% = $3,992 Vested Loss | ||
Strategy Value before Withdrawal | $49,900 - $4,990 = $44,910 | $49,900 - $3,992 = $45,908 | ||
Amount Withdrawn* | $4,945 | $5,055 | ||
Percentage Reduction in Strategy Value | $4,945 / $44,910 = 11.01% | $5,055 / $45,908 = 11.01% | ||
Proportional Reduction in Investment Base | $49,900 x 0.1101 = $5,495 | $49,900 x 0.1101 = $5,495 | ||
Remaining Investment Base after Withdrawal | $49,900 - $5,495 = $44,405 | $49,900 - $5,495 = $44,405 | ||
Value at End of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
Remaining Investment Base after Withdrawal | $44,405 | 44,405 | ||
Daily Charges from Day 147 to Term End | $133 | $133 | ||
Remaining Investment Base at Term End | $44,405 - $133 = $44,272 | $44,405 - $133 = $44,272 | ||
Index Value at Term Start | 1000 | 1000 | ||
Index Value at Term End | 1130 | 1130 | ||
Positive Index Change | (1130 - 1000) / 1000 = 13% | (1130 - 1000) / 1000 = 13% | ||
Maximum Gain | Gain of 12% | Gain of 14% | ||
Positive Index Change Limited by Maximum Gain | 12.00% | 13.00% | ||
Vesting Factor at Term End | 100% | 100% | ||
Vested Gain as a Percentage | 12.00% x 100% = 12.00% Vested Gain | 13.00% x 100% = 13.00% Vested Gain | ||
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Value at End of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
Vested Gain in Dollars | $44,272 x 12% = $5,313 Vested Gain | $44,272 x 13% = $5,755 Vested Gain | ||
Strategy Value at Term End | $44,272 + $5,313 = $49,585 | $44,272 + $5,755 = $50,027 | ||
| *Note: | The withdrawal is taken proportionally from each Indexed Strategy, based on the ratio of that Strategy’s value to the total value of all Indexed Strategies immediately before the withdrawal. In this example, the total value of all Indexed Strategies immediately before the withdrawal was $90,818 ($44,910 + $45,908). The S&P 500 Growth Strategy value was 49.45% of that total value ($44,910 / $90,818 = 49.45%), so 49.45% of the $10,000 withdrawal ($4,945) was taken from it. The S&P 500 Buffer Strategy value was 50.55% of that total value ($45,908 / $90,818 = 50.55%), so 50.55% of the $10,000 withdrawal ($5,055) was taken from it. |
S&P 500 Growth Strategy
In this example, the amount you realized on your $50,000 investment in the S&P 500 Growth Strategy at the end of the Term is $54,530 ($4,945 withdrawal plus the $49,585 Strategy value at the end of the Term).
Had no withdrawal occurred, your S&P 500 Growth Strategy value at the end of the Term would have been $55,720 ($50,000 original Investment Base minus total Daily Charges of $250 and plus $5,970 gain ($49,750 x 12.00%)).
This hypothetical Strategy value of $55,720 exceeds the amount realized of $54,530 because:
| • | the loss at the time of the withdrawal caused the reduction in the Investment Base to be greater than the actual amount withdrawn ($4,945 - $5,495 = -$550); and |
| • | the subsequent gain at the term end was calculated on a smaller Investment Base, which caused that gain to be smaller than the hypothetical gain ($5,313 - $5,970 = -$657); and |
| • | the Daily Charges from Day 147 to Term End are lower than they would have been without the withdrawal by $17 because they are being applied to a decreased Investment Base. |
The result for the S&P 500 Growth Strategy (-$550 + -$657 + $17 = -$1,190) is equal to the difference between the hypothetical Strategy value and the amount realized ($55,720 - $1,190 = $54,530).
S&P 500 Buffer Strategy
The amount you realized on your $50,000 investment in the S&P 500 Buffer Strategy at the end of the Term is $55,082 ($5,055 withdrawal plus the $50,027 Strategy value at the end of the Term). Had no withdrawal occurred, your S&P 500 Buffer Strategy value at the end of the Term would have been $56,218 ($50,000 original Investment Base minus total Daily Charges of $250 and plus $6,468 gain ($49,750 x 13.00%)). This hypothetical Strategy value exceeds the amount realized for the same reasons described above for the S&P 500 Growth Strategy.
Your investment in the S&P 500 Buffer Strategy outperformed the S&P 500 Growth Strategy by $553 in this example. The amount you realized under the Buffer Strategy ($55,082) exceeds the amount you realized under the Growth Strategy ($54,530) for two reasons: (1) at the time of the withdrawal, the Buffer absorbed more of the negative Index Change (4 percentage points of the -12.00% change) than the Maximum Loss absorbed (2 percentage points of the -12.00% change), thus resulting in more of the withdrawal being taken from the Buffer Strategy’s value even though the Investment Base of both strategies was reduced by the same amount and (2) the Index Change at the end of the Term exceeded the Growth Strategy’s lower Maximum Gain, thus increasing the Buffer Strategy’s value by more than the increase in the Growth Strategy’s value.
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Example C: Withdrawal When Index Falling Steadily
Impact of $10,000 Withdrawal on Day 146 of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
Investment Base at Term Start | $50,000 | $50,000 | ||
Daily Charges through Day 146 | $100 | $100 | ||
Remaining Investment Base on Day 146 | $50,000 - $100 = $49,900 | $50,000 - $100 = $49,900 | ||
Index Value at Term Start | 1000 | 1000 | ||
Index Value at Date of Withdrawal | 980 | 980 | ||
Negative Index Change | (980 - 1000) / 1000 = -2.00% | (980 - 1000) / 1000 = -2.00% | ||
Maximum Loss | Loss of 10% | N/A | ||
Negative Index Change Limited by Maximum Loss | -2% | N/A | ||
Buffer on Day 146 of Term | N/A | 10% x (365-219)/365 = 4% Buffer | ||
Negative Index Change Absorbed by Buffer | N/A | Entire -2% Index Change | ||
Negative Index Change after Buffer | N/A | 0% | ||
Vested Loss as a Percentage | -2.00% x 100% = 2.00% Vested Loss | 0.00% Vested Loss | ||
Vested Loss in Dollars | $49,900 x 2.00% = $998 Vested Loss | $0 Vested Loss | ||
Strategy Value before Withdrawal | $49,900 - $998 = $48,902 | $49,900 - $0 = $49,900 | ||
Amount Withdrawn* | $4,949 | $5,051 | ||
Percentage Reduction in Strategy Value | $4,949 / $48,902 = 10.12% | $5,051 / $49,900 = 10.12% | ||
Proportional Reduction in Investment Base | $49,900 x 0.1012 = $5,051 | $49,900 x .0.1012 = $5,051 | ||
Remaining Investment Base after Withdrawal | $49,900 - $5,051 = $44,849 | $49,900 - $5,051 = $44,849 | ||
Value at End of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
Remaining Investment Base after Withdrawal | $44,849 | $44,849 | ||
Daily Charges from Day 147 to Term End | $135 | $135 | ||
Remaining Investment Base at Term End | $44,849 - $135 = $44,715 | $44,849 - $135 = $44,715 | ||
Index Value at Term Start | 1000 | 1000 | ||
Index Value at Term End | 860 | 860 | ||
Negative Index Change | (860 - 1000) / 1000 = -14.00% | (860 - 1000) / 1000 = -14.00% | ||
Maximum Loss | Loss of 10% | N/A | ||
Negative Index Change Limited by Maximum Loss | -10.00% | N/A | ||
Buffer at End of Term | N/A | 10% Buffer | ||
Negative Index Change Absorbed by Buffer | N/A | -10.00% | ||
Negative Index Change after Buffer | N/A | -14.00% - (-10.00%) = -4.00% | ||
Vested Loss as a Percentage | -10.00% x 100% = 10.00% Vested Loss | -4.00% x 100% = 4.00% Vested Loss | ||
Vested Loss in Dollars | $44,715 x 10% = $4,471 Vested Loss | $44,715 x 4% = $1,789 Vested Loss | ||
Strategy Value at Term End | $44,715 - $4,471 = $40,243 | $44,715 - $1,789 = $42,926 | ||
| *Note: | The withdrawal is taken proportionally from each Indexed Strategy, based on the ratio of that Strategy’s value to the total value of all Indexed Strategies immediately before the withdrawal. In this example, the total value of all Indexed Strategies immediately before the withdrawal was $98,802 ($48,902 + $49,900). The S&P 500 Growth Strategy value was 49.49% of that total value ($48,902 / $98,802 = 49.49%), so 49.49% of the $10,000 withdrawal ($4,949) was taken from it. The S&P 500 Buffer Strategy value was 50.51% of that total value ($49,900 / $98,802 = 50.51%), so 50.51% of the $10,000 withdrawal ($5,051) was taken from it. |
S&P 500 Growth Strategy
In this example, the amount you realized on your $50,000 investment in the S&P 500 Growth Strategy at the end of the Term is $45,193 ($4,949 withdrawal plus the $40,243 Strategy value at the end of the Term).
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Had no withdrawal occurred, your S&P 500 Growth Strategy value at the end of the Term would have been $44,775 ($50,000 original Investment Base minus total Daily Charges of $250 and minus $4,975 loss ($49,750 x -10.00%)).
The amount realized of $45,193 exceeds this hypothetical Strategy value of $44,775 because:
| • | the loss at the time of the withdrawal caused the reduction in the Investment Base to be greater than the actual amount withdrawn ($4,949 - $5,051 = -$101); and |
| • | the subsequent loss at the term end was calculated on a smaller Investment Base, which caused that loss to be smaller than the hypothetical loss ($4,975 - $4,471 = $504); and |
| • | the Daily Charges from Day 147 to Term End are lower than they would have been without the withdrawal by $15 because they are being applied to a decreased Investment Base. |
The result for the S&P 500 Growth Strategy ($504 - $101 + 15 = $418) is equal to the difference between the amount realized and the hypothetical Strategy value ($45,193 - $418 = $44,775).
S&P 500 Buffer Strategy
The amount you realized on your $50,000 investment in the S&P 500 Buffer Strategy at the end of the Term is $47,977 ($5,051 withdrawal plus the $42,926 Strategy value at the end of the Term). Had no withdrawal occurred, your S&P 500 Buffer Strategy value at the end of the Term would have been $47,760 ($50,000 original Investment Base minus total Daily Charges of $250 and minus $1,990 loss ($49,750 x -4.00%)). This hypothetical Strategy value is lower than the amount realized for the same reasons described above for the S&P 500 Growth Strategy.
Your investment in the S&P 500 Buffer Strategy outperformed the S&P 500 Growth Strategy by $2,784 in this example. The amount you realized under the Buffer Strategy ($47,977) exceeds the amount you realized under the Growth Strategy ($45,193) for two reasons: (1) at the time of the withdrawal, the Buffer absorbed all of the negative Index Change of -2.00%, while the Maximum Loss did not absorb any of the negative Index Change, thus resulting in more of the withdrawal being taken from the Buffer Strategy’s value even though the Investment Base of both strategies was reduced by the same amount and (2) at the end of the Term, the Buffer absorbed more of the negative Index Change (10 percentage points of the -14.00% change) than the Maximum Loss absorbed (4 percentage points of the -14.00% change), thus reducing the Growth Strategy value by more than the reduction in the Buffer Strategy value.
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Example D: Withdrawal When Index Falling Steadily and Precipitously
Impact of $10,000 Withdrawal on Day 146 of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
Investment Base at Term Start | $50,000 | $50,000 | ||
Daily Charges through Day 146 | $100 | $100 | ||
Remaining Investment Base on Day 146 | $50,000 - $100 = $49,900 | $50,000 - $100 = $49,900 | ||
Index Value at Term Start | 1000 | 1000 | ||
Index Value at Date of Withdrawal | 850 | 850 | ||
Negative Index Change | (850 - 1000) / 1000 = -15.00% | (850 - 1000) / 1000 = -15.00% | ||
Maximum Loss | Loss of 10% | N/A | ||
Negative Index Change Limited by Maximum Loss | -10% | N/A | ||
Buffer on Day 146 of Term | N/A | 10% x (365-219)/365 = 4.00% Buffer | ||
Negative Index Change Absorbed by Buffer | N/A | -4.00% | ||
Negative Index Change after Buffer | N/A | -15.00% - (-4.00%) = -11.00% | ||
Vested Loss as a Percentage | -10.00% x 100% = 10.00% Vested Loss | -11.00% x 100% = 11.00% Vested Loss | ||
Vested Loss in Dollars | $49,900 x 10.00% = $4,990 Vested Loss | $49,900 x 11.00% = $5,489 Vested Loss | ||
Strategy Value before Withdrawal | $49,900 - $4,990 = $44,910 | $49,900 - $5,489 = $44,411 | ||
Amount Withdrawn* | $5,028 | $4,972 | ||
Percentage Reduction in Strategy Value | $5,028 / $44,910 = 11.20% | $4,972 / $44,411 = 11.20% | ||
Proportional Reduction in Investment Base | $49,900 x 0.1120 = $5,587 | $49,900 x 0.1120 = $5,587 | ||
Remaining Investment Base after Withdrawal | $49,900 - $5,587 = $44,313 | $49,900 - $5,587 = $44,313 | ||
Value at End of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
Remaining Investment Base after Withdrawal | $44,313 | $44,313 | ||
Daily Charges from Day 147 to Term End | $133 | $133 | ||
Remaining Investment Base at Term End | $44,313 - $133 = $44,180 | $44,313 - $133 = $44,180 | ||
Index Value at Term Start | 1000 | 1000 | ||
Index Value at Term End | 750 | 750 | ||
Negative Index Change | (750 - 1000) / 1000 = -25.00% | (750 - 1000) / 1000 = -25.00% | ||
Maximum Loss | Loss of 10% | N/A | ||
Negative Index Change Limited by Maximum Loss | -10.00% | N/A | ||
Buffer at End of Term | N/A | 10% Buffer | ||
Negative Index Change Absorbed by Buffer | N/A | -10.00% | ||
Negative Index Change after Buffer | N/A | -25.00% - (-10.00%) = -15.00% | ||
Vested Loss as a Percentage | -10.00% x 100% = 10.00% Vested Loss | -15.00% x 100% = 15.00% Vested Loss | ||
Vested Loss in Dollars | $44,180 x 10.00% = $4,418 Vested Loss | $44,180 x 15.00% = $6,627 Vested Loss | ||
Strategy Value at Term End | $44,180 - $4,418 = $39,762 | $44,180 - $6,627 = $37,553 | ||
| *Note: | The withdrawal is taken proportionally from each Indexed Strategy, based on the ratio of that Strategy’s value to the total value of all Indexed Strategies immediately before the withdrawal. In this example, the total value of all Indexed Strategies immediately before the withdrawal was $89,321 ($44,910 + $44,411). The S&P 500 Growth Strategy value was 50.28% of that total value ($44,910 / $89,321 = 50.28%), so 50.28% of the $10,000 withdrawal ($5,028) was taken from it. The S&P 500 Buffer Strategy value was 49.72% of that total value ($44,411 / $89,321 = 49.72%), so 49.72% of the $10,000 withdrawal ($4,972) was taken from it. |
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S&P 500 Growth Strategy
In this example, the amount you realized on your $50,000 investment in the S&P 500 Growth Strategy at the end of the Term is $44,790 ($5,028 withdrawal plus the $39,762 Strategy value at the end of the Term).
Had no withdrawal occurred, your S&P 500 Growth Strategy value at the end of the Term would have been $44,775 ($50,000 original Investment Base minus total Daily Charges of $250 and minus $4,975 loss ($49,750 x -10.00%)).
The amount realized of $44,790 (after taking into account the effects of rounding) exceeds this hypothetical Strategy value of $44,775 because:
| • | the loss at the time of the withdrawal caused the reduction in the Investment Base to be greater than the actual amount withdrawn ($5,028 - $5,587 = -$559); and |
| • | the subsequent loss at the term end was calculated on a smaller Investment Base, which caused that loss to be smaller than the hypothetical loss ($4,975 - $4,418 = $557); and |
| • | the Daily Charges from Day 147 to Term End are lower than they would have been without the withdrawal by $17 because they are being applied to a decreased Investment Base. |
The result for the S&P 500 Growth Strategy ($557 - $559 + 17 = $15) is equal to the difference between the amount realized and the hypothetical Strategy value ($44,790 - $15 = $44,775).
S&P 500 Buffer Strategy
The amount you realized on your $50,000 investment in the S&P 500 Buffer Strategy at the end of the Term is $42,525 ($4,972 withdrawal plus the $37,553 Strategy value at the end of the Term). Had no withdrawal occurred, your S&P 500 Buffer Strategy value at the end of the Term would have been $42,288 ($50,000 original Investment Base minus total Daily Charges of $250 and minus $7,463 loss ($49,750 x -15.00%)).
The amount realized of $42,525 exceeds this hypothetical Strategy value of $42,288 because:
| • | the loss at the time of the withdrawal caused the reduction in the Investment Base to be greater than the actual amount withdrawn ($4,972 - $5,587 = -$615); |
| • | the subsequent loss at the term end was calculated on a smaller Investment Base, which caused that loss to be smaller than the hypothetical loss ($7,463 - $6,627 = $836); and |
| • | the Daily Charges from Day 147 to Term End are lower than they would have been without the withdrawal by $17. |
The result for the S&P 500 Buffer Strategy ($836 - $615 + 17 = $238) is equal to the difference between the amount realized and the hypothetical Strategy value ($42,525 - $238 = $42,288).
Your investment in the S&P 500 Buffer Strategy underperformed the S&P 500 Growth Strategy by $2,265 in this example. The amount you realized under the Buffer Strategy ($42,525) is smaller than the amount you realized under the Growth Strategy ($44,790) for two reasons: (1) at the time of the withdrawal, the Buffer absorbed less of the negative Index Change of -15.00%, thus resulting in more of the withdrawal being taken from the Buffer Strategy’s value even though the Investment Base of both strategies was reduced by the same amount, and (2) at the end of the Term, the Buffer absorbed less of the negative Index Change (10 percentage points of the -25.00% change) than the Maximum Loss absorbed (15 percentage points of the -25% change), thus reducing the Buffer Strategy value by more than the reduction in the Growth Strategy value. .00
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Example E: Withdrawal When Index Rises and Then Falls
Impact of $10,000 Withdrawal on Day 146 of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
Investment Base at Term Start | $50,000 | $50,000 | ||
Daily Charges through Day 146 | $100 | $100 | ||
Remaining Investment Base on Day 146 | $50,000 - $100 = $49,900 | $50,000 - $100 = $49,900 | ||
Index Value at Term Start | 1000 | 1000 | ||
Index Value at Date of Withdrawal | 1080 | 1080 | ||
Positive Index Change | (1080 - 1000) / 1000 = 8.00% | (1080 - 1000) / 1000 = 8.00% | ||
Maximum Gain | Gain of 12% | Gain of 14% | ||
Positive Index Change Limited by Maximum Gain | 8.00% | 8.00% | ||
Vesting Factor on Day 146 | 25% | 25% | ||
Vested Gain as a Percentage | 8.00% x 25% = 2.00% Vested Gain | 8.00% x 25% = 2.00% Vested Gain | ||
Vested Gain in Dollars | $49,900 x 2.00% = $998 Vested Gain | $49,900 x 2.00% = $998 Vested Gain | ||
Strategy Value before Withdrawal | $49,900 + $998 = $50,898 | $49,900 + $998 = $50,898 | ||
Amount Withdrawn | $5,000 | $5,000 | ||
Percentage Reduction in Strategy Value | $5,000 / $50,898 = 9.82% | $5,000 / $50,898 = 9.82% | ||
Proportional Reduction in Investment Base | $49,900 x 0.0982 = $4,902 | $49,900 x 0.0982 = $4,902 | ||
Remaining Investment Base after Withdrawal | $49,900 - $4,902 = $44,998 | $49,900 - $4,902 = $44,998 | ||
Value at End of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
Remaining Investment Base after Withdrawal | $44,998 | $44,998 | ||
Daily Charges from Day 147 to Term End | $135 | $135 | ||
Remaining Investment Base at Term End | $44,998 - $135 = $44,863 | $44,998 - $135 = $44,863 | ||
Index Value at Term Start | 1000 | 1000 | ||
Index Value at Term End | 860 | 860 | ||
Negative Index Change | (860 - 1000) / 1000 = -14.00% | (860 - 1000) / 1000 = -14.00% | ||
Maximum Loss | Loss of 10% | N/A | ||
Negative Index Change Limited by Maximum Loss | -10.00% | N/A | ||
Buffer at End of Term | N/A | 10% Buffer | ||
Negative Index Change Absorbed by Buffer | N/A | -10.00% | ||
Negative Index Change after Buffer | N/A | -14% - (-10%) = -4.00% | ||
Vested Loss as a Percentage | -10.00% x 100% = 10.00% Vested Loss | -4.00% x 100% = 4.00% Vested Loss | ||
Vested Loss in Dollars | $44,863 x 10.00% = $4,486 Vested Loss | $44,863 x 4.00% = $1,795 Vested Loss | ||
Strategy Value at Term End | $44,863 - $4,486 = $40,376 | $44,863 - $1,795 = $43,068 | ||
S&P 500 Growth Strategy
In this example, the amount you realized on your $50,000 investment in the S&P 500 Growth Strategy at the end of the Term is $45,376 ($5,000 withdrawal plus the $40,376 Strategy value at the end of the Term).
Had no withdrawal occurred, your S&P 500 Growth Strategy value at the end of the Term would have been $44,775 ($50,000 original Investment Base minus total Daily Charges of $250 and minus $4,975 loss ($49,750 x -10%)).
The amount realized of $45,376 exceeds this hypothetical Strategy value of $44,775 because:
| • | the gain at the time of the withdrawal caused the reduction in the Investment Base to be less than the actual amount withdrawn ($5,000 - $4,902 = $98); |
| • | the subsequent loss at the term end was calculated on a smaller Investment Base, which caused that loss to be smaller than the hypothetical loss ($4,975 - $4,486 = $489); and |
| • | the Daily Charges from Day 147 to Term End are lower than they would have been without the withdrawal by $15 because they are being applied to a decreased Investment Base. |
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The result for the S&P 500 Growth Strategy ($98 + $489 + $15 = $601) is equal to the difference between the amount realized and the hypothetical Strategy value ($45,376 - $601 = $44,775).
S&P 500 Buffer Strategy
The amount you realized on your $50,000 investment in the S&P 500 Buffer Strategy at the end of the Term is $48,068 ($5,000 withdrawal plus the $43,068 Strategy value at the end of the Term). Had no withdrawal occurred, your S&P 500 Buffer Strategy value at the end of the Term would have been $47,760 ($50,000 original Investment Base minus total Daily Charges of $250 and minus $1,990 loss ($49,750 x -4.00%)). This hypothetical Strategy value is lower than the amount realized for the same reasons described above for the S&P 500 Growth Strategy.
Your investment in the S&P 500 Buffer Strategy outperformed the S&P 500 Growth Strategy by $2,692 in this example. The amount you realized under the Buffer Strategy ($48,068) exceeds the amount you realized under the Growth Strategy ($45,376) because, at the end of the Term, the Buffer absorbed more of the negative Index Change (10 percentage points of the -14.00% change) than the Maximum Loss absorbed (4 percentage points of the -14.00% change), thus reducing the Growth Strategy value by more than the reduction in the Buffer Strategy value.
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Example F: Multiple Withdrawals in a Volatile Market
Impact of $2,500 Withdrawal on Day 146 of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
Investment Base at Term Start | $50,000 | $50,000 | ||
Daily Charges through Day 146 | $100 | $100 | ||
Remaining Investment Base on Day 146 | $50,000 - $100 = $49,900 | $50,000 - $100 = $49,900 | ||
Index Value at Term Start | 1000 | 1000 | ||
Index Value at Date of Withdrawal | 1040 | 1040 | ||
Positive Index Change | (1040 - 1000) / 1000 = 4.00% | (1040 - 1000) / 1000 = 4.00% | ||
Maximum Gain | Gain of 12% | Gain of 14% | ||
Positive Index Change Limited by Maximum Gain | 4.00% | 4.00% | ||
Vesting Factor on Day 146 | 25% | 25% | ||
Vested Gain as a Percentage | 4.00% x 25% = 1.00% Vested Gain | 4.00% x 25% = 1.00% Vested Gain | ||
Vested Gain in Dollars | $49,900 x 1.00% = $499 Vested Gain | $49,900 x 1.00% = $499 Vested Gain | ||
Strategy Value before Withdrawal | $49,900 + $499 = $50,399 | $49,900 + $499 = $50,399 | ||
Amount Withdrawn | $1,250 | $1,250 | ||
Percentage Reduction in Strategy Value | $1,250 / $50,399 = 2.48% | $1,250 / $50,399 = 2.48% | ||
Proportional Reduction in Investment Base | $49,900 x 0.0248 = $1,238 | $49,900 x 0.0248 = $1,238 | ||
Remaining Investment Base after Day 146 Withdrawal | $49,900 - $1,238 = $48,662 | $49,900 - $1,238 = $48,662 | ||
Impact of $3,500 Withdrawal on Day 219 of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
Remaining Investment Base after Day 146 Withdrawal | $48,662 | $48,662 | ||
Daily Charges Day 147 through Day 219 | $49 | $49 | ||
Remaining Investment Base on Day 219 | $48,662 - $49 = $48,613 | $48,662 - $49 = $48,613 | ||
Index Value at Term Start | 1000 | 1000 | ||
Index Value at Date of Withdrawal | 970 | 970 | ||
Negative Index Change | (970 - 1000) / 1000 = -3.00% | (970 - 1000) / 1000 = -3.00% | ||
Maximum Loss | Loss of 10% | N/A | ||
Negative Index Change Limited by Maximum Loss | -3.00% | N/A | ||
Buffer on Day 219 of Term | N/A | 10% x (365-146)/365 = 6.00% Buffer | ||
Negative Index Change Absorbed by Buffer | N/A | Entire -3% Index Change | ||
Negative Index Change after Buffer | N/A | 0.00% | ||
Vested Loss as Percentage | -3.00% x 100% = 3.00% Vested Loss | 0.00% Vested Loss | ||
Vested Loss in Dollars | $48,613x 3% = $1,458 Vested Loss | $0 Vested Loss | ||
Strategy Value before Withdrawal | $48,613- $1,458 = $47,155 | $48,613- $0 = $48,613 | ||
Amount Withdrawn* | $1,723 | $1,777 | ||
Percentage Reduction in Strategy Value | $1,723 / $47,155 = 3.65% | $1,777 / $48,613= 3.65% | ||
Proportional Reduction in Investment Base | $48,613x 0.0365 = $1,777 | $48,613x 0.0365 = $1,777 | ||
Remaining Investment Base after Day 219 Withdrawal | $48,613- $1,777 = $46,837 | $48,613- $1,777 = $46,837 | ||
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Impact of $4,000 Withdrawal on Day 292 of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
Remaining Investment Base after Day 219 Withdrawal | $46,837 | $46,837 | ||
Daily Charges Day 220 through Day 292 | $47 | $47 | ||
Remaining Investment Base on Day 292 | $46,837- $47 = $46,790 | $46,837 - $47 = $46,790 | ||
Index Value at Term Start | 1000 | 1000 | ||
Index Value at Date of Withdrawal | 1150 | 1150 | ||
Positive Index Change | (1150 - 1000) / 1000 = 15.00% | (1150 - 1000) / 1000 = 15.00% | ||
Maximum Gain | Gain of 12% | Gain of 14% | ||
Positive Index Change Limited by Maximum Gain | 12.00% | 14.00% | ||
Vesting Factor in Month 8 | 50% | 50% | ||
Vested Gain as a Percentage | 12.00% x 50% = 6.00% Vested Gain | 14.00% x 50% = 7.00% Vested Gain | ||
Vested Gain in Dollars | $46,790 x 6.00% = $2,807 Vested Gain | $46,790 x 7.00% = $3,275 Vested Gain | ||
Strategy Value before Withdrawal | $46,790 + $2,807 = $49,597 | $46,790 + $3,275 = $50,065 | ||
Amount Withdrawn* | $1,991 | $2,009 | ||
Percentage Reduction in Strategy Value | $1,991 / $49,597 = 4.01% | $2,009 / $50,065 = 4.01% | ||
Proportional Reduction in Investment Base | $46,790 x 0.0401 = $1,878 | $46,790 x 0.0401 = $1,878 | ||
Remaining Investment Base after Day 292 Withdrawal | $46,790 - $1,878 = $44,912 | $46,790 - $1,878 = $44,912 | ||
Value at End of Term | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||
Remaining Investment Base after Day 292 Withdrawal | $44,912 | $44,912 | ||
Daily Charges Day 293 to Term End | $45 | $45 | ||
Remaining Investment Base at Term End | $44,912 - $45 = $44,867 | $44,912 - $45 = $44,867 | ||
Index Value at Term Start | 1000 | 1000 | ||
Index Value at Term End | 860 | 860 | ||
Negative Index Change | (860 - 1000) / 1000 = -14.00% | (860 - 1000) / 1000 = -14.00% | ||
Maximum Loss | Loss of 10% | N/A | ||
Negative Index Change Limited by Maximum Loss | -10.00% | N/A | ||
Buffer at End of Term | N/A | 10% Buffer | ||
Negative Index Change Absorbed by Buffer | N/A | -10.00% | ||
Negative Index Change after Buffer | N/A | -14.00% - (-10.00%) = -4.00% | ||
Vested Loss as a Percentage | -10.00% x 100% = 10.00% Vested Loss | -4.00% x 100% = 4.00% Vested Loss | ||
Vested Loss in Dollars | $44,867 x 10% = $4,487 Vested Loss | $44,867 x 4.00% = $1,795 Vested Loss | ||
Strategy Value at Term End | $44,867 - $4,487 = $40,380 | $44,867 - $1,795 = $43,072 | ||
| * | Note: The withdrawal is taken proportionally from each Indexed Strategy, based on the ratio of that Strategy’s value to the total value of all Indexed Strategies immediately before the withdrawal. In this example, on Day 219 the total value of all Indexed Strategies immediately before the withdrawal was $95,768 ($47,155 + $48,613). The S&P 500 Growth Strategy value was 49.24% of that total value ($47,155 / $95,768 = 49.24%), so 49.24% of the $3,500 withdrawal ($1,723) was taken from it. The S&P 500 Buffer Strategy value was 50.76% of that total value ($48,613 / $95,768 = 50.76%), so 50.76% of the $3,500 withdrawal ($1,777) was taken from it. |
In this example, on Day 292 the total value of all Indexed Strategies immediately before the withdrawal was $99,662 ($49,597 + $50,065). The S&P 500 Growth Strategy value was 49.77% of that total value ($49,597 / $99,662 = 49.77%), so 49.77% of the $4,000 withdrawal ($1,991) was taken from it. The S&P 500 Buffer Strategy value was 50.23% of that total value ($50,065 / $99,662 = 50.23%), so 50.23% of the $4,000 withdrawal ($2,009) was taken from it.
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S&P 500 Growth Strategy
In this example, the amount you realized on your $50,000 investment in the S&P 500 Growth Strategy at the end of the Term is $45,344 ($4,964 total withdrawal plus the $40,380 Strategy value at the end of the Term).
Had no withdrawal occurred, your S&P 500 Growth Strategy value at the end of the Term would have been $44,775 ($50,000 original Investment Base minus total Daily Charges of $250 and minus $4,975 loss ($49,750 x -10.00%)).
The amount realized of $45,344 exceeds this hypothetical Strategy value of $44,775 because:
| • | the gains at the time of the $1,250 and $1,991 withdrawals caused the reductions in the Investment Base to be less than the actual amounts withdrawn ($1,250 - $1,238 = $12 and $1,991 - $1,878 = $113); |
| • | the loss at the time of the $1,723 withdrawal caused the reduction in the Investment Base to be greater than the actual amount withdrawn ($1,723 - $1,777 = -$54); |
| • | the subsequent loss at the term end was calculated on a smaller Investment Base, which caused that loss to be less than the hypothetical loss ($4,975 - $4,487 = $488); and |
| • | the Daily Charges are lower than they would have been without the withdrawals by $9 because they are being applied to a decreased Investment Base. |
The result for the S&P 500 Growth Strategy ($12 + $113 - $54 + $488 + $9 = $568) is equal to the difference between the amount realized and the hypothetical Strategy value ($45,344 - $568 = $44,775).
S&P 500 Buffer Strategy
The amount you realized on your $50,000 investment in the S&P 500 Buffer Strategy at the end of the Term is $48,108 ($5,036 total withdrawals plus the $43,072 Strategy value at the end of the Term). Had no withdrawal occurred, your S&P 500 Buffer Strategy value at the end of the Term would have been $47,760 ($50,000 original Investment Base minus total Daily Charges of $250 and minus $1,990 loss ($49,750 x -4.00%)). This hypothetical Strategy value is lower than the amount realized for the same reasons described above for the S&P 500 Growth Strategy.
Your investment in the S&P 500 Buffer Strategy outperformed the S&P 500 Growth Strategy by $2,764 in this example. The amount you realized under the Buffer Strategy ($48,108) exceeds the amount you realized under the Growth Strategy ($45,344) for three reasons: (1) at the time of the Day 219 withdrawal, the Buffer absorbed all of the negative Index Change of -3.00%, while the Maximum Loss did not absorb any of the negative Index Change, thus resulting in more of the withdrawal being taken from the Buffer Strategy’s value even though the Investment Base of both strategies was reduced by the same amount, (2) at the time of the Day 292 withdrawal, the Index Change exceeded the Maximum Gain of both the Buffer Strategy and the Growth Strategy, but the Buffer Strategy had a higher Maximum Gain than the Growth Strategy, resulting in more of the withdrawal being taken from the Buffer Strategy’s value even though the Investment Base of both strategies was reduced by the same amount, and (3) at the end of the Term, the Buffer absorbed more of the negative Index Change (10 percentage points of the -14.00% change) than the Maximum Loss absorbed (4 percentage points of the -14.00% change), thus reducing the Growth Strategy value by more than the reduction in the Buffer Strategy value.
Strategy Renewals and Reallocations at Term End
Renewals
At the end of each Term of a given Indexed Strategy, we will apply the ending value of that Strategy to a new Term of that same Strategy. The amount applied to a new Term of the same Strategy will not include any amount that is moved to a different Strategy as part of a reallocation at the Term end.
Reallocations
At the end of a Term, you may reallocate the ending values of the Indexed Strategies for that Term among the available Strategies. You can only reallocate amounts from one Indexed Strategy to another at the end of the Term for which such amount is being held. You cannot make a reallocation at any other time.
We will send you written notice at least 30 days before the end of a Term to provide you with the opportunity to make a reallocation. We must receive your Request in Good Order for a reallocation on or before the last day of the Term. For example, if the end of a Term falls on a weekend, we must receive your request on the last Market Day before that weekend.
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Limitations
Reallocations must be in whole percentages that total 100%. We reserve the right to round amounts up or down to make whole percentages, and to reduce or increase amounts proportionally in order to total 100%.
Any renewal or reallocation will be subject to Strategy availability, minimums and maximums. Currently there are no limitations on the amounts that may be applied to an Indexed Strategy. We may establish minimum and maximum amounts or percentages that may be applied to a given Indexed Strategy for any future Term in our discretion. We will notify you of any such minimum or maximum.
The new Term of each Strategy is subject to the Maximum Gain in effect for that Strategy for that new Term. For example, the Maximum Gain for an Indexed Strategy for a new Term may be different than the Maximum Gain for that Indexed Strategy for the Term that is ending.
Availability of Strategies
At the end of a Term, we may eliminate a particular Indexed Strategy in our discretion. We will send you a written notice at least 30 days before the end of each Term with information about the Indexed Strategies that will be available for the next Term. At least 10 days before the next Term starts, we will post the Maximum Gains that will apply for that next Term on our website (www.massmutualascend.com/RILArates).
We are not obligated to offer any one particular Indexed Strategy. At the end of a Term, we can add or stop offering any Indexed Strategy at our discretion. For example, we could stop offering Growth/-10% Floor Strategies after the first five Contract Years. We may limit the availability of an Indexed Strategy for a Term that would extend beyond the Annuity Payout Initiation Date. All Indexed Strategies may not be available in all states.
We will always offer at least one Conserve/0% Floor Strategy. No earnings are guaranteed for an Indexed Strategy.
If we add or stop offering a Indexed Strategy at the end of a Term, we will send you a notification. If funds are held in an Indexed Strategy that will no longer be available after the end of a Term, the funds will remain in that Indexed Strategy until the end of that Term.
If you have allocated money to an Indexed Strategy and that Indexed Strategy will not be available for the next Term, then the Bailout right will apply. In this case, you may withdraw money from that Indexed Strategy at the end of the current Term without incurring an Early Withdrawal Charge, or you may reallocate amounts to another Indexed Strategy.
Reallocations to Default Strategies
At the end of a Term, to the extent any amount cannot be applied to a given Indexed Strategy for the next Term because that Strategy is no longer available or the amount is under the minimum or over the maximum for that Strategy for the new Term, if you do not withdraw the funds pursuant to your Bailout Right or reallocate them to another Index Strategy, then we will reallocate the amount to a default Strategy. The default strategy will be a Conserve/0% Floor Strategy that we designate.
If the amount to be applied exceeds the maximum, then the default reallocation rules will apply only to the excess amount. For example, if the maximum amount for an Indexed Strategy is $50,000 and the amount to be applied is $54,000, then the default reallocation rules will apply only to the excess $4,000.
Surrender
You may Surrender your Contract at any time before the earlier of: (1) the Annuity Payout Initiation Date; or (2) a death for which a Death Benefit is payable. The right to Surrender may be restricted if your Contract is purchased under an employer plan subject to IRC Section 401 (pension, profit sharing, and 401(k) plans), IRC Section 403(b) (tax-sheltered annuity plans), or IRC Section 457(b) (governmental deferred compensation plans).
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A Surrender must be made by a Request in Good Order. The amount paid upon Surrender is the Surrender Value. If you Surrender your Contract, the Contract terminates.
Withdrawals
You may take a withdrawal from your Contract at any time before the earliest of: (1) the Annuity Payout Initiation Date; (2) a death for which a Death Benefit is payable; or (3) the date that this Contract is Surrendered. The right to withdraw may be restricted if your Contract is purchased under an employer plan subject to IRC Section 401 (pension, profit sharing, and 401(k) plans), IRC Section 403(b) (tax-sheltered annuity plans), or IRC Section 457(b) (governmental deferred compensation plans).
A withdrawal must be made by a Request in Good Order. The amount of any withdrawal must at least $500. If the withdrawal would reduce the Account Value to less than the minimum value of $5,000, we will treat the withdrawal request as a request to withdraw the maximum amount that may be taken without reducing your Account Value to less than $5,000.
We will withdraw funds from your Account Value as of the date on which we receive your Request in Good Order or any later specified effective date. Unless you instruct us otherwise by a Request in Good Order prior to the date of the withdrawal, a withdrawal will be taken in the following order:
| • | first proportionally from funds that then qualify for a waiver of the Early Withdrawal Charge pursuant to the Bailout right; |
| • | then from the Purchase Payment Account; and |
| • | then proportionally from Indexed Strategies. |
Effect of Withdrawals
A withdrawal reduces the Account Value, which in turn reduces the amount payable upon Surrender, applied to the Annuity Payout Benefit, or payable as the Death Benefit.
If an Early Withdrawal Charge applies to your withdrawal, you will receive the amount that you requested, and your Account Value will be reduced by the amount you receive plus the amount needed to pay the Early Withdrawal Charge. A withdrawal from an Indexed Strategy other than at the end of a Term also reduces the Investment Base used to calculate the Vested Gain or Loss for the Term. The reduction in the Investment Base for a withdrawal and any related Early Withdrawal Charge is proportional to the reduction in the Account Value. See Vested Gains and Losses section above.
Automatic Withdrawals
You may elect to automatically withdraw money from your Contract under any automatic withdrawal program that we offer. Your Account Value must be at least $10,000 in order to make an automatic withdrawal election. The minimum amount of each automatic withdrawal payment is $100. Automatic withdrawals will be taken from the Purchase Payment Account and Strategies of your Contract in the same order as any other withdrawal.
Subject to the terms and conditions of the automatic withdrawal program, you may begin or discontinue automatic withdrawals at any time. You must give us at least 30 days’ notice to change any automatic withdrawal instructions that are currently in place. Any request to begin, discontinue or change automatic withdrawals must be a Request in Good Order. We reserve the right to discontinue offering automatic withdrawals at any time.
Currently, we do not charge a fee to participate in an automatic withdrawal program. However, we reserve the right to impose an annual fee in such amount as we may then determine to be reasonable for participation in the automatic withdrawal program. If imposed, the fee will not exceed $30 annually.
Before electing an automatic withdrawal, you should consult with a financial advisor. Automatic withdrawals are similar to starting Annuity Payout Benefit payments, but will result in different taxation of payments and potentially a different amount of total payments over the life of your Contract. Automatic withdrawals will reduce the amount available under the Free Withdrawal Allowance described below. Unless a waiver applies, an Early Withdrawal Charge may apply to an automatic withdrawal during the Early Withdrawal Charge period.
Exchanges, Transfers, and Rollovers
An amount paid on a withdrawal or Surrender may be paid to or for another annuity or tax-qualified account in a tax-free exchange, transfer, or rollover to the extent allowed by federal tax law.
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Examples—Amount Available for Withdrawal
The following examples are intended to help you understand the amount that may be available for withdrawal in different market environments.
Example G: Amount Available for a Withdrawal When Index Rises
This example assumes:
| • | you allocate a $50,000 Purchase Payment to the S&P 500 Growth/-10% Floor Strategy and a $50,000 Purchase Payment to the S&P 500 10% Buffer Strategy; |
| • | the Contract Effective Date and the Term Start Date are both April 6, 2024; |
| • | the Maximum Gain for the initial Term of the S&P 500 Growth Strategy is 12% and the S&P 500 Buffer Strategy is 14%; |
| • | you request a $10,000 withdrawal on Day 146 of the Term (August 30, 2024); |
| • | you do not take any other withdrawals during the initial Term; and |
| • | the Term End Date is April 6, 2025. |
Term Start Date—April 6, 2024 | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||||||||||
Strategy Value | $ | 50,000 | $ | 50,000 | See Footnote 1 below. | |||||||
Investment Base | $ | 50,000 | $ | 50,000 | See Footnote 1 below. | |||||||
Maximum Gain for Term | Gain of 12 | % | Gain of 14 | % | See Footnote 2 below. | |||||||
Index Value | 1900 | 1900 | ||||||||||
Withdrawal Date—August 30, 2024 | ||||||||||||
Daily Charges through withdrawal date | $ | 100 | $ | 100 | See Footnote 3 below | |||||||
Remaining Investment Base | $ | 49,900 | $ | 49,900 | See Footnote 4 below | |||||||
Index Value | 1976 | 1976 | ||||||||||
Positive Index Change | 4.00 | % | 4.00 | % | See Footnote 5 below. | |||||||
Positive Index Change Limited by Maximum Gain | 4.00 | % | 4.00 | % | See Footnote 6 below. | |||||||
Vesting Factor on Day 146 | 25 | % | 25 | % | See Footnote 7 below. | |||||||
Vested Gain as a Percentage | 1.00 | % | 1.00 | % | See Footnote 8 below. | |||||||
Vested Gain | $ | 499 | $ | 499 | See Footnote 8 below. | |||||||
Strategy Value before Withdrawal | $ | 50,399 | $ | 50,399 | See Footnote 9 below. | |||||||
Amount of Withdrawal Requested | $ | 10,000 | $ | 10,000 | ||||||||
Free Withdrawal Allowance | $ | 5,000 | $ | 5,000 | See Footnote 10 below. | |||||||
Early Withdrawal Charge | $ | 435 | $ | 435 | See Footnote 11 below. | |||||||
Total Amount Withdrawn | $ | 10,435 | $ | 10,435 | See Footnote 12 below. | |||||||
Percentage Reduction in Strategy Value | 20.70 | % | 20.70 | % | See Footnote 13 below. | |||||||
Proportional Reduction in Investment Base | $ | 10,331 | $ | 10,331 | See Footnote 13 below. | |||||||
Remaining Investment Base after Withdrawal | $ | 39,569 | $ | 39,569 | See Footnote 14 below. | |||||||
Strategy Value after Withdrawal | $ | 39,964 | $ | 39,964 | See Footnote 15 below. | |||||||
Term End Date—April 6, 2025 | ||||||||||||
Daily Charges withdrawal date to Term End | $ | 119 | $ | 119 | See Footnote 16 below | |||||||
Remaining Investment Base | $ | 39,450 | $ | 39,450 | See Footnote 17 below | |||||||
Index Value | 2033 | 2033 | ||||||||||
Positive Index Change | 7.00 | % | 7.00 | % | See Footnote 18 below. | |||||||
Positive Index Change Limited by Maximum Gain | 7.00 | % | 7.00 | % | See Footnote 19 below. | |||||||
Vesting Factor at Term End | 100 | % | 100 | % | See Footnote 20 below. | |||||||
Vested Gain as a Percentage | 7.00 | % | 7.00 | % | See Footnote 21 below. | |||||||
Vested Gain | $ | 2,761 | $ | 2,761 | See Footnote 21 below. | |||||||
Strategy Value at Term End | $ | 42,211 | $ | 42,211 | See Footnote 22 below. | |||||||
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Footnote 1. On the Term Start Date, the Strategy value is equal to the amount applied to the Strategy on the Term Start Date. The amount applied on the Term Start Date is also the beginning Investment Base.
Footnote 2. The Maximum Gain is the largest positive Index Change for a Term taken into account to determine the Vested Gain. In this example, the Maximum Gain is 12% (for the Growth Strategy) or 14% (for the Buffer Strategy), which means it will not affect the calculation of Vested Gain unless the Index goes up more than 12% or 14%, respectively.
Footnote 3. The Daily Charge is the Investment Base from the prior day, multiplied by the Daily Charge rate. The amount in the table is the sum of the daily charges deducted from the Investment Base from the first day of the Term to the withdrawal date.
| Formula | Investment Base on the Term Start Date – (Investment Base on the Term Start Date x (1 – Daily Fee Rate) ^ number of days elapsed prior to withdrawal) | |
| Calculation | $50,000 - ($50,000 x (1 - 0.0000137329) ^ 146) = $100 |
Footnote 4. The remaining Investment Base is equal to the beginning Investment Base minus the sum of the Daily Charges and minus the proportional reduction for any prior withdrawals and related Early Withdrawal Charges.
| Formula | Beginning Investment Base – sum of Daily Charges since Term Start Date) – proportional reduction for any prior Withdrawals and related Early Withdrawal Charges = remaining Investment Base | |
| Calculation | $50,000 - $100 - $0 = $49,900 |
Footnote 5. The Index Change is equal to the percentage change in the Index Value measured from the Term Start Date to the withdrawal date.
| Formula | (Index Value on withdrawal date - Index Value on Term Start Date) / Index Value on Term Start Date | |
| Calculation | (1976 - 1900) / 1900 = 4.00% |
Footnote 6. In this example, the Index Change on the withdrawal date is not limited by the Maximum Gain because the Index did not go up more than 12% for the Growth Strategy or 14% for the Buffer Strategy.
Footnote 7. A Vesting Factor limits the portion of a positive Index Change that is taken into account to determine the Vested Gain. The Vesting Factor for a positive Index Change varies depending on the day of the Term. The Vesting Factor for a positive Index Change on any date within the first six months of a Term is 25%. The Vesting Factor for a positive Index Change on any date within the final six months of a Term (but before the Final Market Day of the Term) is 50%. The Vesting Factor for a positive Index Change on the final Market Day of the Term (or any date after that when the Vested Gain for the Term is calculated) is 100%. In this example, the Vesting Factor is 25% because the withdrawal date is a date within the first six months of the Term.
Footnote 8. When there is a positive Index Change, we use the following formulas to calculate the Vested Gain.
| Formula | Index Change limited by Maximum Gain x Vesting Factor = Vested Gain percentage | |
| Calculation | 4.00% x 25% = 1.00% | |
| Formula | Remaining Investment Base for the current Term x Vested Gain percentage = Vested Gain in dollars | |
| Calculation | $49,900 x 0.01 = $499 | |
Footnote 9. In this example, there is a Vested Gain on the withdrawal date and you have not taken any withdrawals before that date. This means the Strategy value on the withdrawal date is the remaining Investment Base plus the Vested Gain as of that date.
| Formula | Remaining Investment Base + Vested Gain = Strategy value | |
| Calculation | $49,900 + $499 = $50,399 |
Footnote 10. The Free Withdrawal Allowance (FWA) for the first Contract Year is 10% of the Purchase Payment. The FWA for each subsequent Contract Year is 10% of the Account Value as of the most recent Contract Anniversary.
| Formula | Purchase Payment x 10% = FWA for first Contract Year | |
| Calculation | $50,000 x 0.10 = $5,000 |
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Footnote 11. The Early Withdrawal Charge that would apply to your withdrawal is equal to the amount subject to the charge multiplied by the Early Withdrawal Charge rate (EWC rate). The amount subject to the charge includes the charge itself. The amount subject to the charge does not include the FWA. The EWC rate depends on the Contract Year. In this example, the withdrawal occurs in the first Contract Year, when the EWC rate is 8%. The Early Withdrawal Charge rate declines after each of the first five Contract Years. There is no Early Withdrawal Charge after Contract Year 5.
| Formula | [(Requested withdrawal - FWA) x EWC rate] / (1.00 - EWC rate) = Early Withdrawal Charge | |
| Calculation | [($10,000 - $5,000) x 0.08] / (1.00 - 0.08) = $5,000 x 0.08 / 0.92 = $400 / 0.92 = $435 |
Footnote 12. When you request a withdrawal, you receive the amount you requested. If an Early Withdrawal Charge applies, we also withdraw an amount equal to the charge. This means that the total amount withdrawn from your annuity is equal to the amount you requested plus the applicable Early Withdrawal Charge.
| Formula | Requested withdrawal + Early Withdrawal Charge = total amount withdrawn | |
| Calculation | $10,000 + $435 = $10,435 |
Footnote 13. When you take a withdrawal, the portion of the Investment Base taken to pay for the withdrawal is proportional to the reduction in the value of the Indexed Strategy due to the withdrawal. If there is a Vested Gain as of the withdrawal date, the reduction in the Investment Base will be less than the total amount withdrawn. This difference occurs because your withdrawal is credited with a proportionate share of the Vested Gain.
| Formula | Total amount withdrawn / Strategy value before withdrawal = percentage reduction in Strategy value | |
| Calculation | $10,435 / $50,399 = 20.70% | |
| Formula | Investment Base before withdrawal x percentage reduction in Strategy value = proportional reduction in Investment Base | |
| Calculation | $49,900 x 0.2070 = $10,331 | |
Footnote 14. On the withdrawal date after the withdrawal, the remaining Investment Base is equal to the Investment Base before the withdrawal minus the proportional reduction in the Investment Base for the withdrawal.
| Formula | Investment Base before withdrawal - proportional reduction in Investment Base for withdrawal = Investment Base after withdrawal | |
| Calculation | $49,900 - $10,331 = $39,569 |
Footnote 15. On the withdrawal date, the Strategy value after the withdrawal is equal to Strategy value before the withdrawal minus the total amount withdrawn.
| Formula | Strategy value before withdrawal - total amount withdrawn = Strategy value after withdrawal | |
| Calculation | $50,399 - $10,435 = $39,964 |
Footnote 16. The Daily Charge is the Investment Base from the prior day, multiplied by the Daily Charge rate. The amount in the table is the sum of the daily charges deducted from the Investment Base from the withdrawal date to the last day of the Term.
| Formula | Investment Base after Previous Withdrawal – (Investment Base after Previous Withdrawal x (1 – Daily Fee Rate) ^ Number of Days Elapsed Since Previous Withdrawal) = Daily Charges | |
| Calculation | $39,569 - ($39,569 x (1 - 0.0000137329) ^ 219) = $119 |
Footnote 17. The remaining Investment Base is equal to the beginning Investment Base minus the sum of the Daily Charges and minus the proportional reduction for any prior withdrawals and related Early Withdrawal Charges.
| Formula | Beginning Investment Base – sum of Daily Charges since Term Start Date) – proportional reduction for any prior Withdrawals and related Early Withdrawal Charges = remaining Investment Base | |
| Calculation | $50,000 – ($100 + $119) - $10,331 = $39,450 |
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Footnote 18. The Index Change on the Term End Date is equal to the percentage change in the Index Value measured from the Term Start Date to the Term End Date.
| Formula | (Index Value on Term End Date - Index Value on Term Start Date) / Index Value on Term Start Date | |
| Calculation | (2033 - 1900) / 1900 = 7.00% |
| Formula | (Index Value on Term End Date - Index Value on Term Start Date) / Index Value on Term Start Date | |
| Calculation | (2033 - 1900) / 1900 = 7.00% |
Footnote 19. In this example, the Index Change on the Term End Date is not limited by the Maximum Gain because the Index did not go up more than 12% for the Growth Strategy or 14% for the Buffer Strategy.
Footnote 20. The Vesting Factor for a positive Index Change on the Term End Date is 100%.
Footnote 21. When there is a positive Index Change, we use the following formulas to calculate the Vested Gain.
| Formula | Index Change limited by Maximum Gain x Vesting Factor = Vested Gain percentage | |
| Calculation | 7.00% x 100% = 7.00% |
| Formula | Remaining Investment Base for the current Term x Vested Gain percentage = Vested Gain in dollars | |
| Calculation | $39,450 x 0.07 = $2,761 |
Footnote 22. In this example, there is a Vested Gain on the Term End Date and you have taken a $10,000 withdrawal during the Term. This means the Strategy value on that date is the remaining Investment Base on the Term End Date plus the Vested Gain as of that date.
| Formula | Remaining Investment Base on Term End Date + Vested Gain = Strategy value on Term End Date | |
| Calculation | $39,450 + $2,761 = $42,211 |
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Example H: Amount Available for a Withdrawal When Index Falls
This example assumes:
| • | you allocate a $50,000 Purchase Payment to the S&P 500 Growth/-10% Floor Strategy and a $50,000 Purchase Payment to the S&P 500 10% Buffer Strategy; |
| • | the Contract Effective Date and the Term Start Date are both April 6, 2024; |
| • | you request a $10,000 withdrawal on Day 146 of the Term (August 30, 2024); |
| • | you do not take any other withdrawals during the initial Term; and |
| • | the Term End Date is April 6, 2025. |
Term Start Date - April 6, 2024 | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||||||||
Strategy Value | $ | 50,000 | $ | 50,000 | See Footnote 1 below. | |||||
Investment Base | $ | 50,000 | $ | 50,000 | See Footnote 1 below. | |||||
Maximum Loss for Term | Loss of 10 | % | N/A | See Footnote 2 below. | ||||||
End of Term Buffer | N/A | 10% Buffer | See Footnote 3 below. | |||||||
Index Value | 1900 | 1900 | ||||||||
Withdrawal Date - August 30, 2024 | ||||||||||
Daily Charges through withdrawal date | $ | 100 | $ | 100 | See Footnote 4 below. | |||||
Remaining Investment Base | $ | 49,900 | $ | 49,900 | See Footnote 5 below | |||||
Index Value | 1786 | 1786 | ||||||||
Negative Index Change | -6.00 | % | -6.00 | % | See Footnote 6 below. | |||||
Negative Index Change Limited by Maximum Loss | -6.00 | % | N/A | See Footnote 7 below. | ||||||
Buffer on Day 146 | N/A | 4% Buffer | See Footnote 8 below. | |||||||
Vested Loss Percentage | -6.00 | % | -2.00 | % | See Footnote 9 below. | |||||
Vested Loss | -$ | 2,994 | -$ | 998 | See Footnote 9 below. | |||||
Strategy Value before Withdrawal | $ | 46,906 | $ | 48,902 | See Footnote 10 below. | |||||
Amount of Withdrawal Requested | $ | 10,000 | $ | 10,000 | ||||||
Free Withdrawal Allowance | $ | 5,000 | $ | 5,000 | See Footnote 11 below. | |||||
Early Withdrawal Charge | $ | 435 | $ | 435 | See Footnote 12 below. | |||||
Total Amount Withdrawn | $ | 10,435 | $ | 10,435 | See Footnote 13 below. | |||||
Percentage Reduction in Strategy Value | 22.25 | % | 21.34 | % | See Footnote 14 below. | |||||
Proportional Reduction in Investment Base | $ | 11,101 | $ | 10,648 | See Footnote 14 below. | |||||
Remaining Investment Base after Withdrawal | $ | 38,799 | $ | 39,252 | See Footnote 15 below. | |||||
Strategy Value after Withdrawal | $ | 36,471 | $ | 38,467 | See Footnote 16 below. | |||||
Term End Date - April 6, 2023 | ||||||||||
Daily Charges withdrawal date to Term End | $ | 117 | $ | 118 | See Footnote 17 below | |||||
Remaining Investment Base | $ | 38,682 | $ | 39,134 | See Footnote 18 below | |||||
Index Value | 1748 | 1748 | ||||||||
Negative Index Change | -8.00 | % | -8.00 | % | See Footnote 19 below. | |||||
Negative Index Change Limited by Maximum Loss | -8.00 | % | N/A | See Footnote 20 below. | ||||||
Negative Index Change Limited by Buffer | N/A | 0.00 | % | See Footnote 21 below. | ||||||
Vested Loss as a Percentage | | -8.00% Vested Loss | | | 0.00% Vested Loss | | See Footnote 22 below. | |||
Vested Loss in Dollars | -$ | 3,095 | $ | 0 | See Footnote 22 below. | |||||
Strategy Value at Term End | $ | 35,588 | $ | 39,134 | See Footnote 23 below. | |||||
Footnote 1. On the Term Start Date, the Strategy value is equal to the amount applied to the Strategy on the Term Start Date. The amount applied on the Term Start Date is also the beginning Investment Base.
Footnote 2. The Maximum Loss is the largest negative Index Change for a Term taken into account to determine the Vested Loss for Growth Strategies. In this example, the Maximum Loss is 10%, which means it will not affect the calculation of Vested Loss unless the Index goes down more than 10%.
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Footnote 3. The Buffer is the portion of a negative Index Change for a Term that is disregarded when determining a Vested Loss for a Buffer Strategy. The Buffer varies depending on the day of the Term. Once the final Market Day of the Term has been reached, the Buffer is 10%. Before the final Market Day, the Buffer is:
10% × 365 – N
365
where N is equal to the number of days remaining until the final Market Day of the Term.
Footnote 4. The Daily Charge is the Investment Base from the prior day, multiplied by the Daily Charge rate. The amount in the table is the sum of the daily charges deducted from the Investment Base from the first day of the Term to the withdrawal date.
| Formula | Investment Base on the Term Start Date – (Investment Base on the Term Start Date x (1 – Daily Fee Rate) ^ number of days elapsed prior to withdrawal) | |
| Calculation | $50,000 - ($50,000 x (1 - 0.0000137329) ^ 146) = $100 |
Footnote 5. The remaining Investment Base is equal to the beginning Investment Base minus the sum of the Daily Charges and minus the proportional reduction for any prior withdrawals and related Early Withdrawal Charges.
| Formula | Beginning Investment Base – sum of Daily Charges since Term Start Date) – proportional reduction for any prior Withdrawals and related Early Withdrawal Charges = remaining Investment Base | |
| Calculation | $50,000 - $100 - $0 = $49,900 |
Footnote 6. The Index Change is equal to the percentage change in the Index Value measured from the Term Start Date to the withdrawal date.
| Formula | (Index Value on withdrawal date - Index Value on Term Start Date) / Index Value on Term Start Date | |
| Calculation | (1786 - 1900) / 1900 = -6.00% |
Footnote 7. In this example, the negative Index Change on the withdrawal date is not limited by the Maximum Loss because the Index did not go down more than 10.00%.
Footnote 8. In this example, only a portion of the negative Index Change on the withdrawal date is limited by the Buffer because the Index went down more than 4.00%.
Footnote 9.
Vested Loss – Growth Strategies: When there is a negative Index Change, we use the following formulas to calculate the Vested Loss for Growth Strategies.
| Formula | Index Change limited by Maximum Loss = Vested Loss percentage | |
| Calculation | -6.00% = -6.00% | |
| Formula | Remaining Investment Base for the current Term x Vested Loss percentage = Vested Loss in dollars | |
| Calculation | $49,900 x -0.0600 = -$2,994 | |
Vested Loss – Buffer Strategies: When there is a negative Index Change, we use the following formulas to calculate the Vested Loss for Buffer Strategies.
| Formula | Index Change limited by Buffer = Vested Loss percentage | |
| Calculation | -6.00% Index Change – (-4.00%) Buffer = -2.00% | |
| Formula | Remaining Investment Base for the current Term x Vested Loss percentage = Vested Loss in dollars | |
| Calculation | $49,900 x -0.0200 = -$998 | |
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Footnote 10. In this example, there is a Vested Loss on the withdrawal date and you have not taken any withdrawals before that date. This means the Strategy value on the withdrawal date is the Investment Base, minus the Vested Loss as of that date.
| Formula | Investment Base - Vested Loss = Strategy value | |
| Calculation | For Growth Strategy: $49,900 - $2,994 = $46,906 | |
| For Buffer Strategy: $49,900 - $998 = $48,902 |
Footnote 11. The Free Withdrawal Allowance (FWA) for the first Contract Year is 10% of the Purchase Payment. The FWA for each subsequent Contract Year is 10% of the Account Value as of the most recent Contract Anniversary.
| Formula | Purchase Payment x 10% = FWA for first Contract Year | |
| Calculation | $50,000 x 10% = $5,000 |
Footnote 12. The Early Withdrawal Charge that would apply to your withdrawal is equal to the amount subject to the charge multiplied by the Early Withdrawal Charge rate (EWC rate). The amount subject to the charge includes the charge itself. The amount subject to the charge does not include the FWA. The EWC rate depends on the Contract Year. In this example, the withdrawal occurs in the first Contract Year, when the EWC rate is 8%. The Early Withdrawal Charge rate declines after each of the first five Contract Years. There is no Early Withdrawal Charge after Contract Year 5.
| Formula | [(Requested withdrawal - FWA) x EWC rate] / (1.00 - EWC rate) = Early Withdrawal Charge | |
| Calculation | [($10,000 - $5,000) x 0.08] / (1.00 - 0.08) = $5,000 x 0.08 / 0.92 = $400 / 0.92 = $435 |
Footnote 13. When you request a withdrawal, you receive the amount you requested. If an Early Withdrawal Charge applies, we also withdraw an amount equal to the charge. This means that the total amount withdrawn from your annuity is equal to the amount you requested plus the applicable Early Withdrawal Charge.
| Formula | Requested withdrawal + Early Withdrawal Charge = total amount withdrawn | |
| Calculation | $10,000 + $435 = $10,435 |
Footnote 14. When you take a withdrawal, the portion of the Investment Base taken to pay for the withdrawal is proportional to the reduction in the value of the Indexed Strategy due to the withdrawal. If there is a Vested Loss as of the withdrawal date, the reduction in the Investment Base will be more than the total amount withdrawn. This difference occurs because your withdrawal is charged with a proportionate share of the Vested Loss.
| Formula | total amount withdrawn / Strategy value before withdrawal = percentage reduction in Strategy value | |
| Calculation | For Growth Strategy: $10,435 / $46,906 = 22.25% | |
| For Buffer Strategy: $10,435 / $48,902 = 21.34% | ||
| Formula | Investment Base before withdrawal x percentage reduction in Strategy value = proportional reduction in Investment Base | |
| Calculation | For Growth Strategy: $49,900 x 0.2225 = $11,101 | |
| For Buffer Strategy: $49,900 x 0.2134 = $10,648 | ||
Footnote 15. On the withdrawal date, the remaining Investment Base after the withdrawal is equal to the Investment Base before the withdrawal minus the proportional reduction in the Investment Base for the withdrawal.
| Formula | Investment Base before withdrawal - proportional reduction in Investment Base for withdrawal = Investment Base after withdrawal | |
| Calculation | For Growth Strategy: $49,900 - $11,101 = $38,799 | |
| For Buffer Strategy: $49,900 - $10,648 = $39,252 |
Footnote 16. On the withdrawal date, the Strategy value after the withdrawal is equal to the Strategy value before the withdrawal minus the total amount withdrawn.
| Formula | Strategy value before withdrawal - total amount withdrawn = Strategy value after withdrawal | |
| Calculation | For Growth Strategy: $46,906 - $10,435 = $36,471 For Buffer Strategy: $48,902 - $10,435 = $38,467 |
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Footnote 17. The Daily Charge is the Investment Base from the prior day, multiplied by the Daily Charge rate. The amount in the table is the sum of the daily charges deducted from the Investment Base from the withdrawal date to the last day of the Term.
| Formula | Investment Base after Previous Withdrawal – (Investment Base after Previous Withdrawal x (1 – Daily Fee Rate) ^ Number of Days Elapsed Since Previous Withdrawal) = Daily Charges | |
| Calculation | For Growth Strategy: $38,799 – ($38,799 x (1 - 0.0000137329) ^ 219) = $117 For Buffer Strategy: $39,252 - ($39,252 x (1 - 0.0000137329) ^ 219) = $118 |
Footnote 18. The remaining Investment Base is equal to the beginning Investment Base minus the sum of the Daily Charges and minus the proportional reduction for any prior withdrawals and related Early Withdrawal Charges.
| Formula | Beginning Investment Base - sum of Daily Charges since Term Start Date) - proportional reduction for any prior Withdrawals and related Early Withdrawal Charges = remaining Investment Base | |
| Calculation | For Growth Strategy: $50,000 – ($100 + $117) – $11,101 = $38,682 | |
| For Buffer Strategy: $50,000 – ($100 + $118) – $10,648 = $39,134 |
Footnote 19. The Index Change on the Term End Date is equal to the percentage change in the Index Value measured from the Term Start Date to the Term End Date.
| Formula | (Index Value on Term End Date - Index Value on Term Start Date) / Index Value on Term Start Date | |
| Calculation | (1748 - 1900) / 1900 = -8.00% |
Footnote 20. For the Growth Strategy, in this example, the negative Index Change on the Term End Date is not limited by the Maximum Loss because the Index did not go down more than 10%.
Footnote 21. For the Buffer Strategy, in this example, the entire negative Index Change on the Term End Date is limited by the Buffer because the Index went down less than 10%.
Footnote 22.
Vested Loss – Growth Strategies: When there is a negative Index Change, we use the following formula to calculate the Vested Loss percentage for Growth Strategies.
| Formula | Index Change limited by Maximum Loss = Vested Loss percentage | |
| Calculation | -8.00% = -8.00% | |
| Formula | Remaining Investment Base for the current Term x Vested Loss percentage = Vested Loss in dollars | |
| Calculation | $38,682 x -0.0800 = -$3,095 |
Vested Loss – Buffer Strategies: When there is a negative Index Change, we use the following formula to calculate the Vested Loss percentage for Buffer Strategies.
| Formula | Index Change limited by Buffer = Vested Loss percentage | |
| Calculation | -8% Index Change > -10% Buffer = 0% | |
| Formula | Remaining Investment Base for the current Term x Vested Loss percentage = Vested Loss in dollars | |
| Calculation | $39,134 x 0.0000 = $0 |
Footnote 23. In this example, there is a Vested Loss on the Term End Date for the Growth Strategy and you have taken a $10,000 withdrawal during the Term. This means the Strategy value on that date is the remaining Investment Base on the Term End Date minus the Vested Loss as of that date.
| Formula | Remaining Investment Base on Term End Date—Vested Loss = Strategy value | |
| Calculation | $38,682—$3,095 = $35,588 |
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In this example, there is no Vested Loss on the Term End Date for the Buffer Strategy and you have taken a $10,000 withdrawal during the Term. This means the Strategy value on that date is the remaining Investment Base on the Term End Date.
| Formula | Remaining Investment Base on Term End Date = Strategy value | |
| Calculation | $39,134 = $39,134 |
We impose a Daily Charge to reimburse us for contract sales expenses, including commissions and other distribution, promotion, and acquisition expenses, and to help us maximize Indexed Strategy Maximum Gains. The Daily Charge is calculated using a daily rate that compounds at 0.50% per year.
For an Indexed Strategy, it is calculated as a percentage of the remaining Investment Base and deducted daily.
Example I: Amount Available for a Withdrawal When Index Rises Less Than Daily Charge Rate
The following example is intended to help you understand the amount that may be available for withdrawal when the Index rises at a rate lower than the amount of the Daily Charge over a Term. In such a scenario, Strategy Values will be lower at the end of a Term than they were at the beginning of the Term, despite the fact that the Index rose over that period.
Term Start Date - April 6, 2024 | S&P 500 Growth Strategy | S&P 500 Buffer Strategy | ||||||||
Strategy Value | $ | 50,000 | $ | 50,000 | See Footnote 1 below. | |||||
Investment Base | $ | 50,000 | $ | 50,000 | See Footnote 1 below. | |||||
Maximum Gain for Term | Gain of 12 | % | Gain of 14 | % | See Footnote 2 below. | |||||
Maximum Loss | Loss of 10 | % | N/A | See Footnote 3 below. | ||||||
End of Term Buffer | N/A | 10% Buffer | See Footnote 4 below. | |||||||
Index Value | 2000 | 2000 | ||||||||
Term End Date - April 6, 2025 | ||||||||||
Daily Charges through Term End | $ | 250 | $ | 250 | See Footnote 5 below. | |||||
Remaining Investment Base | $ | 49,750 | $ | 49,750 | See Footnote 6 below | |||||
Index Value | 2005 | 2005 | ||||||||
Positive Index Change | 0.25 | % | 0.25 | % | See Footnote 7 below. | |||||
Positive Index Change Limited by Maximum Gain | 0.25 | % | 0.25 | % | See Footnote 8 below. | |||||
Vesting Factor at Term End | 100 | % | 100 | % | See Footnote 9 below. | |||||
Vested Gain as a Percentage | 0.25 | % | 0.25 | % | See Footnote 10 below. | |||||
Vested Gain | $ | 124 | $ | 124 | See Footnote 10 below. | |||||
Strategy Value at Term End | $ | 49,874 | $ | 49,874 | See Footnote 11 below. | |||||
Footnote 1. On the Term Start Date, the Strategy value is equal to the amount applied to the Strategy on the Term Start Date. The amount applied on the Term Start Date is also the beginning Investment Base.
Footnote 2. The Maximum Gain is the largest positive Index Change for a Term taken into account to determine the Vested Gain. In this example, the Maximum Gain is 12% (for the Growth Strategy) or 14% (for the Buffer Strategy), which means it will not affect the calculation of Vested Gain unless the Index goes up more than 12% or 14%, respectively.
Footnote 3. The Maximum Loss is the largest negative Index Change for a Term taken into account to determine the Vested Loss for Growth Strategies. In this example, the Maximum Loss is 10%, which means it will not affect the calculation of Vested Loss unless the Index goes down more than 10%.
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Footnote 4. The Buffer is the portion of a negative Index Change for a Term that is disregarded when determining a Vested Loss for a Buffer Strategy. The Buffer varies depending on the day of the Term. Once the final Market Day of the Term has been reached, the Buffer is 10%. Before the final Market Day, the Buffer is:
10% x 365 – N
365
where N is equal to the number of days remaining until the final Market Day of the Term.
Footnote 5. When no withdrawals are taken over the course of a Term, the Daily Charges through the Term End Date are equal to the Investment Base on the Term Start Date times the annual rate at which the Daily Charge compounds.
| Formula | Investment Base on Term Start Date × annual rate | |
| Calculation | $50,000 x 0.50% = $250 |
Footnote 6. The remaining Investment Base is equal to the beginning Investment Base minus the sum of the Daily Charges and minus the proportional reduction for any prior withdrawals and related Early Withdrawal Charges.
| Formula | Beginning Investment Base – sum of Daily Charges since Term Start Date) – proportional reduction for any prior Withdrawals and related Early Withdrawal Charges = remaining Investment Base | |
| Calculation | $50,000 - $250 - $0 = $49,750 |
Footnote 7. The Index Change on the Term End Date is equal to the percentage change in the Index Value measured from the Term Start Date to the Term End Date.
| Formula | (Index Value on Term End Date - Index Value on Term Start Date) / Index Value on Term Start Date | |
| Calculation | (2005 - 2000) / 2000 = 0.25% |
Footnote 8. In this example, the Index Change on the Term End Date is not limited by the Maximum Gain because the Index did not go up more than 12% for the Growth Strategy or 14% for the Buffer Strategy.
Footnote 9. The Vesting Factor for a positive Index Change on the Term End Date is 100%.
Footnote 10. When there is a positive Index Change, we use the following formulas to calculate the Vested Gain.
| Formula | Index Change limited by Maximum Gain x Vesting Factor = Vested Gain percentage | |
| Calculation | 0.25% × 100% = 0.25% | |
| Formula | Remaining Investment Base for the current Term x Vested Gain percentage = Vested Gain in dollars | |
| Calculation | $49,750 x 0.0025 = $124 |
Footnote 11. In this example, there is a Vested Gain on the Term End Date. This means the Strategy value on that date is the remaining Investment Base on the Term End Date plus the Vested Gain as of that date.
| Formula | Remaining Investment Base on Term End Date + Vested Gain = Strategy value on Term End Date | |
| Calculation | $49,750 + $124 = $49,874 |
We impose an Early Withdrawal Charge to reimburse us for contract sales expenses, including commissions and other distribution, promotion, and acquisition expenses, and to allow us to support higher Indexed Strategy Maximum Gains by investing assets for a longer duration.
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The Early Withdrawal Charge applies if, during the first five Contract Years, you take a withdrawal from your Contract or Surrender it. After that, the Early Withdrawal Charge does not apply.
The Early Withdrawal Charge is equal to the amount that is subject to the charge multiplied by the Early Withdrawal Charge rate.
| • | If you take a withdrawal from your Contract, the amount subject to the charge is the amount you withdraw plus any amount needed to pay the Early Withdrawal Charge. |
| • | If you Surrender your Contract, the amount subject to the charge is your Account Value. |
| • | The amount subject to the charge will not include: (1) the Free Withdrawal Allowance; (2) the amount, if any, that qualifies under the Bailout right; or (3) the amount, if any, that qualifies for another waiver as described below. |
The Early Withdrawal Charge rate depends on how long you own your Contract. The rate schedule is set out below.
Contract Year | 1 | 2 | 3 | 4 | 5 | 6+ | ||||||||||||||||||
Early Withdrawal Charge Rate | 8 | % | 7 | % | 6 | % | 5 | % | 4 | % | 0 | % | ||||||||||||
Example. You Surrender your annuity in Contract Year 5 when your Account Value is $100,000. You have already used your Free Withdrawal Allowance for the year and no other exception applies. We take an Early Withdrawal Charge of $4,000 ($100,000 x 0.04) and you receive $96,000.
Example. You take a $10,000 withdrawal from your annuity in Contract Year 5 when your Account Value is $100,000. You have already used your Free Withdrawal Allowance for the year and no other exception applies. We take an Early Withdrawal Charge of $400 ($10,000 x 0.04) and you receive $9,600.
An Early Withdrawal Charge may apply if you take a withdrawal during the first five Contract Years. That charge will reduce Strategy values, including the value of a Conserve/0% Floor Strategy.
Free Withdrawal Allowance
The Free Withdrawal Allowance lets you withdraw some money from your Contract without the imposition of the Early Withdrawal Charge. For the first Contract Year, the Free Withdrawal Allowance is an amount equal to 10% of the total Purchase Payments received by us. For each subsequent Contract Year, the Free Withdrawal Allowance is equal to 10% of the Account Value as of the most recent Contract Anniversary. The Free Withdrawal Allowance is non-cumulative and you may not carry over any unused portion to other Contract Years.
For qualified annuities, the Free Withdrawal Allowance will be large enough to cover your required minimum distribution to age 93. However, if you have used your Free Withdrawal Allowance to facilitate a transfer or rollover, then an Early Withdrawal Charge may apply to a required minimum distribution.
Example. Your Account Value as of the end of Contract Year 3 is $200,000. Your Free Withdrawal Allowance for Contract Year 4 is $20,000 ($200,000 x 0.10). If you take a withdrawal of $50,000 at the beginning of Contract Year 4, the Early Withdrawal Charge will not apply to the first $20,000 of the withdrawal, but will apply to the remaining $30,000 plus the amount needed to pay the Early Withdrawal Charge. If you take another withdrawal later in Contract Year 4, the Early Withdrawal Charge applies to the entire withdrawal plus the amount needed to pay the Early Withdrawal Charge.
Early Withdrawal Charge Waivers
Bailout Right. We will waive the Early Withdrawal Charge on amounts that you withdraw from this Contract at the end of a current Term if the amounts are held under an Indexed Strategy for that Term and either:
| • | the Maximum Gain for the next Term of that Strategy is less than its Bailout Trigger for the current Term; or |
| • | that Strategy will not be available for the next Term. |
Each current Term of an Indexed Strategy has its own Bailout Trigger, even if no funds are held under the Indexed Strategy for that Term. If your Contract has multiple Purchase Payments, the Bailout Trigger for one current Term of an Indexed Strategy may be different from the Bailout Trigger for another current Term of the same Indexed Strategy that started on a different date.
The initial Bailout Trigger for each Indexed Strategy is set out on the Contract Specifications page. It is less than the Maximum Gain that we anticipate setting for the initial Term of that Indexed Strategy.
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For each subsequent Term, the Bailout Trigger is the lesser of:
| • | the Bailout Trigger for the Term that ended on the date the current Term began; or |
| • | the Maximum Gain set for the current Term. |
This means that:
| • | if the Maximum Gain is never set below the Bailout Trigger, then the Bailout Trigger will not change; and |
| • | if the Maximum Gain is ever set below the Bailout Trigger, then the Bailout Trigger will be reduced for the new Term and for each Term that starts on an anniversary of that Term start date. |
The Bailout Trigger will never increase from one Term to the next.
Example. The Bailout Trigger for the initial Term of an Indexed Strategy is 6.5%.
| • | If we set the Maximum Gain for the next Term of that Indexed Strategy at 7.5%, then you will not qualify for a waiver of the Early Withdrawal Charge at the end of the current Term and the Bailout Trigger for that next Term will continue to be 6.5%. |
| • | If we set the Maximum Gain for the next Term of that Indexed Strategy at 5.5%, then you will qualify for a waiver of the Early Withdrawal Charge at the end of the current Term and the Bailout Trigger for that next Term will change to 5.5%. |
If this waiver will apply to an Indexed Strategy at the end of a Term, we will notify you in writing at least 30 days before that Term ends. You may elect a withdrawal under the Bailout right by a Request in Good Order. We must receive your request before the end of the applicable Term.
This waiver will only apply to the amount held under the Indexed Strategy for the Term that is ending. It will not apply to amounts then held under a different Strategy, or to amounts held under the same Strategy for a Term ending on a different date. You may not carry over any unused part of the waiver from one Term to the next.
If you withdraw funds that qualify for a waiver under the Bailout right, the withdrawal will reduce the Free Withdrawal Allowance for the applicable Contract Year. For example, if the amount you withdraw that qualifies for a waiver under the Bailout right in Contract Year 4 is more than 10% of your Account Value as of the most recent Contract Anniversary, then no Free Withdrawal Allowance will be available for subsequent withdrawals in Contract Year 4.
Instead of withdrawing amounts that qualify for a waiver under the Bailout right, you may wish to reallocate those amounts to a different Strategy. A Request in Good Order to reallocate funds must be received by us before the end of the applicable Term.
Extended Care Waiver. (Rider form R1462316NW-Waiver of Early Withdrawal Charges for Extended Care Rider). We will waive the Early Withdrawal Charge that would otherwise apply if you make a Request in Good Order and:
| • | your Contract is modified by the Extended Care Waiver Rider; |
| • | you are confined in a long-term care facility or hospital and the confinement is prescribed by a physician and is medically necessary; |
| • | the first day of the confinement is at least one year after the Contract Effective Date; and |
| • | the confinement has continued for a period of at least 90 consecutive days. |
You must provide us with satisfactory proof that you meet these conditions before the date of the withdrawal or Surrender. There is no charge for this rider, but it may not be available in all states. In California, the Extended Care Waiver Rider has been replaced with the Waiver of Early Withdrawal Charges for Facility Care or Home Care or Community-Based Services Rider, which provides for a waiver of Early Withdrawal Charges under an expanded variety of circumstances. Please see the rider for details.
Terminal Illness Waiver. (Rider form R1462416NW-Waiver of Early Withdrawal Charges Upon Terminal Illness Rider). We will waive the Early Withdrawal Charge that would otherwise apply if you make a Request in Good Order and:
| • | your Contract is modified by the Waiver of Early Withdrawal Charges upon Terminal Illness Rider; |
| • | you are diagnosed with a terminal illness by a physician and, as a result of the terminal illness, you have a life expectancy of less than 12 months from the date of diagnosis; and |
| • | the diagnosis is rendered by a physician more than one year after the Contract Effective Date. |
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You must provide us with satisfactory proof that you meet these conditions before the date of the withdrawal or Surrender. There is no charge for this rider, but it may not be available in all states. Please see the rider for details.
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Required Minimum Distributions. No special waiver of Early Withdrawal Charges exists for required minimum distributions except as may be offered from time to time under an automated payment program.
State Limitations. In some states, our ability to waive fees or charges may be limited by applicable laws, regulations or administrative positions. Please see the “State Variations” section below for information on additional state variations.
Under the Contract you may receive regular Annuity Payout Benefit payments for the duration of the period that you select. Once Annuity Payout Benefit payments start, you can no longer Surrender the Contract or take a withdrawal, no Death Benefit will be payable under your Contract, and your Beneficiary designations will no longer apply. The amount payable after death, if any, is governed by the Payout Option you select.
The Annuity Payout Benefit is payable if the Annuity Payout Initiation Date is reached before the earlier of: (1) a death for which a Death Benefit is payable; or (2) the date that this Contract is Surrendered.
Annuity Payout Initiation Date
The Annuity Payout Initiation Date is the first day of the first payment interval for which payment of the Annuity Payout Benefit is to be made. Annuity Payout Benefit payments are made at the end of each payment interval. This means that for annual payments, the first payment will be made one year after the Annuity Payout Initiation Date.
You may select the Annuity Payout Initiation Date by a Request in Good Order. We must receive your request before the last Market Close on or before the Annuity Payout Initiation Date you selected and at least 30 days before the first Annuity Payout Benefit payment is to be made.
| • | The earliest Annuity Payout Initiation you may select is the first Contract Anniversary. |
| • | Unless we agree, the latest Annuity Payout Initiation Date you may select is the Contract Anniversary following your 95th birthday or the 95th birthday, of a joint owner, if earlier. If the Owner is not a human being such as a trust or a corporation, then the Annuity Payout Initiation Date may not be later than the Contract Anniversary following the 95th birthday of the eldest Annuitant, unless we agree. |
The earliest permitted date and the latest permitted date for the Annuity Payout Initiation Date are set out on your Contract Specifications Page. The latest permitted date may change if an Owner changes.
If you do not select an Annuity Payout Initiation Date by the latest permitted date, we may select it for you. We will notify you in writing at least 45 days before the date we select. We will give you an opportunity to select an earlier date.
Annuity Payout Amount
The amount of each payment under the Annuity Payout Benefit is determined on the Annuity Payout Initiation Date based on the Annuity Payout Value on that date, the Payout Option that applies, and the payment interval.
The Annuity Payout Value is the amount that can be applied to the Annuity Payout Benefit is equal to: (1) the Account Value on the Annuity Payout Initiation Date; minus (2) premium tax or other taxes not previously deducted.
Form of Annuity Payout Benefit
The Annuity Payout Benefit is paid in the form of annual payments as a Life Payout with Payments for at Least a Fixed Period. That fixed period will be 10 years or, if fewer, the maximum number of whole years permitted by any tax qualification endorsement.
In place of that, you may elect to have the Annuity Payout Benefit paid in any form of Payout Option that is available under your Contract. The available Payout Options are described in the Payout Options section below. You may elect a Payout Option by a Request in Good Order. We must receive your request before the last Market Close on or before the Annuity Payout Initiation Date and at least 30 days before the first Annuity Payout Benefit payment is to be made.
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Payee for Annuity Payout Benefit
Payment of the Annuity Payout Benefit generally is made to the surviving Owner(s) as the payee(s). In place of that, the surviving Owner(s) may elect for payment to be made as a tax-free exchange, transfer, or rollover, or for payment to be made to the Annuitant. That election must be made by a Request in Good Order that we receive at least 30 days before the payment date.
Payments that become due after the death of the payee are made to:
| • | the surviving Owner(s); or if none |
| • | then to the surviving contingent payee(s) designated by the surviving Owner(s); or if none; |
| • | the estate of the last payee who received payments. |
The portion of any Annuity Payout Benefit remaining after the death of an Owner or Annuitant must be paid at least as rapidly as payments were being made at the time of such death.
You may designate a contingent payee by a Request in Good Order. If you designate your spouse as a contingent payee and your marriage ends before your death, then we will treat your former spouse as having predeceased you except in the following situations: (1) if a court order provides that the former spouse’s rights as a contingent payee are to continue; or (2) if the former spouse remains or becomes an Owner.
A Death Benefit is payable under your Contract if you die before the Annuity Payout Initiation Date and before the Contract is Surrendered. If your spouse becomes a successor owner of the Contract, no Death Benefit will be payable on account of your death.
When the Owner is a non-natural person, a Death Benefit is payable under the Contract if the Annuitant dies before the Annuity Payout Initiation Date and before the Contract is Surrendered. For this purpose, a non-natural person is a trust, custodial account, corporation, limited liability company, partnership, or other entity.
Only one Death Benefit will be paid under the Contract. If a Death Benefit becomes payable, it will be in place of all other benefits under the Contract, and all other rights under this Contract will terminate except for rights related to the Death Benefit.
Death Benefit Payout Date
| • | If the Death Benefit is to be paid as a lump sum, then it will be paid as soon as practicable after the receipt of proof of death and a Request in Good Order for a lump sum payment. |
| • | If the Death Benefit is to be paid under a Payout Option, then we will apply the Death Benefit Value to a Payout Option as soon as practicable after receipt of proof of death and a Request in Good Order. That application date will be the first day of the first payment interval for which a payment is to be made. Death Benefit payments under a Payout Option are made at the end of each payment interval. This means that, for annual payments, the first payment will be made one year after that application date. |
Death Benefit Amount
| • | If the Death Benefit is paid in a lump sum, then it is equal to the Death Benefit Value, increased by any additional post- death interest as required by law. |
| • | If the Death Benefit will be paid as a series of periodic payments under a Payout Option, then the amount of each payment under the Death Benefit is determined on the date that the Death Benefit Value is applied to the Payout Option. The amount or each payment will be based on the Death Benefit Value (increased by any additional post-death interest as required by law to the date it is applied to the Payout Option), the Payout Option that applies, and the payment interval. |
Death Benefit Value
The Death Benefit Value is the greater of:
| • | the Account Value determined as of the date that the Death Benefit Value is determined; or |
| • | the Purchase Payments, reduced proportionally for all withdrawals, but not including amounts applied to pay Early Withdrawal Charges (the “Purchase Payment base”). |
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In either case, the Death Benefit Value is reduced by premium tax or other taxes not previously deducted.
The reduction in your Purchase Payment base for withdrawals will be in the same proportion that your Account Value was reduced on the date of the withdrawal. A proportional reduction in your Purchase Payment base could be larger than the dollar amount of your withdrawal.
Example. Here is an example of how we calculate a proportional reduction of your Purchase Payment base. In this example, we assume you take an $8,000 withdrawal. To simplify the example, we also assume no Early Withdrawal Charge, no premium tax is deducted, and no additional post-death interest is added.
| Before Withdrawal | After Withdrawal | Explanation | ||||||||
Account Value | $ | 100,000 | $ | 92,000 | Your withdrawal reduces your Account Value by $8,000 (which is an 8% reduction in your Account Value). $8,000 / $100,000 = 8% | |||||
Purchase Payment Base for Death Benefit | $ | 120,000 | $ | 110,400 | After the withdrawal, the Purchase Payment base for the Death Benefit is also reduced by 8% or $9,600. $120,000 x 0.08 = $9,600 | |||||
Determination Date
The date that the Death Benefit Value is determined is the earlier of: (1) the first anniversary of the date of death; or (2) the date that we have received both proof of death and Requests in Good Order with instructions as to the form of Death Benefit from all Beneficiaries. Thus, in many cases where there are multiple Beneficiaries, the date that the Death Benefit Value is determined will be the date when the last Beneficiary submits the necessary Request in Good Order or the first anniversary of death. Until then, the Contract values remain in the Indexed Strategies and the Indexed Strategy values may fluctuate. This risk is borne by the Beneficiaries.
Proof of Death
Before making payment of a Death Benefit, or any other payment or transfer of ownership rights that depends on the death of a specified person, we will require proof of death. We may delay making any payment until it is received. For this purpose, proof of death is:
| • | a certified copy of a death certificate showing the cause and manner of death; |
| • | a certified copy of a decree that is made by a court of competent jurisdiction as to the finding of death; or |
| • | other proof that is satisfactory to us. |
Form of Death Benefit
The Death Benefit is paid in the form of annual payments for a fixed period of two years.
In place of that, you may elect to have the Death Benefit paid in one lump sum or in any form of Payout Option that is available under your Contract. The available Payout Options are described in the Payout Options section below. There is no additional charge associated with this election.
You may make an election by a Request in Good Order. We must receive your request on or before the date of death for which a Death Benefit is payable. If you do not make such an election, the Beneficiary may make that election after the date of death. The Beneficiary’s election must be made by a Request in Good Order that is received by us no later than the date that the Death Benefit Value is applied to a Payout Option and at least 30 days before the date of the first payment to be made.
Additional Rules
Any election is subject to the Death Benefit Distribution Rules described below.
A Payout Option that is contingent on life is based on the life of the Beneficiary or, in some cases, the life of a person to whom the Beneficiary is obligated.
We will pay the Death Benefit as a lump sum rather than as payments under a Payout Option if: (1) the Death Benefit is less than $2,000; or (2) as of the date that the Death Benefit Value is to be applied to a Payout Option, the Death Benefit Distribution Rules do not allow a two-year payout.
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Payee of Death Benefit Payments
Death Benefit payments generally are made to the Beneficiary as the payee.
In place of that, the Beneficiary may elect to have payments made:
| • | as a tax-free exchange, transfer, or rollover to or for an annuity or tax-qualified account as permitted by federal tax law; or |
| • | in cases where the Beneficiary is an estate, trust, custodial account, corporation, limited liability company, partnership, or other entity, to a person to whom the Beneficiary is obligated to make corresponding payments. |
Payments that become due after the death of the Beneficiary are made to:
| • | the contingent payee designated as part of a Death Benefit Payout Option elected by you; or if none |
| • | then to a contingent payee designated by the Beneficiary; or if none |
| • | the estate of the last payee who received payments. |
Such payments are subject to the Death Benefit Distribution Rules described below.
You may designate a contingent payee by a Request in Good Order. A Beneficiary may make or change a payee or contingent payee, except a Beneficiary may not change a designation made as part of a Payout Option election made by you for the Death Benefit. If the Beneficiary designates his or her spouse as a contingent payee and their marriage ends before the Beneficiary’s death, then we will treat the former spouse as having predeceased the Beneficiary except to the extent a court order provides that the former spouse’s rights as a contingent payee are to continue.
Death Benefit Distribution Rules
The Death Benefit Distribution Rules are summarized below.
| • | For a Tax Qualified Contract. The Death Benefit must be paid in accordance with the tax qualification endorsement. |
| • | For a Nonqualified Contract. The Death Benefit must be paid either: (1) in full within five years of the date of death; or (2) over the life of the Beneficiary or over a period certain not exceeding the Beneficiary’s life expectancy, with payments at least annually, and with the first payment made within one year of the date of death. |
The standard Payout Options are described below.
Payments under each standard Payout Option are made at the end of a payment interval. For example, if the Annuity Payout Initiation Date is October 31, 2029 and you select annual payments, then the first payment will be paid as of October 31, 2030.
Option | Description for Annuity Payout Benefit | Description for Death Benefit | ||
| Fixed Period Payout | We will make periodic payments to you, or to the Annuitant, if you direct, for the fixed period of time that you select.
• If the payee dies before the end of the fixed period, then we will make periodic payments to the surviving owner(s), or if none, then to the surviving contingent payee(s), or if none, then to the estate of the last payee who received payments.
• In all cases, payments will stop at the end of the fixed period.
For a nonqualified contract, fixed periods shorter than 10 years are not available. For a tax-qualified contract, the only fixed period available is 10 years. | We will make periodic payments to the Beneficiary for the fixed period of time that you or the Beneficiary selects.
• If the Beneficiary dies before the end of the fixed period, then we will make periodic payments to the contingent payee designated as part of any Death Benefit Payout Option that you have elected. If no such contingent payee is surviving, then such payments will be made to a contingent payee designated by the Beneficiary. If there is no contingent payee surviving, then such payments will be made to the estate of the last payee who received payments.
• In all cases, payments will stop at the end of the fixed period.
The fixed period cannot exceed the life expectancy of the Beneficiary. For a tax-qualified contract, the fixed period also cannot exceed 10 years. |
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Option | Description for Annuity Payout Benefit | Description for Death Benefit | ||
| Life Payout | We will make periodic payments to you, or to the Annuitant, if you direct, for as long as the Annuitant lives.
Payments will stop on the death of the Annuitant. This means that, even if we have made only one payment when the Annuitant dies, payments will stop.
If the Annuitant dies after the Annuity Payout Initiation Date but before the first payment, a Life Payout will not provide any benefit at all. In that case, we will reverse the Annuity Benefit Payout election and treat the Contract as if the Annuity Payout Initiation Date had not yet been reached.
• If the Owner is living, this treatment will generally allow the Owner to choose between continuing the Contract as a deferred annuity or electing a new Annuity Payout Initiation Date and another Payout Option.
• If the Annuitant’s death before the Annuity Payout Initiation Date would give rise to a Death Benefit, then the Death Benefit will be available. | We will make periodic payments to the Beneficiary for as long as the Beneficiary lives.
Payments will stop on the death of the Beneficiary. This means that, even if we have made only one payment when the Beneficiary dies, payments will stop.
If the Beneficiary dies after the Death Benefit is applied to the Payout Option but before the first payment, a Life Payout will not provide any benefit at all. In that case, we will reverse the Payout Option election and allow the Beneficiary’s estate to choose a new Payout Option or to take the Death Benefit as a lump sum.
For a tax-qualified contract, a Life Payout is not available to all Beneficiaries. | ||
| Life Payout with Payments for at Least a Fixed Period | We will make periodic payments to you, or to the Annuitant, if you direct, for as long as the Annuitant lives.
• If the Annuitant dies after the end of the fixed period you selected, then payments will stop on the death of the Annuitant.
• If the Annuitant dies before the end of the fixed period you selected, then we will make periodic payments to the surviving owner(s), or if none, then to the surviving contingent payee(s), or if none, then to the estate of the last payee who received payments. In this case, payments will stop at the end of the fixed period you selected.
For a tax-qualified contract, fixed periods longer than 10 years are not available. | We will make periodic payments to the Beneficiary for as long as the Beneficiary lives.
• If the Beneficiary dies after the end of the fixed period selected, then payments will stop on the death of the Beneficiary.
• If the Beneficiary dies before the end of the fixed period you or the Beneficiary selected, then we will make periodic payments to the contingent payee designated as part of any Death Benefit Payout Option that you have elected. If no such contingent payee is surviving, then such payments will be made to a contingent payee designated by the Beneficiary. If there is no contingent payee surviving, then such payments will be made to the estate of the last payee who received payments. In this case, payments will stop at the end of the fixed period you or the Beneficiary selected.
The fixed period cannot exceed the life expectancy of the Beneficiary. For a tax-qualified contract, a Life Payout with Payments for at Least a Fixed Period is not available to all Beneficiaries, and the fixed period also cannot exceed 10 years. |
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Option | Description for Annuity Payout Benefit | Description for Death Benefit | ||
| Joint and One-Half Survivor Payout | We will make periodic payments to you, or to the primary Annuitant, if you direct, for as long as the primary Annuitant lives.
• If the primary Annuitant dies and the secondary Annuitant does not survive the primary Annuitant, then payments will stop on the death of the primary Annuitant.
• If the primary Annuitant dies and the secondary Annuitant is surviving, then we will make one-half of the periodic payment to you, or the secondary Annuitant, if you direct, for the rest of the secondary Annuitant’s life. In this case, payments will stop on the death of the secondary Annuitant.
This means that, even if we have made only one payment when the primary Annuitant dies, payments will stop unless the secondary Annuitant survives.
If the Annuitant dies after the Annuity Payout Initiation Date but before the first payment, a Joint and One-Half Survivor Payout will never provide the full payment amount. In that case, if the secondary Annuitant agrees, we will reverse the Annuity Benefit Payout election and treat the Contract as if the Annuity Payout Initiation Date had not been reached.
• If the Owner is living, this treatment will generally allow the Owner to choose between continuing the Contract as a deferred annuity or electing a new Annuity Payout Initiation Date and another Payout Option.
• If the Annuitant’s death before the Annuity Benefit Payout Initiation Date would give rise to a Death Benefit, then the Death Benefit will be available. | We will make periodic payments to the Beneficiary for as long as the Beneficiary lives.
• If the Beneficiary dies and the contingent payee does not survive the Beneficiary, then payments will stop on the death of the Beneficiary.
• If the Beneficiary dies and the contingent payee designated as part of the Death Benefit Payout Option election is surviving, then we will make one-half of the periodic payment to the contingent payee for the rest of the contingent payee’s life. In this case, payments will stop on the death of the contingent payee.
This means that, even if we have made only one payment when the Beneficiary dies, payments will stop unless the contingent payee survives.
If the Beneficiary dies after the Death Benefit is applied to the Payout Option but before the first payment, a Joint and One-Half Survivor Payout will never provide the full payment amount. In that case, if the contingent payee agrees, we will reverse the Payout Option election and allow the Beneficiary’s estate to choose a new Payout Option or to take the Death Benefit as a lump sum.
A Joint and One-Half Survivor Payout is only available to a Beneficiary who is the surviving spouse of the owner. |
We will make payments in any other form of Payout Option that is acceptable to us at the time of any election. More than one Payout Option may be elected if the requirements for each Payout Option elected are satisfied. All elected Payout Options must comply with pertinent laws and regulations.
Payments under a Payout Option are calculated and paid as fixed dollar payments. The stream of payments is an obligation of the general account of MassMutual Ascend Life. Fixed dollar payments will remain level for the duration of the payment period. Once payments begin under a Payout Option, the Payout Option may not be changed. Once the Contract value is applied to a Payout Option, the periodic payments cannot be accelerated or converted into a lump sum payment unless we agree.
We will use the 2012 Individual Annuity Reserving Table with projection scale G2 for blended lives (60% female/40% male) with interest at 1% per year, compounded annually, to compute all guaranteed Payout Option factors, values, and benefits under the Contract. For purposes of calculating payments based on the age of a person, we will use his or her age as of his or her last birthday.
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Considerations in Selecting a Payout Option
Payments under a Payout Option are affected by various factors, including the length of the payment period, the life expectancy of the person on whose life payments are based, and the frequency of the payment interval (monthly, quarterly, semi-annually or annually).
| • | Generally, the longer the period over which payments are made or the more frequently the payments are made, the lower the amount of each payment because more payments will be made. |
| • | For Life Payout Options, the longer the life expectancy of the Annuitant or Beneficiary, the lower the amount of each payment because more payments are expected to be paid. |
Non-Human Payees under a Payout Option
Except as stated below, the primary payee under a Payout Option must be a human being. All payments during his or her life must be made by check payable to the primary payee or by electronic transfer to a bank account owned by the primary payee.
Exceptions. Below are some exceptions to the general rule that the primary payee must be a human being. We may make other exceptions in our discretion.
| • | A nonhuman that is the Owner of the Contract may be the primary payee. For example, if the Owner is a trust, that trust may be the primary payee. |
| • | Payments may be made payable to another insurance company or financial institution as a tax-free exchange, transfer, or rollover to or for another annuity or tax-qualified account as allowed by federal tax law. |
Processing Applications and Requests
Processing Applications and Initial Purchase Payments
We will process an application when we have received both the application and the initial Purchase Payment.
| • | If that happens on a Market Day before the Market Close, we will process the application and apply the Purchase Payment on that Market Day. |
| • | If that happens on a Market Day after the Market Close or on a day that is not a Market Day, then we will process the application and apply the Purchase Payment on the next Market Day. |
We cannot process your application if it is not a Request in Good Order or if we have not received your initial Purchase Payment. Likewise, we cannot apply your initial Purchase Payment if we have not received your application.
If you have any questions, you should contact us or your registered representative before submitting your application or sending your initial Purchase Payment.
Processing Additional Purchase Payments
| • | If we receive an additional Purchase Payment on a Market Day before the Market Close, we will apply it on that Market Day. |
| • | If we receive an additional Purchase Payment on a Market Day after the Market Close or on a day that is not a Market Day, then we will apply it on the next Market Day. |
We cannot apply an additional Purchase Payment if we do not have complete instructions from you.
If you have any questions, you should contact us or your registered representative before sending an additional Purchase Payment.
Processing Requests
Requests may be made by mail at P.O. Box 5423, Cincinnati OH 45201-5423. Request by fax may be made at 800-807-9777.
Requests for reallocations among Strategies may be made by telephone at 1-800-789-6771 between 8:00 AM and 4:00 PM Eastern Time Monday through Friday. We may also permit reallocation requests to be made at our website (www.massmutualascend.com). Some selling firms may restrict the ability of their registered representatives to convey reallocation requests by telephone or Internet on your behalf.
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To obtain one of our forms (for example, a Strategy Selection form or a Withdrawal Request form) or to obtain more information about how to make a request, call us at 1-800-789-6771 or send us a fax at 800-807-9777. You can also request forms or information by mail at MassMutual Ascend Life Insurance Company, P.O. Box 5423, Cincinnati OH 45201-5423. You may also obtain forms on our website, www.massmutualascend.com.
We cannot process a request unless it is a Request in Good Order. A request may be rejected or delayed if it is not a Request in Good Order.
| • | If we receive a Request in Good Order on a Market Day before the Market Close, we will process it using values determined at the Market Close on that Market Day. |
| • | If we receive a Request in Good Order after the Market Close or on a day that is not a Market Day, then we will treat that request as received at the start of the next Market Day. |
If you have any questions, you should contact us or your registered representative before submitting the request.
Exception. If a withdrawal under an automatic withdrawal program is scheduled for a date that is not a Market Day, then we will process the withdrawal on the scheduled date using values at the most recent Market Close. For example, if the automatic withdrawal is scheduled for a date that falls on Sunday and there was a Market Close at 4:00 PM on the previous Friday, then we will process the withdrawal on Sunday using values determined at 4:00 PM on that Friday.
Market Days and Market Close
A Market Day is each day that all markets that are used to measure available Indexed Strategies are open for regular trading.
| • | Saturdays, Sundays, holidays and any other day that the New York Stock Exchange and the NYSE Arca are closed are not Market Days. |
| • | The NYSE and the NYSE Arca observe the following holidays: New Year’s Day, Martin Luther King, Jr. Day, President’s Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. |
A Market Close is the close of the regular or core trading session on the market used to measure a given Indexed Strategy.
NYSE | NYSE Arca | |
| Regular trading hours usually end at 4:00 PM Eastern Time | Core trading session usually ends at 4:00 PM Eastern Time | |
| Trading hours end at 1:00 PM Eastern Time on the day before the Fourth of July and the Friday after Thanksgiving Christmas Eve. | Core trading session ends at 1:00 PM Eastern Time on the day before the Fourth of July and the Friday after Thanksgiving Christmas Eve. | |
Regular trading or a core trading session may end at a different time on a Market Day under certain circumstances when and as permitted under applicable rules. Such circumstances generally cannot be predicted in advance.
Specific information about NYSE and NYSE Arca holidays and trading hours in any given calendar year is available at https://www.nyse.com/markets/hours-calendars.
Receipt of Purchase Payments, Applications and Requests
For purposes of processing, we deem Purchase Payments and applications, Requests in Good Order and other instructions (paperwork) mailed to our post office box as received by us at our administrative office when the Purchase Payment or the paperwork reaches the applicable processing department located at 191 Rosa Parks Street, Cincinnati OH 45202.
Risks and Limitations Related to Requests by Telephone or Internet
We will use reasonable procedures such as requiring certain identifying information, tape recording the telephone instructions, and providing written confirmation of the transaction, in order to confirm that instructions communicated by telephone, fax, Internet or other means are genuine. Any telephone, fax or Internet instructions reasonably believed by us to be genuine will be your responsibility, including losses arising from any errors in the communication of instructions. As a result of this policy, you will bear the risk of loss. We are not responsible for the validity of any request or action.
Telephone and computer systems may not always be available. Any telephone or computer system, whether it is yours, your service provider’s, your agent’s, or ours, can experience outages or slowdowns for a variety of reasons. These outages or slowdowns may delay or prevent our processing of your request. Although we have taken precautions to help our systems handle heavy use, we cannot promise complete reliability under all circumstances. If you experience technical difficulties or problems, you should consider making your request by mail.
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If you purchase your contract and subsequently move or travel to a country for which we restrict website access due to Office of Foreign Assets Control (OFAC) sanctions, other US government regulations, or high computer hacker risk, you will only be able to submit transaction requests via telephone, U.S. postal service, or private carriers. The list of countries for which we currently block website access is as follows: Iran, Russia, North Korea, Ukraine, China, Syrian Arab Republic, Tunisia, Belarus, Turkey, South Korea, Venezuela, Palestinian Territory, and Vietnam. We will update this list from time to time, as needed.
Suspension of Payments or Transfers
We may be required to suspend or delay payments, withdrawals and reallocations when we cannot obtain an Index Value because:
| • | the New York Stock Exchange or NYSE Arca is closed (other than customary weekend and holiday closings); |
| • | trading on the New York Stock Exchange or NYSE Arca is restricted; |
| • | an emergency exists such that it is not reasonably practicable to determine fairly the value of the Index; or |
| • | we are permitted to do so under a regulatory order. |
Restrictions on Financial Transactions
Federal laws designed to counter terrorism and prevent money laundering might, in certain circumstances, require us to block an Owner’s ability to make certain transactions. This means that we may be required to refuse to accept any request for withdrawals, Surrenders, Annuity Payout Benefit payments or Death Benefit payments, until instructions are received from the appropriate regulator. We may also be required to provide additional information about you and your Contract to government regulators.
If you change your mind about owning the Contract, you can cancel it within 20 days after you receive it. If you purchased this Contract to replace an existing annuity contract or life insurance policy, you have 30 days after you receive it. This is known as a “free look.” The right to cancel period may be longer in some states.
To cancel your Contract, you must submit your request to cancel to the producer who sold it or send it to us at P.O. Box 5423, Cincinnati, OH 45201-5423. If sent to us by mail, it is effective on the date postmarked with proper address and postage paid. Your request to cancel must be in writing and signed by you.
When you cancel the Contract within this free look period, we will not assess an Early Withdrawal Charge. Unless otherwise required by state law, you will receive the Account Value of your Contract on the day that we receive your cancellation request. The amount you receive may be more or less than your Purchase Payment(s) depending upon the amount of interest earned by your Contract during the free look period and any Vested Gain or Loss that applies as of the day that we receive your cancellation request. This means that you bear the risk of any decline in the Account Value of your Contract during the free look period. We do not refund any Daily Charge assessed during the free look period. We do not refund any Early Withdrawal Charges assessed during the free look period that relate to a withdrawal taken before you cancel the Contract.
In certain states, we are required to give back your Purchase Payment(s) if you decide to cancel your Contract during the free look period. If we are required by law to refund your Purchase Payment(s), we reserve the right to hold your Purchase Payment(s) in the Purchase Payment Account until the first Strategy Application Date on or after the end of the free look period. In those states, no interest or Vested Gain will be paid.
Annual Statement and Confirmations
At least once each calendar year, we will send you a statement that will show: (1) your Account Value; (2) all transactions regarding your Contract during the year; and (3) the interest credited to your Contract and Vested Gains and Losses credited to your Contract.
We will also send you written confirmations of Purchase Payments, Strategy allocations and renewals, withdrawals, and other financial transactions under your Contract. Statements and confirmations will be sent to your last known address on our records.
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You should promptly report any inaccuracy or discrepancy in a statement or confirmation. To report an inaccuracy or discrepancy, contact us at P.O. Box 5423, Cincinnati, OH 45201-5423, or call us at 1-800-789-6771. To protect your rights, you should consider reconfirming any oral communications by sending a written statement to P.O. Box 5423, Cincinnati, OH 45201-5423.
You may elect to receive electronic delivery of the Contract prospectus and other Contract related documents. Contact us at our website at www.massmutualascend.com for more information and to enroll.
Abandoned Property Requirements
Every state has unclaimed property laws. These laws generally declare annuity contracts to be abandoned after a period of inactivity of three to five years from: (1) the latest permitted Annuity Payout Initiation Date; or (2) the date of death for which a Death Benefit is due and payable. For example, if the payment of a death benefit has been triggered, but the beneficiary does not come forward to claim the death benefit in a timely manner, the unclaimed property laws will apply.
If a Death Benefit, Annuity Payout Benefit payments or other contract proceeds are unclaimed, we will pay them to the abandoned property division or unclaimed property office of the applicable state. (Escheatment is the formal, legal name for this process.) For example, on an unclaimed Death Benefit, depending on the circumstances, the proceeds are paid: (1) to the state where the beneficiary last resided, as shown on our books and records; (2) to the state where the contract owner last resided, as shown on our books and records; or (3) to Ohio, which is our state of domicile. The state will hold the proceeds without interest until a valid claim is made by the person entitled to the proceeds.
To prevent escheatment of the Death Benefit, Annuity Payout Benefit payments, or other proceeds from your Contract, it is important:
| • | to update your contact information, such as your address, phone number, and email address, if and as it changes; and |
| • | to update your Beneficiary and other designations, including complete names, complete addresses, phone numbers, and social security numbers, if and as they change. |
Please contact us at P.O. Box 5423, Cincinnati, OH 45201-5423, or call us at 1-800-789-6771, to make such updates.
State unclaimed property laws do not apply to annuity contracts that are held under an employer retirement plan that is subject to the Employee Retirement Income Security Act of 1974 (ERISA).
The Owner on the Contract Effective Date is set out on your Contract Specifications Page. The Owner possesses all of the ownership rights under a Contract, such as making allocations among the Strategies, electing a Payout Option, and designating a Beneficiary.
If an Owner is a trust, custodial account, corporation, limited liability company, partnership, or other entity, then the age of the eldest Annuitant is treated as the age of the Owner for all purposes of this Contract.
Joint Owners
| • | For a Nonqualified Contract. Two persons may jointly own the Contract. In this case, the term “Owner” includes the joint Owner and you must exercise all rights of ownership by joint action. |
| • | For a Tax Qualified Contract. No joint owner is permitted. |
Change of Owner
| • | For a Nonqualified Contract. You may change the Owner at any time during your lifetime. A change of Owner cancels all prior Beneficiary designations. It does not cancel a designation of an Annuitant or a Payout Option election. |
| • | For a Tax Qualified Contract. You cannot change the Owner except to the limited extent permitted by the tax qualification endorsement. |
A change of Owner must be made by a Request in Good Order. A change of Owner may have adverse tax consequences.
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Assignment
| • | For a Nonqualified Contract. You may assign all or any part of your rights under this Contract except your rights to designate or change a Beneficiary or an Annuitant, to change Owners, or to elect a Payout Option. |
| • | For a Tax Qualified Contract. You cannot assign your rights under this Contract except to the limited extent permitted by the tax qualification endorsement. |
An assignment must be made by a Request in Good Order. We are not responsible for the validity of any assignment. An assignment may have adverse tax consequences.
The rights of a person holding an assignment, including the right to any payment under this Contract, come before the rights of an Owner, Annuitant, Beneficiary, or other payee. An assignment may be ended only the person holding it or as provided by law.
Successor Owner
Your spouse becomes the successor owner of the Contract and succeeds to all rights of ownership if all of the following requirements are met:
| • | a Death Benefit is payable on account of your death; |
| • | the sole Beneficiary under the Contract is your spouse or a revocable trust or custodial account created by your spouse; |
| • | either you make that election by a Request in Good Order before your death or your spouse makes that election by a Request in Good Order before the Death Benefit Payment Date; and |
| • | you were not a successor owner of the Contract. |
A successor owner election cancels all prior Beneficiary designations. It does not cancel a designation of an Annuitant or a Payout Option election.
In some states, state law extends this successor owner right to a civil union partner or other person who is not your spouse as defined by federal tax law. In that case, distributions after your death must be made as required by the Death Benefit Distributions Rules described in the Death Benefit section on page 56.
Community Property
If you live in a community property state and have a spouse at any time while you own this Contract, the laws of that state may vary your ownership rights.
The Annuitant is the natural person on whose life Annuity Payout Benefit payments are based. The Annuitant on the Contract Effective Date is set out on your Contract Specifications Page.
| • | For a Nonqualified Contract. The Annuitant cannot be changed at any time that the Contract is owned by a trust, custodial account, corporation, limited liability company, partnership, or other entity. Otherwise, you may change a designation of Annuitant at any time before the Annuity Payout Initiation Date. |
| • | For a Tax Qualified Contract. The Annuitant must be the natural person covered under the retirement arrangement for whose benefit the Contract is held. |
A change of Annuitant must be made by a Request in Good Order. A change of Annuitant does not cancel a designation of a Beneficiary or a Payout Option election.
If an Annuitant dies before the Annuity Payout Initiation Date and no Death Benefit is payable, then in the absence of a new designation, the Annuitant will be:
| • | the surviving joint Annuitant(s); or if none |
| • | the Owner(s). |
A Beneficiary is a person entitled to receive all or part of a Death Benefit that is to be paid under this Contract on account of a death before the Annuity Payout Initiation Date.
| • | If a Death Benefit becomes payable on account of your death or the death of a joint Owner, then the surviving Owner is the Beneficiary no matter what other designation you may have made. |
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| • | In all other cases, you may designate a person or person who will be the Beneficiaries as provided in the Designation of Beneficiary provision of the Contract. |
| • | If no designated Beneficiary is surviving, then the Beneficiary is your estate. |
| • | If the sole Beneficiary under the Contract is your spouse or a revocable trust or custodial account created by your spouse and all other requirements for successor ownership are met, then your spouse may become the successor owner of the Contract in lieu of receiving the Death Benefit. |
A designation of Beneficiary must be made by a Request in Good Order. We must receive the request on or before the date of death for which a Death Benefit is payable.
| • | You may designate two or more persons jointly as the Beneficiaries. Unless you state otherwise, joint Beneficiaries that are surviving are entitled to equal shares. |
| • | You may designate one or more persons as contingent Beneficiary. Unless you state otherwise, a contingent Beneficiary is entitled to a benefit only if there is no primary Beneficiary who that is surviving. |
Survivorship Required
In order to be entitled to receive a Death Benefit, a Beneficiary must survive for at least 30 days after the death for which the Death Benefit is payable.
If you designate your spouse as a Beneficiary and your marriage ends before your death, we will treat your former spouse as having predeceased you unless:
| • | a court order provides that the former spouse’s rights as a beneficiary are to continue; or |
| • | the former spouse remains or becomes an Owner. |
Amendment of the Contract
We reserve the right to amend the Contract to comply with applicable Federal or state laws or regulations. We will notify you in writing of any such amendments.
Misstatement
We may require proof of the age of the Annuitant, Owner and/or the Beneficiary before making any payments under the Contract that are measured by such person’s life. If the age of the measuring life has been misstated, the amount payable will be the amount that would have been provided at the correct age. If payments based on the correct age would have been higher, we will pay the underpaid amount with interest. If payments would be lower, we may deduct the overpaid amount, with interest, from succeeding payments.
Involuntary Termination
If your Account Value on any anniversary of the initial Strategy Application Date is below the minimum value of $5,000 for any reason, we may terminate your Contract on that anniversary. If your Contract has Terms that end on the same date because you made only one Purchase Payment, any involuntary termination will occur on that date. If your Contract has Terms that end on different dates because you made more than one Purchase Payment, any involuntary termination will occur on one of those dates, which will be the end of one Term but not the end of the other Terms. In this case, the Surrender Value payable upon termination of your Contract will reflect the Vested Gains and Vested Losses used to calculate the values of Indexed Strategies with Terms that are not ending on the termination date.
Loans
Loans are not available under the Contract.
This prospectus describes the material features of the Contract. Contracts issued in your state may provide different features and benefits from, and impose different costs than, those described in this prospectus because of state law variations. However, please note that the maximum charge is set forth in this prospectus. If you would like to review a copy of the Contract and any endorsements, contact us at P.O. Box 5423, Cincinnati, OH 45201-5423, visit our website at www.massmutualascend.com or call us at 1-800-789-6771.
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The following information is a summary of material state variations as of the date of this prospectus.
General
For Contracts Issued in Illinois and New Jersey: References to “spouse” have been changed to “spouse or civil union partner.”
Extended Care Waiver Rider. The table below summarizes material state variations related to the rider.
For Contracts Issued in: | Variations in Extended Care Waiver Rider | |
| California | The Waiver of Early Withdrawal Charges for Facility Care or Home Care or Community-Based Services Rider (CA Rider) replaces the Extended Care Waiver Rider. The CA Rider provides a waiver under an expanded set of circumstances. The waiver will apply if, at the time of the withdrawal or surrender, or within the immediately preceding 90 days, the following conditions are met: (1) the insured is confined in a facility or is receiving, as prescribed by a physician, registered nurse or licensed social worker, home care or community-based services; (2) the insured’s confinement in a facility, the insured’s receipt of home care or community-based services, or any combination thereof has continued for a period of at least 90 consecutive days; and (3) the first day of such 90-day period was at least one year after the contract effective date. Facility includes a skilled nursing facility, a convalescent nursing home, or an extended care facility or a residential care facility or a residential care facility for the elderly. Home care or community-based services includes home health care, adult day care, personal care, homemaker services, hospice services and respite care as defined in the rider. Additional conforming changes have been made including revised and new definitions, and inclusion of a description of circumstances under which the waiver does not apply. The termination provision has been modified to reflect that the rider will not terminate if you transfer or assign an interest in the contract to a person or entity other than the insured. | |
| Connecticut | The conditions under which the waiver applies have been modified. The waiver will apply if at the time of a withdrawal or surrender or within the immediately preceding 90 days all of the following conditions are met: (1) an insured is confined in a long-term care facility or hospital; and (2) the confinement has continued for a period of at least 90 consecutive days. | |
| Kansas | The conditions under which the waiver applies have been modified. The first day of confinement must be at least 90 days after the contract effective date, rather than one year after the contract effective date. | |
| Massachusetts and Missouri | This waiver rider in not available in Massachusetts or Missouri. | |
| Montana | The definition of medically necessary has been modified and refers to the insured’s physician. | |
| Nebraska | The definition of skilled nursing facility has been modified by adding a licensed practical nurse to the list of persons who may provide nursing services or supervise the provision of nursing services. | |
| New Hampshire | The definition of skilled nursing facility has been modified by changing the phrase “licensed and operated as a skilled nursing facility” to “operated as a skilled nursing facility.” | |
Pennsylvania | The conditions under which the waiver is available have been modified. The waiver will apply if at the time of a withdrawal or surrender or within the immediately preceding 90 days all of the following conditions are met: (1) an insured is confined in one or more long-term care facilities, hospital, or a combination of such; (2) the confinement is prescribed by a physician and is medically necessary; (3) the first day of the confinement is at least one year after the contract effective date; and (4) the confinement has continued for a period of at least 90 consecutive days, or has continued for a total of at least 90 days if each successive confinement occurs within six months of the previous confinement and is for the same related medical cause.
The definition of long-term care facility has been modified. The following facilities have been deleted from the list of facilities excluded from that definition: a facility that primarily treats drug addicts and a facility that is a home for the mentally ill. An exclusion provision has been added to clarify that the waiver will not apply if the insured is confined in a long-term care facility or hospital for the treatment of certain types of drug addiction or mental illnesses.
The definition of hospital has been modified by changing the phrase “it maintains, or has access to, medical, diagnostic, and major surgical facilities” to “it maintains, or has access to, medical and diagnostic facilities.” | |
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For Contracts Issued in: | Variations in Extended Care Waiver Rider | |
| Vermont | The definition of long-term care facility has been modified. The following facilities have been deleted from the list of excluded facilities: a facility that primarily treats drug addicts, a facility that primarily treats alcoholics, and a facility that is a home for the mentally ill.
The definition of physician has been modified by changing the phrase “a person who is licensed in the United States as a medical doctor or a doctor of osteopathy and who is practicing within the scope of his or her license” to “a person who is licensed in the United States who is providing medical care and treatment when such services are provided within the scope of his or her license and provided pursuant to applicable law.” | |
| Washington | The waiver is based on confinement to an extended care facility or hospital rather than a long-term care facility or hospital. Definitions are modified to reflect the new terminology, references to “skilled nursing facility” are changed to “nursing facility” and the related definition is modified. In the definition of nursing facility and hospital, a licensed practical nurse is added to the list of persons who may provide nursing services or supervise the provision of nursing services. | |
Terminal Illness Waiver Rider. The table below summarizes material state variations related to the rider.
For Contracts Issued in: | Variations in Terminal Illness Waiver Rider | |
| Illinois, Kansas, Washington | As a result of the terminal illness, your life expectancy must be 24 months from the date of death, rather than 12 months. | |
| Kansas | The diagnosis must be rendered 90 days after the contract effective date, rather than one year after the contract effective date. | |
| New Jersey | The requirement related to the timing of the diagnosis does not apply. But the waiver will not be available until at least one year after the contract effective date. | |
| Massachusetts | This waiver rider in not available in Massachusetts. | |
| Pennsylvania | The diagnosis must be rendered after the contract effective date, rather than one year after the contract effective date. But the waiver will not be available until at least one year after the contract effective date. The waiver is based on a terminal condition as defined in the rider, rather than a terminal illness. | |
| Texas | The diagnosis must be rendered on or after the contract effective date, rather than one year after the contract effective date. | |
Form of Annuity Payout Benefit
For Contracts Issued in Texas: Payments under a Payout Option are subject to a $50 minimum.
Right to Cancel (Free Look)
State law governs the length of the free look period and the amount of the refund that you will receive. The table below summarizes the state law provisions.
For Contracts Issued in: | Free Look Period and Refund | Replacement Situations: Free Look Period and Refund | ||
| Alabama, Colorado, Hawaii, Iowa, Maine, Mississippi, Montana, New Mexico, Ohio, Oregon, Vermont, Virginia, West Virginia | 20 days Account Value | 30 days Account Value + Fees/Charges | ||
| Alaska, Arizona, Connecticut, Illinois, Kansas, Michigan, New Jersey, North Dakota, South Dakota | 20 days Account Value + Fees/Charges | 30 days Account Value + Fees/Charges | ||
| Arkansas, District of Columbia, Pennsylvania | 20 days Account Value | 30 days Account Value | ||
| Delaware, Indiana, Massachusetts, Tennessee | 20 days Account Value | 30 days Purchase Payments | ||
| Georgia, Idaho, Missouri, Nevada, Oklahoma, Utah | 20 days Purchase Payments | 30 days Purchase Payments | ||
| Kentucky, Louisiana, Maryland, Nebraska, New Hampshire, North Carolina, Rhode Island, South Carolina, Texas | 20 days Purchase Payments | 30 days Account Value + Fees/Charges | ||
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For Contracts Issued in: | Free Look Period and Refund | Replacement Situations: Free Look Period and Refund | ||
| California | 30 days Account Value + Fees/Charges If owner is age 60 or older, refund amount is Purchase Payments | 30 days Account Value + Fees/Charges If owner is age 60 or older, refund amount is Purchase Payments | ||
| Florida | 21 days Account Value + Fees/Charges | 30 days Account Value + Fees/Charges | ||
| Minnesota | 20 days Account Value + Fees/Charges | 30 days Purchase Payments | ||
| Washington | 20 days Greater of: (1) Purchase Payments or (2) Account Value minus taxes | 30 days Purchase Payments | ||
| Wisconsin | 30 days Account Value | 30 days Account Value + Fees/Charges | ||
| Wyoming | 20 days Account Value | 30 days Greater of: (1) Purchase Payments or (2) Account Value + Fees/Charges | ||
Assignment
For Contracts Issued in Ohio: Subject to the tax qualifications endorsement, if any, you may assign your rights to designate or change a Beneficiary or an Annuitant, to change Owners, or to elect a Payout Option if you make a specific Request in Good Order.
Amendment of the Contract
For Contracts Issued in Florida and Texas: You have the right to reject an endorsement that changes the provisions of this Contract to obtain or retain the intended tax treatment under federal tax law, or to take into account other pertinent laws and governmental regulations and rulings. We will not be responsible for the tax or other consequences of your rejection.
Involuntary Termination
For Contracts Issued in Texas: Our right to terminate this Contract is not tied to the minimum required value. We have the right to terminate this Contract if the Account Value would provide a benefit of less than $20 each month at age 70 under a life payout with payments for at least a fixed period of 10 years.
We may replace an Index if it is discontinued or we are no longer able to use it, its calculation changes substantially, or we determine that hedging instruments are difficult to acquire or the cost of hedging becomes excessive. We may do so at the end of a Term or during a Term. We will notify you in writing at least 30 days before we replace an Index.
We would attempt to choose a replacement Index that is similar to the old Index. To determine if a new Index is similar, we will consider factors such as asset class, Index composition, strategy or methodology inherent to the Index and Index liquidity.
If we replace an Index during a Term, we will calculate Vested Gains and Losses using the old Index up until the replacement date. After the replacement date, we will calculate Vested Gains and Losses using the new Index, but with a modified start of Term value for the new Index. The modified start of Term value for the new Index will reflect the Index Change for the old Index from the start of the Term to the replacement date.
If we replace an Index, the applicable Maximum Gain and Bailout Trigger for the Term, the applicable Maximum Loss or Buffer, and the Vesting Factors will not change.
Example. This example is intended to show how we would calculate Vested Gain or Loss on any day during a Term if we have replaced an Index during the Term. This example assumes: (1) you allocate $50,000 to a Growth/-10% Floor Strategy; and (2) the replacement is made on day 90 of the Term. To simplify the example, we assume that you take no withdrawals during the Term.
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Index Change on Replacement Date for Old Index | ||||
Old Index Value at Term Start | 1000 | |||
Old Index Value on Replacement Date | 1050 | |||
Old Index Change on Replacement Date | (1050 - 1000) / 1,000 = 5 | % | ||
The 5% Index Change on the Replacement Date is then used to calculate the modified start of Term value for the new Index.
Modified Start of Term Value for New Index | ||||
Old Index Change on Replacement Date | 5 | % | ||
New Index Value on Replacement Date | 1785 | |||
Modified Start of Term Value for New Index | 1785 / (100% + 5%) = 1700 | |||
The modified start of Term value for the new Index is then used to calculate the Strategy value on any date after the replacement date, including the value at the Term end.
Strategy Value at Term End | ||
Daily Charges through Term End | $50,000 x 0.50% = $250 | |
Remaining Investment Base at Term End | $50,000 - $250 = $49,750 | |
Modified Start of Term Value for New Index | 1700 | |
Value of New Index at Term End | 1853 | |
Positive Index Change | (1853 - 1,700) / 1700) = 9% | |
Maximum Gain | Gain of 8% | |
Positive Index Change Limited by Maximum Gain | 8% | |
Vesting Factor for Positive Index Change at Term End | 100% | |
Vested Gain as a Percentage | 8% x 100% = 8% | |
Vested Gain in Dollars | $49,750 x 8% = $3,980 | |
Strategy Value at Term End | $49,750 + $3,980 = $53,730 |
This section provides a general description of federal income tax considerations relating to the Contracts. The purchase, holding and transfer of a Contract may have federal estate and gift tax consequences in addition to income tax consequences. Estate and gift taxation is not discussed in this prospectus. State taxation will vary, depending on the state in which you reside, and is not discussed in this prospectus.
The tax information provided in this prospectus is not intended or written to be used as legal or tax advice. It is written solely to provide general information related to the sale and holding of the Contracts. You should seek advice on legal or tax questions based on your particular circumstances from an attorney or tax advisor.
Tax Deferral on Annuities
Internal Revenue Code (“IRC”) Section 72 governs taxation of annuities in general. The income earned on a Contract is generally not included in income until it is withdrawn from the Contract. In other words, a Contract is a tax-deferred investment. Tax deferral is not available for a Contract when an Owner is not a natural person unless the Contract is part of a tax-qualified retirement plan or the Owner is a mere agent for a natural person. For a nonqualified deferred compensation plan, this rule means that the employer as Owner of the Contract will generally be taxed currently on any increase in the Surrender Value, although the plan itself may provide a tax deferral to the participating employee.
Under certain circumstances, based on a rule known as the “Investor Control Doctrine,” the IRS has stated that the holder of an annuity contract could be treated as the owner (for tax purposes) of the assets of a separate account that supports the annuity contract. If you were treated as the owner of an interest in the separate account, then you would be taxed on the income, gain, and loss arising out of your interest in the separate account. Although the IRS has not provided definitive guidance on the application of this rule to indexed annuity contracts, we do not believe that this rule applies to the Contract because you have no specific, fractional, or unitized interest in the separate account assets, we are not obligated to invest the separate account in any particular assets, the investment return and market value of the separate account assets is not allocated in an identical manner to any Contract, the Contract values are determined based on gains and losses regardless of the performance of the separate account assets, and the derivatives that we may hold in the separate account are not publicly traded.
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Tax-Qualified Retirement Plans
Annuities may also qualify for tax-deferred treatment, or serve as a funding vehicle, under tax-qualified retirement plans that are governed by other IRC provisions. These provisions include IRC Section 401 (pension, profit sharing, and 401(k) plans), IRC Section 403(b) (tax-sheltered annuities), IRC Sections 408 and 408A (individual retirement annuities), and IRC Section 457(b) (governmental deferred compensation plans). Tax-deferral is generally also available under these tax-qualified retirement plans through the use of a trust or custodial account without the use of an annuity.
The tax law rules governing tax-qualified retirement plans and the treatment of amounts held and distributed under such plans are complex. If the Contract is to be used in connection with a tax-qualified retirement plan, including an individual retirement annuity (“IRA”) under a Simplified Employee Pension (SEP) Plan, you should seek competent legal and tax advice regarding the suitability of the Contract for your particular situation.
Contributions to a tax-qualified Contract are typically made with pre-tax dollars, while contributions to other Contracts are typically made from after-tax dollars, though there are exceptions in either case. Tax-qualified Contracts may also be subject to restrictions on withdrawals that do not apply to other Contracts. These restrictions may be imposed to meet the requirements of the IRC or of an employer plan.
Following is a brief description of the types of tax-qualified retirement plans for which the Contracts are available.
Individual Retirement Annuities. IRC Sections 219 and 408 permit certain individuals or their employers to contribute to an individual retirement arrangement known as an “Individual Retirement Annuity” or “IRA”. Under applicable limitations, an individual may claim a tax deduction for certain contributions to an IRA. Contributions made to an IRA for an employee under a Simplified Employee Pension (SEP) Plan or Savings Incentive Match Plan for Employees (SIMPLE) established by an employer are not includable in the gross income of the employee until distributed from the IRA. Distributions from an IRA are taxable to the extent that they represent contributions for which a tax deduction was claimed, contributions made under a SEP plan or SIMPLE, or income earned within the IRA.
Roth IRAs. IRC Section 408A permits certain individuals to contribute to a Roth IRA. Contributions to a Roth IRA are not tax deductible. Tax-free distributions of contributions may be made at any time. Distributions of earnings are tax-free following the five-year period beginning with the first year for which a Roth IRA contribution was made if the Owner has attained age 59 1/2, become disabled, or died, or for qualified first-time homebuyer expenses.
Tax-Sheltered Annuities. IRC Section 403(b) of permits public schools and charitable, religious, educational, and scientific organizations described in IRC Section 501(c)(3) to establish “tax-sheltered annuity” or “TSA” plans for their employees. TSA contributions and Contract earnings are generally not included in the gross income of the employee until distributed from the TSA. Amounts attributable to contributions made under a salary reduction agreement cannot be distributed until the employee attains age 59 1/2, severs employment, becomes disabled, incurs a hardship, is eligible for a qualified reservist distribution, or dies. The IRC and the plan may impose additional restrictions on distributions.
Pension, Profit-Sharing, and 401(k) Plans. IRC Section 401 permits employers to establish various types of retirement plans for employees, and permits self-employed individuals to establish such plans for themselves and their employees. These plans may use annuity contracts to fund plan benefits. Generally, contributions are deductible to the employer in the year made, and contributions and earnings are generally not included in the gross income of the employee until distributed from the plan. The IRC and the plan may impose restrictions on distributions. Purchasers of a Contract for use with such plans should seek competent advice regarding the suitability of the Contract under the particular plan.
Governmental Eligible Deferred Compensation Plans. State and local government employers may purchase annuity contracts to fund eligible deferred compensation plans for their employees, as described in IRC Section 457(b). Contributions and earnings are generally not included in the gross income of the employee until the employee receives distributions from the plan. Amounts cannot be distributed until the employee attains age 70 1/2, severs employment, becomes disabled, incurs an unforeseeable emergency, or dies. The plan may impose additional restrictions on distributions.
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Roth TSAs, Roth 401(k)s, and Roth 457(b)s. IRC Section 402A permits TSA plans, 401(k) plans, and governmental 457(b) plans to allow participating employees to designate some part or all of their future elective contributions as Roth contributions. Roth contributions to a TSA plan, 401(k) plan, or governmental 457(b) plan are included in the employee’s taxable income as earned. Amounts attributable to Roth TSA, Roth 401(k), or Roth 457(b) contributions must be held in a separate account from amounts attributable to traditional pre-tax TSA, 401(k), or 457(b) contributions. Distributions from a Roth TSA, Roth 401(k), or Roth 457(b) account are considered to come proportionally from contributions and earnings. Distributions attributable to Roth account contributions are tax-free. Distributions attributable to Roth account earnings are tax-free following the five-year period beginning with the first year for which Roth contributions are made to the plan if the employee has attained age 59 1/2, become disabled, or died. A Roth TSA, Roth 401(k), or Roth 457(b) account is subject to the same distribution restrictions that apply to amounts attributable to traditional pre-tax TSA, 401(k), or 457(b) contributions made under a salary reduction agreement. The plan may impose additional restrictions on distributions.
Nonqualified Deferred Compensation Plans
Employers may invest in annuity contracts in connection with unfunded deferred compensation plans for their employees. Such plans may include eligible deferred compensation plans of non-governmental tax-exempt employers, as described in IRC Section 457(b); deferred compensation plans of both governmental and nongovernmental tax-exempt employers that are taxed under IRC Section 457(f) and subject to Section 409A; and nonqualified deferred compensation plans of for-profit employers subject to Section 409A. In most cases, these plans are designed so that amounts credited under the plan will not be includable in the employees’ gross income until paid under the plan. In these situations, the annuity contracts are not plan assets and are subject to the claims of the employer’s general creditors. Whether or not made from the Contract, plan benefit payments are subject to restrictions imposed by the IRC and the plan.
Summary of Income Tax Rules
The following chart summarizes the basic income tax rules governing tax-qualified retirement plans, nonqualified deferred compensation plans, and other non-tax-qualified Contracts.
Tax-Qualified Contracts and Plans | Nonqualified Deferred Compensation Plans | Other Non-Tax-Qualified Contracts | ||||
| Plan Types | • IRC §408 (IRA, SEP, SIMPLE IRA)
• IRC §408A (Roth IRA)
• IRC §403(b) (Tax-Sheltered Annuity)
• IRC §401 (Pension, Profit– Sharing, 401(k))
• Governmental IRC §457(b)
• IRC §402A (Roth TSA, Roth 401(k), or Roth 457(b)) | • IRC §409A
• Nongovernmental IRC §457(b)
• IRC §457(f) | • IRC §72 only | |||
| Who May Purchase a Contract | Eligible employee, employer, or employer plan. | Employer on behalf of eligible employee. Employer generally loses tax-deferred status of Contract itself. | Anyone. Non-natural person will generally lose tax-deferred status. | |||
| Contribution Limits | Contributions are limited by IRC and/or plan requirements. | None. | ||||
| Distribution Restrictions | Distributions from Contract and/or plan may be restricted to meet IRC and/or plan requirements. | None. | ||||
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Tax-Qualified Contracts and Plans | Nonqualified Deferred Compensation Plans | Other Non-Tax-Qualified Contracts | ||||
| Taxation of Withdrawals, Surrenders, and Lump Sum Death Benefit | Generally, 100% of distributions must be included in taxable income. However, the portion that represents an after-tax investment is not taxable. Distributions from Roth IRA are deemed to come first from after- tax contributions. Distributions from other plans are generally deemed to come from income and after-tax investment (if any) on a pro-rata basis. Distributions from §408A Roth IRA or §402A Roth TSA, Roth 401(k), or Roth 457(b) are completely tax free if certain requirements are met.
For tax purposes, all IRAs and SEP IRAs of an owner are treated as a single IRA, and all Roth IRAs of an owner are treated as a single Roth IRA. | Generally, distributions must be included in taxable income until all accumulated earnings are paid out. Thereafter, distributions are tax-free return of the original investment. However, distributions are tax-free until any investment made before August 14, 1982 is returned.
For tax purposes, all non-tax-qualified annuity contracts issued to the same owner by the same insurer in the same calendar year are treated as one contract. | ||||
| Taxation of Payout Option Payments (Annuity Benefit or Death Benefit) | A percentage of each payment is tax free equal to the ratio of after-tax investment (if any) to the total expected payments, and the balance is included in taxable income. Once the after-tax investment has been recovered, the full amount of each benefit payment is included in taxable income. Distributions from a Roth IRA, Roth TSA, Roth 401(k), or Roth 457(b) are completely tax free if certain requirements are met. | |||||
| Possible Penalty Taxes for Distributions Before Age 59 1/2 | Taxable portion of payments made before age 59 1/2 may be subject to 10% penalty tax (or 25% for a SIMPLE IRA during the first two years of participation). Penalty taxes do not apply to payments after the participant’s death, or to §457 plans. Other exceptions may apply. | None. | Taxable portion of payments made before age 59 1/2 may be subject to a 10% penalty tax. Penalty taxes do not apply to payments after the Owner’s death. Other exceptions may apply. | |||
| Assignment/ Transfer of Contract | Assignment and transfer of Ownership generally not permitted. | Generally, deferred earnings taxable to transferor upon transfer or assignment. Gift tax consequences are not discussed herein. | ||||
| Federal Income Tax Withholding | Eligible rollover distributions from §401, §403(b), and governmental §457(b) plans are subject to 20% mandatory withholding on taxable portion unless direct rollover. For other payments, Payee may generally elect to have taxes withheld or not. | Generally subject to wage withholding. | Generally, Payee may elect to have taxes withheld or not. | |||
Rollovers, Transfers, and Exchanges
Amounts from a tax-qualified Contract may be rolled over, transferred, or exchanged into another tax-qualified account or retirement plan as permitted by the IRC and plan(s). Amounts may be rolled over, transferred, or exchanged into a tax-qualified Contract from another tax-qualified account or retirement plan as permitted by the IRC and plan(s). In most cases, such a rollover, transfer, or exchange is not taxable, unless the rollover of pre-tax amounts is made into a Roth IRA, a Roth TSA, Roth 401(k), or Roth 457(b). Rollovers, transfers, and exchanges are not subject to normal contribution limits. The IRC or plan may require that rollovers be held in a separate Contract from other plan funds.
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Amounts from a non-tax-qualified Contract may be transferred to another non-tax-qualified annuity or to a qualified long-term care policy as a tax-free exchange as permitted by the IRC Section 1035. Amounts from another non-tax-qualified annuity or from a life insurance or endowment policy may be transferred to a Contract as a tax-free exchange under IRC Section 1035.
Required Distributions
The Contracts are subject to the required distribution rules of federal tax law. These rules vary based on the tax qualification of the Contract or the plan under which it is issued.
For a tax-qualified Contract other than a Roth IRA, required minimum distributions must generally begin by April 1 following the year the participant attains age 73 (age 75 if born after December 31, 1960, or age 72 if born after June 30, 1949, but before January 1, 1951, or age 70 1/2 if born before July 1, 1949). However, for a 403(b) Tax-Sheltered Annuity Plan, a 401 Pension, Profit-Sharing, or 401(k) Plan, or a 457(b) Governmental Deferred Compensation Plan, a participant who is not a 5% owner of the employer may delay required minimum distributions until April 1 following the year in which the participant retires from that employer. The required minimum distributions during life are calculated based on standard life expectancy tables adopted under federal tax law.
For a Roth IRA or for a Contract that is not tax-qualified, there are no required distributions during life.
A tax-qualified Contract must make required distributions after death. The required distributions vary depending on the type of beneficiary. Some beneficiaries may take payments over life or life expectancy, and others must receive all benefits within five or ten years after death. A non-tax-qualified Contract that has begun making payments under a payout option during the Owner’s life must make any remaining payments at least as rapidly after death. If payments from a non-tax-qualified Contract have not begun, then the death benefit must be paid out in full within five years after death, or must be paid out in substantially equal payments beginning within one year of death over a period not exceeding the life expectancy of the designated beneficiary.
For a traditional IRA, a Roth IRA, or a Contract that is not tax-qualified, a beneficiary who is a surviving spouse may elect out of these requirements, and apply the required distribution rules as if the Contract were his or her own. For this purpose, federal tax law recognizes as married any two people whose marriage is valid in the state in which it was celebrated. A civil union or domestic partnership is not considered a marriage.
We reserve the right to deduct from the Purchase Payment or Account Value any taxes relating to the Contract paid by us to any government entity (including, but not limited to, premium taxes, additional taxes, and maintenance taxes on insurers, Federal, state and local withholding of income, estate, inheritance, or other taxes required by law from annuity purchase payments, and any new or increased taxes on insurers or annuity purchase payments that may be enacted into law).
Currently some state governments impose premium taxes, additional taxes, and maintenance taxes on insurers based on annuity purchase payments received or applied to an annuity payout benefit. These taxes currently range from zero to 3.5% depending upon the jurisdiction and the tax qualification of the Contract. A federal premium tax has been proposed but not enacted. We may deduct any such premium or other taxes from the Purchase Payments or the Account Value at the time that the tax is imposed. We may also deduct any such tax not previously deducted from the Annuity Payout Value or Death Benefit Value.
We reserve the right to deduct from the Contract for any income taxes that we incur because of the Contract. At the present time, however, we are not incurring any such income tax or making any such deductions.
MM Ascend Life Investor Services, LLC (“MMALIS”) is the principal underwriter and distributor of the securities offered through this prospectus. MMALIC and MMALIS are affiliated because MMALIS is a subsidiary of MMALIC. MMALIS also acts as the principal underwriter and distributor of the variable annuity contracts that are issued by one of our subsidiaries.
MMALIS’s principal executive offices are located at 191 Rosa Parks Street, Cincinnati, Ohio 45202. MMALIS is registered as a broker- dealer with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as well as the securities regulators in the states in which it operates and registration is required. MMALIS is a member of the Financial Industry Regulatory Authority (“FINRA”).
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Contracts are sold by licensed insurance agents (the “Selling Agents”) in those states where the Contract may be lawfully sold. Such Selling Agents will be appointed agents of MMALIC and will be registered representatives of broker-dealer firms (the “Selling Broker-Dealers”) that have entered into selling agreements with us and MMALIS. Selling Broker-Dealers will be registered under the Securities Exchange Act of 1934 and will be members of FINRA.
FINRA provides background information about broker-dealers and their registered representatives through FINRA BrokerCheck. You may contact the FINRA BrokerCheck Hotline at 1-800-289-9999, or log on to www.finra.org to learn more about MMALIS, your Selling Agent, and his or her Selling Broker Dealer.
MMALIS receives no compensation for acting as underwriter of the Contracts; however, MMALIC pays for some of MMALIS’s operating and other expenses, including overhead and legal and accounting fees. MMALIC may reimburse MMALIS for certain sales expenses, such as marketing materials and advertising expenses, and other expenses of distributing the Contracts.
MMALIC or MMALIS pay the Selling Broker-Dealers compensation for the promotion and sale of the Contract. The Selling Agents who solicit sales of the Contract typically receive a portion of the compensation paid to the Selling Broker-Dealers in the form of commissions or other compensation, depending on the agreement between the Selling Broker-Dealer and the Selling Agent.
The amount and timing of commissions paid to Selling Broker-Dealers may vary depending on the selling agreement but is not expected to be more than 9.2% of each Purchase Payment. In most cases, such amounts paid to a Selling Broker-Dealer will be divided between the Selling Agent and the Selling Broker-Dealer. Some Selling Broker-Dealers may elect to receive a lower commission when a Purchase Payment is made, along with annual trail commissions up to 1.5% of Account Value for so long as a contract remains in effect or as agreed in the selling agreement. MMALIC may pay or allow other promotional incentives or payments in the form of cash or other compensation to the extent permitted by FINRA rules and other applicable laws and regulations.
MMALIC also may pay compensation to wholesaling broker-dealers or other firms or intermediaries in return for wholesaling services such as providing marketing and sales support, product training, and administrative services to the Selling Agents of the Selling Broker-Dealers. These allowances may be based on a percentage of a Purchase Payment.
In addition to the compensation described above, MMALIC may make additional cash payments, in certain circumstances referred to as “override” compensations, or reimbursements to Selling Broker-Dealers in recognition of their marketing and distribution, transaction processing and/or administrative services support. These payments are not offered to all Selling Broker-Dealers, and the terms of any particular agreement governing the payments may vary among Selling Broker-Dealers depending on, among other things, the level and type of marketing and distribution support provided. Marketing and distribution support services may include, among other services, placement of MMALIC’s products on the Selling Broker-Dealers’ preferred or recommended list, increased access to the Selling Broker-Dealers’ registered representatives for purposes of promoting sales of MMALIC products, assistance in training and education of the Selling Agents, and opportunities for MMALIC and MMALIS to participate in sales conferences and educational seminars. The payments or reimbursements may be calculated as a percentage of the particular Selling Broker-Dealer’s actual or expected aggregate sales of our indexed annuity contracts (including the Contract) and/or may be a fixed dollar amount. Broker-dealers receiving these additional payments may pass on some or all of the payments to the Selling Agents.
You should ask your Selling Agent for further information about the commissions or other compensation that he or she, or the Selling Broker-Dealer for which he or she works, may receive in connection with your purchase of a Contract.
There is no front-end sales load deducted from the Purchase Payment(s) to pay sales commissions. Commissions and other incentives or payments described above are not charged directly to you. We intend to recoup at least a portion of the sales commissions and other sales expenses through fees and charges deducted under the Contract.
MassMutual Ascend Life’s General Account
Our general account (the “General Account”) holds all our assets other than assets in our insulated separate accounts. We own our General Account assets, and, subject to applicable law, have sole investment discretion over them. The assets are subject to our general business operation liabilities and claims of our creditors and may lose value. Our General Account assets fund the guarantees provided in the Contracts.
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We must invest our assets according to applicable state laws regarding the nature, quality and diversification of investments that may be made by life insurance companies. In general, these laws permit investments, within specified limits and subject to certain qualifications, in Federal, state and municipal obligations, corporate bonds, preferred and common stocks, real estate mortgages, real estate and certain other investments.
We place a majority of the Purchase Payments made under the Contract in our General Account where we primarily invest the assets in a variety of fixed income securities.
We place a portion of the Purchase Payments made under the Contract in a non-unitized separate account (the “Separate Account”) that is not registered with the Securities and Exchange Commission. We established and maintain the Separate Account pursuant to the laws of our domiciliary state for the purpose of supporting our obligation to adjust Indexed Strategy values for Vested Gains and Losses associated with the Indexed Strategies. The assets of the Separate Account are held in our name on behalf of the Separate Account and legally belong to us. The assets in the Separate Account are not chargeable with liabilities arising out of any other business that we conduct. We may invest these assets in hedging instruments, including derivative contracts as well as other assets permitted under state law. To support our obligations to adjust Indexed Strategy values for Vested Gains and Losses associated with the Indexed Strategies, we may move money between the Separate Account and our General Account.
Contract owners do not have any interest in or claim on the assets in the Separate Account nor do Contract owners participate in any way in the performance of assets held in the Separate Account.
Reliance on Rule 12h-7
MassMutual Ascend Life relies on the exemption provided by Rule 12h-7 under the Securities Exchange Act of the 1934 Act from the requirement to file reports pursuant to Section 15(d) of that Act.
Legal Proceedings
MassMutual Ascend Life and its subsidiaries are involved in litigation from time to time, generally arising in the ordinary course of business. This litigation may include, but is not limited to, general commercial disputes, lawsuits brought by contract owners and policyholders, employment matters, reinsurance collection matters and actions challenging certain business practices of insurance subsidiaries. Also, from time to time, state and federal regulators or other officials conduct formal and informal examinations or undertake other actions dealing with various aspects of the financial services and insurance industries. It is not possible to predict with certainty the ultimate outcome of any pending legal proceeding or regulatory action. However, MassMutual Ascend Life does not believe any such action or proceeding will have a material adverse effect upon its ability to meet its obligations under the Contracts.
Legal Opinion on Contracts
Legal matters in connection with federal laws and regulations affecting the issue and sale of the Contracts described in this prospectus and the organization of MassMutual Ascend Life, its authority to issue such Contracts under Ohio law, and the validity of the forms of the Contracts under Ohio law have been passed on by John P. Gruber, General Counsel of MassMutual Ascend Life.
Securities and Exchange Commission Position on Indemnification
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling MassMutual Ascend Life pursuant to its articles of incorporation or its code of regulations or pursuant to any insurance coverage or otherwise, MassMutual Ascend Life has been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable.
The statutory financial statements and financial statement schedules of MassMutual Ascend Life Insurance Company (formerly known as Great American Life Insurance Company) at December 31, 2023, 2022, and 2021 and for each of the years in the three year period ended December 31, 2023, have been included herein in reliance upon the reports of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.
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The KPMG LLP report dated April 23, 2024 of MassMutual Ascend Life Insurance Company includes explanatory language that states that the financial statements are prepared by MassMutual Ascend Life Insurance Company using statutory accounting practices prescribed or permitted by the Ohio Department of Insurance, which is a basis of accounting other than U.S. generally accepted accounting principles. Accordingly, the KPMG LLP audit report states that the financial statements are not presented fairly in accordance with U.S. generally accepted accounting principles and further states that those statements are presented fairly, in all material respects, in accordance with statutory accounting practices prescribed or permitted by the Ohio Department of Insurance.
The KPMG LLP report dated April 23, 2024 of MassMutual Ascend Life Insurance Company includes an emphasis of matter paragraph that states that MassMutual Ascend Life Insurance Company elected to apply a prescribed practice promulgated under Ohio Administrative Code Section 3901-1-67 (“OAC 3901-1-67”) to its derivative instruments hedging indexed products and indexed annuity reserve liabilities. The opinion was not modified with respect to this matter.
We filed a Registration Statement with the Securities and Exchange Commission under the Securities Act of 1933 relating to the Contracts offered by this prospectus. This prospectus was filed as a part of the Registration Statement, but it does not constitute the complete Registration Statement. The Registration Statement contains further information relating to the Company and the Contracts. The Registration Statement and the exhibits thereto may be inspected and copied at the office of the Securities and Exchange Commission, located at 100 F Street, N.E., Washington, D.C., and may also be accessed at www.sec.gov. The Securities and Exchange Commission file number for the Contract is 333-278199.
Statements in this prospectus discussing the content of the Contracts and other legal instruments are summaries. The actual documents are filed as exhibits to the Registration Statement. For a complete statement of the terms of the Contracts or any other legal document, refer to the appropriate exhibit to the Registration Statement.
| • | The Contract is not insured by the FDIC (Federal Deposit Insurance Corporation) or the NCUSIF (National Credit Union Share Insurance Fund). |
| • | Although the Contract may be sold through relationships with banks or other financial institutions, the Contract is not a deposit or obligation of, or guaranteed by, such institutions or any federal regulatory agency. |
The Contract doesn’t invest in any equity, debt, or other investments.
Dealer Prospectus Delivery Obligations. All dealers that effect transactions in these securities are required to deliver a prospectus.
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MASSMUTUAL ASCEND LIFE INFORMATION
Overview
MassMutual Ascend Life is a stock insurance company incorporated in 1961. We are domiciled in the state of Ohio and have been continuously engaged in the insurance business since that time. We are licensed to conduct life insurance business in all states of the United States except New York, as well as the District of Columbia and Puerto Rico. Our principal executive offices are located at 191 Rosa Parks Street, Cincinnati, Ohio 45202.
We are a wholly-owned subsidiary of Massachusetts Mutual Life Insurance Company (“MassMutual”), a mutual life insurance company. MassMutual and its domestic life insurance subsidiaries provide individual and group life insurance, disability insurance, individual and group annuities and guaranteed interest contracts to individual and institutional customers in all 50 states of the U.S., the District of Columbia and Puerto Rico.
Below is a chart that shows the relationships among MassMutual, MassMutual Ascend Life, and other MassMutual subsidiaries that are mentioned in this Section II of this prospectus. Each subsidiary in the chart is wholly-owned by its immediate parent.
Massachusetts Mutual Life Insurance Company (“MassMutual”)
| • | Glidepath Holdings Inc. (“Glidepath”) is a subsidiary of MassMutual. It is a financial services holding company. |
| • | MassMutual Ascend Life Insurance Company (“MMALIC”) is a subsidiary of Glidepath. It is the issuer of the annuities that are the subject of this Registration Statement and other annuity products. |
| • | MM Ascend Life Investor Services, LLC (“MMALIS”) is a subsidiary of MMALIC. It is the principal underwriter and distributor of the annuities that are the subject of this Registration Statement. |
| • | MM Asset Management Holding LLC is a subsidiary of MassMutual. It is a financial services holding company. |
| • | Barings LLC (“Barings”) is a subsidiary of MM Asset Management Holding LLC. It provides investment services for MassMutual and certain of its affiliated companies, including MMALIC. |
Prior to October 3, 2022, MMALIC’s name was Great American Life Insurance Company (“GALIC”) and MMALIS’ name was Great American Advisors, LLC (“GAA”). On May 28, 2021, American Financial Group, Inc. sold its annuity business consisting of GALIC and its two insurance subsidiaries, Annuity Investors Life Insurance Company and Manhattan National Life Insurance Company, as well as a broker-dealer affiliate, GAA, and insurance distributor, AAG Insurance Agency, Inc. to MassMutual.
No company other than MMALIC has any legal responsibility to pay amounts owed under the Contract. You should look to the financial strength of MMALIC for its claims-paying ability.
Directors and Executive Officers of MassMutual Ascend Life
Below is a list of the names and ages of the individuals who will serve as directors and executive officers of MMALIC, and a description of the business experience of each of the respective individuals.
Name | Year of Birth | Position(s) with MassMutual Ascend Life | Served in Position(s) Since | |||
Dominic L. Blue | 1976 | Director and Chief Executive Officer | May 2021/ June 2023 | |||
Donna Carrelli | 1974 | Head of Insurance Operations | February 2022 | |||
Susan M. Cicco | 1971 | Director | May 2021 | |||
Geoffrey J. Craddock | 1959 | Director | May 2021 | |||
Roger W. Crandall | 1964 | Director, Chairman of the Board | May 2021 | |||
John P. Gruber | 1962 | Senior Vice President, Secretary, Chief Compliance Officer and General Counsel | November 2005 | |||
Paul A. LaPiana | 1969 | Director | May 2021 |
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Name | Year of Birth | Position(s) with MassMutual Ascend Life | Served in Position(s) Since | |||
Sears Merritt | 1981 | Director | May 2022 | |||
Mark F. Muething | 1959 | Director President | October 1993 April 2018 | |||
Michael J. O’Connor | 1969 | Director | May 2021 | |||
Eric W. Partlan | 1973 | Director, Chief Investment Officer | May 2021 | |||
Brian P. Sponaugle | 1969 | Senior Vice President and Treasurer | May 2022 | |||
Arthur W. Wallace | 1974 | Director | May 2021 | |||
Elizabeth A. Ward | 1964 | Director | May 2021 |
Dominic L. Blue
Mr. Blue has served as Chief Executive Officer of MMALIC since June, 2023 and as the Head of MassMutual Strategic Distributors since October 2020. Mr. Blue has served in various positions with MassMutual since August 2011.
Donna Carrelli
Ms. Carrelli has served as MMALIC’s Head of Insurance Operations since February 2022. Ms. Carrelli has served in various positions with the Company since March 1998.
Susan M. Cicco
Ms. Cicco has served as the Head of Human Resources & Employee Experience since January 2017 and also has served since July 2020 as the Chief of Staff to the CEO. Ms. Cicco has served in various positions with MassMutual since 1993.
Geoffrey J. Craddock
Mr. Craddock has served as the Chief Risk Officer of MassMutual since October 2017. Previously, Mr. Craddock served as the leader of risk management and asset allocation at MassMutual’s former subsidiary, OppenheimerFunds, Inc., from 2008 through September 2017.
Roger W. Crandall
Mr. Crandall has served as Chairman of the Board of MMALIC since May 28, 2021. Mr. Crandall has served as Chairman, President and Chief Executive Officer of MassMutual since December 2010. Mr. Crandall has served in various positions with MassMutual since 1988.
John P. Gruber
Mr. Gruber has served as MMALIC’s Senior Vice President, General Counsel and Secretary since November 2005. He also serves as Chief Compliance Officer of MMALIC. Mr. Gruber has served in various positions with the Company since July 1993.
Paul A. LaPiana
Mr. LaPiana has served as Head of MMUS Product since February of 2019. Mr. LaPiana joined MassMutual in July of 2016 and served as the Head of Field Management until he assumed his current role.
Sears Merritt
Mr. Merritt has served as the Head of Enterprise Technology & Experience since May 2022. Mr. Merritt has served in various positions with MassMutual since 2014.
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Mark F. Muething
Mr. Muething has served as President of MMALIC since April 2018. Mr. Muething served in various positions with MMALIC since October 1993.
Michael J. O’Connor
Mr. O’Connor has served as the General Counsel of MassMutual since February 2017. Mr. O’Connor has served in various positions with MassMutual since he joined the company in 2005, including as the Chief of Staff to the CEO.
Eric W. Partlan
Mr. Partlan has served as MMALIC’s Chief Investment Officer since May 28, 2021. Mr. Partlan has served as the Head of Portfolio Management at MassMutual since January 2013. He joined MassMutual in January of 2010 as the Head of Investment Risk and served in that office until he assumed his current role.
Brian P. Sponaugle
Mr. Sponaugle has served as Senior Vice President and Treasurer of MMALIC since June 2022. Mr. Sponaugle served in various positions with MMALIC since June 1993.
Arthur W. Wallace
Mr. Wallace has served as MassMutual’s Chief Actuary since he joined MassMutual in October of 2019. Previously, Mr. Wallace was Chief Actuary at Prudential Financial from November 2014 until joining MassMutual.
Elizabeth A. Ward
Ms. Ward has served as the Chief Financial Officer of MassMutual since June 2016. Ms. Ward has served in various positions since joining MassMutual in 2007, including as Chief Actuary and as Chief Enterprise Risk Officer.
Executive Compensation
MMALIC does not have any employees. Its parent, Glidepath, provides personnel to MMALIC pursuant to a Services Agreement between MMALIC and Glidepath.
As a result, MMALIC does not determine or pay any compensation to its executive officers or additional personnel provided by Glidepath. Glidepath determines and pays salaries, bonuses and other compensation to its executive officers and additional personnel provided by Glidepath commensurate with their positions, tenure and levels of responsibility. Glidepath also determines whether and to what extent it will provide employee benefits plans to such persons.
See “Transactions with Related Persons” for more information about the Services Agreement.
Director Compensation
Mark Muething is the only director who is an employee of Glidepath. No director receives any additional compensation for serving as a director.
Director Independence
No director is considered independent under independence standards applicable to MMALIC. MMALIC does not have a separately designated audit, nominating or compensation committee, but MassMutual’s audit committee performs a similar function for MMALIC.
Compensation Committee Interlocks and Insider Participation
MMALIC does not have a compensation committee.
Security Ownership of Certain Beneficial Owners and Management
MassMutual indirectly owns 100% of the voting securities of MMALIC. MassMutual’s principal executive offices are located at 1295 State Street, Springfield, Massachusetts 01111-0001.
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Transactions with Related Persons
Transactions between MMALIC and Glidepath
Pursuant to a Leased Employee Agreement between MMALIC and Glidepath, Glidepath furnishes MMALIC with personnel as requested by MMALIC. MMALIC pays for these services on the basis of cost, which must be fair and reasonable. Payments for these services by MMALIC to Glidepath were approximately $109 million in 2023 and $98 million in 2022.
Transactions between MMALIC and MassMutual or Other MassMutual Subsidiaries
MMALIC and Barings are parties to an Investment Services Agreement under which Barings provides investment services to MMALIC in accordance with guidelines. MMALIC pays Barings a fee based on Barings’s cost of providing these services.
Pursuant to an Administrative Services Agreement between MMALIC and MassMutual, MassMutual furnishes MMALIC with office, data processing, telecommunications, and administrative and support services, including enterprise risk management services, corporate finance services, actuarial services, legal services, internal audit services, corporate compliance services and procurement services, as agreed upon by the parties. Payments for these services by MMALIC to MassMutual were approximately $4.4 million in 2023 and $4.4 million in 2022.
MMALIC and its subsidiaries have entered into an intercompany tax allocation agreement. Pursuant to the agreement, each company’s tax expense is determined based upon its inclusion in the consolidated tax return of MMALIC and its includable subsidiaries. Estimated payments are made quarterly during the year. Following year-end, additional settlements are made on the original due date of the return and, when extended, at the time the return is filed. The method of allocation among the companies under the agreement is based upon separate return calculations with current credit for losses to the extent the losses provide a benefit in the consolidated return.
Transactions Involving Immediate Family Members of MMALIC’s Directors and Executive Officers
A brother of MMALIC’s President is a partner and Chairman of the Board of Keating Muething & Klekamp PLL. MMALIC and its related entities paid Keating Muething & Klekamp approximately $5,300 in 2023, $0.4 million in 2022, and $1.1 million in 2021.
Review, Approval or Ratification of Transactions with Related Persons
MMALIC’s senior management team approves all related party transactions involving directors and executive officers of MMALIC, including relevant transactions described in “Transactions Involving Immediate Family Members of MMALIC’s Directors and Executive Officers” above. In considering the transaction, MMALIC’s senior management team may consider all relevant factors, including as applicable: the business rationale for entering into the transaction; the alternatives to entering into a related person transaction; whether the transaction is on terms comparable to those available to third parties, or in the case of employment relationships, to employees generally; the potential for the transaction to lead to an actual or apparent conflict of interest and any safeguards imposed to prevent such actual or apparent conflicts; and the overall fairness of the transaction to MMALIC. Potential related party transactions are covered by MMALIC’s Code of Conduct policy. Approval of such related person transactions would be evidenced by resolutions of the Finance committee of the MMALIC Board of Directors in accordance with its practice of reviewing and approving transactions in this manner.
Information on MMALIC’s Business and Property
Competition
MMALIC’s annuity businesses operate in highly competitive markets. They compete with other insurers and financial institutions based on many factors, including: (i) ratings; (ii) financial strength; (iii) reputation; (iv) service to policyholders and agents; (v) product design (including interest rates credited, bonus features and index participation); and (vi) commissions. Because most policies are marketed and distributed through independent agents, the insurance companies must also compete for agents.
No single insurer dominates the markets in which MMALIC’s annuity businesses compete. See Risks Primarily Related to MMALIC’s Financial Strength and Claims-Paying Ability. MMALIC’s competitors include (i) individual insurers and insurance groups, (ii) mutual funds and (iii) other financial institutions. In a broader sense, MMALIC’s annuity businesses compete for retirement savings with a variety of financial institutions offering a full range of financial services. In the financial institution annuity market, MMALIC’s annuities compete directly against competitors’ annuities, certificates of deposit and other investment alternatives at the point of sale.
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Sales of annuities, including renewal premiums, are affected by many factors, including: (i) competitive annuity products and rates; (ii) the general level and volatility of interest rates, including the slope of the yield curve; (iii) the favorable tax treatment of annuities; (iv) commissions paid to agents; (v) services offered; (vi) ratings from independent insurance rating agencies; (vii) other alternative investments; (viii) performance and volatility of the equity markets; (ix) media coverage of annuities; (x) regulatory developments regarding suitability and the sales process; and (xi) general economic conditions.
Financial Strength Ratings
MMALIC believes that the ratings assigned by independent insurance rating agencies are an important competitive factor because agents, potential policyholders and financial institutions often use a company’s rating as an initial screening device in considering annuity products. MMALIC believes that a rating in the “A” category by at least one rating agency is necessary to successfully compete in its primary annuity markets. In 2023, MMALIC was rated A++ (Superior) by A.M. Best and A+ by Standard & Poor’s.
Regulation
MMALIC is subject to regulation in the jurisdictions where MMALIC does business. In general, the insurance laws of the various states establish regulatory agencies with broad administrative powers governing, among other things, premium rates, solvency standards, licensing of insurers, agents and brokers, trade practices, forms of policies, maintenance of specified reserves and capital for the protection of policyholders, deposits of securities for the benefit of policyholders, investment activities and relationships between insurance subsidiaries and their parents and affiliates. Material transactions between insurance subsidiaries and their parents and affiliates generally must receive prior approval of the applicable insurance regulatory authorities and be disclosed.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”), among other things, established a Federal Insurance Office (“FIO”) within the U.S. Treasury. Under this law, the regulatory framework for the FIO to carry out its mandate to focus on systemic risk oversight continues to evolve. Since its formation, the FIO has worked with the National Association of Insurance Commissioners (“NAIC”) and other stakeholders to explore a hybrid approach to regulation of the insurance industry; however, the state-based system of regulation has largely been retained. MMALIC cannot predict the future role of the FIO and its role in regulation of the insurance industry and how that might ultimately affect MMALIC’s operations.
Most states have created insurance guaranty associations that assess solvent insurers to pay claims of insurance companies that become insolvent. Annual guaranty assessments for MMALIC have not been material.
Risks Primarily Related to MMALIC’s Financial Strength and Claims-Paying Ability
We make annuity payout benefit payments and pay death benefits for this Contract from our general account. We also pay benefits for other insurance contracts from our general account, and our general account is subject to claims by our creditors. Our ability to make payments from our general account is subject to our financial strength. Set out below are the most significant factors that may negatively impact our financial strength and claims-paying ability.
Financial losses could adversely affect our financial strength and claims-paying ability.
Owners of MMALIC’s insurance products do not share in the profits and losses generated by our business. However, if we were to experience significant losses, we might not have sufficient assets in our general account to satisfy all of the guarantees provided in our insurance contracts. Events that may result in financial losses are listed below. We cannot predict the impact that any of these events may ultimately have on our financial strength and claims-paying ability.
Adverse developments in financial markets and deterioration in global economic conditions.
Worldwide financial markets have, from time to time, experienced significant and unpredictable disruption. For example, a prolonged economic downturn may result in heightened credit risk, reduction in the valuation of certain investments and decreased economic activity. Our financial position is materially impacted by the global economy and capital markets. During an economic downturn, we could experience a drop in the demand for our insurance products. In addition, surrenders and
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withdrawals from MMALIC’s insurance products might also increase during an economic downturn, and owners of MMALIC’s insurance products might opt to discontinue or delay paying insurance premiums or additional purchase payments. In recent years, the financial markets have experienced periods of significant volatility and negative returns, contributing to an uncertain and evolving economic environment. The performance of the markets in recent years has been impacted by several interrelating factors such as, but not limited to, the COVID-19 pandemic, rising inflation, changes in interest rates, geopolitical turmoil, and actions by governmental authorities. In addition, multiple bank failures in 2023 resulted in periods of market disruption and volatility and reduced confidence in depository institutions. While such bank failures did not significantly impact our business, if banks or other financial institutions with whom we do business were to enter into receivership or become insolvent in the future, there could be an adverse effect on our business and financial condition. It is not possible to predict the future performance of the markets with any certainty.
Unfavorable interest rate environments.
During periods of declining interest rates, we may experience losses as the spread tightens between crediting rates that we pay to owners of our insurance contracts and returns on our investments. During periods of increasing rates, we may experience financial losses due to increases in surrenders and withdrawals under our insurance contracts as owners of those contracts choose to seek higher returns. In an attempt to curb rising inflation, the Federal Reserve and other central banks raised interest rates multiple times in recent years. It is unclear whether and how interest rates will change in future periods. Although we take measures to manage economic risks associated with different interest rate environments, we may not be able to fully mitigate those risks.
Losses on our investment portfolio.
A significant majority of MMALIC’s investment portfolio consists of fixed maturity investments, which are subject to both interest rate risk and credit risk. Interest rate risk refers to how the values of our fixed maturity investments fluctuate in response to changes in market interest rates. Increases in market interest rates generally result in decreases in the value of our fixed maturity investment portfolio. On the other hand, decreases in rates generally result in increases in the portfolio value. Credit risk refers to the risk that certain investments may default or become impaired due to deterioration in the financial condition of the issuers of those investments.
A portion of MMALIC’s investment portfolio consists of equity investments that are generally valued based on quoted market prices and subject to market risk. Market risk refers to how market prices for equity investments are subject to fluctuation due to general market conditions or changes in the actual or perceived attractiveness of an investment. A decrease in the market price for an equity investment could result in losses upon the sale of that investment.
MMALIC’s investment portfolio also includes investments that lack liquidity, such as privately placed fixed maturity investments, mortgage loans, collateralized debt obligations, commercial mortgage-backed securities, real estate and limited partnership interests. The value of our real estate investments may be negatively impacted by general, regional, and local economic conditions in the real estate sector, such as supply and demand, market volatility, interest rate fluctuations, vacancy rates, and geographic and extreme weather conditions, as well as the creditworthiness of obligors. If we were required to sell illiquid investments on short notice, we might have difficulty doing so and may be forced to sell them for less than fair value.
Loss of market share due to intense competition.
There is strong competition among individual insurers and insurance groups, mutual funds and other financial institutions seeking clients for the products we provide. Competition is based on numerous factors including the ability to recruit and retain key personnel, quality of service, reputation, product design, crediting rates, insurance product performance and pricing, scope of distribution, perceived financial strength and credit ratings. If competition limits MMALIC’s ability to write new or renewal business at adequate rates, its results of operations will be adversely affected.
Ineffectiveness of risk management policies.
Our risk management policies and procedures, which are intended to identify, monitor and manage economic risks, may not be fully effective at mitigating risk exposures in all market conditions or against all types of risk. For instance, we use derivatives to alleviate risks related to floating-rate investments as well as annuity products that credit interest or provide a return based, in part, on the change in a referenced index. Our use of derivatives may not accurately counterbalance the actual risk exposure,
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and any derivatives held may not be sufficient to completely hedge the associated risks. In addition, counterparties may fail to perform under the derivative financial instruments. We may also decide not to hedge, or fail to identify, certain risks to which we are exposed. Ultimately, our use of derivatives and other risk management strategies may be inadequate to protect against the full extent of the exposure or losses we seek to mitigate.
Changes in applicable law and regulations may affect our financial strength and claims-paying ability.
We are subject to comprehensive regulation and supervision by government agencies in all the jurisdictions in which we operate. Our operations, products and services are subject to a variety of state and federal laws. We are regulated by various regulatory authorities and self-regulatory authorities including state insurance departments, state securities administrators, the Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority (“FINRA”), the Internal Revenue Service (“IRS”) and the Department of Labor (“DOL”).
Changes to state and federal laws and regulations and regulatory interpretations thereof may materially impact the way we conduct business. For example, a change in U.S. federal tax policy that would modify the favorable tax treatment of annuities could make our products less attractive to consumers. Moreover, the pace of changes to the regulatory environment continues to increase. Federal and state governments, including federal and state regulatory authorities, are active in the regulation of the manufacture, sale and administration of annuity products. We cannot predict the potential effects that any new laws or regulations, changes in existing laws and regulations, or the interpretation or enforcement of laws and regulations may have on our business, but such changes may increase our compliance costs and negatively impact our financial strength and claims-paying ability. Below, we summarize areas of applicable law that have been subject to substantial change in recent years.
Cybersecurity and Data Privacy.
We are subject to federal and state laws, regulations, and directives that require financial institutions and other businesses to protect the security of computer systems and the confidentiality of personal information. Financial regulators continue to focus on data privacy and cybersecurity, have communicated heightened expectations with respect to security and regulatory compliance, and have increased emphasis in this area in their examinations of regulated entities. Recently, the SEC proposed new rules that would require registered separate accounts to adopt and implement comprehensive cybersecurity policies and procedures and disclose significant cybersecurity incidents in the prospectuses for variable contracts. Also, many states have adopted comprehensive privacy and data protection laws, and insurance regulatory activity related to privacy, data protection and cybersecurity also continues to increase. For example, the NAIC is considering a new Consumer Privacy Protection Model Law (to replace the corresponding existing model law) that would include stronger provisions related to consumer rights, consent, and notification, as well as third-party service agreements, data retention and deletion policies, and data sharing agreements. We actively monitor regulatory developments in this area, and may be subject to increased compliance costs, regulatory requirements, and legal proceedings as new laws become effective.
Standards of Care.
The SEC adopted a series of rules related to the standard of care owed by a broker-dealer and an investment adviser to its customers (“Regulation BI”), and the creation of a Form CRS Relationship Summary. The obligations of Regulation BI and Form CRS became effective on June 30, 2020. Among other things, Regulation BI imposes a “best interest” standard of care on broker-dealers making a recommendation to their customers, and provides certain new disclosure requirements for broker-dealers with respect to, among other things, their compensation and conflicts. Broker-dealers and investment advisers are required to provide the Form CRS Relationship Summary to their customers. The Form is designed to provide information about the broker-dealer or investment adviser to their customers. Since its adoption, Regulation BI has been a focus of SEC examinations and enforcement activity. The changes under Regulation BI and the Form CRS have increased overall compliance costs. In addition, these changes may lead to greater exposure to legal claims in certain circumstances, including an increased risk of regulatory enforcement actions or potentially private claims.
The NAIC adopted revisions to its Suitability in Annuity Transactions Model Regulation that would impose a requirement that any recommendation of an annuity product be in the consumer’s best interest in 2020. To date, at least 40 states have adopted revisions to their suitability laws to generally track the NAIC’s revised model regulation. As a result, as changes are adopted by state insurance regulator(s) and made applicable to insurers or the third-party firms that distribute insurer products, they could have an adverse impact on business.
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In addition, sales of annuities to employee benefit plans governed by provisions of the Employee Retirement Income Security Act (“ERISA”) and to IRAs governed by similar provisions under the Internal Revenue Code are subject to restrictions that require ERISA fiduciaries to perform their duties solely in the interests of ERISA plan participants and beneficiaries, and that prohibit ERISA fiduciaries from causing a covered plan or retirement account to engage in certain prohibited transactions absent an exemption. The definition of a “fiduciary” as it relates to ERISA plans and IRAs has been the subject of multiple DOL rulemaking initiatives, interpretive guidance releases, and subsequent legal challenges in recent years. On October 31, 2023, the DOL proposed rule amendments that would broaden the circumstances under which fiduciary duties are imposed, particularly with regard to recommendations to “rollover” assets from a qualified retirement plan to an IRA or from an IRA to another IRA.
We continue to closely monitor these ongoing regulatory developments. It remains unclear the extent to which these regulatory initiatives and the evolving nature of enforcement and interpretation of them could ultimately affect how our annuities are marketed and distributed. Any of the foregoing regulatory and legislative measures (or judicial matters on those measures), or the reaction to such activity by consumers or other members of the insurance industry could have an adverse impact on our ability to sell annuities and to retain in-force business. Inconsistencies among the rules adopted by the SEC, the DOL, and state insurance regulators could increase this impact.
Artificial Intelligence.
State regulators and the NAIC are evaluating existing regulatory frameworks for insurance industry use of artificial intelligence, machine learning, and large language models (“AI”). Regulators are concerned about the privacy and protection of individual consumer data and about bias and discrimination resulting from the use of AI in algorithms and predictive models, as may be used either directly by insurance companies or indirectly through third party service providers. For example, in December 2023, the NAIC adopted a model bulletin on the use of AI by insurers, which was intended to remind insurance companies that decisions impacting consumers that are made or supported by advanced analytical and computational technologies, including AI, must comply with all applicable insurance laws and regulations, including unfair trade practices. The bulletin also sets forth state insurance regulators’ expectations on how insurers should govern the use of such technologies by or on behalf of the insurer to make or support such decisions. Our adoption of new AI technologies may be inhibited by the emergence of industry-wide standards, a changing legislative and regulatory environment, and other factors. In addition, our adoption of new AI technologies may expose us to increased compliance costs and heightened regulatory risks.
The evolving landscape of environmental, social and governance standards could adversely affect our reputation or business results and could lead to litigation or regulatory proceedings that harm our financial condition.
Customers, regulators, and other market participants may evaluate our business or other practices according to a variety of environmental, social and governance (“ESG”) standards, expectations, or metrics, all of which may evolve, may be subjective or underdeveloped in nature, and may reflect contrasting or conflicting values. Standard-setting organizations and regulators including, but not limited to, the NAIC, SEC, and state insurance regulators, have proposed or adopted, or may propose or adopt, ESG rules or standards applicable to us. For example, the NAIC has generally modified the Insurer Climate Risk Disclosure survey to align with aspects of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures framework, a recognized framework of recommendations that were developed to enhance climate-related disclosures. The SEC has also adopted new disclosure rules that generally require a wide range of registered companies to provide extensive disclosures and financial information on climate-related risk in their registration statements and periodic reports filed with the SEC. In October 2023, the Governor of California signed two bills into law that will require significant climate-related disclosures (in some cases beyond the disclosures required by the SEC’s new rules) by large entities doing business in that state. In addition, certain organizations that provide information to investors have developed ratings for evaluating companies on their approach to different ESG matters. Due to the sometimes conflicting, uncertain, and subjective ESG regulatory and market environment, we may be seen as acting inconsistently with ESG standards or values from the perspective of certain customers, regulators, or other constituents. As a result, we may face adverse regulatory, customer, media, or public scrutiny related to ESG that potentially could have a negative impact on our business or reputation or lead to legal challenges.
The inability to obtain or collect on reinsurance could adversely affect our financial strength and claims-paying ability.
We use reinsurance for various business segments as part of our risk management strategy. While reinsurance agreements typically bind the reinsurer for the life of the business reinsured at specific pricing, market conditions may determine the availability and cost of the reinsurance for new business. Our risk of loss increases if we are unable to purchase reinsurance at acceptable terms. We are also subject to credit risk related to the ability of a reinsurer to meet its obligations. If we are unable to purchase reinsurance at acceptable terms or if the financial condition of our reinsurers is impaired, it may impact our ability to meet our financial obligations.
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A downgrade or potential downgrade in MMALIC’s financial strength ratings by one or more rating agencies could adversely affect its financial strength and claims-paying ability.
MMALIC’s claims-paying and financial strength is rated A++ (Superior) by A.M. Best and A+ by Standard & Poor’s. We believe a rating in the “A” category by at least one rating agency is important for us to successfully compete in our primary annuity markets. We also believe the ratings assigned by these independent insurance rating agencies are an important competitive factor because agents, potential contract owners and financial institutions often use a company’s rating as an initial screening device in considering annuity products. A downgrade in MMALIC’s claims-paying and financial strength ratings could adversely impact MMALIC’s financial strength and claims-paying ability by causing financial losses to our business. Such losses may be due to:
| • | Reduction in new sales of annuity products; |
| • | Harm to our relationships with distributors of our annuity products; |
| • | Increases to the cost of capital or limitation on our access to sources of capital; |
| • | Harm to our ability to obtain reinsurance or reasonable terms for reinsurance; |
| • | Significant increases in the number and amount of surrenders of, or withdrawals from, our annuity products; and |
| • | Pressure to increase the crediting rates for our annuity products. |
Credit rating agencies also evaluate the insurance industry as a whole and may change our claims-paying and financial strength rating based on their overall view of our industry.
Variations from actual experience and management’s estimates and assumptions could result in inadequate reserves.
We establish and maintain reserves to pay future benefits and claims of our policyholders and contract holders. The reserves we establish are estimates, primarily based on actuarial assumptions with regard to our future experience, which involve the exercise of significant judgment. Our future financial results depend on the extent to which our actual future experience is consistent with the assumptions we have used in pricing our products and determining our reserves. Many factors can affect future experience, including investment yields (and spreads over fixed annuity crediting rates), benefit utilization rates, equity market performance, the cost of call and put options used in the indexed annuity business, persistency, mortality, surrenders, annuity benefit payments, withdrawals, expenses incurred and changes in regulations. Developing such assumptions is complex and involves information obtained from company-specific and industry-wide data, as well as general economic information. We cannot precisely predict the ultimate amounts we will pay for actual benefits or the timing of those payments. We use actuarial models to assist us in establishing reserves. If actual results differ significantly from our estimates and assumptions, our claim costs could increase significantly and our reserves could be inadequate. If so, we will be required to increase reserves or accelerate amortization of deferred acquisition costs. We cannot be certain that our reserves will ultimately be sufficient to pay future benefit and claims of policyholders and contract holders.
The amount of capital that we must hold to meet our statutory capital requirements can vary significantly from time to time.
Statutory capital requirements are set by applicable state insurance regulators and the NAIC. State insurance regulators have established regulations that govern reserving requirements and provide minimum capitalization requirements based on risk-based capital (“RBC”) ratios for life insurance companies. Statutory surplus and RBC ratios may change in a given year based on a number of factors, including statutory income or losses, reserve changes, excess capital held to support growth, changes in equity market levels, interest rate changes, the value of certain fixed-income and equity securities, and changes to the RBC formulas. Additionally, state insurance regulators have significant leeway in interpreting existing regulations, which could further impact the amount of statutory capital or reserves that we must maintain. There is no guarantee that we will be able to maintain our current RBC ratio in the future or that our RBC ratio will not fall to a level that could have a material adverse effect on our business. If we are unable to maintain minimum capitalization requirements, our business may be subject to significant increases in supervision or control by state insurance regulators.
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Legal actions and regulatory proceedings may adversely affect our financial strength and claims-paying ability.
We have been named as defendant in lawsuits. We have also been involved in regulatory investigations and examinations. We may be involved in lawsuits and regulatory actions in the future. Lawsuits and regulatory actions arise in various contexts, including MMALIC’s roles as an insurer, investor, securities issuer and taxpaying entity. These actions may result in material amounts of damages or fines that we must pay and may involve certain regulatory authorities that have substantial power over our business operations. A negative outcome in any legal action or regulatory proceeding that results in significant financial losses or operational burdens may adversely impact MMALIC’s financial position and claims-paying ability.
We may experience difficulties with technology or data security, which could have an adverse effect on our business.
We use computer systems and services to process, store, retrieve, evaluate and utilize company and customer data and information. Systems failures or outages could compromise our ability to perform business functions in a timely manner, which could harm our ability to conduct business and hurt our relationships with business partners and customers. In the event of a disaster such as a natural catastrophe, an industrial accident, a blackout, a malicious software attack, a terrorist attack or war, our systems may be inaccessible to employees, customers or business partners for an extended period of time. As a result, our employees may be unable to perform their duties for an extended period of time if our data or systems are disabled or destroyed.
Our computer systems are subject to cyber-attacks, viruses, malware, ransomware, denial of service, hackers and other external hazards, as well as inadvertent errors, equipment and system failures and to unauthorized or illegitimate actions by employees, consultants, agents and other persons with legitimate access to our systems. Publicly-reported cyber-security threats and incidents have dramatically increased in recent years, and financial services companies and their third-party service providers are increasingly the targets of cyber-attacks. The techniques used to attack systems and networks change frequently and can originate from a wide variety of sources. In addition, over time, the sophistication of these threats continues to increase. It is possible that a cyber-security incident could persist for an extended period of time without detection. The use of remote or flexible work arrangements, remote access tools, and mobile technology have expanded potential targets for cyber-attacks. Our administrative and technical controls as well as other preventative actions used to reduce the risk of cyber incidents and protect our information may be insufficient to detect or prevent future unauthorized access, other physical and electronic break-ins, cyber-attacks or other security breaches to our computer systems or those of third parties with whom we transact business.
We have increasingly outsourced certain technology and business process functions to third parties and may continue to do so in the future. Outsourcing of certain technology and business process functions to third parties may expose us to increased risk related to data security or service disruptions. If we do not effectively develop, implement and monitor these relationships, third-party providers do not perform as anticipated, technological or other problems are incurred with a transition, or outsourcing relationships relevant to our business process functions are terminated, we may not realize expected productivity improvements or cost efficiencies and may experience operational difficulties, increased costs and a loss of business.
The increased risks identified above could expose us to data loss, disruption of service, monetary and reputational damages, competitive disadvantage and significant increases in compliance costs, and costs to improve the security and resiliency of our computer systems. The compromise of personal, confidential or proprietary information could also subject us to legal liability or regulatory action under evolving cyber-security, data protection and privacy laws and regulations enacted by the U.S. federal and state governments, or by various regulatory organizations. As a result, our ability to conduct business and our results of operations might be materially and adversely affected. We could also suffer harm to our business and reputation if attempted cyber-attacks are publicized. The regulatory trend toward broad consumer and general public notification of such incidents could exacerbate the harm.
Any failure to protect the confidentiality of customer information could have a material adverse effect on our business and financial condition.
We are subject to privacy regulations and confidentiality obligations, including the Gramm-Leach-Bliley Act and state privacy laws and regulations, that restrict the use and dissemination of, and access to, the information we produce, store or maintain in the course of our business. We also have contractual obligations to protect certain confidential information received through various business relationships. The obligations generally include protecting such information in the same manner and to the same extent as we protect our own confidential information, and, in some instances, may impose indemnity obligations on us relating to unlawful or unauthorized disclosure of any such information.
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If we do not properly comply with privacy regulations or fail to protect confidential information, we could experience adverse consequences, including reputational damage, possible litigation, and regulatory sanctions, such as penalties, fines and loss of license. This could have adverse impact on our image or customer relationships and, consequently, result in loss of business partners, lower sales, lapses of existing business or increased expenses. While we may maintain insurance to mitigate or offset these risks, we cannot be certain that any such insurance coverage would be sufficient in amount or scope to fully address any resulting losses or liability.
Failure to maintain effective and efficient information systems could adversely affect our business.
Our various lines of business depend greatly on the use of effective information systems. Maintaining and updating current information systems and the development of new systems to match emerging technology, regulatory standards and customer expectations requires a substantial commitment of resources. We must maintain adequate information systems in order to perform necessary business functions, including processing premium and purchase payments, administering our products, providing customer support and paying claims. We also use systems for investment management, financial reporting and data analysis to support our reserves and other actuarial estimates. Any interruptions may reduce our revenues or increase our expenses, and may adversely impact our reputation, business partnerships and customer relationships. In addition, system interruptions may impair our ability to timely and accurately complete our financial reporting and other regulatory obligations, and may impact the effectiveness of our internal controls over financial reporting.
The occurrence of catastrophic events, pandemics, terrorism or military actions could adversely affect our business operations.
The occurrence of natural or man-made disasters and catastrophes, including but not limited to pandemics such as COVID-19, acts of terrorism, floods, earthquakes, industrial accident, blackout, cyberattack, malicious software, insider threat, insurrections and military actions and the resulting response by the United States and other countries, unanticipated problems with our business continuity plans and disaster recovery systems, or a support failure from a third party vendor, could adversely affect our business operations and business results. In addition to impacting our normal business operations, such disasters and catastrophes may impact us indirectly by changing the condition and behavior of our customers, business counterparties and regulators, as well as by causing declines or volatility in the economic and financial markets. We maintain business continuity plans for our operations, but we cannot predict with certainty when normal operations would resume if such an event occurred.
The failure of third parties to perform contracted services or the inadequate policies and procedures of third parties with whom we transact business could adversely affect our business operations and financial results.
The Company contracts with third parties to deliver certain services, including administrative, operational, technology, financial, investment, and actuarial services. There is a risk that we will fail to meet legal, regulatory, financial, or customer obligations in the event that our third party service providers fail to deliver contracted services, fail to comply with applicable laws and regulations, fail to provide material information on a timely basis, or suffer a cyber-attack or other security breach. We may also be exposed to reputational damage due to the actions or inactions of our third party service providers. In addition, if we transition to new third party service providers, we may incur unanticipated expenses or experience service delays or interruptions.
Forward-Looking Statements
The disclosures in this Form S-1 contain certain forward-looking statements that are subject to numerous assumptions, risks or uncertainties. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Some of the forward-looking statements can be identified by the use of words such as “anticipates”, “believes”, “expects”, “projects”, “estimates”, “intends”, “plans”, “seeks”, “could”, “may”, “should”, “will” or the negative version of those words or other comparable terminology. Such forward-looking statements include statements relating to: expectations concerning market and other conditions and their effect on future premiums, revenues, earnings and investment activities; recoverability of asset values; and rate changes.
Actual results and/or financial condition could differ materially from those contained in or implied by such forward-looking statements for a variety of reasons including but not limited to the following and those discussed in Risk Factors.
| • | changes in financial, political and economic conditions, including changes in interest and inflation rates, currency fluctuations and extended economic recessions or expansions in the U.S. and/or abroad; |
| • | performance of securities markets, including the cost of equity index options; |
| • | new legislation or declines in credit quality or credit ratings that could have a material impact on the valuation of securities in MMALIC’s investment portfolio; |
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| • | the availability of capital; |
| • | regulatory actions (including changes in statutory accounting rules); |
| • | changes in the legal environment affecting MMALIC or its customers; |
| • | tax law and accounting changes; |
| • | terrorist activities (including any nuclear, biological, chemical or radiological events), incidents of war or losses resulting from civil unrest and other major losses; |
| • | disruption caused by cyber-attacks or other technology breaches or failures by MMALIC or its business partners and service providers, which could negatively impact MMALIC’s business and/or expose MMALIC to litigation; |
| • | availability of reinsurance and ability of reinsurers to pay their obligations; |
| • | trends in persistency and mortality; |
| • | competitive pressures; |
| • | the ability to obtain adequate rates and policy terms; and |
| • | changes in MMALIC’s financial strength ratings assigned by major ratings agencies. |
The forward-looking statements herein are made only as of the date of this report. MMALIC assumes no obligation to publicly update any forward-looking statements.
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Management’s Discussion and Analysis of Financial Conditions and Results of Operations
The following discussion provides an assessment of the financial position and results of operations on a statutory basis of MassMutual Ascend Life Insurance Company (“MMALIC” or “Company”) operations. Statutory accounting practices (“SAP”) financial information is prepared and presented in accordance with accounting practices prescribed or permitted by the National Association of Insurance Commissioners (“NAIC”) and the Ohio Department of Insurance. Certain differences exist between SAP and U.S. generally accepted accounting principles (“GAAP”). See Note B of MMALIC’s statutory basis audited financial statements, which are included elsewhere in this document, for a discussion of these differences.
OVERVIEW
In the fourth quarter of 2022, the Company’s name was changed to MassMutual Ascend Life Insurance Company, formerly known as Great American Life Insurance Company (“GALIC”). MMALIC, a stock life insurance company domiciled in the state of Ohio, is a direct, wholly-owned subsidiary of Glidepath Holdings Inc., a financial services holding company wholly-owned by Massachusetts Mutual Life Insurance Company (“MassMutual”).
MMALIC predominantly markets traditional fixed, fixed-indexed, and registered index-linked annuities nationwide to the savings and retirement markets and maintains term and universal life in-force business, which the Company manages as one operating segment. MMALIC is licensed to write life, annuity and accident & health insurance in forty-nine states, District of Columbia and Puerto Rico (effective February 8th, 2024).
CHANGE OF OWNERSHIP
On May 28, 2021, MassMutual purchased MMALIC, formerly known as GALIC, and its two insurance subsidiaries, Annuity Investors Life Insurance Company and Manhattan National Life Insurance Company, as well as a broker-dealer affiliate, MM Ascend Life Investor Services, LLC (formerly known as Great American Advisors, LLC) and insurance distributor AAG Insurance Agency, LLC from American Financial Group, Inc. (“AFG”). Total proceeds for the sale were $3.57 billion. MMALIC and its subsidiaries at that date became a direct wholly-owned subsidiary of Glidepath Holdings Inc., a financial services holding company wholly-owned by MassMutual.
NOTABLE TRANSACTIONS
On February 17, 2022, MMALIC entered into a Funds Withheld Coinsurance agreement, effective February 1, 2022, with Martello Re Limited, a Bermuda-domiciled Class E life and annuity reinsurer launched in 2022. MMALIC ceded statutory reserves of approximately $14.2 billion on a closed block of fixed, fixed-indexed and payout annuity policies, in exchange for a $320.0 million ceding commission paid by Martello Re. The transaction resulted in a significant increase to MMALIC’s Risk Based Capital ratio.
Effective January 1, 2022, the Company recaptured the fixed-indexed annuity policies ceded to Hannover Life Reassurance Company of America pursuant to an Indemnity Reinsurance Agreement, dated December 31, 2018. The financial impact of the reinsurance recapture was a decrease to statutory capital of $140.6 million and reported as a change in policyholder reserves.
In 2021 the Ohio Department of Insurance promulgated Ohio Administrative Code Section 3901-1-67, Alternative Derivative and Reserve Accounting Practices (OAC 3901-1-67). This regulation allows Ohio-domiciled insurance companies to utilize certain alternative derivative and reserve accounting practices for eligible derivative instruments and indexed products, respectively, in order to better align the measurement of indexed product reserves and the derivatives that hedge them. Effective January 1, 2022, the Company elected to apply OAC 3901-1-67 to its derivative instruments hedging fixed-indexed annuity products and fixed-indexed reserve liabilities.
Under OAC 3901-1-67, derivative instruments will be carried on the statutory balance sheet at amortized cost with the initial hedge cost amortized over the term and asset payoffs realized at the end of the term being reported through net investment income. Additionally, the cash surrender value reserves for fixed-indexed annuity products will only reflect index interest credits at the end of the crediting term as compared to partial index interest credits accumulating throughout the crediting term as an increase in aggregate reserves for life and accident and health contracts. As a result of the Company’s election to apply OAC 3901-1-67 as of January 1, 2022, total statutory admitted assets decreased $393.6 million, total statutory liabilities decreased $236.2 million and total statutory capital and surplus decreased $157.4 million. The following table summarizes the components of the total decrease in statutory surplus as of the adoption date of January 1, 2022 (in millions):
Change in reserve on account of change in valuation basis | $ | 236.2 | ||
Cumulative effect of change in accounting principle | (454.4 | ) | ||
Change in net deferred tax asset | 46.2 | |||
Change in nonadmitted assets | 14.6 | |||
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Total decrease in statutory surplus | $ | (157.4 | ) | |
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A-13
In August 2023, the NAIC adopted INT 23-01T — Disallowed IMR (“INT 23-01T”). INT 23-01T provides optional, limited-term guidance for the assessment of disallowed IMR for up to 10% of adjusted general account capital and surplus. An insurer’s capital and surplus must first be adjusted to exclude certain “soft assets” including net positive goodwill, electronic data processing equipment and operating system software, net deferred tax assets and admitted disallowed IMR. An insurer will only be able to admit the negative IMR if the insurer’s risk-based capital is over 300% authorized control level after adjusting to remove the assets described above.
As adopted, negative IMR may be admitted first in the insurer’s general account and then, if all disallowed IMR in the general account is admitted and the percentage limit is not reached, to the separate account proportionately between insulated and noninsulated accounts. If the insurer can demonstrate historical practice in which acquired gains from derivatives were also reversed to IMR (as liabilities) and amortized, there is no exclusion for derivatives losses. INT 23-01T was adopted by the Company as of September 30, 2023 and will be effective through December 31, 2025. To the extent the Company’s IMR balance is a net negative, the effects of INT 23-01T will be reflected in the Company’s financial position, results of operations, and financial statement disclosures. The Company has adopted this guidance and the adoption resulted in an admitted disallowed IMR of $271.5 million.
ANALYIS OF RESULTS OF OPERATIONS – YEARS ENDED DECEMBER 31, 2023 AND 2022
The following table presents MMALIC’s statutory results of operations for the periods indicated:
| Year Ended December 31 | ||||||||||||
| 2023 | 2022 | % Change | ||||||||||
Revenues: | ||||||||||||
Premiums and annuity considerations | $ | 8,506.8 | $ | (7,198.3 | ) | 218 | % | |||||
Net investment income | 1,918.4 | 1,019.0 | 88 | % | ||||||||
Other income | 139.8 | 581.0 | -76 | % | ||||||||
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Total premiums and other revenues | 10,565.0 | (5,598.3 | ) | 289 | % | |||||||
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Benefits and Expenses: | ||||||||||||
Policyholder benefits | 748.1 | 505.8 | 48 | % | ||||||||
Surrender benefits | 2,434.7 | 1,460.5 | 67 | % | ||||||||
Change in policyholder reserves | 5,901.8 | (8,743.9 | ) | 167 | % | |||||||
Direct commissions and commissions and expense allowances on reinsurance assumed | 394.2 | 364.6 | 8 | % | ||||||||
Other expenses | 695.8 | 610.5 | 14 | % | ||||||||
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Total benefits and expenses | 10,174.6 | (5,802.5 | ) | 275 | % | |||||||
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Operating results before federal income taxes and realized capital gains (losses) | 390.4 | 204.2 | 91 | % | ||||||||
Federal income taxes on operations | (241.8 | ) | (13.6 | ) | 1678 | % | ||||||
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Operating results before realized gains (losses) | 148.6 | 190.6 | -22 | % | ||||||||
Realized losses net of federal income taxes | (153.7 | ) | (32.6 | ) | 371 | % | ||||||
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Net income | $ | (5.1 | ) | $ | 158.0 | -103 | % | |||||
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Operating results before federal income taxes and realized capital gains (losses) increased by 91% for the 12 months ended December 31, 2023, compared to the 12 months ended December 31, 2022. This increase was primarily attributable to higher net investment income in 2023 partially offset by the Hannover reinsurance treaty recapture in 2022.
Net income decreased 103% in 2023 compared to 2022. This decrease was largely driven by federal income taxes on operations and realized losses primarily related to option mark to market gains (partially offset in change in deferred tax asset). In addition, impairments increased by $48.4 million in 2023 compared to 2022 primarily related to Silicon Valley Bank and Signature Bank.
A-14
Revenues
Total revenues increased to $10,565.0 million in the 12 months ended December 31, 2023 from ($5,598.3) million for the 12 months ended December 31, 2022. Following is a discussion of the primary contributors to this increase.
This increase is primarily attributable to the Martello Re transaction recorded through premium and annuity considerations in 2022 (offset in change in policyholder reserves). Excluding the initial Martello Re ceded premium of $14.2 billion, premium and annuity considerations increased 23%. This increase is due to record premium sales in 2023 primarily attributable to higher traditional fixed annuity sales. Net investment income increased 88% in the 2023 compared to 2022, primarily due to higher investment income from higher yields, ceded investment income related to reimbursement of capital losses, and higher income on derivative instruments. Gross investment income, excluding derivative instruments, increased 35% primarily due to growth in annuity sales.
The following table provides a summary of the components of net investment income:
| Year Ended December 31 | ||||||||
| 2023 | 2022 | |||||||
Investment income: | ||||||||
Bonds | $ | 1,803.2 | $ | 1,436.1 | ||||
Equity securities | 23.7 | 9.3 | ||||||
Mortgage loans | 200.3 | 116.5 | ||||||
Policy loans | 3.8 | 4.1 | ||||||
Cash and short-term investments | 109.7 | 17.5 | ||||||
Other invested assets | 131.9 | 96.1 | ||||||
Derivative instruments | (41.3 | ) | (174.6 | ) | ||||
Other | — | 2.9 | ||||||
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Gross investment income | 2,231.3 | 1,507.9 | ||||||
Investment expenses | (72.2 | ) | (35.6 | ) | ||||
Ceded investment income | (240.7 | ) | (453.3 | ) | ||||
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Net investment income | $ | 1,918.4 | $ | 1,019.0 | ||||
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Other income decreased 76% from 2022 to 2023, primarily due to the $320.0 million ceding commission paid by Martello Re in 2022. In accordance with statutory accounting practices, ceding commissions representing gains on the reinsurance of in-force blocks of business are deferred in surplus and amortized over the reinsurance contract period. The offsetting impact of ceding commissions is recorded in other income with a corresponding increase in surplus representing the deferred gain that will be amortized over the reinsurance contract.
Benefits and Expenses
Policyholder benefits increased 48% in 2023 compared to 2022. This increase was primarily attributable to the initial ceded annuity claim liability related to the Martello Re transaction in 2022. Surrender benefits increased 67% in 2023 compared to the prior year due to the higher interest rate environment in 2023 and aging of the business. Net Surrender and withdrawal benefits are offset by a corresponding change in policyholder reserves. The death benefits paid pursuant to life insurance policies resulted in an impact to operating earnings by the amount of benefits paid above the amount of policyholder reserves released, net of reinsurance.
Change in policyholder reserves increased 167% in 2023 compared to 2022. This increase was primarily the result of the initial Martello Re transaction recorded through Change in policyholder reserves (offset in Premiums and annuity considerations) in 2022 and record annuity sales in 2023 partially offset by surrenders.
Commissions related expenses – direct commissions and expense allowances on reinsurance assumed increased 8% in 2023 compared to 2022, primarily due to higher commissions on record gross annuity sales in 2023. Other expenses increased 14% from 2023 to 2022 primarily due to a litigation accrual and net transfer to separate accounts in 2023 partially offset by the amortization of the ceding commission paid by Martello Re in 2022. The amortization of the ceding commission is offset by the ceding commission reported in Other income.
A-15
Realized Gains (Losses) Net of Federal Income Taxes
Realized losses net of federal income taxes in 2023 were ($153.7) million compared to losses of ($32.6) million in 2022. For statutory reporting purposes, realized gains (losses) reported on the statement of operations are net of gains and losses transferred to the Interest Maintenance Reserve (“IMR”). Amounts transferred to IMR, which is a liability reported in the statement of financial position, are the portion of gains and losses for securities sold that relates to gains and losses resulting from changes in interest rates and are amortized into operations over the estimated remaining lives of the securities sold. Gains and losses reported in the statement of operations are credit and non-interest related. The increase in realized losses (net of federal income taxes) relates to option mark to market gains (partially offset in change in deferred tax asset). In addition, impairments increased by $48.4 million in 2023 compared to 2022 primarily related to Silicon Valley Bank and Signature Bank.
ANALYIS OF RESULTS OF OPERATIONS – YEARS ENDED DECEMBER 31, 2022 AND 2021
The following table presents the statutory results of operations for the periods indicated:
| Year Ended December 31 | ||||||||||||
| 2022 | 2021 | % Change | ||||||||||
Revenues: | ||||||||||||
Premiums and annuity considerations | $ | (7,198.3 | ) | $ | 5,027.0 | -243 | % | |||||
Net investment income | 1,019.0 | 1,951.0 | -48 | % | ||||||||
Other income | 581.0 | 97.0 | 499 | % | ||||||||
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Total premiums and other revenues | (5,598.3 | ) | 7,075.0 | -179 | % | |||||||
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Benefits and Expenses: | ||||||||||||
Policyholder benefits | 505.8 | 901.2 | -44 | % | ||||||||
Surrender benefits | 1,460.5 | 2,208.0 | -34 | % | ||||||||
Change in policyholder reserves | (8,743.9 | ) | 3,107.8 | -381 | % | |||||||
Direct commissions and commissions and expense allowances on reinsurance assumed | 364.6 | 285.2 | 28 | % | ||||||||
Other expenses | 610.5 | 317.0 | 93 | % | ||||||||
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Total benefits and expenses | (5,802.5 | ) | 6,819.2 | -185 | % | |||||||
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Operating results before federal income taxes and realized capital gains (losses) | 204.2 | 255.8 | -20 | % | ||||||||
Federal income taxes on operations | (13.6 | ) | (45.5 | ) | -70 | % | ||||||
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Operating results before realized gains (losses) | 190.6 | 210.3 | -9 | % | ||||||||
Realized gains (losses) net of federal income taxes | (32.6 | ) | 118.7 | -127 | % | |||||||
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Net income | $ | 158.0 | $ | 329.0 | -52 | % | ||||||
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Operating results before federal income taxes and realized capital gains (losses) decreased by 20% for the 12 months ended December 31, 2022 compared to the 12 months ended December 31, 2021. This decrease was primarily attributable to the Hannover reinsurance treaty recapture and the impact from the Martello Re reinsurance transaction.
Net income decreased 52% in 2022 compared to 2021. This decrease was largely driven by items mentioned above, along with realized losses in 2022 compared to realized gains in 2021. The realized losses in 2022 were primarily related to sales of fixed maturities, equities, and derivative instruments. The realized gains in 2021 were primarily related to sales of fixed maturities, equities, and other invested assets.
A-16
Revenues
Total revenues decreased to ($5,598.3) million in the 12 months ended December 31, 2022 from $7,075.0 million for the 12 months ended December 31, 2021. Following is a discussion of the primary contributors to this decrease.
This decrease is primarily attributable to the initial Martello Re transaction recorded through premium and annuity considerations (offset in change in policyholder reserves). Excluding the initial Martello Re ceded premium of $14.2 billion, premium and annuity considerations increased 39%. This increase is primarily attributable to higher traditional fixed, fixed-indexed and registered index-linked annuity sales in 2022. Net investment income decreased 48% in the 2022 period compared to 2021, primarily due to ceded investment income related to the Martello Re reinsurance transaction, and lower income on derivative instruments. Gross investment income, excluding derivative instruments, increased 16% primarily due to growth in annuity sales.
The following table provides a summary of the components of net investment income:
| Year Ended December 31 | ||||||||
| 2022 | 2021 | |||||||
Investment income: | ||||||||
Bonds | $ | 1,436.1 | $ | 1,240.2 | ||||
Equity securities | 9.3 | 28.5 | ||||||
Mortgage loans | 116.5 | 74.6 | ||||||
Real estate | — | 11.9 | ||||||
Policy loans | 4.1 | 4.7 | ||||||
Cash and short-term investments | 17.5 | 18.8 | ||||||
Other invested assets | 96.1 | 75.8 | ||||||
Derivative instruments | (174.6 | ) | 543.7 | |||||
Other | 2.9 | 2.0 | ||||||
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Gross investment income | 1,507.9 | 2,000.2 | ||||||
Investment expenses | (35.6 | ) | (49.2 | ) | ||||
Ceded investment income | (453.3 | ) | — | |||||
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Net investment income | $ | 1,019.0 | $ | 1,951.0 | ||||
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Other income increased 499% from 2021 to 2022, primarily due to the $320.0 million ceding commission paid by Martello Re. In accordance with statutory accounting practices, ceding commissions representing gains on the reinsurance of in-force blocks of business are deferred in surplus and amortized over the reinsurance contract period. The offsetting impact of ceding commissions is recorded in other income with a corresponding increase in surplus representing the deferred gain that will be amortized over the reinsurance contract.
Benefits and Expenses
Policyholder benefits decreased 44% in 2022 compared to 2021. This decrease was primarily attributable to ceded annuity benefits related to the Martello Re transaction. Surrender benefits decreased 34% in 2022 compared to the prior year due to ceded surrenders related to the Martello Re transaction. Net Surrender and withdrawal benefits were offset by a corresponding change in policyholder reserves. The death benefits paid pursuant to life insurance policies resulted in an impact to operating earnings by the amount of benefits paid above the amount of policyholder reserves released, net of reinsurance.
Change in policyholder reserves decreased 381% in 2022 compared to 2021. This decrease was primarily the result of the initial Martello Re transaction recorded through Change in policyholder reserves (offset in Premiums and annuity considerations). The initial Martello Re transaction in the first quarter of 2022 resulted in a reduction of annuity reserves of approximately $14.2 billion.
Commissions related expenses – direct commissions and expense allowances on reinsurance assumed increased 28% in 2022 compared to 2021, primarily due to higher commissions on record gross annuity sales in 2022. Other expenses increased 93% from 2021 to 2022 primarily due to the amortization of the ceding commission paid by Martello Re. The amortization of the ceding commission is offset by the ceding commission reported in Other income.
A-17
Realized Gains (Losses) Net of Federal Income Taxes
Realized losses net of federal income taxes in 2022 were ($32.6) million compared to gains of $118.7 million in 2021. For statutory reporting purposes, realized gains (losses) reported on the statement of operations are net of gains and losses transferred to the Interest Maintenance Reserve (“IMR”). Amounts transferred to IMR, which is a liability reported in the statement of financial position, are the portion of gains and losses for securities sold that relates to gains and losses resulting from changes in interest rates and are amortized into operations over the estimated remaining lives of the securities sold. Gains and losses reported in the statement of operations are credit and non-interest related. The decrease is mainly due to the net gain recognized by MMALIC in 2021 related to the sale of Schedule BA assets to AFG prior to MassMutual’s acquisition of MMALIC and its subsidiaries.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Management believes MMALIC has sufficient resources to meet its liquidity requirements. MMALIC’s liquidity requirements relate primarily to the liabilities associated with its annuity and life products as well as operating costs and expenses, taxes, and contributions of capital to its subsidiaries. Historically, cash flows from premiums and investment income have provided more than sufficient funds to meet these requirements. Funds received in excess of cash requirements are generally invested in additional marketable securities. In addition, MMALIC generally holds a significant amount of highly liquid, short-term investments. If funds generated from operations are insufficient to meet liquidity requirements for any period, MassMutual may contribute funds to MMALIC.
MMALIC’s annuity operations typically produce positive net operating cash flows as investment income exceeds acquisition costs and operating expenses. Interest credited on annuity policyholder funds is a non-cash increase in MMALIC’s annuity reserves, and annuity premiums, benefits and withdrawals are considered financing activities due to the deposit-type nature of annuities. For the full year, net cash provided by operating activities was $6.82 billion in 2023 and net cash provided by operating activities was $5.76 billion in 2022.
MMALIC’s financing activities consist primarily of transactions with annuity policyholders and dividend payments to its former parent company. Net cash used in financing activities was $2,619.3 million in 2023 compared to $1,121.8 million in 2022, an increase of $1,497.5 million. Net withdrawals on deposit-type contracts were $136.5 million in 2023 compared to deposits of $50.4 million in 2022, an increase of $186.9 million. In addition, MMALIC paid $200.0 million of cash dividends to its parent in 2023 compared to no dividend in 2022. The additional increase primarily relates to the change in funds held under reinsurance treaties partially offset by derivative collateral.
The Company is a member of the Federal Home Loan Bank (“FHLB”). The FHLB makes advances and provides other banking services to member institutions. The Company owned $20.0 million of FHLB Class B membership stock at December 31, 2023 and 2022. The Company has no membership stock eligible for redemption. Through its association with the FHLB and by purchasing a set amount of FHLB stock, the Company can enter into deposit-type contracts with the FHLB known as funding agreements.
In 2022, the FHLB advanced MMALIC $300.0 million. At December 31, 2023 and 2022, MMALIC had $500.0 million in outstanding advances from the FHLB (included in Liability for deposit-type contracts), bearing interest at rates ranging from 1.35% to 1.97% (average rate of 1.72% at December 31, 2023). The Company paid interest of approximately $8.6 million and $8.4 million on these advances in 2023 and 2022, respectively. These advances must be repaid between 2025 and 2030 ($200.0 million in 2025 and $300.0 million in 2030). The Company has invested the proceeds from the advances in bonds for the purpose of earning a spread over the interest payments due to the FHLB. As required by the funding agreement, the Company purchased 215,252 shares ($21.5 million) of FHLB activity and excess stock.
The Company also posted collateral to the FHLB of assets with a fair value and carrying value of approximately $1,204.1 million and $1,279.2 million, respectively, as of December 31, 2023. The Company’s FHLB borrowing capacity is based on the Company’s estimate of collateral eligible to be pledged with the FHLB. The deposit contract liabilities, reported in liability for deposit-type contracts in the balance sheet, and related assets are accounted for in the Company’s general account.
MMALIC has no material contractual purchase obligations or other long-term liabilities at December 31, 2023 or 2022.
A-18
Policyholder Liabilities
Liquidity needs vary by annuity and life product. Factors that impact a product’s need for liquidity include interest rate levels, contract size, competitive products, termination or surrender charges, market value adjustments, federal income taxes, and benefit levels. To help assure that obligations will be met when they fall due, the Company uses asset/liability cash flow management techniques that take into consideration current and total investment return requirements, asset and liability durations, risk tolerance, and cash flow requirements. The fair values for liabilities under all insurance contracts are taken into consideration in the overall management of interest rate risk.
The Company’s products include features that enhance the Company’s liquidity position. Virtually all individual deferred annuity products contain surrender charges of varying durations, reducing the risk that customers will request a full surrender during the period charges are in effect. Surrender charges allow the Company to better plan the maturities of its invested assets by reducing the risk that future cash outflows will exceed anticipated levels. Also, 49% of the Company’s in-force annuity products (measured by reserves) at December 31, 2023 had a market value adjustment (“MVA”) that protects the Company when surrenders occur as a result of changes in market interest rates.
The following table provides a summary of statutory annuity reserves at December 31, 2023 by withdrawal characteristics:(1)
| Annuity Reserves Amount | % of Total | |||||||
Subject to discretionary withdrawal: | ||||||||
a. With market value adjustment | $ | 22,517.3 | 48.6 | % | ||||
b. At book value less current surrender charge of 5% or more | 5,395.5 | 11.7 | % | |||||
c. At fair value | 387.5 | 0.8 | % | |||||
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d. Total with market value adjustment or at fair value (total of a through c) | 28,300.3 | 61.1 | % | |||||
e. At book value without adjustment (minimal or no charge or adjustment) | 14,108.8 | 30.5 | % | |||||
Not subject to discretionary withdrawal | 3,865.2 | 8.4 | % | |||||
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Total (gross: direct + assumed) | 46,274.3 | 100.0 | % | |||||
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Reinsurance ceded | 15,069.3 | |||||||
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Total (net) | $ | 31,205.0 | ||||||
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| (1) | Annuity contract reserves and deposit fund liabilities are monetary amounts that an insurer must have available to provide for future obligations with respect to annuities and deposit funds. Reserves are liabilities on the balance sheets of financial statements prepared in conformity with statutory accounting practices. These amounts are at least equal to the value to be withdrawn by policyholders. |
As indicated in the table above, 8.4% of policyholder funds at December 31, 2023 were not subject to discretionary withdrawal and another 61.1% were subject to adjustments and charges that are designed to protect the Company from early withdrawals in the event that they occur. We believe that this structure provides the Company with a relatively stable block of deposit liabilities which helps reduce the risk of unexpected cash withdrawals and the adverse financial effects cash withdrawals could cause.
Some MMALIC annuity products include guaranteed benefits, including guaranteed minimum death benefits and guaranteed minimum withdrawal benefits. These guarantees are designed to protect contract holders against significant downturns in securities markets and fluctuations in interest rates. Periods of significant and sustained downturns in securities markets, increased equity volatility, or reduced interest rates could result in an increase in the valuation of liabilities associated with products with guaranteed benefits. An increase in these liabilities would result in a decrease in MMALIC’s net income.
MMALIC manages market risks by utilizing a comprehensive asset/liability management process involving the monitoring of asset and liability interest rate sensitivities for its various products. This process includes cash flow testing under various interest rate scenarios, including severe stress tests. Although cash flow testing includes many different scenarios, cash flow requirements are inherently unpredictable, as they are affected by external factors, such as changes in interest rates.
MMALIC also utilizes a variety of financial instruments as part of its efforts to efficiently hedge and manage fluctuations in the fair value of its investment portfolio attributable to changes in general interest rate levels and to manage duration mismatch of assets and liabilities. Those instruments may include interest rate exchange agreements, equity index options purchased in either the over-the-counter market or on the Chicago Board Options Exchange, payer swaptions, and commitments to extend credit. All instruments involve elements of credit and market risks in excess of the amounts recognized in the accompanying financial statements at a given point of time. The contract or notional amounts reflect the extent of involvement in the various types of financial instruments.
A-19
There can be no assurance that future experience regarding benefit payments and surrenders will be similar to historic experience because withdrawal and surrender levels are influenced by factors such as the interest rate environment and the Company’s claims-paying and financial strength ratings.
Capital Resources
The NAIC’s model law for risk based capital (“RBC”) applies to life, accident and health companies. RBC formulas determine the amount of capital that an insurance company needs so that it has an acceptable expectation of not becoming financially impaired. At December 31, 2023, the capital ratios of MMALIC and its insurance subsidiaries substantially exceeded the applicable RBC requirements.
The maximum amount of dividends which can be paid to stockholders of life insurance companies domiciled in the State of Ohio without prior approval of the Ohio Insurance Director is the greater of 10% of surplus as regards to policyholders or net income as of the preceding December 31, but only to the extent of earned surplus as of the preceding December 31. The maximum amount of dividends payable by MMALIC in 2024 without prior approval is $304.9 million based on 10% of surplus as regards to policyholders as of the preceding December 31. At December 31, 2023, surplus as regards policyholders was $3,049.4 million, earned surplus was $1,962.7 million, and 2023 net loss was $5.1 million.
INVESTMENTS
MMALIC had total cash and invested assets of $44,732.1 million and $41,690.4 million at December 31, 2023 and 2022, respectively, as illustrated below (in millions):
| 2023 | 2022 | |||||||||||||||
| Carrying Value | % of Carrying Value | Carrying Value | % of Carrying Value | |||||||||||||
Cash and invested assets: | ||||||||||||||||
Bonds | $ | 34,972.3 | 78.2 | % | $ | 33,331.9 | 79.9 | % | ||||||||
Preferred stocks | 201.0 | 0.5 | % | 185.0 | 0.4 | % | ||||||||||
Common stocks | 271.2 | 0.6 | % | 281.4 | 0.7 | % | ||||||||||
Investments in affiliates and subsidiaries | 445.2 | 1.0 | % | 401.9 | 1.0 | % | ||||||||||
Mortgage loans | 4,256.5 | 9.5 | % | 3,088.8 | 7.4 | % | ||||||||||
Cash, cash equivalents and short-term investments | 2,211.3 | 4.9 | % | 1,991.2 | 4.8 | % | ||||||||||
Policy loans | 30.0 | 0.1 | % | 31.5 | 0.1 | % | ||||||||||
Derivative instruments | 771.4 | 1.7 | % | 873.0 | 2.1 | % | ||||||||||
Other invested assets | 1,573.2 | 3.5 | % | 1,505.7 | 3.6 | % | ||||||||||
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Total cash and invested assets | $ | 44,732.1 | 100.0 | % | $ | 41,690.4 | 100.0 | % | ||||||||
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All investments held by the Company are monitored for conformity with the qualitative and quantitative limits prescribed by the applicable Ohio laws and regulations. MMALIC attempts to optimize investment income while building the value of its portfolio, placing emphasis upon total long-term performance. Management believes that a high quality investment portfolio should generate a stable and predictable investment return.
The following table summarizes the carrying values and estimated fair values of the Company’s bond portfolio for the year ended December 31, 2023 (in millions):
| 2023 | ||||||||||||
| Carrying Value | Fair Value | Unrealized Gain (Losses) | ||||||||||
U.S. Government and agencies | $ | 186.7 | $ | 156.8 | $ | (29.9 | ) | |||||
All other governments | 19.2 | 18.2 | (1.0 | ) | ||||||||
States, territories and possessions | 180.4 | 175.5 | (4.9 | ) | ||||||||
Political subdivisions | 231.5 | 228.7 | (2.8 | ) | ||||||||
Special Revenue | 1,920.8 | 1,800.2 | (120.6 | ) | ||||||||
Industrial and miscellaneous | 31,688.5 | 29,809.8 | (1,878.7 | ) | ||||||||
Parent, subsidiaries and affiliates | 745.2 | 722.2 | (23.0 | ) | ||||||||
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Total bonds | $ | 34,972.3 | $ | 32,911.4 | $ | (2,060.9 | ) | |||||
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A-20
The following table summarizes the carrying values and estimated fair values of the Company’s bond portfolio for the year ended December 31, 2022 (in millions):
| 2022 | ||||||||||||
| Carrying Value | Fair Value | Unrealized Gain (Losses) | ||||||||||
U.S. Government and agencies | $ | 98.9 | $ | 64.0 | $ | (34.9 | ) | |||||
All other governments | 19.2 | 17.8 | (1.4 | ) | ||||||||
States, territories and possessions | 190.7 | 183.1 | (7.6 | ) | ||||||||
Political subdivisions | 272.7 | 268.7 | (4.0 | ) | ||||||||
Special Revenue | 1,691.6 | 1,537.0 | (154.6 | ) | ||||||||
Industrial and miscellaneous | 30,538.0 | 27,421.0 | (3,117.0 | ) | ||||||||
Parent, subsidiaries and affiliates | 520.8 | 468.3 | (52.5 | ) | ||||||||
|
|
|
|
|
| |||||||
Total bonds | $ | 33,331.9 | $ | 29,959.9 | $ | (3,372.0 | ) | |||||
|
|
|
|
|
| |||||||
The Company’s bond portfolio consisted of 94% investment grade securities at December 31, 2023 and 2022. The NAIC Securities Valuation Office (“SVO”) is responsible for the day-to-day credit quality assessment and valuation of securities owned by state-regulated insurance companies. The NAIC assigns securities quality ratings and uniform valuations, which are used by insurers when preparing their annual statements to their state insurance regulators. The NAIC ratings are similar to the rating agency designations of the Nationally Recognized Statistical Rating Organizations (“NRSRO”) for marketable bonds. NAIC ratings 1 and 2 include bonds generally considered investment grade. NAIC ratings 3 through 6 include bonds generally considered below investment grade. Typically, if a security has been rated by an NRSRO, the SVO utilizes that rating and assigns an NAIC designation based on the following system:
NAIC Rating | NRSRO Equivalent | |
| 1 | Aaa/Aa/A | |
| 2 | Baa | |
| 3 | Ba | |
| 4 | B | |
| 5 | Caa and Lower | |
| 6 | In or near default |
The following table summarizes MMALIC’s bond portfolio by NAIC ratings (in millions):
| 2023 | 2022 | |||||||||||||||
| Carrying Value | % of Carrying Value | Carrying Value | % of Carrying Value | |||||||||||||
NAIC Rating | ||||||||||||||||
1 | $ | 20,190.9 | 57.7 | % | $ | 17,725.2 | 53.2 | % | ||||||||
2 | 12,704.0 | 36.3 | % | 13,435.6 | 40.3 | % | ||||||||||
3 | 1,253.2 | 3.6 | % | 1,475.9 | 4.4 | % | ||||||||||
4 | 495.3 | 1.4 | % | 454.6 | 1.4 | % | ||||||||||
5 | 287.0 | 0.8 | % | 209.4 | 0.6 | % | ||||||||||
6 | 41.9 | 0.1 | % | 31.2 | 0.1 | % | ||||||||||
|
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|
|
|
|
|
| |||||||||
Total Bonds | $ | 34,972.3 | 100.0 | % | $ | 33,331.9 | 100.0 | % | ||||||||
|
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|
| |||||||||||||
The table below sets out the expected maturities of MMALIC’s bonds as of December 31, 2023 and 2022, respectively (in millions):
| 2023 | 2022 | |||||||||||||||
| Carrying Value | % of Carrying Value | Carrying Value | % of Carrying Value | |||||||||||||
Maturity: | ||||||||||||||||
One year or less | $ | 2,522.4 | 7.2 | % | $ | 2,834.3 | 8.5 | % | ||||||||
After one year through five years | 14,032.5 | 40.1 | % | 12,227.3 | 36.7 | % | ||||||||||
After five years through ten years | 10,975.9 | 31.4 | % | 10,341.3 | 31.0 | % | ||||||||||
After ten years | 7,441.5 | 21.3 | % | 7,929.0 | 23.8 | % | ||||||||||
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| |||||||||
Total bonds by maturity | $ | 34,972.3 | 100.0 | % | 33,331.9 | 100.0 | % | |||||||||
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| |||||||||
A-21
The expected maturities in the foregoing tables may differ from the contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties.
Fair values for MMALIC’s portfolio are determined by MMALIC’s internal investment professionals using data from nationally recognized pricing services as well as non-binding broker quotes. Fair values of equity securities are generally based on published closing prices. When prices obtained for the same security vary, MMALIC’s internal investment professionals select the price they believe is most indicative of an exit price.
The pricing services engaged by MMALIC’s investment professionals use a variety of observable inputs to estimate fair value of bonds that do not trade on a daily basis. These inputs include, but are not limited to, recent reported trades, benchmark yields, issuer spreads, bids or offers, reference data, and measures of volatility.
The pricing of mortgage backed securities (“MBS”) is unique as fair value includes estimates of the rate of future prepayments and defaults of principal over the remaining life of the underlying collateral. Due to the lack of transparency in the process that brokers use to develop MBS prices, valuations based on brokers’ prices are classified as Level 3 in the hierarchy unless the price can be corroborated, for example, by comparison to similar securities priced using observable inputs.
Valuation techniques utilized by pricing services and prices obtained from external sources are reviewed by MMALIC’s internal investment professionals who are familiar with the securities being priced and the markets in which they trade to ensure the fair value determination is representative of an exit price. To validate the appropriateness of the prices obtained, these investment professionals consider widely published indices (as benchmarks), recent trades, changes in interest rates, general economic conditions, and the credit quality of the specific issuers. In addition, MMALIC communicates directly with pricing services regarding the methods and assumptions used in pricing, including verifying, on a test basis, the inputs used by the services to value specific securities.
MBS are subject to significant prepayment risk because, in periods of declining interest rates, mortgages may be repaid more rapidly than scheduled as borrowers refinance higher rate mortgages to take advantage of lower rates. MBS represented approximately 12% and 13% of MMALIC’s bond portfolio at December 31, 2023 and 2022, respectively.
Municipal bonds represented approximately 5% of MMALIC’s fixed maturity portfolio at December 31, 2023 and 2022. MMALIC’s municipal bond portfolio is high quality, with the majority of the securities rated investment grade as of year-end 2023 and 2022. The portfolio is well diversified across the states of issuance and individual issuers.
When a decline in the value of a specific investment is considered to be other-than-temporary, an allowance for credit losses (impairment) is charged to earnings (accounted for as a realized loss). The determination of whether unrealized losses are other-than-temporary requires judgment based on subjective as well as objective factors. Factors considered and resources used by management include:
| a) | whether the unrealized loss is credit-driven or a result of changes in market interest rates, |
| b) | the extent to which fair value is less than cost basis, |
| c) | cash flow projections received from independent sources, |
| d) | historical operating, balance sheet and cash flow data, |
| e) | near-term prospects for improvement in the issuer or its industry, |
| f) | third-party research and communications with industry specialists, |
| g) | financial models and forecasts, |
| h) | the continuity of interest payments, maintenance of investment grade ratings and hybrid nature of certain investments, |
| i) | discussions with issuer management, and |
| j) | ability and intent to hold the investment for a period sufficient to allow for anticipated recovery in fair value. |
Based on its analysis of the factors listed above, management believes MMALIC will recover its cost basis in the bond securities with unrealized losses and that MMALIC has the ability to hold the securities until they recover in value and had no intent to sell them at December 31, 2023. Although MMALIC can continue holding its bond investments with unrealized losses, its intent to hold them may change due to deterioration in the issuers’ creditworthiness, decisions to lessen exposure to a particular issuer or industry, asset/liability management decisions, market movements, changes in views about appropriate asset allocation or the desire to offset taxable realized gains. Should MMALIC’s ability or intent change regarding a particular security, a charge for impairment would likely be required. Significant declines in the fair value of MMALIC’s investment portfolio could have a significant adverse effect on MMALIC’s liquidity. For information on MMALIC’s realized gains (losses) on securities, see “Realized Gains (Losses) Net of Federal Income Taxes.”
A-22
OTHER FINANCIAL INSTRUMENTS
The Company’s derivative strategy employs a variety of derivative financial instruments including interest rate and currency swaps, options, financial futures, and forward contracts. Investment risk is assessed on a portfolio basis and individual derivative financial instruments are not generally designated in hedging relationships; therefore, as allowed by statutory accounting practices, the Company intentionally has not applied hedge accounting.
MMALIC utilizes a variety of financial instruments as part of its efforts to economically hedge and manage fluctuations in the fair value of its investment portfolio attributable to changes in general interest rate levels and to manage duration mismatch of assets and liabilities. Those instruments may include interest rate exchange agreements, equity index options purchased in either over-the-counter market or on the Chicago Board Options Exchange, payer swaptions, and commitments to extend credit. All instruments involve elements of credit and market risks in excess of the amounts recognized in the accompanying financial statements at a given point of time. The contract or notional amounts of those instruments reflect the extent of involvement in the various types of financial instruments.
The following table presents the estimated fair value and admitted value for assets and reported value for liabilities of derivatives as of December 31, 2023 and 2022:
| (dollars in millions) | ||||||||||||||||
| Derivative instruments: | 2023 | 2022 | ||||||||||||||
| Assets: | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | ||||||||||||
Options* | $ | 723.8 | $ | 822.9 | $ | 846.8 | $ | 287.4 | ||||||||
Interest rate swaps | 26.6 | 26.6 | 25.2 | 25.2 | ||||||||||||
Financial futures | 21.0 | 21.0 | — | — | ||||||||||||
Currency swaps | — | — | 0.9 | 0.9 | ||||||||||||
Forward contracts | — | — | 0.1 | 0.1 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total derivative instruments assets | $ | 771.4 | $ | 870.5 | $ | 873.0 | $ | 313.6 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| Liabilities: | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | ||||||||||||
Options* | $ | 418.1 | $ | — | $ | 598.6 | $ | — | ||||||||
Interest rate swaps | 66.3 | 95.0 | 95.0 | 95.0 | ||||||||||||
Currency swaps | 38.8 | 4.8 | 4.8 | 4.8 | ||||||||||||
Forward contracts | 5.0 | 2.5 | 2.5 | 2.5 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total derivative instruments liabilities | $ | 528.2 | $ | 102.3 | $ | 700.9 | $ | 102.3 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| * | Effective 1/1/2022, Fixed-indexed options are carried at amortized cost per OAC 3901-1-67. Estimated Fair Value of options is reported net in the asset section for disclosure. |
A-23
CRITICAL ACCOUNTING POLICIES
Significant accounting policies are summarized in Note B — “Significant Accounting Policies” to the financial statements. The preparation of financial statements in conformity with accounting practices prescribed or permitted by the NAIC and the Ohio Department of Insurance, which vary in some respects from GAAP. As more information becomes known, these estimates and assumptions will likely change and may impact amounts reported in the future. The areas where management believes the degree of judgment required to determine amounts recorded in the financial statements is most significant are as follows:
| • | calculation of statutory reserves, and |
| • | the valuation of investments. |
Qualitative and Quantitative Disclosures about Market Risk
Market risk represents the potential economic loss arising from adverse changes in the fair value of financial instruments. MMALIC’s exposures to market risk relate primarily to its investment portfolio and annuity contracts, which are exposed to interest rate risk and, to a lesser extent, equity price risk.
MMALIC’s exposures to interest rate risk relate primarily to the fair value of MMALIC’s bond securities, which are inversely correlated to changes in interest rates. MMALIC’s bond portfolio is comprised of primarily fixed-rate investments with intermediate-term maturities. Structuring the bond portfolio in this manner provides MMALIC with flexibility in reacting to interest rate fluctuations.
MMALIC’s portfolios are managed with an objective of achieving an adequate risk-adjusted return while maintaining sufficient liquidity to meet policyholder obligations. The portfolios are managed in an effort to adequately position the duration and interest rate sensitivity of the assets against the projected cash flows of policyholder liabilities.
A-24
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
Statutory-Basis Financial Statements
As of December 31, 2023 and 2022 and for each of the three years
ended December 31, 2023, 2022 and 2021
with Independent Auditors’ Report
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
Statutory-Basis Financial Statements
As of December 31, 2023 and 2022 and for each of the three years ended
December 31, 2023, 2022 and 2021
Contents
| F-1 | ||||
Statutory-Basis Financial Statements | ||||
| F-4 | ||||
| F-5 | ||||
Statements of Changes in Capital and Surplus - Statutory-Basis | F-6 | |||
| F-7 | ||||
| F-8 | ||||
KPMG LLP
Suite 3400
312 Walnut Street
Cincinnati, OH 45202
The Board of Directors
MassMutual Ascend Life Insurance Company:
Opinions
We have audited the financial statements of MassMutual Ascend Life Insurance Company (the Company), which comprise the balance sheets statutory-basis as of December 31, 2023 and 2022, and the related statements of operations statutory-basis, statements of changes in capital and surplus statutory-basis, and statements of cash flow statutory-basis for the years then ended, and the related notes to the financial statements (collectively, financial statements).
Unmodified Opinion on Statutory Basis of Accounting
In our opinion, the accompanying financial statements present fairly, in all material respects, the balance sheets statutory-basis of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flow for the years then ended in accordance with accounting practices prescribed or permitted by the Ohio Department of Insurance described in Note B.
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 section of our report, the financial statements do not present fairly, in accordance with U.S. generally accepted accounting principles, the financial position of the Company as of December 31, 2023 and 2022, or the results of its operations or its cash flows for the years then ended.
Basis for Opinions
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles
As described in Note B to the financial statements, the financial statements are prepared by the Company using accounting practices prescribed or permitted by the Ohio Department of Insurance, which is a basis of accounting other than U.S. generally accepted accounting principles. Accordingly, the financial statements are not intended to be presented in accordance with U.S. generally accepted accounting principles. The effects on the financial statements of the variances between the statutory accounting practices described in Note B and U.S. generally accepted accounting principles, although not reasonably determinable, are presumed to be material and pervasive.
Emphasis of Matter
As discussed in Note B to the financial statements, in 2022, the Company elected to apply a prescribed practice promulgated under Ohio Administrative Code Section 3901-1-67 (“OAC 3901-1-67”) to its derivative
KPMG LLP, a Delaware limited liability partnership and a member firm of
the KPMG global organization of independent member firms affiliated with
KPMG International Limited, a private English company limited by guarantee.
F-1
instruments hedging indexed products and indexed annuity reserve liabilities. Our opinions are not modified with respect to this matter.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting practices prescribed or permitted by the Ohio Department of Insurance. 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.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that the financial statements are issued.
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
| • | Exercise professional judgment and maintain professional skepticism throughout the audit. |
| • | Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. |
| • | Obtain an understanding of internal control relevant to the audit 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, no such opinion is expressed. |
| • | Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. |
| • | Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time. |
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
F-2
Supplementary Information
Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The supplementary information included in the supplemental schedule of selected statutory-basis financial data, supplemental investment disclosures, and supplemental schedule of life and health reinsurance disclosures is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Ohio Department of Insurance. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audits of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.
/s/ KPMG LLP
Cincinnati, Ohio
April 23, 2024
F-3
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
STATUTORY-BASIS
(Dollars in millions, except share data)
| December 31 | ||||||||
| 2023 | 2022 | |||||||
ADMITTED ASSETS | ||||||||
Cash and invested assets: | ||||||||
Bonds - at amortized cost (fair value: $32,911.4 and $29,959.9) | $ | 34,972.3 | $ | 33,331.9 | ||||
Preferred stocks - principally at fair value (cost: $212.2 and $165.5) | 201.0 | 185.0 | ||||||
Common stocks - at fair value (cost: $195.6 and $220.5) | 271.2 | 281.4 | ||||||
Investments in affiliates and subsidiaries - at subsidiary capital and surplus (cost: $242.8 and $242.1) | 445.2 | 401.9 | ||||||
Mortgage loans | 4,256.5 | 3,088.8 | ||||||
Cash, cash equivalents and short-term investments | 2,211.3 | 1,991.2 | ||||||
Policy loans | 30.0 | 31.5 | ||||||
Derivatives | 771.4 | 873.0 | ||||||
Other invested assets | 1,573.2 | 1,505.7 | ||||||
|
|
|
| |||||
Total cash and invested assets | 44,732.1 | 41,690.4 | ||||||
Net deferred federal income tax asset | 272.8 | 72.2 | ||||||
Deferred and uncollected premiums | 5.6 | 7.7 | ||||||
Current federal income tax recoverable | 16.0 | 89.6 | ||||||
Investment income due and accrued | 528.5 | 414.7 | ||||||
Company-owned life insurance | 223.1 | 218.7 | ||||||
Admitted disallowed interest maintenance reserve | 271.5 | — | ||||||
Other admitted assets | 495.8 | 286.0 | ||||||
|
|
|
| |||||
Total general account admitted assets | 46,545.4 | 42,779.3 | ||||||
Separate account assets | 443.3 | 103.7 | ||||||
|
|
|
| |||||
Total admitted assets | $ | 46,988.7 | $ | 42,883.0 | ||||
|
|
|
| |||||
LIABILITIES, CAPITAL AND SURPLUS | ||||||||
Liabilities: | ||||||||
Policy benefit reserves | $ | 30,212.2 | $ | 24,310.4 | ||||
Liability for deposit-type contracts | 788.0 | 779.8 | ||||||
Policy and contract claims | 165.3 | 140.6 | ||||||
Asset valuation reserve | 528.4 | 577.1 | ||||||
Funds held under reinsurance treaties | 9,968.0 | 12,677.3 | ||||||
Interest maintenance reserve | — | 93.3 | ||||||
Commissions, general expenses, taxes, licenses and fees due or accrued | 63.3 | 59.4 | ||||||
Payable for securities | 315.1 | 120.1 | ||||||
Collateral | 763.9 | 209.5 | ||||||
Derivatives | 528.2 | 700.9 | ||||||
Other liabilities | 162.0 | 278.3 | ||||||
|
|
|
| |||||
Total general account liabilities | 43,494.4 | 39,946.7 | ||||||
Separate account liabilities | 443.3 | 103.7 | ||||||
|
|
|
| |||||
Total liabilities | 43,937.7 | 40,050.4 | ||||||
Capital and surplus: | ||||||||
Common stock - $7.50 par value; 1,200,000 shares authorized; 201,000 shares issued and outstanding | 1.5 | 1.5 | ||||||
Gross paid-in and contributed surplus | 815.2 | 815.2 | ||||||
Unassigned funds | 1,962.8 | 2,015.9 | ||||||
Aggregate write-in for special surplus funds | 271.5 | — | ||||||
|
|
|
| |||||
Total capital and surplus | 3,051.0 | 2,832.6 | ||||||
|
|
|
| |||||
Total liabilities, capital and surplus | $ | 46,988.7 | $ | 42,883.0 | ||||
|
|
|
| |||||
See accompanying notes to statutory-basis financial statements.
F-4
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
STATUTORY-BASIS
(Dollars in millions)
| Year Ended December 31 | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
Premiums and other revenues: | ||||||||||||
Premiums and annuity considerations | $ | 8,506.8 | $ | (7,198.3 | ) | $ | 5,027.0 | |||||
Net investment income | 1,918.4 | 1,019.0 | 1,951.0 | |||||||||
Amortization of interest maintenance reserve | 10.4 | 36.4 | 23.5 | |||||||||
Commissions and expense allowances and reserve adjustments on reinsurance ceded | 70.2 | 496.8 | (50.8 | ) | ||||||||
Charges and fees for deposit-type contracts and miscellaneous income | 59.2 | 47.8 | 124.3 | |||||||||
|
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|
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| |||||||
Total premiums and other revenues | 10,565.0 | (5,598.3 | ) | 7,075.0 | ||||||||
|
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| |||||||
Benefits and expenses: | ||||||||||||
Policyholders’ benefits | 748.1 | 505.8 | 901.2 | |||||||||
Surrender benefits | 2,434.7 | 1,460.5 | 2,208.0 | |||||||||
Change in policy and contract reserves | 5,901.8 | (8,743.9 | ) | 3,107.8 | ||||||||
Interest and adjustments on deposit-type contracts | 156.9 | 142.3 | 118.7 | |||||||||
Direct commissions and commissions and expense allowances on reinsurance assumed | 394.2 | 364.6 | 285.2 | |||||||||
General insurance expenses | 169.8 | 158.7 | 145.3 | |||||||||
Insurance taxes, licenses and fees | 12.7 | 12.2 | 12.6 | |||||||||
Net transfers to or (from) separate accounts | 356.8 | (22.0 | ) | 36.8 | ||||||||
Other | (0.4 | ) | 319.3 | 3.6 | ||||||||
|
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|
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| |||||||
Total benefits and expenses | 10,174.6 | (5,802.5 | ) | 6,819.2 | ||||||||
|
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|
|
|
| |||||||
Income from operations before federal income taxes and net realized capital gains and losses | 390.4 | 204.2 | 255.8 | |||||||||
Federal income tax (expense) benefit on operations | (241.8 | ) | (13.6 | ) | (45.5 | ) | ||||||
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| |||||||
Income from operations before net realized capital gains and losses | 148.6 | 190.6 | 210.3 | |||||||||
Net realized capital (losses) gains: | ||||||||||||
Net realized capital (losses) gains before related federal income taxes and transfers to interest maintenance reserve | (531.5 | ) | (12.6 | ) | 301.1 | |||||||
Federal income tax benefit (expense) on net realized capital gains | 23.4 | 14.3 | (118.3 | ) | ||||||||
Interest maintenance reserve transfers, net of tax | 354.4 | (34.3 | ) | (64.0 | ) | |||||||
|
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| |||||||
Net realized capital (losses) gains | (153.7 | ) | (32.6 | ) | 118.7 | |||||||
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| |||||||
Net (loss) income | $ | (5.1 | ) | $ | 158.0 | $ | 329.0 | |||||
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| |||||||
See accompanying notes to statutory-basis financial statements.
F-5
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
STATUTORY-BASIS
(Dollars in millions)
| Year Ended December 31 | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
Common stock: | ||||||||||||
Balance at beginning of year | $ | 1.5 | $ | 1.5 | $ | 1.5 | ||||||
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| |||||||
Balance at end of year | $ | 1.5 | $ | 1.5 | $ | 1.5 | ||||||
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| |||||||
Gross paid-in and contributed surplus: | ||||||||||||
Balance at beginning of year | $ | 815.2 | $ | 815.2 | $ | 814.0 | ||||||
Contributions from parent | — | — | 1.2 | |||||||||
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| |||||||
Balance at end of year | $ | 815.2 | $ | 815.2 | $ | 815.2 | ||||||
|
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| |||||||
Unassigned funds: | ||||||||||||
Balance at end of prior year | $ | 2,015.9 | $ | 2,061.4 | $ | 2,081.7 | ||||||
Change in reserve on account of change in valuation basis* | — | 236.2 | — | |||||||||
Cumulative effect of change in accounting principle* | — | (454.4 | ) | — | ||||||||
|
|
|
|
|
| |||||||
Adjusted beginning balance | 2,015.9 | 1,843.2 | 2,081.7 | |||||||||
Net income | (5.1 | ) | 158.0 | 329.0 | ||||||||
Change in net unrealized gains (losses) on derivatives | 217.1 | (204.1 | ) | (67.7 | ) | |||||||
Change in net unrealized foreign exchange capital gains | 19.9 | 8.8 | — | |||||||||
Change in net unrealized capital (losses) gains, net of deferred taxes | (51.8 | ) | 3.5 | 93.1 | ||||||||
Change in net deferred tax asset* | 214.6 | (33.1 | ) | 39.4 | ||||||||
Change in nonadmitted assets* | (22.8 | ) | (4.6 | ) | (20.7 | ) | ||||||
Change in admitted disallowed interest maintenance reserve | (271.5 | ) | — | — | ||||||||
Change in asset valuation reserve | 48.7 | (73.0 | ) | (93.4 | ) | |||||||
Change in surplus as a result of reinsurance | — | 317.2 | — | |||||||||
Dividends to parent | (200.0 | ) | — | (300.0 | ) | |||||||
Correction of error, net of tax | (2.2 | ) | — | — | ||||||||
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Balance at end of year | $ | 1,962.8 | $ | 2,015.9 | $ | 2,061.4 | ||||||
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Special surplus funds: | ||||||||||||
Balance at end of prior year | $ | — | $ | — | $ | — | ||||||
Change in admitted disallowed interest maintenance reserve | 271.5 | — | — | |||||||||
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Balance at end of year | $ | 271.5 | $ | — | $ | — | ||||||
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Total capital and surplus | $ | 3,051.0 | $ | 2,832.6 | $ | 2,878.1 | ||||||
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| * | Effective January 1, 2022, the Company elected to apply Ohio Administrative Code 3901-1-67, Alternative Derivative and Reserve Accounting Practices (OAC 3901-1-67) to its derivative instruments hedging fixed-indexed products and fixed-indexed annuity reserve liabilities. At adoption, the decrease in statutory surplus of ($157.4 million) was comprised of $236.2 million in change in reserve on account of change in valuation basis, ($454.4 million) in cumulative effect of change in accounting principle, $46.2 million in change in net deferred income tax and $14.6 million in change in nonadmitted assets. |
See accompanying notes to statutory-basis financial statements.
F-6
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
STATUTORY-BASIS
(Dollars in millions)
| Year Ended December 31 | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
Operations: | ||||||||||||
Premiums and annuity considerations | $ | 8,509.2 | $ | 6,877.6 | $ | 5,028.1 | ||||||
Net investment income | 2,279.3 | 1,244.9 | 2,392.4 | |||||||||
Benefits paid | (3,375.1 | ) | (2,266.8 | ) | (3,052.6 | ) | ||||||
Commissions, expenses and other deductions | (570.4 | ) | (551.5 | ) | (408.9 | ) | ||||||
Federal income taxes paid | (144.6 | ) | (103.8 | ) | (140.3 | ) | ||||||
Other | 119.1 | 562.2 | 33.1 | |||||||||
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Net cash provided by operations | 6,817.5 | 5,762.6 | 3,851.8 | |||||||||
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Investing activities: | ||||||||||||
Sales, maturities or repayments of investments, net: | ||||||||||||
Bonds | 8,046.0 | 14,058.5 | 6,454.7 | |||||||||
Stocks | 131.1 | 18.2 | 338.1 | |||||||||
Mortgage loans | 715.1 | 537.0 | 506.8 | |||||||||
Real estate | — | — | 65.8 | |||||||||
Other invested assets | 322.1 | 274.0 | 716.5 | |||||||||
Net gains or (losses) on cash, cash equivalents and short-term investments | — | (0.1 | ) | 2.6 | ||||||||
Miscellaneous proceeds | 56.7 | (22.3 | ) | — | ||||||||
Purchases of investments: | ||||||||||||
Bonds | (10,104.1 | ) | (16,364.8 | ) | (9,899.7 | ) | ||||||
Stocks | (128.7 | ) | (109.2 | ) | (78.6 | ) | ||||||
Mortgage loans | (1,881.1 | ) | (1,107.7 | ) | (1,074.4 | ) | ||||||
Real estate | — | — | (1.1 | ) | ||||||||
Other invested assets | (340.0 | ) | (300.9 | ) | (232.4 | ) | ||||||
Miscellaneous applications | (796.7 | ) | (673.9 | ) | (389.3 | ) | ||||||
Net decrease in policy loans | 1.5 | 32.7 | 5.8 | |||||||||
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Net cash used in investing activities | (3,978.1 | ) | (3,658.5 | ) | (3,585.2 | ) | ||||||
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Financing and miscellaneous activities: | ||||||||||||
Net (withdrawals) deposits on deposit-type contracts | (136.5 | ) | 50.4 | (1,056.1 | ) | |||||||
Dividends to parent | (200.0 | ) | — | (300.0 | ) | |||||||
Other | (2,282.8 | ) | (1,172.2 | ) | 51.0 | |||||||
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Net cash used in financing and miscellaneous activities | (2,619.3 | ) | (1,121.8 | ) | (1,305.1 | ) | ||||||
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Net increase (decrease) in cash and short-term investments | 220.1 | 982.3 | (1,038.5 | ) | ||||||||
Cash and short-term investments at beginning of year | 1,991.2 | 1,008.9 | 2,047.4 | |||||||||
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Cash and short-term investments at end of year | $ | 2,211.3 | $ | 1,991.2 | $ | 1,008.9 | ||||||
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Cash flow information for non-cash transactions: | ||||||||||||
Bond conversions and refinancing | $ | 255.4 | $ | 453.1 | $ | — | ||||||
Common stock conversions | 34.4 | 0.2 | — | |||||||||
Bonds transferred to other invested assets | 18.6 | 119.7 | — | |||||||||
Other invested assets transferred to common stocks | 15.5 | — | — | |||||||||
Common stocks transferred to other invested assets | 6.4 | — | — | |||||||||
Perferred stock conversions | 0.4 | — | — | |||||||||
Bonds transferred to mortgage loans | — | 362.7 | — | |||||||||
Other invested assets transferred to bonds | — | 17.1 | — | |||||||||
Net investment income payment-in-kind for bonds | — | 1.1 | — | |||||||||
Maturity extensions | — | — | 385.9 | |||||||||
Exchanges | — | — | 162.0 | |||||||||
Transfers | — | — | 30.0 | |||||||||
Securities acquired from dividends/return of capital distribution | — | — | 7.1 | |||||||||
Capitalized interest | — | — | 5.6 | |||||||||
Securities acquired as capital contributions | — | — | 0.7 | |||||||||
See accompanying notes to statutory-basis financial statements.
F-7
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
A. ORGANIZATION AND NATURE OF OPERATIONS
As of May 28, 2021, Great American Life Insurance Company (“GALIC” or “the Company”), a stock life insurance company domiciled in the State of Ohio, is a direct, wholly-owned subsidiary of Glidepath Holdings, Inc. (“Glidepath”), a financial services holding company wholly-owned by Massachusetts Mutual Life Insurance Company (“MassMutual”). Prior to that date, GALIC was a direct wholly-owned subsidiary of Great American Financial Resources, Inc. (“GAFRI”), a financial services holding company wholly-owned by American Financial Group, Inc. (“AFG”). In the fourth quarter of 2022 the Company’s name was changed to MassMutual Ascend Life Insurance Company (“MMALIC”). MMALIC predominantly markets traditional fixed, fixed-indexed and registered index-linked annuities (“RILA”) in the retail, financial institutions, broker-dealer and registered investment advisor markets, and maintains pension risk transfer business (“PRT”), which is a run-off block of business. MMALIC also has small blocks of long-term care products (“LTC”), other accident and health business, term and universal life in-force business, much of which is reinsured to third parties and are run-off blocks of business. MMALIC is licensed to write life, annuity and accident & health insurance in forty-nine states and the District of Columbia.
B. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements have been prepared in conformity with accounting practices prescribed or permitted by the National Association of Insurance Commissioners (“NAIC”) and the Ohio Department of Insurance, which vary in some respects from U.S. generally accepted accounting principles (“GAAP”). Although the differences to GAAP have not been quantified, they are presumed to be material. The more significant of the differences using these statutory policies versus GAAP are as follows:
| (a) | annuity receipts are accounted for as revenues versus liabilities for GAAP, |
| (b) | costs incurred in the acquisition of new business such as commissions, underwriting and policy issuance costs are expensed at the time incurred versus being capitalized for GAAP, |
| (c) | reserves established for future policy benefits are calculated using more conservative assumptions for mortality and interest rates than would be used under GAAP. Beginning on January 1, 2022, certain indexed annuity reserves are calculated in accordance with a prescribed practice under the Ohio Administrative Code discussed elsewhere in this footnote, |
| (d) | for statutory reporting, an Interest Maintenance Reserve (“IMR”) is provided whereby portions of certain realized gains and losses from fixed income investments are deferred and amortized into investment income as prescribed by the NAIC, |
| (e) | investments in bonds considered “available for sale” (as defined under GAAP) are generally recorded at amortized cost versus fair value for GAAP, except those with an NAIC designation of “6,” which are stated at the lower of amortized cost or fair value, |
| (f) | investments in non-affiliated common stocks are carried at fair value. Redeemable preferred stocks rated RP1 through RP3 are stated at book value. All other redeemable preferred stocks are stated at the lower of book value or fair value. Perpetual preferred stocks are stated at fair value, not to exceed any effective call price. GAAP requires that equity securities are carried at fair value with holding gains and losses reported in realized gains, |
| (g) | for statutory reporting, surplus notes are carried at book value. Under GAAP, surplus notes are considered investments in bonds “available for sale” recorded at fair value, |
| (h) | investments in equity securities of wholly-owned subsidiaries are carried at statutory and GAAP equity, in accordance with Statement of Statutory Accounting Principle No. 97, Investments in Subsidiary, Controlled and Affiliated Entities (“SSAP No. 97”), versus being consolidated for GAAP, |
| (i) | for statutory reporting, an Asset Valuation Reserve (“AVR”) is provided under a formula prescribed by the NAIC as a valuation allowance for invested assets, which reclassifies a portion of surplus to liabilities, |
| (j) | the cost of certain assets designated as “nonadmitted assets” (principally advance commissions paid to agents, inventory and prepaid assets on real estate holdings, deferred tax assets (“DTA”) and certain investment income due and accrued in excess of statutory limitations) is charged against surplus, |
| (k) | policy liabilities and accruals in the statutory-basis balance sheets are reported net of reinsurance credits and recoverable unpaid losses. Under GAAP, balance sheet amounts are reported gross of reinsurance, |
| (l) | commissions allowed by reinsurers on business ceded are reported as income when incurred rather than being deferred and amortized with deferred policy acquisition costs as required under GAAP. Gains on reinsurance transactions are recorded to surplus when incurred rather than being deferred as required under GAAP, |
F-8
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
B. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
| (m) | for statutory reporting, reinsurance agreements are reported in accordance with Statement of Statutory Accounting Principle No. 61R, Life, Deposit-Type and Accident and Health Reinsurance; certain reinsurance agreements are accounted for using deposit accounting for GAAP, |
| (n) | the mark to market on RILA options, forward contracts, currency swaps and interest rate swaps is included as an unrealized gain/(loss) in unassigned surplus versus income for GAAP. Prior to January 1, 2022, fixed-indexed annuity options were carried at fair value and the mark to market was included as an unrealized gain/(loss) in unassigned funds versus income for GAAP, |
| (o) | the fixed-indexed annuity options are carried at amortized cost versus fair value for GAAP. Prior to January 1, 2022, fixed-indexed annuity options were carried at fair value, |
| (p) | in accordance with SSAP No. 101 – Income Taxes, DTAs are limited to: 1) the amount of federal income taxes paid in prior years that can be recovered through loss carrybacks for existing temporary differences that reverse during a timeframe corresponding with Internal Revenue Service (“IRS”) tax loss carryback provisions, not to exceed three years, including amounts established in accordance with the provision of SSAP No. 5R, plus 2) for entities who meet the required realization threshold in SSAP No. 101, the lesser of the remaining gross DTAs expected to be realized within three years of the balance sheet date or 15% of capital and surplus excluding any net DTAs, EDP equipment and operating software and any net positive goodwill, plus 3) the amount of remaining gross DTAs that can be offset against existing gross deferred tax liabilities (“DTL”). The remaining DTAs are nonadmitted. Deferred taxes do not include amounts for state taxes. Under GAAP, a DTA is recorded for the amount of gross DTAs expected to be realized in future years, and a valuation allowance is established for DTAs not realizable, |
| (q) | for statutory reporting, cash, cash equivalents, and short-term investments represent cash balances and investments with initial maturities of one year or less. Under GAAP, cash and cash equivalents include cash balances and investments with initial maturities of three months or less, and negative cash balances are reported as negative assets, |
| (r) | changes in deferred taxes are recognized in operations under GAAP versus a change in surplus for statutory reporting, |
| (s) | statutory financial statements are prepared using language and groupings substantially the same as the annual statements of the Company filed with the Ohio Department of Insurance, |
| (t) | statutory statements of cash flows are presented on the basis prescribed by the NAIC, and |
| (u) | statutory financial statements do not include accumulated other comprehensive income. |
INTEREST RATE RISK
Significant changes in interest rates expose the Company to the risk of not earning income or experiencing losses based on the differences between the interest rates earned on investments and the credited interest rates paid on outstanding fixed annuity contracts and life insurance products with account values. Significant changes in interest rates may affect:
| • | the unrealized gains and losses in the investment portfolio; |
| • | the book yield of the investment portfolio; and |
| • | the ability of the Company to maintain appropriate interest rate spreads over the fixed rates guaranteed in life and annuity products. |
CREDIT RISK
Third party debtors may not pay or perform their obligations. These parties may include the issuers of securities, customers, reinsurers, and other financial intermediaries.
F-9
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
B. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PRESCRIBED OR PERMITTED PRACTICES
The Ohio Department of Insurance recognizes only statutory accounting practices prescribed or permitted by the State of Ohio for determining and reporting the financial condition and results of operations of an insurance company, for determining its solvency under the Ohio Insurance Law. The NAIC’s Accounting Practices and Procedures Manual (“NAIC SAP”) has been adopted as a component of prescribed or permitted practices by the State of Ohio. The Company has no prescribed practices or permitted practices that would result in differences between NAIC SAP and the State of Ohio with the exception of OAC 3901-1-67.
Effective January 1, 2022, the Company elected to apply OAC 3901-1-67 to its derivative instruments hedging fixed-indexed products and fixed-indexed reserve liabilities. Under OAC 3901-1-67, derivative instruments are carried at amortized cost with the initial hedge cost amortized over the term and asset payoffs realized at the end of the term being reported through net investment income. Additionally, the cash surrender value reserves for fixed-indexed products only reflect index interest credits at the end of the crediting term as compared to partial index interest credits accumulating throughout the crediting term through change in policy and contract reserves.
If the prescribed practices were not applied, the Company’s risk-based capital would continue to be above regulatory action levels. A reconciliation of the Company’s net income (loss) between NAIC SAP and prescribed practice is shown below:
| Year Ended December 31 | ||||||||||||||||||||
Net Income (in millions ) | SSAP # | F/S Page | State of | 2023 | 2022 | 2021 | ||||||||||||||
| (1) | State basis | XXX | XXX | XXX | $ | (5.1 | ) | $ | 158.0 | $ | 329.0 | |||||||||
| (2) | State prescribed practices that are an increase/(decrease) from NAIC SAP | XXX | XXX | XXX | ||||||||||||||||
OAC 3901-1-67: | ||||||||||||||||||||
Derivative instruments | 86 | 4 | OH | (49.3 | ) | (26.4 | ) | — | ||||||||||||
Reserves for fixed indexed annuities | 51 | 4 | OH | 306.6 | (188.0 | ) | — | |||||||||||||
Tax impact | 101 | 4 | OH | 0.7 | 0.4 | — | ||||||||||||||
| (3) | State permitted practices that are an increase/(decrease) from NAIC SAP | XXX | XXX | XXX | — | — | — | |||||||||||||
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| (4) | NAIC SAP (1-2-3=4) | XXX | XXX | XXX | $ | (263.1 | ) | $ | 372.0 | $ | 329.0 | |||||||||
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A reconciliation of the Company’s capital and surplus between the NAIC SAP and prescribed practice is shown below:
| Year Ended December 31 | ||||||||||||||||||||
Surplus (in millions ) | SSAP # | F/S Page | State of | 2023 | 2022 | 2021 | ||||||||||||||
| (5) | Statutory surplus state basis | XXX | XXX | XXX | $ | 3,051.0 | $ | 2,832.6 | $ | 2,878.1 | ||||||||||
| (6) | State prescribed practices that are an increase/(decrease) from NAIC SAP | |||||||||||||||||||
OAC 3901-1-67: | ||||||||||||||||||||
Derivative instruments | 86 | 2, 4 | OH | (525.3 | ) | (39.2 | ) | — | ||||||||||||
Reserves for fixed indexed annuities | 51 | 3, 4 | OH | 354.8 | 48.2 | — | ||||||||||||||
Tax impact | 101 | 2, 4 | OH | 50.8 | 13.1 | — | ||||||||||||||
| (7) | State permitted practices that are an increase/(decrease) from NAIC SAP | XXX | XXX | XXX | — | — | — | |||||||||||||
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| (8) | NAIC SAP (5-6-7=8) | XXX | XXX | XXX | $ | 3,170.7 | $ | 2,810.5 | $ | 2,878.1 | ||||||||||
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On February 17, 2022, MMALIC entered into a Funds Withheld Coinsurance agreement effective February 1, 2022, with Martello Re Limited, a Bermuda-domiciled Class E life and annuity reinsurer launched in 2022. MMALIC ceded statutory reserves of approximately $14.2 billion on a closed block of fixed, fixed-indexed and payout annuity policies, in exchange for a $320 million ceding commission paid by Martello Re. The transaction resulted in a significant increase to MMALIC’s Risk Based Capital ratio. See “Note F - Reinsurance” for additional disclosure.
Preparation of the statutory-basis financial statements requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein.
F-10
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
B. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVESTMENTS
Investments are generally stated as follows:
| a) | bonds with a NAIC rating 1 through 5 are stated at amortized cost using the interest method; all others are stated at the lower of amortized cost or fair value. For residential mortgage-backed securities (“MBS”), commercial MBS and loan-backed and structured securities (“LBASS”), the NAIC has retained a third-party investment management firm to assist in the determination of the appropriate NAIC designations and Book Adjusted Carrying Values based on not only the probability of loss, but also the severity of loss. Those residential MBS, commercial MBS and LBASS securities that are not modeled but receive a current year NAIC Credit Rating Provider rating equal to NAIC 1 and 2 are stated at amortized cost and NAIC 3-6 are stated at lower of amortized cost or fair value. Dealer modeled prepayment assumptions are used for mortgage-backed and asset-backed securities at the date of purchase to determine effective yields; significant changes in estimated cash flows from the original purchase assumptions are accounted for on a prospective basis, |
| b) | short-term investments are carried at cost, |
| c) | redeemable preferred stocks rated RP1 through RP3 are stated at book value. All other redeemable preferred stocks are stated at the lower of book value or fair value. Perpetual preferred stocks are stated at fair value, not to exceed any effective call price, |
| d) | common stocks are carried at fair value except investments in stocks of unconsolidated subsidiaries and affiliates in which the Company has an interest of 10% or more are carried on the equity basis in accordance with SSAP No. 97, |
| e) | RILA options, forward contracts, financial futures, currency swaps and interest rate swaps are carried at fair value, |
| f) | fixed-indexed annuity options are carried at amortized cost. Prior to adoption of OAC 3901-1-67, fixed-indexed annuity options were carried at fair value, |
| g) | other invested assets include limited partnerships, limited liability companies and surplus notes. Surplus notes are stated at the lower of amortized cost or fair value. Investments in limited partnerships and limited liability companies are accounted for using the equity method, |
| h) | mortgage loans on real estate are carried at amortized cost less an allowance, and |
| i) | policy loans are stated at the aggregate unpaid balance. |
If it is determined that a decline in fair value of a specific investment is other-than-temporary, an impairment is recognized as a realized capital loss. Investments that are in an unrealized loss position that the Company intends to sell, or does not have the intent and ability to hold until recovery, are written down to fair value. Loan-backed and structured securities (included in bonds) that are in an unrealized loss position that the Company has the intent and ability to hold until recovery, are written down only to the extent the present value of expected future cash flows using the security’s effective yield is lower than the amortized cost. All other bonds that are in an unrealized loss position that the Company has the intent and ability to hold until recovery are written down to fair value if declines are credit-related and not written down for interest-related declines. When a decline in the value of a specific investment is considered to be other-than-temporary, a provision for impairment is charged to earnings (included in net realized capital gains (losses)) and the cost basis of that investment is reduced by the amount of the charge.
The Company’s derivative strategy employs a variety of derivative financial instruments including interest rate and currency swaps, options, financial futures, and forward contracts. Investment risk is assessed on a portfolio basis and individual derivative financial instruments are not generally designated in hedging relationships; therefore, as allowed by statutory accounting practices, the Company intentionally has not applied hedge accounting. Subsequent to the adoption of OAC on January 1, 2022, options related to fixed-indexed annuities are recorded at amortized cost with amortization and expirations recorded in Net investment income. All other derivative instruments are recorded at fair value with the related changes reported in Unassigned funds and settlements and expirations reported in Net realized capital gains (losses).
F-11
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
B. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Counterparties to financial instruments expose the Company to credit-related losses in the event of nonperformance, but the Company does not expect any counterparties to fail to meet their obligations and expects any nonperformance to not have a material impact on the Company’s financial statements. The Company receives collateral from certain counterparties to support its purchased equity index call option assets (net of collateral required under put option contracts with the same counterparties).
Investments having maturities of three months or less when purchased are considered to be cash equivalents for purposes of the statutory-basis financial statements. The carrying values of cash and short-term investments approximate their fair values.
Gains or losses on sales of securities are recognized at the time of disposition with the amount of gain or loss determined on the specific identification basis.
The IMR applies to interest-related realized capital gains and losses (net of tax) and is intended to defer realized gains and losses resulting from changes in the general level of interest rates. Gains and losses deferred from realized capital gains and losses are reported in interest maintenance reserve transfers, net of tax on the Statement of Operations. The IMR is amortized into investment income over the approximate remaining life of the investments sold.
The AVR provides for possible credit-related losses on securities and is calculated according to a specified formula as prescribed by the NAIC for the purpose of stabilizing surplus against fluctuations in the fair value of investment securities. Changes in the required reserve balances are made by direct credits or charges to surplus.
During 2023 and 2022, the Company did not reduce the interest rates on any of the outstanding mortgage loans due to credit concerns. Fire insurance, at least equal to the excess of the loan over the maximum loan that would be permitted by law on the land without the buildings, is required on all properties covered by mortgage loans.
Investments in the capital stock of MMALIC’s wholly-owned insurance subsidiaries, Annuity Investors Life Insurance Company (“AILIC”) and Manhattan National Life Insurance Company (“MNLIC”), are carried at the subsidiary’s statutory equity in accordance with SSAP No. 97.
PREMIUMS
Annuity premiums and considerations are recognized as revenue when received. Life and accident and health premiums are recognized as revenue when due and premiums over 90 days past due are nonadmitted and charged against surplus. Additionally, life and accident and health premiums include deferred premiums on in-force business.
SEPARATE ACCOUNT
Separate account assets and liabilities reported in the accompanying statutory-basis balance sheet represent funds that are separately administered to hedge the Company’s registered index-linked annuity contracts. Separate account assets are reported at fair value and include equity index call options. Separate account liabilities are reported at fair value and include equity index put options and registered index-linked annuity reserves. The operations of the separate account are not included in the accompanying statutory-basis financial statements.
F-12
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
B. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
POLICY BENEFIT RESERVES
Life, annuity, and accident and health disability benefit reserves are developed by actuarial methods and are determined based on published tables using statutorily specified interest rates and valuation methods that will provide, in the aggregate, reserves that are greater than or equal to the minimum or guaranteed policy cash values or the amounts required by the Ohio Department of Insurance. MMALIC waives deduction of deferred fractional premiums on the death of life and annuity policy insureds and returns any premium beyond the date of death. Surrender values on policies do not exceed the corresponding benefit reserves.
For life insurance policies extra premiums are charged for substandard lives. Additional reserves are established when the results of cash flow testing under various interest rate scenarios indicate the need for such reserves or, where required by the valuation standards, when the net premiums exceed the gross premiums. The net deficiency reserve at December 31, 2023 and December 31, 2022, was $1.7 million and $1.9 million, respectively. The net amount of insurance in force for these reserves at December 31, 2023 and December 31, 2022 was approximately $13.9 million and $16.1 million, respectively. Much of the deficiency reserve is related to a cash endowment rider.
The valuation mortality table and interest assumptions being used on the vast majority of life policies in force is the 1980 Commissioners Standard Ordinary Table with 2.0% to 6.0% interest. Approximately one-sixth of the future life insurance benefits are based on a net level reserve basis and the remaining are based on a modified reserve basis. The effect of using a modified reserve basis is to partially offset the effect of immediately expensing acquisition costs by providing a reserve increase in the first policy year which is less than the increase in the renewal years.
For life insurance policies the mean reserve method is used to adjust the calculated terminal reserve to the appropriate reserve at December 31. Mean reserves for substandard lives are determined by computing the regular mean reserve for the plan at the rated age and holding, in addition, one-half of the extra premium charge for the year. An asset is recorded for deferred premiums net of loading to adjust the reserve for modal premium payments.
Life insurance deferred and uncollected premiums represent annual or fractional premiums, either due and uncollected or not yet due, whereby policy reserves have been provided on the assumption that the full premium for the current policy year has been collected.
Annuity policy and deposit fund reserves are based on principles underlying the Commissioners Annuity Reserve Valuation Method. Valuation interest rates range from 0.75% to 11.25%. Valuation mortality rates are from the 1971 Individual Annuity Mortality (“IAM”) table, the 1983 IAM table, 1994 Group Annuity Mortality table, Annuity 2000 mortality table and the 2012 Individual Annuity Reserving mortality table. Reserves for fixed-indexed annuities are calculated using the market value reserve method as defined in NAIC Actuarial Guideline 35, adjusted in accordance with OAC 3901-1-67. The fixed-indexed reserves will only reflect index interest credits at the end of the crediting term as compared to partially reflecting the index interest credits throughout the crediting term in aggregate reserves for life and accident and health contracts. Prior to 2022, reserves for fixed-indexed annuities were calculated using the market value reserve method as defined in NAIC Actuarial Guideline 35. Reserves for registered index-linked annuities are calculated using the reserve method defined in the Valuation Manual (VM-21), including the use of the Alternative Methodology for calculating the Conditional Tail Expectation Amount. Rates determined by section VM-22 of the Valuation Manual were used for pension risk transfer contracts and single premium immediate annuities with issue years after 2017 and payout annuities issued as an annuitization of a deferred annuity originally issued after 2017.
Tabular interest, tabular less actual reserves released and tabular costs have been determined by formula. Tabular interest on funds not involving life contingencies is calculated as the product of such valuation rate of interest times the mean of the amount of funds subject to such valuation rate of interest held at the beginning and end of the year of valuation.
The nature of significant other reserve changes primarily relates to annuity reserves ceded to both Martello Re Limited and Commonwealth Annuity and Life Insurance Company (“Commonwealth”). The Company has ceded approximately $15.0 billion and $18.3 billion of annuity reserves in aggregate to Martello Re Limited and Commonwealth at December 31, 2023 and 2022, respectively.
F-13
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
B. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The liability for unreported claims is based on actual, recent Company experience of unreported life and annuity claim development. This experience is monitored and the liability is adjusted accordingly each quarter.
The Company is required to perform an annual asset adequacy test of reserves, to determine if they are adequate under moderately adverse conditions. The Appointed Actuary oversees the analysis and determines if and how much additional reserves are required. As of December 31, 2023 and 2022 additional reserves were not required.
FEDERAL INCOME TAXES
Through the first five months of 2021, the Company had an intercompany tax allocation agreement with AFG. Pursuant to the agreement, the Company’s tax expense was determined based upon its inclusion in the consolidated tax return of AFG and its includable subsidiaries. Estimated payments were made quarterly during the year. Following year-end, additional settlements would be made on the original due date of the return and, when extended, at the time the return was filed. The method of allocation among the companies under the agreement was based upon separate return calculations with current credit for net losses to the extent the losses provide a benefit in the consolidated return.
Beginning in June of 2021, MMALIC and its subsidiaries entered into a separate intercompany tax allocation agreement (the Tax Agreement). The Tax Agreement sets forth the manner in which the total combined federal income is allocated among the subsidiaries. The Tax Agreement provides MMALIC with the enforceable right to recoup federal income taxes paid in prior years in the event of future net capital losses, which it may incur. Further, the Tax Agreement provides MMALIC with the enforceable right to utilize its net losses carried forward as an offset to future net income subject to federal income taxes. Estimated payments are made quarterly during the year. Following year-end, additional settlements are made on the original due date of the return and, when extended, at the time the return is filed.
ADOPTION OF NEW ACCOUNTING STANDARDS
In June 2022, the NAIC adopted modifications to SSAP No. 25, Affiliates and Other Related Parties and SSAP No. 43R, Loan-Backed and Structured Securities, effective December 31, 2022. The modifications clarify application of the existing affiliate definition and incorporate disclosure requirements for all investments that involve related parties, regardless of whether they meet the affiliate definition. The revisions to SSAP No. 43R also included additional clarifications that the investments from any arrangements that results in direct or indirect control, which include but are not limited to control through a servicer, shall be reported as affiliated investments. The modifications did not have a material effect on the Company’s financial statements.
In August 2023, the NAIC adopted INT 23-01T — Disallowed IMR (“INT 23-01T”). INT 23-01T provides optional, limited-term guidance for the assessment of disallowed IMR for up to 10% of adjusted general account capital and surplus. An insurer’s capital and surplus must first be adjusted to exclude certain “soft assets” including net positive goodwill, electronic data processing equipment and operating system software, net deferred tax assets and admitted disallowed IMR. An insurer will only be able to admit the negative IMR if the insurer’s risk-based capital is over 300% authorized control level after adjusting to remove the assets described above.
As adopted, negative IMR may be admitted first in the insurer’s general account and then, if all disallowed IMR in the general account is admitted and the percentage limit is not reached, to the separate account proportionately between insulated and noninsulated accounts. If the insurer can demonstrate historical practice in which acquired gains from derivatives were also reversed to IMR (as liabilities) and amortized, there is no exclusion for derivatives losses. INT 23-01T was adopted by the Company as of September 30, 2023 and will be effective through December 31, 2025. To the extent the Company’s IMR balance is a net negative, the effects of INT 23-01T will be reflected in the Company’s financial position, results of operations, and financial statement disclosures. The Company has adopted this guidance and the adoption resulted in an admitted disallowed IMR of $271.5 million.
F-14
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
B. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In March 2023, the NAIC adopted modifications to SSAP No. 34 – Investment Income Due and Accrued, effective December 31, 2023. The modifications require additional disclosures and data capture related to gross, non-admitted and admitted amounts for interest income due and accrued, deferred interest, and paid-in-kind (“PIK”) interest.
In August 2023, the NAIC adopted revisions to further clarify the PIK interest disclosure in SSAP No. 34, effective December 31, 2023. The revisions clarify that decreasing amounts to principal balances are first applied to any PIK interest included in the principal balance. The original principal would not be reduced until the PIK interest had been fully eliminated from the balance. The revisions also provide a practical expedient for determining the PIK interest in the cumulative balance by subtracting the original principal/ par value from the current principal/ par value, with the resulting PIK interest not to go less than zero. The modifications did not have a material effect on the Company’s impact of PIK in relation to the financial statements.
In August 2023, the NAIC adopted revisions to clarify and incorporate a new bond definition within disclosures SSAP No. 26 – Bonds, SSAP No. 43 – Asset-Backed Securities, and other related SSAPs, effective January 1, 2025. The revisions were issued in connection with its principle-based bond definition project, the Bond Project.
The Bond Project began in October 2020 through the development of a principle-based bond definition to be used for all securities in determining whether they qualify for reporting on the statutory annual statement Schedule D. Within the new bond definition, bonds are classified as an “issuer credit obligation” or an “asset-backed security.” An “issuer credit obligation” is defined as a bond where repayment is supported by the general creditworthiness of an operating entity, and an “asset-backed security” is defined as a bond issued by an entity created for the primary purpose of raising capital through debt backed by financial assets. The revisions to SSAP No. 26 reflect the principle-based bond definition, and SSAP No. 43 provides accounting and reporting guidance for investments that qualify as asset-backed securities under the new bond definition. Upon adoption, investments that do not qualify as bonds will not be permitted to be reported as bonds on Schedule D, Part 1 thereafter as there will be no grandfathering for existing investments that do not qualify under the revised SSAPs. The Company is currently assessing the impacts of the adopted SSAP No. 26, SSAP No. 43 and other related SSAPs in relation to the financial statements.
SUBSEQUENT EVENTS
Management has evaluated all events occurring after December 31, 2023, through the date the financial statements were available to be issued, to determine whether any event required either recognition or disclosure in the financial statements.
F-15
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
C. FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s view of market assumptions in the absence of observable market information. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. In determining fair value, the Company uses various methods, including market, income and cost approaches.
The Company categorizes its financial instruments into a three-level hierarchy based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument in its entirety.
The three levels of the hierarchy are as follows:
Level 1 - Quoted prices for identical assets or liabilities in active markets (markets in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis). MMALIC’s Level 1 financial instruments consist primarily of cash, cash equivalents and short-term investments and publicly traded equity securities for which quoted market prices in active markets are available.
Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar assets or liabilities in inactive markets (markets in which there are few transactions, the prices are not current, price quotations vary substantially over time or among market makers, or in which little information is released publicly); and valuations based on other significant inputs that are observable in active markets. MMALIC’s Level 2 financial instruments include fixed maturities, non-affiliated preferred stocks, separate account assets and liabilities, funds held as collateral and derivative instruments priced using observable inputs. Level 2 inputs include benchmark yields, reported trades, corroborated broker/dealer quotes, issuer spreads and benchmark securities. When non-binding broker quotes can be corroborated by comparison to similar securities priced using observable inputs, they are classified as Level 2.
Level 3 - Valuations derived from market valuation techniques generally consistent with those used to estimate the fair value of Level 2 financial instruments in which one or more significant inputs are unobservable or when the market for a security exhibits significantly less liquidity relative to markets supporting the Level 2 fair value measurements. The unobservable inputs may include management’s own assumptions about the assumptions market participants would use based on the best information available in the circumstances. MMALIC’s Level 3 is comprised of financial instruments whose fair value is estimated based on non-binding broker quotes or internally developed using significant inputs not based on, or corroborated by, observable market information.
Management is responsible for the valuation process and uses data from outside sources (including nationally recognized pricing services and broker/dealers) in establishing fair value. Valuation techniques utilized by pricing services and prices obtained from external sources are reviewed by internal investment professionals who are familiar with the securities being priced and the markets in which they trade to ensure the fair value determination is representative of an exit price. To validate the appropriateness of the prices obtained, the investment manager considers widely published indices (as benchmarks), recent trades, changes in interest rates, general economic conditions and the credit quality of the specific issuers. In addition, management communicates directly with the pricing service regarding the methods and assumptions used in pricing, including verifying, on a test basis, the inputs used by the service to value specific securities. See “Note D - Investments” for fair value of investment securities.
F-16
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
C. FAIR VALUE MEASUREMENTS (CONTINUED)
Financial assets and liabilities measured at fair value on a recurring basis categorized into the three-level fair value hierarchy at December 31, 2023 are summarized below (in millions):
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | ||||||||||||||||
Bonds: | ||||||||||||||||
Industrial and miscellaneous | $ | — | $ | 8.0 | $ | 6.3 | $ | 14.3 | ||||||||
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Total bonds | — | 8.0 | 6.3 | 14.3 | ||||||||||||
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Non-affiliated preferred stocks | 45.2 | 16.4 | 67.7 | 129.3 | ||||||||||||
Non-affiliated common stocks | 113.0 | — | 158.2 | 271.2 | ||||||||||||
Financial Futures | 21.0 | — | — | 21.0 | ||||||||||||
Interest rate swaps | — | 26.6 | — | 26.6 | ||||||||||||
Separate account assets | 5.2 | 438.1 | — | 443.3 | ||||||||||||
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Total assets accounted for at fair value | $ | 184.4 | $ | 489.1 | $ | 232.2 | $ | 905.7 | ||||||||
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Liabilities: | ||||||||||||||||
Currency swaps | $ | — | $ | 38.8 | $ | — | $ | 38.8 | ||||||||
Currency forwards | — | 5.0 | — | 5.0 | ||||||||||||
Interest rate swaps | — | 66.3 | — | 66.3 | ||||||||||||
Separate account liabilities | 5.2 | 438.1 | — | 443.3 | ||||||||||||
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Total liabilities accounted for at fair value | $ | 5.2 | $ | 548.2 | $ | — | $ | 553.4 | ||||||||
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Financial assets and liabilities measured at fair value on a recurring basis categorized into the three-level fair value hierarchy at December 31, 2022 are summarized below (in millions):
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | ||||||||||||||||
Bonds: | ||||||||||||||||
Industrial and miscellaneous | $ | — | $ | 8.6 | $ | 12.7 | $ | 21.3 | ||||||||
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Total bonds | — | 8.6 | 12.7 | 21.3 | ||||||||||||
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Non-affiliated preferred stocks | 24.0 | — | 127.3 | 151.3 | ||||||||||||
Non-affiliated common stocks | 142.3 | — | 139.1 | 281.4 | ||||||||||||
Currency swaps | — | 1.0 | — | 1.0 | ||||||||||||
Currency forwards | — | 0.1 | — | 0.1 | ||||||||||||
Interest rate swaps | — | 25.2 | — | 25.2 | ||||||||||||
Separate account assets | 1.1 | 102.6 | — | 103.7 | ||||||||||||
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Total assets accounted for at fair value | $ | 167.4 | $ | 137.5 | $ | 279.1 | $ | 584.0 | ||||||||
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Liabilities: | ||||||||||||||||
Currency swaps | $ | — | $ | 4.8 | $ | — | $ | 4.8 | ||||||||
Currency forwards | — | 2.5 | — | 2.5 | ||||||||||||
Interest rate swaps | — | 95.0 | — | 95.0 | ||||||||||||
Separate account liabilities | 1.1 | 102.6 | — | 103.7 | ||||||||||||
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Total liabilities accounted for at fair value | $ | 1.1 | $ | 204.9 | $ | — | $ | 206.0 | ||||||||
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The Company had no material assets or liabilities measured at fair value on a nonrecurring basis as of December 31, 2023 and 2022.
F-17
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
C. FAIR VALUE MEASUREMENTS (CONTINUED)
The Company recognizes and records the transfer of securities into and out of Level 3 due to changes in availability of market observable inputs. All transfers are reflected in the tables below at fair values as of the end of the reporting periods (in millions):
| Balance | Gain | Losses | Balance | |||||||||||||||||||||||||||||||||||||||||
| as of | (Losses) | (Gains) | Transfers | as of | ||||||||||||||||||||||||||||||||||||||||
| 1/1/2023 | in Net Income | in Surplus | Purchases | Issuances | Settlements | Sales | In | Out | Other | 12/31/2023 | ||||||||||||||||||||||||||||||||||
Financial assets: | ||||||||||||||||||||||||||||||||||||||||||||
Industial and miscellaneous | $ | 12.7 | $ | 2.7 | $ | (6.8 | ) | $ | 0.8 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (3.1 | ) | $ | 6.3 | ||||||||||||||||||||
Preferred stocks - unaffiliated | 127.3 | — | (10.9 | ) | — | 0.9 | (0.5 | ) | — | — | — | (49.1 | ) | 67.7 | ||||||||||||||||||||||||||||||
Common stocks - unaffiliated | 139.1 | 6.1 | (15.9 | ) | — | — | (40.7 | ) | (0.3 | ) | — | — | 69.9 | 158.2 | ||||||||||||||||||||||||||||||
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Total financial assets | $ | 279.1 | $ | 8.8 | $ | (33.6 | ) | $ | 0.8 | $ | 0.9 | $ | (41.2 | ) | $ | (0.3 | ) | $ | — | $ | — | $ | 17.7 | $ | 232.2 | |||||||||||||||||||
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| Balance | Gain | Losses | Balance | |||||||||||||||||||||||||||||||||||||||||
| as of | (Losses) | (Gains) | Transfers | as of | ||||||||||||||||||||||||||||||||||||||||
| 1/1/2022 | in Net Income | in Surplus | Purchases | Issuances | Settlements | Sales | In | Out | Other | 12/31/2022 | ||||||||||||||||||||||||||||||||||
Financial assets: | ||||||||||||||||||||||||||||||||||||||||||||
Industial and miscellaneous | $ | 8.4 | $ | (9.3 | ) | $ | (3.0 | ) | $ | — | $ | — | $ | (4.9 | ) | $ | — | $ | — | $ | — | $ | 21.5 | $ | 12.7 | |||||||||||||||||||
Preferred stocks - unaffiliated | 143.4 | — | 59.8 | — | — | — | — | — | — | (75.9 | ) | 127.3 | ||||||||||||||||||||||||||||||||
Common stocks - unaffiliated | 172.0 | (0.6 | ) | 83.8 | 6.4 | 48.3 | (52.5 | ) | — | 9.0 | — | (127.3 | ) | 139.1 | ||||||||||||||||||||||||||||||
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Total financial assets | $ | 323.8 | $ | (9.9 | ) | $ | 140.6 | $ | 6.4 | $ | 48.3 | $ | (57.4 | ) | $ | — | $ | 9.0 | $ | — | $ | (181.7 | ) | $ | 279.1 | |||||||||||||||||||
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F-18
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
C. FAIR VALUE MEASUREMENTS (CONTINUED)
The following table categorizes all the financial assets and liabilities in the financial statements into the three-level fair value hierarchy at December 31, 2023 (in millions):
Description | Fair Value | Carrying Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
Financial assets: | ||||||||||||||||||||
Bonds: | ||||||||||||||||||||
U.S. Government and agencies | $ | 156.8 | $ | 186.7 | $ | — | $ | 156.8 | $ | — | ||||||||||
All other governments | 18.2 | 19.2 | — | 18.2 | — | |||||||||||||||
States, territories and possessions | 175.5 | 180.4 | — | 175.5 | — | |||||||||||||||
Political subdivisions | 228.7 | 231.5 | — | 228.7 | — | |||||||||||||||
Special Revenue | 1,800.2 | 1,920.8 | — | 1,784.9 | 15.3 | |||||||||||||||
Industrial and miscellaneous | 29,809.8 | 31,688.5 | — | 21,914.2 | 7,895.6 | |||||||||||||||
Parent, subsidiaries and affiliates | 722.2 | 745.2 | — | 583.4 | 138.8 | |||||||||||||||
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Total bonds | $ | 32,911.4 | $ | 34,972.3 | $ | — | $ | 24,861.7 | $ | 8,049.7 | ||||||||||
Non-affiliated preferred stocks | 217.9 | 201.0 | 89.8 | 16.4 | 111.7 | |||||||||||||||
Non-affiliated common stocks | 271.2 | 271.2 | 113.0 | — | 158.2 | |||||||||||||||
Mortgage loans | 4,053.2 | 4,256.5 | — | — | 4,053.2 | |||||||||||||||
Fixed-indexed annuity options** | 822.9 | 723.8 | 317.9 | 505.0 | — | |||||||||||||||
Interest rate swaps | 26.6 | 26.6 | — | 26.6 | — | |||||||||||||||
Financial futures | 21.0 | 21.0 | — | 21.0 | — | |||||||||||||||
Separate account assets | 443.3 | 443.3 | 5.2 | 438.1 | — | |||||||||||||||
Cash, cash equivalents and short-term investments | 2,211.3 | 2,211.3 | 2,211.3 | — | — | |||||||||||||||
Policy loans | 30.0 | 30.0 | — | — | 30.0 | |||||||||||||||
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Total financial assets | $ | 41,008.8 | $ | 43,157.0 | $ | 2,737.2 | $ | 25,868.8 | $ | 12,402.8 | ||||||||||
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Financial liabilities: | ||||||||||||||||||||
Currency swaps | $ | 38.8 | $ | 38.8 | $ | — | $ | 38.8 | $ | — | ||||||||||
Currency forwards | 5.0 | 5.0 | — | 5.0 | — | |||||||||||||||
Interest rate swaps | 66.3 | 66.3 | — | 66.3 | — | |||||||||||||||
Fixed-indexed annuity options** | — | 418.1 | — | — | — | |||||||||||||||
Separate account liabilities | 443.3 | 443.3 | 5.2 | 438.1 | — | |||||||||||||||
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Total financial liabilities | $ | 553.4 | $ | 971.5 | $ | 5.2 | $ | 548.2 | $ | — | ||||||||||
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| * | Separate account liabilities incorporates the fair value of the separate account reserve and equity index put options. |
| ** | Effective 1/1/2022, Fixed-indexed annuity options are carried at amortized cost per OAC 3901-1-67. Fair Value of options is reported net in the asset section for disclosure. |
F-19
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
C. FAIR VALUE MEASUREMENTS (CONTINUED)
The following table categorizes all the financial assets and liabilities in the financial statements into the three-level fair value hierarchy at December 31, 2022 (in millions):
Description | Fair Value | Carrying Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
Financial assets: | ||||||||||||||||||||
Bonds: | ||||||||||||||||||||
U.S. Government and agencies | $ | 64.0 | $ | 98.9 | $ | — | $ | 64.0 | $ | — | ||||||||||
All other governments | 17.8 | 19.2 | — | 17.8 | — | |||||||||||||||
States, territories and possessions | 183.1 | 190.7 | — | 183.1 | — | |||||||||||||||
Political subdivisions | 268.7 | 272.7 | — | 268.7 | — | |||||||||||||||
Special Revenue | 1,537.0 | 1,691.6 | — | 1,537.0 | — | |||||||||||||||
Industrial and miscellaneous | 27,421.0 | 30,538.0 | — | 20,029.5 | 7,391.5 | |||||||||||||||
Parent, subsidiaries and affiliates | 468.3 | 520.8 | — | 347.8 | 120.5 | |||||||||||||||
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Total bonds | $ | 29,959.9 | $ | 33,331.9 | $ | — | $ | 22,447.9 | $ | 7,512.0 | ||||||||||
Non-affiliated preferred stocks | 198.3 | 185.0 | 38.5 | — | 159.8 | |||||||||||||||
Non-affiliated common stocks | 281.4 | 281.4 | 142.3 | — | 139.1 | |||||||||||||||
Mortgage loans | 2,846.5 | 3,088.8 | — | — | 2,846.5 | |||||||||||||||
Currency forwards | 0.1 | 0.1 | — | 0.1 | — | |||||||||||||||
Fixed-indexed annuity options** | 287.4 | 846.8 | 102.6 | 184.8 | — | |||||||||||||||
Interest rate swaps | 25.2 | 25.2 | — | 25.2 | — | |||||||||||||||
Currency swaps | 0.9 | 0.9 | — | 0.9 | — | |||||||||||||||
Separate account assets | 103.7 | 103.7 | 1.1 | 102.6 | — | |||||||||||||||
Cash, cash equivalents and short-term investments | 1,991.2 | 1,991.2 | 1,991.2 | — | — | |||||||||||||||
Policy loans | 31.5 | 31.5 | — | — | 31.5 | |||||||||||||||
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Total financial assets | $ | 35,726.1 | $ | 39,886.5 | $ | 2,275.7 | $ | 22,761.5 | $ | 10,688.9 | ||||||||||
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Financial liabilities: | ||||||||||||||||||||
Currency swaps | $ | 4.8 | $ | 4.8 | $ | — | $ | 4.8 | $ | — | ||||||||||
Currency forwards | 2.5 | 2.5 | — | 2.5 | — | |||||||||||||||
Interest rate swaps | 95.0 | 95.0 | — | 95.0 | — | |||||||||||||||
Fixed-indexed annuity options** | — | 598.6 | — | — | — | |||||||||||||||
Separate account liabilities | 103.7 | 103.7 | 1.1 | 102.6 | — | |||||||||||||||
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| |||||||||||
Total financial liabilities | $ | 206.0 | $ | 804.6 | $ | 1.1 | $ | 204.9 | $ | — | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| * | Separate account liabilities incorporates the fair value of the separate account reserve and equity index put options. |
| ** | Effective 1/1/2022, Fixed-indexed annuity options are carried at amortized cost per OAC 3901-1-67. Fair Value of options is reported net in the asset section for disclosure. |
F-20
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
C. FAIR VALUE MEASUREMENTS (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair values of financial instruments:
Bonds: Fair values for investments in publicly traded bonds are obtained from nationally recognized pricing services. Fair values for privately placed investment grade bonds are obtained from broker quotes or determined internally by security analysts of the Company’s affiliated investment portfolio manager.
Non-affiliated preferred and common stock: Fair values of equity securities are generally based on closing prices obtained from the exchanges on which the securities are traded. For the remainder of these securities, fair values are determined by management’s internal investment professionals using data from nationally recognized pricing services as well as non-binding broker quotes.
Mortgage Loans: The fair values for the Company’s mortgage loans are estimated by discounting the future contractual cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings.
Derivative instruments: The fair values for MMALIC’s derivative instruments are based on settlement values, quoted market prices of comparable instruments, fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing (guarantees, loan commitments), or, if there are no relevant comparables, on pricing models or formulas using current assumptions.
Separate Account: The separate account consists of derivative instruments in both asset and liability positions and registered index-linked annuity reserves. The reserves are set equal to the net fair value of the separate account derivative instruments. The methods and assumptions used for the separate account derivatives and reserves are described in more detail above.
Policy Loans: The Company states policy loans at the aggregate unpaid balance, which approximates fair value.
Cash, cash equivalents and short-term investments: Cash and cash equivalents, which are carried at amortized cost, consist of all highly liquid investments purchased with original maturities of three months or less. Short-term investments, which are carried at amortized cost, consist of short-term bonds, money market mutual funds and all highly liquid investments purchased with maturities of greater than three months and less than or equal to 12 months. The carrying value reported in the Statutory Balance Sheet for cash, cash equivalents and short-term investment instruments approximates the fair value.
F-21
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS
Bonds at December 31 consisted of the following (in millions):
| 2023 | ||||||||||||||||
| Carrying | Fair | Gross Unrealized | ||||||||||||||
| Value | Value | Gains | Losses | |||||||||||||
U.S. Government and agencies | $ | 186.7 | $ | 156.8 | $ | 3.9 | $ | 33.8 | ||||||||
All other governments | 19.2 | 18.2 | — | 1.0 | ||||||||||||
States, territories and possessions | 180.4 | 175.5 | 0.5 | 5.4 | ||||||||||||
Political subdivisions | 231.5 | 228.7 | 3.7 | 6.5 | ||||||||||||
Special Revenue | 1,920.8 | 1,800.2 | 10.5 | 131.1 | ||||||||||||
Industrial and miscellaneous | 31,688.5 | 29,809.8 | 247.6 | 2,126.3 | ||||||||||||
Parent, subsidiaries and affiliates | 745.2 | 722.2 | 4.2 | 27.2 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total bonds | $ | 34,972.3 | $ | 32,911.4 | $ | 270.4 | $ | 2,331.3 | ||||||||
|
|
|
|
|
|
|
| |||||||||
The December 31, 2023 gross unrealized losses exclude $12.8 million of losses included in the carrying value. These losses include $12.5 million from NAIC Class 6 bonds and $0.3 million from residential mortgage-backed securities (RMBS) whose ratings were obtained from outside modelers. These losses were primarily included in industrial and miscellaneous.
Bonds at December 31 consisted of the following (in millions):
| 2022 | ||||||||||||||||
| Carrying | Fair | Gross Unrealized | ||||||||||||||
| Value | Value | Gains | Losses | |||||||||||||
U.S. Government and agencies | $ | 98.9 | $ | 64.0 | $ | 0.9 | $ | 35.8 | ||||||||
All other governments | 19.2 | 17.8 | — | 1.4 | ||||||||||||
States, territories and possessions | 190.7 | 183.1 | 0.6 | 8 | ||||||||||||
Political subdivisions | 272.7 | 268.7 | 4.9 | 8.9 | ||||||||||||
Special Revenue | 1,691.6 | 1,537.0 | 4.0 | 158.6 | ||||||||||||
Industrial and miscellaneous | 30,538.0 | 27,421.0 | 99.6 | 3,216.6 | ||||||||||||
Parent, subsidiaries and affiliates | 520.8 | 468.3 | 3.6 | 56.1 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total bonds | $ | 33,331.9 | $ | 29,959.9 | $ | 113.6 | $ | 3,485.6 | ||||||||
|
|
|
|
|
|
|
| |||||||||
The December 31, 2022 gross unrealized losses exclude $15.7 million of losses included in the carrying value. These losses include $15.4 million from NAIC Class 6 bonds and $0.3 million from residential mortgage-backed securities (RMBS) whose ratings were obtained from outside modelers. These losses were primarily included in industrial and miscellaneous.
At December 31, 2023 and 2022, the Company held unrated or less-than-investment grade bonds of $2,077.4 million and $2,171.2 million, respectively, with an aggregate fair value of $1,950.7 million and $1,968.2 million, respectively. Those holdings amounted to 5.9% and 6.5% of the Company’s investments in bonds and approximately 4.4% and 5.1% of the Company’s total admitted assets at December 31, 2023 and 2022, respectively. The Company performs periodic evaluations of the relative credit standing of the issuers of these bonds.
Mortgage loans are collateralized by underlying real estate properties, with geographic diversification across the United States. The Company monitors loan-to-value ratios and debt-service coverage ratios in assessing the credit quality of the underlying mortgage loans. There have been no material losses related to commercial mortgage loans historically or in 2023, 2022 or 2021.
F-22
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
The carrying value and fair value of the Company’s mortgage loans at December 31 were as follows (in millions):
| 2023 | 2022 | |||||||||||||||
| Carrying | Fair | Carrying | Fair | |||||||||||||
| Value | Value | Value | Value | |||||||||||||
Commercial mortgage loans: | ||||||||||||||||
Primary lender | $ | 1,431.9 | $ | 1,343.4 | $ | 1,263.5 | $ | 1,160.4 | ||||||||
Mezzanine loans | 47.6 | 47.6 | 22.6 | 22.6 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total commercial mortgage loans | 1,479.5 | 1,391.0 | 1,286.1 | 1,183.0 | ||||||||||||
Residential mortgage loans: | ||||||||||||||||
FHA insured and VA guranteed | 428.1 | 393.0 | 486.6 | 439.5 | ||||||||||||
Other residential mortgage loans | 2,348.9 | 2,269.2 | 1,316.1 | 1,224.0 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total residential mortgage loans | 2,777.0 | 2,662.2 | 1,802.7 | 1,663.5 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total mortgage loans | $ | 4,256.5 | $ | 4,053.2 | $ | 3,088.8 | $ | 2,846.5 | ||||||||
|
|
|
|
|
|
|
| |||||||||
The loan-to-value ratios by property type of the Company’s commercial mortgage loans at December 31 were as follows (in millions):
| 2023 | ||||||||||||||||||||
| Less Than | 81% to | Above | % of | |||||||||||||||||
| 81% | 95% | 95% | Total | Total | ||||||||||||||||
Office | $ | 53.5 | $ | 17.6 | $ | 25.1 | $ | 96.2 | 7 | % | ||||||||||
Apartments | 597.8 | 65.5 | — | 663.3 | 45 | % | ||||||||||||||
Industrial and other | 238.9 | — | — | 238.9 | 16 | % | ||||||||||||||
Hotels | 382.1 | 47.4 | 51.6 | 481.1 | 32 | % | ||||||||||||||
Retail | — | — | — | — | 0 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 1,272.3 | $ | 130.5 | $ | 76.7 | $ | 1,479.5 | 100 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
More than 85% of the Company’s commercial mortgage loans’ loan-to-value ratios are below 81% for the year ended December 31, 2023.
| 2022 | ||||||||||||||||||||
| Less Than | 81% to | Above | % of | |||||||||||||||||
| 81% | 95% | 95% | Total | Total | ||||||||||||||||
Office | $ | 79.1 | $ | — | $ | 30.8 | $ | 109.9 | 9 | % | ||||||||||
Apartments | 441.5 | 82.9 | — | 524.4 | 41 | % | ||||||||||||||
Industrial and other | 224.7 | — | — | 224.7 | 17 | % | ||||||||||||||
Hotels | 351.3 | 75.8 | — | 427.1 | 33 | % | ||||||||||||||
Retail | — | — | — | — | 0 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 1,096.6 | $ | 158.7 | $ | 30.8 | $ | 1,286.1 | 100 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
More than 85% of the Company’s commercial mortgage loans’ loan-to-value ratios were below 81% for the year ended December 31, 2022.
F-23
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
The Company uses an internal rating system as its primary method of monitoring credit quality. The following illustrates the Company’s mortgage loan portfolio rating at December 31, translated into the equivalent rating agency designation (in millions):
| 2023 | ||||||||||||||||||||||||
| CCC and | ||||||||||||||||||||||||
| AAA/AA/A | BBB | BB | B | Lower | Total | |||||||||||||||||||
Commercial mortgage loans: | ||||||||||||||||||||||||
Primary lender | $ | 178.0 | $ | 947.7 | $ | 288.5 | $ | 17.7 | $ | — | $ | 1,431.9 | ||||||||||||
Mezzanine loans | — | 22.6 | 25.0 | — | — | 47.6 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total commercial mortgage loans | 178.0 | 970.3 | 313.5 | 17.7 | — | 1,479.5 | ||||||||||||||||||
Residential mortgage loans: | ||||||||||||||||||||||||
FHA insured and VA guranteed | 428.1 | — | — | — | — | 428.1 | ||||||||||||||||||
Other residential mortgage loans | — | 2,325.1 | 23.8 | — | — | 2,348.9 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total residential mortgage loans | 428.1 | 2,325.1 | 23.8 | — | — | 2,777.0 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total mortgage loans | $ | 606.1 | $ | 3,295.4 | $ | 337.3 | $ | 17.7 | $ | — | $ | 4,256.5 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 2022 | ||||||||||||||||||||||||
| CCC and | ||||||||||||||||||||||||
| AAA/AA/A | BBB | BB | B | Lower | Total | |||||||||||||||||||
Commercial mortgage loans: | ||||||||||||||||||||||||
Primary lender | $ | 174.8 | $ | 798.4 | $ | 276.1 | $ | — | $ | 14.2 | $ | 1,263.5 | ||||||||||||
Mezzanine loans | — | 22.6 | — | — | — | 22.6 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total commercial mortgage loans | 174.8 | 821.0 | 276.1 | — | 14.2 | 1,286.1 | ||||||||||||||||||
Residential mortgage loans: | ||||||||||||||||||||||||
FHA insured and VA guranteed | 481.6 | 5.0 | — | — | — | 486.6 | ||||||||||||||||||
Other residential mortgage loans | 56.3 | 1,259.8 | — | — | — | 1,316.1 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total residential mortgage loans | 537.9 | 1,264.8 | — | — | — | 1,802.7 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total mortgage loans | $ | 712.7 | $ | 2,085.8 | $ | 276.1 | $ | — | $ | 14.2 | $ | 3,088.8 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
The maximum percentage of any one commercial mortgage loan to the estimated value of secured collateral at the time the loan was originated, exclusive of mezzanine, insured, guaranteed or purchase money mortgages, was 100% as of December 31, 2023 and 100% as of December 31, 2022.
F-24
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
The geographic distribution of commercial mortgage loans as of December 31 was as follows (in millions):
| 2023 | ||||||||
| Average | ||||||||
| Carrying | Loan-to-Value | |||||||
| Value | Ratio | |||||||
Colorado | $ | 175.8 | 68 | % | ||||
Florida | 170.5 | 67 | % | |||||
New York | 142.3 | 50 | % | |||||
Texas | 128.8 | 61 | % | |||||
California | 126.2 | 51 | % | |||||
Virginia | 104.7 | 61 | % | |||||
All other | 631.2 | 69 | % | |||||
|
| |||||||
Total commercial mortgage loans | $ | 1,479.5 | 64 | % | ||||
|
| |||||||
All other consists of 19 jurisdictions, with no individual exposure exceeding $83.1 million.
The geographic distribution of commercial mortgage loans as of December 31 was as follows (in millions):
| 2022 | ||||||||
| Average | ||||||||
| Carrying | Loan-to-Value | |||||||
| Value | Ratio | |||||||
Florida | $ | 194.3 | 76 | % | ||||
Colorado | 175.8 | 67 | % | |||||
Texas | 174.1 | 54 | % | |||||
New York | 104.1 | 43 | % | |||||
Virginia | 87.3 | 64 | % | |||||
Indiana | 70.4 | 60 | % | |||||
All other | 480.1 | 60 | % | |||||
|
| |||||||
Total commercial mortgage loans | $ | 1,286.1 | 61 | % | ||||
|
| |||||||
All other consists of 18 jurisdictions, with no individual exposure exceeding $70.4 million.
F-25
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
Interest rates, including fixed and variable, on the Company’s portfolio of mortgage loans at December 31 were:
| 2023 | 2022 | |||||||||||||||
| Low | High | Low | High | |||||||||||||
Commercial mortgage loans: | 2.6 | % | 12.9 | % | 2.6 | % | 11.7 | % | ||||||||
Residential mortgage loans | 4.8 | % | 11.8 | % | 2.2 | % | 11.7 | % | ||||||||
Mezzanine mortgage loans | 11.0 | % | 14.4 | % | 10.0 | % | 13.3 | % | ||||||||
Interest rates, including fixed and variable, on new mortgage loans at December 31 were:
| 2023 | 2022 | |||||||||||||||
| Low | High | Low | High | |||||||||||||
Commercial mortgage loans: | 4.7 | % | 11.0 | % | 2.6 | % | 11.7 | % | ||||||||
Residential mortgage loans | 7.1 | % | 11.8 | % | 2.5 | % | 11.7 | % | ||||||||
Mezzanine mortgage loans | 11.0 | % | 11.0 | % | 10.0 | % | 13.3 | % | ||||||||
As of December 31, 2023 and 2022, the Company had no impaired mortgage loans with or without a valuation allowance or mortgage loans derecognized as a result of foreclosure, including mortgage loans subject to a participant or co-lender mortgage loan agreement with a unilateral mortgage loan foreclosure restriction or mortgage loan derecognized as a result of a foreclosure.
F-26
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
Unrealized gains and losses on investments in non-affiliated preferred and common stocks are reported directly in unassigned funds and do not affect operations. The cost, gross unrealized gains and losses and fair value of those investments are summarized as follows (in millions):
| Fair | Gross Unrealized | |||||||||||||||
| Cost | Value | Gains | Losses | |||||||||||||
At December 31, 2023 | ||||||||||||||||
Non-affiliated preferred stocks | $ | 212.2 | $ | 217.9 | $ | 31.2 | $ | 25.5 | ||||||||
Non-affiliated common stocks | 195.6 | 271.2 | 102.4 | 26.8 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 407.8 | $ | 489.1 | $ | 133.6 | $ | 52.3 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| Fair | Gross Unrealized | |||||||||||||||
| Cost | Value | Gains | Losses | |||||||||||||
At December 31, 2022 | ||||||||||||||||
Non-affiliated preferred stocks | $ | 165.5 | $ | 198.3 | $ | 58.5 | $ | 25.7 | ||||||||
Non-affiliated common stocks | 220.5 | 281.4 | 87.8 | 26.9 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 386.0 | $ | 479.7 | $ | 146.3 | $ | 52.6 | ||||||||
|
|
|
|
|
|
|
| |||||||||
F-27
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
The following tables present gross unrealized losses and fair values on bonds and non-affiliated preferred and common stocks by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31 (in millions):
| 2023 | ||||||||||||||||||||||||
| Twelve Months or Less | More Than Twelve Months | |||||||||||||||||||||||
| Fair Value | Gross Unrealized Loss | Number of Issuers | Fair Value | Gross Unrealized Loss | Number of Issuers | |||||||||||||||||||
U.S. Government and agencies | $ | 24.6 | $ | 0.2 | 2 | $ | 45.4 | $ | 33.6 | 3 | ||||||||||||||
All other governments | — | — | 0 | 18.2 | 1.0 | 11 | ||||||||||||||||||
States, territories and possessions | 17.8 | 0.1 | 3 | 120.8 | 5.3 | 8 | ||||||||||||||||||
Political subdivisions | 25.5 | 0.5 | 5 | 113.0 | 6.0 | 13 | ||||||||||||||||||
Special Revenue | 134.5 | 2.1 | 25 | 1,132.3 | 129.0 | 104 | ||||||||||||||||||
Industrial and miscellaneous | 2,181.0 | 55.7 | 322 | 16,931.4 | 2,083.4 | 1,585 | ||||||||||||||||||
Parent, subsidiaries and affiliates | 132.7 | 0.4 | 6 | 369.4 | 26.8 | 10 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total bonds | $ | 2,516.1 | $ | 59.0 | 363 | $ | 18,730.5 | $ | 2,285.1 | 1,734 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Non-affiliated preferred stocks | $ | 11.6 | $ | 22.1 | 3 | $ | — | $ | 3.4 | — | ||||||||||||||
Non-affiliated common stocks | 5.0 | 4.6 | 31 | 9.0 | 22.2 | 18 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total non-affiliated preferred and common stocks | $ | 16.6 | $ | 26.7 | 34 | $ | 9.0 | $ | 25.6 | 18 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
The December 31, 2023 gross unrealized losses exclude $12.8 million of losses included in the carrying value. These losses include $12.5 million from NAIC Class 6 bonds and $0.3 million from residential mortgage-backed securities (RMBS) whose ratings were obtained from outside modelers. These losses were primarily included in industrial and miscellaneous.
| 2022 | ||||||||||||||||||||||||
| Twelve Months or Less | More Than Twelve Months | |||||||||||||||||||||||
| Fair Value | Gross Unrealized Loss | Number of Issuers | Fair Value | Gross Unrealized Loss | Number of Issuers | |||||||||||||||||||
U.S. Government and agencies | $ | 49.5 | $ | 35.8 | 2 | $ | — | $ | — | — | ||||||||||||||
All other governments | 17.8 | 1.4 | 11 | — | — | — | ||||||||||||||||||
States, territories and possessions | 160.6 | 8.2 | 10 | — | — | — | ||||||||||||||||||
Political subdivisions | 157.9 | 8.9 | 22 | — | — | — | ||||||||||||||||||
Special Revenue | 1,378.7 | 158.6 | 118 | — | — | — | ||||||||||||||||||
Industrial and miscellaneous | 23,786.8 | 3,212.8 | 2,170 | 101.2 | 19.4 | 28 | ||||||||||||||||||
Parent, subsidiaries and affiliates | 444.6 | 56.1 | 13 | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total bonds | $ | 25,995.9 | $ | 3,481.8 | 2,346 | $ | 101.2 | $ | 19.4 | 28 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Non-affiliated preferred stocks | $ | 1.3 | $ | 25.7 | 2 | $ | — | $ | — | — | ||||||||||||||
Non-affiliated common stocks | 36.8 | 26.9 | 53 | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total non-affiliated preferred and common stocks | $ | 38.1 | $ | 52.6 | 55 | $ | — | $ | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
The December 31, 2022, gross unrealized losses include $15.7 million of losses included in the carrying value. These losses include $15.4 million from NAIC Class 6 bonds and $0.3 million from RMBS whose ratings were obtained from outside modelers. These losses were primarily included in industrial and miscellaneous.
F-28
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
The quality of the bond portfolio is determined by the use of SVO ratings and the equivalent rating agency designations, except for RMBS and CMBS that use third-party modelers. The following sets forth the NAIC class ratings for the bond portfolio (in millions):
| 2023 | 2022 | |||||||||||||||||
| NAIC Class | Equivalent Rating Agency Designation | Carrying Value | % of Total | Carrying Value | % of Total | |||||||||||||
| 1 | Aaa/Aa/A | $ | 20,190.9 | 57.8 | % | $ | 17,729.1 | 53.2 | % | |||||||||
| 2 | Baa | 12,704.0 | 36.3 | % | 13,435.0 | 40.3 | % | |||||||||||
| 3 | Ba | 1,253.2 | 3.6 | % | 1,473.9 | 4.4 | % | |||||||||||
| 4 | B | 495.3 | 1.4 | % | 454.6 | 1.4 | % | |||||||||||
| 5 | Caa and lower | 287.0 | 0.8 | % | 209.4 | 0.6 | % | |||||||||||
| 6 | In or near default | 41.9 | 0.1 | % | 29.9 | 0.1 | % | |||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 34,972.3 | 100.0 | % | $ | 33,331.9 | 100.0 | % | ||||||||||
|
|
|
|
|
|
|
| |||||||||||
When a decline in the fair value of a specific investment is considered to be other-than-temporary, a provision for impairment is charged to earnings (accounted for as realized capital loss) and the cost basis of that investment is reduced by the amount of the charge. The determination of whether unrealized losses are other-than-temporary requires judgment based on subjective as well as objective factors. Factors considered and resources used by management include:
| (a) | whether the unrealized loss is credit-driven or a result of changes in market interest rates, |
| (b) | the extent to which fair value is less than cost basis, |
| (c) | cash flow projections received from independent sources, |
| (d) | historical operating, balance sheet and cash flow data contained in issuer Securities and Exchange Commission filings and news releases, |
| (e) | near-term prospects for improvement in the issuer and/or its industry, |
| (f) | third party research and communications with industry specialists, |
| (g) | financial models and forecasts, |
| (h) | the continuity of dividend payments, maintenance of investment grade ratings and hybrid nature of certain investments, |
| (i) | discussions with issuer management, and |
| (j) | the ability and intent to hold investment for a period of time sufficient to allow for any anticipated recovery in fair value. |
Based on its analysis of the factors enumerated above, management believes (i) MMALIC will recover its cost basis in the securities with unrealized losses and (ii) that MMALIC has the ability and intent to hold securities until they recover in value. Although MMALIC has the ability to continue holding its investments with unrealized losses, its intent to hold them may change due to deterioration in the issuers’ creditworthiness, decisions to lessen exposure to a particular issuer or industry, asset/liability management decisions, market movements, changes in views about appropriate asset allocation or the desire to offset taxable realized gains. Should MMALIC’s ability or intent change with regard to a particular security, a charge for impairment would likely be required. While it is not possible to accurately predict if or when a specific security will become impaired, charges for other-than-temporary impairment (“OTTI”) could be material to results of operations in future periods.
Net realized gains (losses) on investments sold and charges for OTTI on investments held were as follows for the years ended December 31 (dollars in millions):
Year | Net Realized (Losses) Gains (Net of IMR Transfers and Taxes) | Charges for Impairment | Total | Number of Investments with Impairment Charges | ||||||||||||
2023 | $ | (64.3 | ) | $ | (89.4 | ) | $ | (153.7 | ) | 137 | ||||||
2022 | $ | 8.4 | $ | (41.0 | ) | $ | (32.6 | ) | 138 | |||||||
2021 | $ | 170.7 | $ | (52.0 | ) | $ | 118.7 | 31 | ||||||||
F-29
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
The following is a summary of the carrying value and fair value of bonds as of December 31, 2023 and 2022 (in millions) by contractual maturity. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without prepayment penalties. Securities with more than one maturity date are included in the table using the final maturity date:
| 2023 | 2022 | |||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
Maturity: | ||||||||||||||||
One year or less | $ | 477.7 | $ | 461.8 | $ | 662.3 | $ | 657.9 | ||||||||
After one year through five years | 7,313.4 | 7,226.3 | 5,118.2 | 4,925.2 | ||||||||||||
After five years through ten years | 10,259.6 | 9,804.4 | 9,902.5 | 9,068.6 | ||||||||||||
After ten years | 16,921.6 | 15,418.9 | 17,648.9 | 15,308.2 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total bonds by maturity | $ | 34,972.3 | $ | 32,911.4 | $ | 33,331.9 | $ | 29,959.9 | ||||||||
|
|
|
|
|
|
|
| |||||||||
The aggregate amount of investment income generated as a result of prepayment penalties and acceleration fees was $0.0 million, $0.6 million, and $35.9 million during 2023, 2022, and 2021, respectively.
Proceeds from sales of bonds were $5,146.6 million, $10,640.3 million, and $686.8 million for 2023, 2022, and 2021, respectively. Gross realized gains of $21.3 million, $282.1 million, and $87.4 million and gross realized losses of $491.4 million, $232.4 million, and $11.9 million were realized on bonds during 2023, 2022, and 2021, respectively. The number of securities disposed of with a callable feature in 2023 and 2022 was 136 and 182, respectively.
MMALIC’s $4,365.1 million investment in MBS represents approximately 12% of the carrying value of its bonds at December 31, 2023. The Company’s indirect exposure to subprime mortgage risk as of December 31, 2023 had a total actual cost and book adjusted carrying value of approximately $1,185.0 million and $1,184.6 million, respectively, and a total fair value of approximately $1,083.9 million. MMALIC’s $4,253.5 million investment in MBS represents approximately 13% of the carrying value of its bonds at December 31, 2022. The Company’s indirect exposure to subprime mortgage risk as of December 31, 2022 had a total actual cost and book adjusted carrying value of approximately $551.0 million and $546.9 million, respectively, and a total fair value of approximately $515.7 million.
The Company has no aggregate loan-backed securities with an OTTI in which the Company has the intent to sell or the inability or lack of intent to retain the investment in the security for a period of time to recover the amortized cost basis.
F-30
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
The following table shows each loan-backed security with an OTTI recognized in 2023, as the present value of cash flows expected to be collected is less than the amortized cost basis of the security (in whole dollars):
CUSIP | Amortized Cost Before OTTI | Present Value of Projected Cash Flows | OTTI Charge Recognized in Statement of Operations | Amortized Cost After OTTI | Fair Value at Time of OTTI | Date Reported | ||||||||||||||||||
00176BAM5 | $ | 202,546 | $ | 110,277 | $ | 92,269 | $ | 110,277 | $ | 116,065 | 03/31/2023 | |||||||||||||
001406AA5 | 1,763,035 | 1,274,229 | 488,807 | 1,274,229 | 1,285,767 | 03/31/2023 | ||||||||||||||||||
26827EAC9 | 9,193,316 | 4,723,119 | 4,470,196 | 4,723,119 | 6,207,776 | 03/31/2023 | ||||||||||||||||||
3622EAAA8 | 3,756,795 | 3,647,858 | 108,936 | 3,647,858 | 3,611,452 | 03/31/2023 | ||||||||||||||||||
61751DAE4 | 1,645,601 | 1,578,836 | 66,764 | 1,578,836 | 1,967,072 | 03/31/2023 | ||||||||||||||||||
617526AD0 | 2,356,207 | 2,115,198 | 241,009 | 2,115,198 | 2,354,557 | 03/31/2023 | ||||||||||||||||||
86358RXZ5 | 421,445 | 412,256 | 9,189 | 412,256 | 413,530 | 03/31/2023 | ||||||||||||||||||
05951KAN3 | 622,182 | 623,350 | (1,169 | ) | 623,350 | 601,336 | 03/31/2023 | |||||||||||||||||
059522AU6 | 2,269,369 | 2,102,631 | 166,738 | 2,102,631 | 2,176,835 | 03/31/2023 | ||||||||||||||||||
12628LAD2 | 785,041 | 763,053 | 21,988 | 763,053 | 660,429 | 03/31/2023 | ||||||||||||||||||
12667F4N2 | 2,210,900 | 2,186,739 | 24,161 | 2,186,739 | 2,182,686 | 03/31/2023 | ||||||||||||||||||
12667F5E1 | 1,062,067 | 1,059,207 | 2,860 | 1,059,207 | 995,081 | 03/31/2023 | ||||||||||||||||||
12668APC3 | 896,073 | 883,009 | 13,065 | 883,009 | 857,687 | 03/31/2023 | ||||||||||||||||||
17307GED6 | 1,409,643 | 1,393,308 | 16,335 | 1,393,308 | 1,455,502 | 03/31/2023 | ||||||||||||||||||
17309BAB3 | 220,495 | 214,662 | 5,834 | 214,662 | 195,222 | 03/31/2023 | ||||||||||||||||||
32051GSQ9 | 1,814,597 | 1,786,038 | 28,559 | 1,786,038 | 1,836,075 | 03/31/2023 | ||||||||||||||||||
32051GT70 | 663,419 | 662,609 | 810 | 662,609 | 596,313 | 03/31/2023 | ||||||||||||||||||
46627MAD9 | 589,002 | 581,089 | 7,914 | 581,089 | 518,389 | 03/31/2023 | ||||||||||||||||||
46627MEJ2 | 1,138,638 | 1,136,631 | 2,006 | 1,136,631 | 957,220 | 03/31/2023 | ||||||||||||||||||
59020UW43 | 223,543 | 223,584 | (41 | ) | 223,584 | 245,108 | 03/31/2023 | |||||||||||||||||
643529AC4 | 537,761 | 506,075 | 31,686 | 506,075 | 563,770 | 03/31/2023 | ||||||||||||||||||
74923GAC7 | 1,432,936 | 1,431,302 | 1,634 | 1,431,302 | 1,521,208 | 03/31/2023 | ||||||||||||||||||
74923HAQ4 | 538,028 | 538,123 | (95 | ) | 538,123 | 480,166 | 03/31/2023 | |||||||||||||||||
74928RAB0 | 248,088 | 241,996 | 6,091 | 241,996 | 266,975 | 03/31/2023 | ||||||||||||||||||
74928XBB6 | 4,436,827 | 3,886,418 | 550,409 | 3,886,418 | 4,352,809 | 03/31/2023 | ||||||||||||||||||
75115BAC3 | 1,010,823 | 1,015,108 | (4,285 | ) | 1,015,108 | 1,087,275 | 03/31/2023 | |||||||||||||||||
75115DAA3 | 195,780 | 193,598 | 2,183 | 193,598 | 182,546 | 03/31/2023 | ||||||||||||||||||
761118BU1 | 717,506 | 688,322 | 29,183 | 688,322 | 756,457 | 03/31/2023 | ||||||||||||||||||
761118FM5 | 2,089,659 | 1,852,770 | 236,889 | 1,852,770 | 1,945,475 | 03/31/2023 | ||||||||||||||||||
761118GS1 | 1,139,848 | 1,138,816 | 1,032 | 1,138,816 | 1,041,063 | 03/31/2023 | ||||||||||||||||||
761118SC3 | 1,581,486 | 1,581,588 | (103 | ) | 1,581,588 | 1,360,351 | 03/31/2023 | |||||||||||||||||
761118UG1 | 506,268 | 503,201 | 3,067 | 503,201 | 428,316 | 03/31/2023 | ||||||||||||||||||
76112BNM8 | 4,707,569 | 4,708,889 | (1,320 | ) | 4,708,889 | 4,941,288 | 03/31/2023 | |||||||||||||||||
855541AC2 | 854,276 | 851,419 | 2,857 | 851,419 | 808,830 | 03/31/2023 | ||||||||||||||||||
863579J90 | 344,828 | 339,476 | 5,352 | 339,476 | 355,595 | 03/31/2023 | ||||||||||||||||||
86360BAG3 | 1,782,553 | 1,688,545 | 94,008 | 1,688,545 | 1,858,413 | 03/31/2023 | ||||||||||||||||||
86360BAJ7 | 684,793 | 671,937 | 12,855 | 671,937 | 700,892 | 03/31/2023 | ||||||||||||||||||
87222EAB4 | 838,918 | 811,788 | 27,130 | 811,788 | 736,793 | 03/31/2023 | ||||||||||||||||||
87222EAC2 | 971,562 | 933,068 | 38,494 | 933,068 | 795,832 | 03/31/2023 | ||||||||||||||||||
45660LCK3 | 2,673,423 | 2,598,842 | 74,581 | 2,598,842 | 2,689,571 | 03/31/2023 | ||||||||||||||||||
F-31
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
CUSIP | Amortized Cost Before OTTI | Present Value of Projected Cash Flows | OTTI Charge Recognized in Statement of Operations | Amortized Cost After OTTI | Fair Value at Time of OTTI | Date Reported | ||||||||||||||||||
939336X99 | 1,829,627 | 1,670,689 | 158,938 | 1,670,689 | 1,792,660 | 03/31/2023 | ||||||||||||||||||
05949CHM1 | 768,548 | 755,812 | 12,736 | 755,812 | 773,623 | 03/31/2023 | ||||||||||||||||||
05949CKX3 | 1,213,201 | 1,188,146 | 25,055 | 1,188,146 | 1,243,199 | 03/31/2023 | ||||||||||||||||||
05990HAT0 | 934,146 | 930,177 | 3,969 | 930,177 | 940,458 | 03/31/2023 | ||||||||||||||||||
073880AD8 | 1,121,205 | 1,122,339 | (1,134 | ) | 1,122,339 | 1,064,409 | 03/31/2023 | |||||||||||||||||
07401CAS2 | 3,138,214 | 3,078,739 | 59,474 | 3,078,739 | 3,132,170 | 03/31/2023 | ||||||||||||||||||
12543XAD8 | 1,165,771 | 1,150,483 | 15,288 | 1,150,483 | 1,070,971 | 03/31/2023 | ||||||||||||||||||
12544DAG4 | 85,474 | 83,364 | 2,109 | 83,364 | 73,861 | 03/31/2023 | ||||||||||||||||||
12545EAK2 | 1,406,029 | 1,363,895 | 42,134 | 1,363,895 | 1,226,917 | 03/31/2023 | ||||||||||||||||||
12638PAB5 | 719,347 | 697,335 | 22,011 | 697,335 | 549,668 | 03/31/2023 | ||||||||||||||||||
126694CS5 | 2,842,754 | 2,832,174 | 10,581 | 2,832,174 | 2,292,959 | 03/31/2023 | ||||||||||||||||||
126694HP6 | 421,087 | 419,930 | 1,157 | 419,930 | 402,076 | 03/31/2023 | ||||||||||||||||||
12669G3S8 | 1,254,365 | 1,250,349 | 4,015 | 1,250,349 | 1,124,398 | 03/31/2023 | ||||||||||||||||||
16165MAG3 | 1,841,254 | 1,776,091 | 65,163 | 1,776,091 | 1,597,907 | 03/31/2023 | ||||||||||||||||||
2254582Y3 | 1,208,346 | 1,200,002 | 8,344 | 1,200,002 | 1,082,976 | 03/31/2023 | ||||||||||||||||||
225458L55 | 539,692 | 536,533 | 3,159 | 536,533 | 500,154 | 03/31/2023 | ||||||||||||||||||
225470VF7 | 1,460,576 | 1,422,984 | 37,592 | 1,422,984 | 1,400,985 | 03/31/2023 | ||||||||||||||||||
36185N6N5 | 4,571,722 | 4,071,935 | 499,788 | 4,071,935 | 4,514,039 | 03/31/2023 | ||||||||||||||||||
362341FN4 | 774,099 | 765,095 | 9,005 | 765,095 | 702,117 | 03/31/2023 | ||||||||||||||||||
362341XC8 | 857,596 | 848,675 | 8,921 | 848,675 | 768,173 | 03/31/2023 | ||||||||||||||||||
36242DQY2 | 99,752 | 97,979 | 1,772 | 97,979 | 93,530 | 03/31/2023 | ||||||||||||||||||
41161PCX9 | 191,672 | 191,284 | 388 | 191,284 | 190,228 | 03/31/2023 | ||||||||||||||||||
466247J46 | 74,610 | 73,055 | 1,554 | 73,055 | 73,519 | 03/31/2023 | ||||||||||||||||||
466247UG6 | 526,361 | 514,800 | 11,561 | 514,800 | 510,820 | 03/31/2023 | ||||||||||||||||||
46630WAB6 | 872,431 | 866,888 | 5,543 | 866,888 | 808,108 | 03/31/2023 | ||||||||||||||||||
46630WAL4 | 506,494 | 500,786 | 5,709 | 500,786 | 479,625 | 03/31/2023 | ||||||||||||||||||
46631NAA7 | 719,259 | 693,483 | 25,776 | 693,483 | 569,822 | 03/31/2023 | ||||||||||||||||||
576433D52 | 503,578 | 493,400 | 10,178 | 493,400 | 450,563 | 03/31/2023 | ||||||||||||||||||
57643MLZ5 | 284,150 | 280,753 | 3,397 | 280,753 | 269,995 | 03/31/2023 | ||||||||||||||||||
59023PAB9 | 508,302 | 498,819 | 9,484 | 498,819 | 517,983 | 03/31/2023 | ||||||||||||||||||
74958YAE2 | 287,181 | 287,688 | (507 | ) | 287,688 | 287,680 | 03/31/2023 | |||||||||||||||||
78473TAJ9 | 198,841 | 177,853 | 20,989 | 177,853 | 154,392 | 03/31/2023 | ||||||||||||||||||
863579RP5 | 609,579 | 590,361 | 19,218 | 590,361 | 577,909 | 03/31/2023 | ||||||||||||||||||
863579UL0 | 263,373 | 261,997 | 1,377 | 261,997 | 256,211 | 03/31/2023 | ||||||||||||||||||
92979DAC9 | 2,710,529 | 2,629,297 | 81,232 | 2,629,297 | 2,800,364 | 03/31/2023 | ||||||||||||||||||
94984DAC8 | 342,454 | 342,081 | 373 | 342,081 | 345,646 | 03/31/2023 | ||||||||||||||||||
94986CAA2 | 264,625 | 265,827 | (1,202 | ) | 265,827 | 262,986 | 03/31/2023 | |||||||||||||||||
001406AA55 | 27,755 | — | 27,755 | — | — | 06/30/2023 | ||||||||||||||||||
61751DAE4 | 1,614,822 | 1,548,177 | 66,645 | 1,548,177 | 1,908,732 | 06/30/2023 | ||||||||||||||||||
86358RXZ5 | 381,361 | 332,609 | 48,752 | 332,609 | 337,433 | 06/30/2023 | ||||||||||||||||||
02146TAL1 | 361,912 | 345,869 | 16,042 | 345,869 | 366,804 | 06/30/2023 | ||||||||||||||||||
02147XAR8 | 617,209 | 612,988 | 4,221 | 612,988 | 505,733 | 06/30/2023 | ||||||||||||||||||
059522AU6 | 2,107,010 | 2,107,010 | — | 2,107,010 | 2,147,399 | 06/30/2023 | ||||||||||||||||||
F-32
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
CUSIP | Amortized Cost Before OTTI | Present Value of Projected Cash Flows | OTTI Charge Recognized in Statement of Operations | Amortized Cost After OTTI | Fair Value at Time of OTTI | Date Reported | ||||||||||||||||||
07386XAH9 | 984,857 | 984,374 | 483 | 984,374 | 807,325 | 06/30/2023 | ||||||||||||||||||
12566UAN4 | 572,055 | 570,484 | 1,571 | 570,484 | 586,599 | 06/30/2023 | ||||||||||||||||||
12628LAD2 | 766,444 | 716,904 | 49,540 | 716,904 | 624,798 | 06/30/2023 | ||||||||||||||||||
12667F5E1 | 1,039,544 | 1,031,360 | 8,184 | 1,031,360 | 960,648 | 06/30/2023 | ||||||||||||||||||
12667GAC7 | 662,986 | 611,428 | 51,558 | 611,428 | 628,342 | 06/30/2023 | ||||||||||||||||||
12668APC3 | 845,763 | 838,619 | 7,144 | 838,619 | 804,549 | 06/30/2023 | ||||||||||||||||||
17309BAB3 | 213,365 | 208,774 | 4,591 | 208,774 | 183,775 | 06/30/2023 | ||||||||||||||||||
32051GSQ9 | 1,688,266 | 1,682,972 | 5,294 | 1,682,972 | 1,728,278 | 06/30/2023 | ||||||||||||||||||
32051GT70 | 654,707 | 650,913 | 3,793 | 650,913 | 584,241 | 06/30/2023 | ||||||||||||||||||
36244SAD0 | 2,252,386 | 2,071,962 | 180,424 | 2,071,962 | 2,271,187 | 06/30/2023 | ||||||||||||||||||
43739EAP2 | 616,209 | 611,759 | 4,449 | 611,759 | 570,177 | 06/30/2023 | ||||||||||||||||||
46627MAD9 | 572,129 | 572,115 | 13 | 572,115 | 503,882 | 06/30/2023 | ||||||||||||||||||
46627MEC7 | 377,567 | 371,830 | 5,737 | 371,830 | 339,925 | 06/30/2023 | ||||||||||||||||||
46627MEJ2 | 1,118,100 | 1,113,603 | 4,497 | 1,113,603 | 921,828 | 06/30/2023 | ||||||||||||||||||
643529AC4 | 520,520 | 491,053 | 29,467 | 491,053 | 557,549 | 06/30/2023 | ||||||||||||||||||
65535VNL8 | 2,089,478 | 2,081,888 | 7,590 | 2,081,888 | 2,063,447 | 06/30/2023 | ||||||||||||||||||
65535VSJ8 | 1,285,712 | 1,246,997 | 38,715 | 1,246,997 | 1,115,827 | 06/30/2023 | ||||||||||||||||||
74923HAQ4 | 525,772 | 519,269 | 6,502 | 519,269 | 443,687 | 06/30/2023 | ||||||||||||||||||
75116FBH1 | 1,485,771 | 1,465,650 | 20,121 | 1,465,650 | 1,253,422 | 06/30/2023 | ||||||||||||||||||
761118SC3 | 1,528,680 | 1,515,672 | 13,008 | 1,515,672 | 1,309,921 | 06/30/2023 | ||||||||||||||||||
761118UG1 | 485,611 | 483,232 | 2,379 | 483,232 | 409,243 | 06/30/2023 | ||||||||||||||||||
863579J90 | 326,147 | 321,439 | 4,707 | 321,439 | 331,247 | 06/30/2023 | ||||||||||||||||||
86360BAJ7 | 664,426 | 663,728 | 698 | 663,728 | 678,337 | 06/30/2023 | ||||||||||||||||||
87222EAB4 | 814,203 | 791,937 | 22,266 | 791,937 | 715,293 | 06/30/2023 | ||||||||||||||||||
87222EAC2 | 944,500 | 906,175 | 38,325 | 906,175 | 780,900 | 06/30/2023 | ||||||||||||||||||
05949CHM1 | 754,991 | 752,303 | 2,689 | 752,303 | 770,786 | 06/30/2023 | ||||||||||||||||||
05949CKX3 | 1,233,035 | 1,190,687 | 42,348 | 1,190,687 | 1,225,158 | 06/30/2023 | ||||||||||||||||||
07386YAE4 | 1,919,895 | 1,890,046 | 29,849 | 1,890,046 | 1,717,512 | 06/30/2023 | ||||||||||||||||||
073880AD8 | 1,095,079 | 1,087,921 | 7,158 | 1,087,921 | 1,010,811 | 06/30/2023 | ||||||||||||||||||
12543XAD8 | 1,146,866 | 1,132,734 | 14,132 | 1,132,734 | 1,025,398 | 06/30/2023 | ||||||||||||||||||
12544DAG4 | 82,048 | 82,482 | (434 | ) | 82,482 | 72,144 | 06/30/2023 | |||||||||||||||||
12638PAB5 | 704,325 | 687,341 | 16,984 | 687,341 | 538,077 | 06/30/2023 | ||||||||||||||||||
12669G3S8 | 1,216,352 | 1,205,920 | 10,432 | 1,205,920 | 1,077,627 | 06/30/2023 | ||||||||||||||||||
16165MAG3 | 1,698,141 | 1,698,815 | (675 | ) | 1,698,815 | 1,501,094 | 06/30/2023 | |||||||||||||||||
17025AAH5 | 866,588 | 804,309 | 62,279 | 804,309 | 831,165 | 06/30/2023 | ||||||||||||||||||
2254582Y3 | 239,471 | 239,472 | (2 | ) | 239,472 | 214,686 | 06/30/2023 | |||||||||||||||||
225458L55 | 535,805 | 532,092 | 3,713 | 532,092 | 459,983 | 06/30/2023 | ||||||||||||||||||
225470VF7 | 1,403,814 | 1,403,895 | (81 | ) | 1,403,895 | 1,341,332 | 06/30/2023 | |||||||||||||||||
45669AAD6 | 3,387,280 | 3,358,005 | 29,274 | 3,358,005 | 3,217,657 | 06/30/2023 | ||||||||||||||||||
466247J46 | 71,231 | 71,237 | (5 | ) | 71,237 | 69,271 | 06/30/2023 | |||||||||||||||||
466247ZP1 | 550,885 | 540,659 | 10,226 | 540,659 | 482,855 | 06/30/2023 | ||||||||||||||||||
46628LAB4 | 41,586 | 40,556 | 1,030 | 40,556 | 41,521 | 06/30/2023 | ||||||||||||||||||
46630WAL4 | 515,281 | 485,878 | 29,403 | 485,878 | 468,594 | 06/30/2023 | ||||||||||||||||||
F-33
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
CUSIP | Amortized Cost Before OTTI | Present Value of Projected Cash Flows | OTTI Charge Recognized in Statement of Operations | Amortized Cost After OTTI | Fair Value at Time of OTTI | Date Reported | ||||||||||||||||||
46631NAA7 | 691,427 | 678,636 | 12,791 | 678,636 | 532,232 | 06/30/2023 | ||||||||||||||||||
46631NDT3 | 6,223,773 | 6,162,743 | 61,029 | 6,162,743 | 6,052,651 | 06/30/2023 | ||||||||||||||||||
576433D52 | 492,252 | 487,446 | 4,806 | 487,446 | 417,672 | 06/30/2023 | ||||||||||||||||||
57643MLZ5 | 269,334 | 264,924 | 4,410 | 264,924 | 253,589 | 06/30/2023 | ||||||||||||||||||
59023PAB9 | 497,202 | 495,714 | 1,488 | 495,714 | 511,575 | 06/30/2023 | ||||||||||||||||||
74958YAE2 | 281,262 | 262,418 | 18,844 | 262,418 | 270,970 | 06/30/2023 | ||||||||||||||||||
863579XC7 | 1,084,387 | 1,062,034 | 22,353 | 1,062,034 | 1,101,633 | 06/30/2023 | ||||||||||||||||||
863579XR4 | 2,120,615 | 2,023,213 | 97,402 | 2,023,213 | 2,051,084 | 06/30/2023 | ||||||||||||||||||
86363GAF1 | 1,315,519 | 1,224,816 | 90,703 | 1,224,816 | 1,244,515 | 06/30/2023 | ||||||||||||||||||
885220KW2 | 1,906,234 | 1,901,275 | 4,960 | 1,901,275 | 1,823,623 | 06/30/2023 | ||||||||||||||||||
00176BAM54 | 101,071 | 71 | 101,000 | 71 | 78,651 | 09/30/2023 | ||||||||||||||||||
57430U301 | 1,207,914 | 922,371 | 285,543 | 922,371 | 815,210 | 09/30/2023 | ||||||||||||||||||
07325DAF1 | 214,725 | 211,984 | 2,742 | 211,984 | 195,404 | 09/30/2023 | ||||||||||||||||||
3622EAAA8 | 3,564,775 | 3,424,094 | 140,681 | 3,424,094 | 3,261,277 | 09/30/2023 | ||||||||||||||||||
61751DAE4 | 1,569,635 | 1,508,933 | 60,702 | 1,508,933 | 1,731,342 | 09/30/2023 | ||||||||||||||||||
86358RXY8 | 199,869 | 182,391 | 17,478 | 182,391 | 196,421 | 09/30/2023 | ||||||||||||||||||
86358RXZ5 | 297,911 | 283,221 | 14,691 | 283,221 | 280,466 | 09/30/2023 | ||||||||||||||||||
02146TAL1 | 356,025 | 334,459 | 21,566 | 334,459 | 347,841 | 09/30/2023 | ||||||||||||||||||
02147XAR8 | 595,098 | 598,203 | (3,104 | ) | 598,203 | 483,800 | 09/30/2023 | |||||||||||||||||
058933AN2 | 801,762 | 795,980 | 5,782 | 795,980 | 738,147 | 09/30/2023 | ||||||||||||||||||
059522AU6 | 2,113,373 | 2,046,846 | 66,528 | 2,046,846 | 2,043,226 | 09/30/2023 | ||||||||||||||||||
07386XAH9 | 967,729 | 884,778 | 82,951 | 884,778 | 783,965 | 09/30/2023 | ||||||||||||||||||
12628LAD2 | 722,914 | 702,073 | 20,842 | 702,073 | 584,662 | 09/30/2023 | ||||||||||||||||||
12667F4N2 | 2,131,981 | 2,102,525 | 29,456 | 2,102,525 | 2,003,869 | 09/30/2023 | ||||||||||||||||||
12667F5E1 | 998,934 | 999,062 | (128 | ) | 999,062 | 919,366 | 09/30/2023 | |||||||||||||||||
12667GAC7 | 641,949 | 642,107 | (158 | ) | 642,107 | 605,263 | 09/30/2023 | |||||||||||||||||
12668APC3 | 811,652 | 812,953 | (1,300 | ) | 812,953 | 775,662 | 09/30/2023 | |||||||||||||||||
17307GED6 | 1,383,968 | 1,370,895 | 13,074 | 1,370,895 | 1,414,213 | 09/30/2023 | ||||||||||||||||||
17309BAB3 | 205,994 | 202,794 | 3,201 | 202,794 | 171,985 | 09/30/2023 | ||||||||||||||||||
32051GSQ9 | 1,609,003 | 1,603,331 | 5,672 | 1,603,331 | 1,656,065 | 09/30/2023 | ||||||||||||||||||
32051GT70 | 638,394 | 635,227 | 3,166 | 635,227 | 561,409 | 09/30/2023 | ||||||||||||||||||
36244SAD0 | 2,086,866 | 2,091,595 | (4,729 | ) | 2,091,595 | 2,092,913 | 09/30/2023 | |||||||||||||||||
43739EAP2 | 600,361 | 591,499 | 8,862 | 591,499 | 566,842 | 09/30/2023 | ||||||||||||||||||
46627MAD9 | 551,967 | 541,058 | 10,909 | 541,058 | 474,792 | 09/30/2023 | ||||||||||||||||||
46627MEC7 | 364,017 | 360,581 | 3,437 | 360,581 | 323,064 | 09/30/2023 | ||||||||||||||||||
46627MEJ2 | 1,097,236 | 1,094,239 | 2,997 | 1,094,239 | 888,082 | 09/30/2023 | ||||||||||||||||||
643529AC4 | 504,332 | 491,904 | 12,428 | 491,904 | 538,114 | 09/30/2023 | ||||||||||||||||||
65535VNL8 | 2,075,144 | 2,055,698 | 19,446 | 2,055,698 | 2,078,429 | 09/30/2023 | ||||||||||||||||||
65535VSJ8 | 1,256,596 | 1,234,664 | 21,931 | 1,234,664 | 1,073,207 | 09/30/2023 | ||||||||||||||||||
69337BAH7 | 1,342,250 | 1,324,870 | 17,380 | 1,324,870 | 1,128,015 | 09/30/2023 | ||||||||||||||||||
74923HAQ4 | 509,767 | 510,394 | (627 | ) | 510,394 | 429,265 | 09/30/2023 | |||||||||||||||||
75115DAA3 | 188,747 | 185,664 | 3,083 | 185,664 | 182,465 | 09/30/2023 | ||||||||||||||||||
761118GS1 | 1,085,700 | 1,072,281 | 13,419 | 1,072,281 | 1,007,009 | 09/30/2023 | ||||||||||||||||||
F-34
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
CUSIP | Amortized Cost Before OTTI | Present Value of Projected Cash Flows | OTTI Charge Recognized in Statement of Operations | Amortized Cost After OTTI | Fair Value at Time of OTTI | Date Reported | ||||||||||||||||||
761118SC3 | 1,483,628 | 1,492,604 | (8,976 | ) | 1,492,604 | 1,269,597 | 09/30/2023 | |||||||||||||||||
761118UG1 | 468,938 | 469,663 | (725 | ) | 469,663 | 393,703 | 09/30/2023 | |||||||||||||||||
863579J90 | 308,602 | 305,810 | 2,792 | 305,810 | 317,961 | 09/30/2023 | ||||||||||||||||||
86360BAJ7 | 651,289 | 649,170 | 2,119 | 649,170 | 663,487 | 09/30/2023 | ||||||||||||||||||
87222EAB4 | 794,273 | 757,539 | 36,733 | 757,539 | 695,006 | 09/30/2023 | ||||||||||||||||||
87222EAC2 | 917,429 | 875,091 | 42,338 | 875,091 | 735,483 | 09/30/2023 | ||||||||||||||||||
41161PTN3 | 331,804 | 277,221 | 54,583 | 277,221 | 311,042 | 09/30/2023 | ||||||||||||||||||
45660LCK3 | 2,616,065 | 2,518,214 | 97,852 | 2,518,214 | 2,766,498 | 09/30/2023 | ||||||||||||||||||
05946XY72 | 1,018,663 | 1,014,239 | 4,424 | 1,014,239 | 947,595 | 09/30/2023 | ||||||||||||||||||
05949CHM1 | 666,490 | 660,363 | 6,127 | 660,363 | 690,602 | 09/30/2023 | ||||||||||||||||||
07386YAE4 | 1,885,974 | 1,866,881 | 19,093 | 1,866,881 | 1,705,295 | 09/30/2023 | ||||||||||||||||||
073880AD8 | 1,076,505 | 1,037,154 | 39,351 | 1,037,154 | 987,684 | 09/30/2023 | ||||||||||||||||||
12543XAD8 | 1,101,148 | 1,105,980 | (4,831 | ) | 1,105,980 | 936,389 | 09/30/2023 | |||||||||||||||||
12638PAB5 | 694,351 | 675,173 | 19,178 | 675,173 | 512,071 | 09/30/2023 | ||||||||||||||||||
12669G4K4 | 2,601,658 | 2,601,146 | 511 | 2,601,146 | 2,396,294 | 09/30/2023 | ||||||||||||||||||
12669GR45 | 498,496 | 476,051 | 22,445 | 476,051 | 430,865 | 09/30/2023 | ||||||||||||||||||
170257AE9 | 2,360,086 | 2,294,691 | 65,396 | 2,294,691 | 1,706,184 | 09/30/2023 | ||||||||||||||||||
17025AAH5 | 753,396 | 787,624 | (34,228 | ) | 787,624 | 795,445 | 09/30/2023 | |||||||||||||||||
225458L55 | 495,061 | 491,459 | 3,602 | 491,459 | 425,644 | 09/30/2023 | ||||||||||||||||||
225470VF7 | 1,387,201 | 1,333,114 | 54,088 | 1,333,114 | 1,298,598 | 09/30/2023 | ||||||||||||||||||
32052EAA7 | 46,567 | 43,785 | 2,782 | 43,785 | 40,679 | 09/30/2023 | ||||||||||||||||||
362341FN4 | 754,611 | 747,216 | 7,395 | 747,216 | 669,320 | 09/30/2023 | ||||||||||||||||||
362341XC8 | 827,434 | 812,370 | 15,063 | 812,370 | 684,900 | 09/30/2023 | ||||||||||||||||||
41161PCX9 | 180,773 | 179,982 | 791 | 179,982 | 176,391 | 09/30/2023 | ||||||||||||||||||
46631NDT3 | 5,999,611 | 6,009,390 | (9,779 | ) | 6,009,390 | 5,617,945 | 09/30/2023 | |||||||||||||||||
47233DAB7 | 595,329 | 204,708 | 390,622 | 204,708 | 681,585 | 09/30/2023 | ||||||||||||||||||
576433D52 | 486,384 | 480,875 | 5,509 | 480,875 | 413,266 | 09/30/2023 | ||||||||||||||||||
57643MLZ5 | 248,993 | 244,183 | 4,811 | 244,183 | 230,150 | 09/30/2023 | ||||||||||||||||||
59023PAB9 | 483,479 | 478,356 | 5,122 | 478,356 | 492,971 | 09/30/2023 | ||||||||||||||||||
74958TAB9 | 519,216 | 508,266 | 10,950 | 508,266 | 470,425 | 09/30/2023 | ||||||||||||||||||
863579RP5 | 591,272 | 566,391 | 24,881 | 566,391 | 560,020 | 09/30/2023 | ||||||||||||||||||
863579UL0 | 259,923 | 258,399 | 1,523 | 258,399 | 245,880 | 09/30/2023 | ||||||||||||||||||
863579UU0 | 1,016,080 | 963,663 | 52,416 | 963,663 | 990,946 | 09/30/2023 | ||||||||||||||||||
863579XC7 | 1,037,796 | 981,054 | 56,742 | 981,054 | 1,022,671 | 09/30/2023 | ||||||||||||||||||
86363GAF1 | 1,179,527 | 1,182,146 | (2,619 | ) | 1,182,146 | 1,193,014 | 09/30/2023 | |||||||||||||||||
885220KW2 | 1,896,532 | 1,874,254 | 22,278 | 1,874,254 | 1,835,343 | 09/30/2023 | ||||||||||||||||||
07325DAF1 | 193,552 | 193,679 | (127 | ) | 193,679 | 183,083 | 12/31/2023 | |||||||||||||||||
3622EAAA8 | 3,286,278 | 3,237,272 | 49,006 | 3,237,272 | 3,255,864 | 12/31/2023 | ||||||||||||||||||
61751DAE4 | 1,543,361 | 1,498,683 | 44,678 | 1,498,683 | 1,797,931 | 12/31/2023 | ||||||||||||||||||
75156VAD7 | 2,959,112 | 2,496,716 | 462,396 | 2,496,716 | 2,973,028 | 12/31/2023 | ||||||||||||||||||
86358RDX2 | 963,691 | 945,774 | 17,917 | 945,774 | 795,532 | 12/31/2023 | ||||||||||||||||||
86358RXY8 | 191,518 | 165,259 | 26,259 | 165,259 | 165,808 | 12/31/2023 | ||||||||||||||||||
86358RXZ5 | 327,597 | 248,323 | 79,275 | 248,323 | 244,869 | 12/31/2023 | ||||||||||||||||||
F-35
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
CUSIP | Amortized Cost Before OTTI | Present Value of Projected Cash Flows | OTTI Charge Recognized in Statement of Operations | Amortized Cost After OTTI | Fair Value at Time of OTTI | Date Reported | ||||||||||||||||||
00703QAD4 | 2,455,266 | 2,403,956 | 51,310 | 2,403,956 | 2,362,111 | 12/31/2023 | ||||||||||||||||||
02147XAR8 | 582,086 | 581,667 | 419 | 581,667 | 475,448 | 12/31/2023 | ||||||||||||||||||
02152AAS8 | 1,839,976 | 1,736,745 | 103,231 | 1,736,745 | 1,709,492 | 12/31/2023 | ||||||||||||||||||
058933AN2 | 794,268 | 793,985 | 283 | 793,985 | 750,932 | 12/31/2023 | ||||||||||||||||||
05951KAN3 | 580,528 | 579,964 | 564 | 579,964 | 514,479 | 12/31/2023 | ||||||||||||||||||
07386XAH9 | 876,767 | 875,510 | 1,257 | 875,510 | 782,619 | 12/31/2023 | ||||||||||||||||||
12628LAD2 | 708,617 | 661,150 | 47,467 | 661,150 | 587,483 | 12/31/2023 | ||||||||||||||||||
12667F4N2 | 2,025,464 | 2,012,088 | 13,376 | 2,012,088 | 1,984,305 | 12/31/2023 | ||||||||||||||||||
12667F5E1 | 983,360 | 978,296 | 5,064 | 978,296 | 909,176 | 12/31/2023 | ||||||||||||||||||
12667GAC7 | 619,616 | 613,153 | 6,463 | 613,153 | 585,116 | 12/31/2023 | ||||||||||||||||||
17307GED6 | 1,341,806 | 1,336,284 | 5,522 | 1,336,284 | 1,400,985 | 12/31/2023 | ||||||||||||||||||
17309BAB3 | 201,958 | 198,201 | 3,757 | 198,201 | 176,462 | 12/31/2023 | ||||||||||||||||||
32051GSQ9 | 1,522,783 | 1,512,933 | 9,850 | 1,512,933 | 1,515,991 | 12/31/2023 | ||||||||||||||||||
32051GT70 | 619,138 | 612,519 | 6,618 | 612,519 | 534,842 | 12/31/2023 | ||||||||||||||||||
36244SAD0 | 2,148,368 | 1,989,448 | 158,920 | 1,989,448 | 2,137,247 | 12/31/2023 | ||||||||||||||||||
43739EAP2 | 561,096 | 556,890 | 4,206 | 556,890 | 538,989 | 12/31/2023 | ||||||||||||||||||
46627MAD9 | 524,569 | 524,569 | (0 | ) | 524,569 | 468,198 | 12/31/2023 | |||||||||||||||||
46627MCY1 | 3,947,612 | 3,784,942 | 162,670 | 3,784,942 | 3,845,527 | 12/31/2023 | ||||||||||||||||||
46627MEC7 | 353,579 | 351,690 | 1,889 | 351,690 | 326,489 | 12/31/2023 | ||||||||||||||||||
643529AC4 | 505,690 | 486,982 | 18,708 | 486,982 | 551,521 | 12/31/2023 | ||||||||||||||||||
65535VNL8 | 1,947,633 | 1,933,908 | 13,724 | 1,933,908 | 2,036,022 | 12/31/2023 | ||||||||||||||||||
65535VSJ8 | 1,230,484 | 1,232,758 | (2,274 | ) | 1,232,758 | 989,929 | 12/31/2023 | |||||||||||||||||
69337BAH7 | 1,311,917 | 1,303,815 | 8,102 | 1,303,815 | 1,159,687 | 12/31/2023 | ||||||||||||||||||
74928RAB0 | 239,342 | 216,651 | 22,691 | 216,651 | 238,268 | 12/31/2023 | ||||||||||||||||||
74928XBB6 | 3,183,555 | 3,039,107 | 144,448 | 3,039,107 | 3,430,881 | 12/31/2023 | ||||||||||||||||||
75115BAC3 | 1,030,772 | 916,005 | 114,767 | 916,005 | 1,035,843 | 12/31/2023 | ||||||||||||||||||
75115DAA3 | 186,218 | 186,790 | (572 | ) | 186,790 | 164,206 | 12/31/2023 | |||||||||||||||||
75116FBH1 | 1,377,535 | 1,361,078 | 16,456 | 1,361,078 | 1,145,682 | 12/31/2023 | ||||||||||||||||||
76110HT90 | 840,834 | 582,373 | 258,461 | 582,373 | 917,175 | 12/31/2023 | ||||||||||||||||||
761118SC3 | 1,431,534 | 1,428,103 | 3,431 | 1,428,103 | 1,242,244 | 12/31/2023 | ||||||||||||||||||
855541AC2 | 750,496 | 745,072 | 5,424 | 745,072 | 691,191 | 12/31/2023 | ||||||||||||||||||
863579J90 | 303,000 | 300,072 | 2,928 | 300,072 | 306,643 | 12/31/2023 | ||||||||||||||||||
86360BAJ7 | 680,750 | 643,758 | 36,993 | 643,758 | 672,067 | 12/31/2023 | ||||||||||||||||||
87222EAB4 | 834,894 | 822,502 | 12,392 | 822,502 | 694,825 | 12/31/2023 | ||||||||||||||||||
87222EAC2 | 882,066 | 857,058 | 25,008 | 857,058 | 695,801 | 12/31/2023 | ||||||||||||||||||
45660LCK3 | 3,167,425 | 2,938,420 | 229,005 | 2,938,420 | 2,780,987 | 12/31/2023 | ||||||||||||||||||
058931AT3 | 1,095,711 | 1,095,714 | (3 | ) | 1,095,714 | 918,016 | 12/31/2023 | |||||||||||||||||
05946XY72 | 977,968 | 978,683 | (715 | ) | 978,683 | 937,593 | 12/31/2023 | |||||||||||||||||
05949CHM1 | 663,718 | 655,328 | 8,390 | 655,328 | 662,826 | 12/31/2023 | ||||||||||||||||||
05949CKX3 | 1,187,717 | 1,150,126 | 37,591 | 1,150,126 | 1,168,876 | 12/31/2023 | ||||||||||||||||||
073880AD8 | 1,030,655 | 1,019,083 | 11,571 | 1,019,083 | 930,752 | 12/31/2023 | ||||||||||||||||||
12544DAG4 | 78,643 | 78,571 | 72 | 78,571 | 64,456 | 12/31/2023 | ||||||||||||||||||
12638PAB5 | 679,907 | 659,700 | 20,206 | 659,700 | 486,778 | 12/31/2023 | ||||||||||||||||||
F-36
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
CUSIP | Amortized Cost Before OTTI | Present Value of Projected Cash Flows | OTTI Charge Recognized in Statement of Operations | Amortized Cost After OTTI | Fair Value at Time of OTTI | Date Reported | ||||||||||||||||||
1266942H0 | 512,111 | 510,107 | 2,004 | 510,107 | 423,601 | 12/31/2023 | ||||||||||||||||||
12669G4K4 | 2,556,809 | 2,555,364 | 1,445 | 2,555,364 | 2,427,811 | 12/31/2023 | ||||||||||||||||||
12669GR45 | 470,597 | 467,135 | 3,462 | 467,135 | 435,906 | 12/31/2023 | ||||||||||||||||||
2254582Y3 | 1,077,827 | 1,066,955 | 10,873 | 1,066,955 | 959,317 | 12/31/2023 | ||||||||||||||||||
225458L55 | 491,469 | 487,840 | 3,628 | 487,840 | 406,462 | 12/31/2023 | ||||||||||||||||||
32052EAA7 | 43,448 | 42,472 | 976 | 42,472 | 41,090 | 12/31/2023 | ||||||||||||||||||
362341FN4 | 733,600 | 729,603 | 3,996 | 729,603 | 662,609 | 12/31/2023 | ||||||||||||||||||
362341XC8 | 795,518 | 795,302 | 217 | 795,302 | 720,040 | 12/31/2023 | ||||||||||||||||||
466247UG6 | 427,081 | 426,051 | 1,029 | 426,051 | 391,055 | 12/31/2023 | ||||||||||||||||||
46628LAB4 | 37,967 | 37,273 | 694 | 37,273 | 37,689 | 12/31/2023 | ||||||||||||||||||
46630WAL4 | 455,687 | 451,993 | 3,694 | 451,993 | 302,703 | 12/31/2023 | ||||||||||||||||||
46631NDT3 | 5,867,333 | 5,886,670 | (19,337 | ) | 5,886,670 | 5,731,594 | 12/31/2023 | |||||||||||||||||
57643MLZ5 | 229,612 | 225,458 | 4,154 | 225,458 | 205,035 | 12/31/2023 | ||||||||||||||||||
59023PAB9 | 475,891 | 473,619 | 2,272 | 473,619 | 481,056 | 12/31/2023 | ||||||||||||||||||
863579RP5 | 600,470 | 597,146 | 3,324 | 597,146 | 549,353 | 12/31/2023 | ||||||||||||||||||
863579UL0 | 258,471 | 257,405 | 1,065 | 257,405 | 242,466 | 12/31/2023 | ||||||||||||||||||
863579UU0 | 958,195 | 945,112 | 13,083 | 945,112 | 980,662 | 12/31/2023 | ||||||||||||||||||
863579XC7 | 980,418 | 980,418 | — | 980,418 | 1,038,343 | 12/31/2023 | ||||||||||||||||||
863579XR4 | 1,957,805 | 1,957,254 | 552 | 1,957,254 | 2,023,487 | 12/31/2023 | ||||||||||||||||||
86363GAF1 | 1,167,594 | 1,159,765 | 7,829 | 1,159,765 | 1,173,720 | 12/31/2023 | ||||||||||||||||||
885220KW2 | 1,840,344 | 1,731,006 | 109,338 | 1,731,006 | 1,616,956 | 12/31/2023 | ||||||||||||||||||
92979DAC9 | 2,388,453 | 2,324,573 | 63,880 | 2,324,573 | 2,467,969 | 12/31/2023 | ||||||||||||||||||
94984DAC8 | 277,596 | 275,841 | 1,755 | 275,841 | 284,511 | 12/31/2023 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total | $ | 13,772,890 | ||||||||||||||||||||||
|
| |||||||||||||||||||||||
F-37
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
The following table shows each loan-backed security with an OTTI recognized in 2022, as the present value of cash flows expected to be collected is less than the amortized cost basis of the security (in whole dollars):
| Present Value | OTTI Charge | |||||||||||||||||||||||
| Amortized Cost | of Projected | Recognized in | Amortized Cost | Fair Value at | Date | |||||||||||||||||||
CUSIP | Before OTTI | Cash Flows | Statement of Operations | After OTTI | Time of OTTI | Reported | ||||||||||||||||||
00256DAA0 | $ | 5,028,172 | $ | 3,890,891 | $ | 1,137,281 | $ | 3,890,891 | $ | 3,201,439 | 3/31/2022 | |||||||||||||
05535DBG8 | 270,320 | 226,054 | 44,266 | 226,054 | 146,322 | 3/31/2022 | ||||||||||||||||||
36157NFL3 | 63,101 | 48,296 | 14,805 | 48,296 | 65,578 | 3/31/2022 | ||||||||||||||||||
86358RXZ5 | 730,465 | 680,597 | 49,868 | 680,597 | 653,004 | 3/31/2022 | ||||||||||||||||||
05951KAN3 | 769,516 | 727,854 | 41,662 | 727,854 | 725,932 | 3/31/2022 | ||||||||||||||||||
17309AAD1 | 1,178,157 | 1,157,862 | 20,295 | 1,157,862 | 1,143,417 | 3/31/2022 | ||||||||||||||||||
41161PMV2 | 381,790 | 294,193 | 87,597 | 294,193 | 400,491 | 3/31/2022 | ||||||||||||||||||
65535VNL8 | 2,434,448 | 2,223,472 | 210,976 | 2,223,472 | 2,443,775 | 3/31/2022 | ||||||||||||||||||
74928XBB6 | 5,618,112 | 4,942,615 | 675,497 | 4,942,615 | 6,168,357 | 3/31/2022 | ||||||||||||||||||
05949CHM1 | 951,691 | 869,857 | 81,834 | 869,857 | 894,663 | 3/31/2022 | ||||||||||||||||||
57643MLZ5 | 391,660 | 375,540 | 16,120 | 375,540 | 376,146 | 3/31/2022 | ||||||||||||||||||
59020UV77 | 84,020 | 82,288 | 1,732 | 82,288 | 80,945 | 3/31/2022 | ||||||||||||||||||
863579RP5 | 736,920 | 685,020 | 51,900 | 685,020 | 711,770 | 3/31/2022 | ||||||||||||||||||
885220KW2 | 2,541,472 | 2,529,769 | 11,703 | 2,529,769 | 2,530,102 | 3/31/2022 | ||||||||||||||||||
94984DAC8 | 474,157 | 426,688 | 47,469 | 426,688 | 439,204 | 3/31/2022 | ||||||||||||||||||
07325DAF1 | 351,756 | 298,754 | 53,002 | 298,754 | 308,547 | 6/30/2022 | ||||||||||||||||||
759676AF6 | 467,062 | 389,330 | 77,732 | 389,330 | 403,998 | 6/30/2022 | ||||||||||||||||||
02147WAT6 | 1,833,809 | 1,810,984 | 22,825 | 1,810,984 | 1,647,430 | 6/30/2022 | ||||||||||||||||||
02147XAR8 | 722,783 | 716,983 | 5,800 | 716,983 | 616,400 | 6/30/2022 | ||||||||||||||||||
05951KAN3 | 727,416 | 726,755 | 661 | 726,755 | 709,393 | 6/30/2022 | ||||||||||||||||||
12566UAE4 | 484,546 | 479,517 | 5,029 | 479,517 | 428,794 | 6/30/2022 | ||||||||||||||||||
12566UAN4 | 745,695 | 687,455 | 58,239 | 687,455 | 680,275 | 6/30/2022 | ||||||||||||||||||
12566XAM0 | 762,429 | 749,321 | 13,107 | 749,321 | 711,263 | 6/30/2022 | ||||||||||||||||||
12628LAD2 | 939,894 | 917,685 | 22,210 | 917,685 | 775,478 | 6/30/2022 | ||||||||||||||||||
12668APC3 | 1,053,742 | 1,028,969 | 24,773 | 1,028,969 | 1,023,156 | 6/30/2022 | ||||||||||||||||||
17309BAB3 | 231,697 | 229,910 | 1,787 | 229,910 | 212,294 | 6/30/2022 | ||||||||||||||||||
17309VAH6 | 883,901 | 881,260 | 2,641 | 881,260 | 828,464 | 6/30/2022 | ||||||||||||||||||
225470Q89 | 639,198 | 566,017 | 73,181 | 566,017 | 434,433 | 6/30/2022 | ||||||||||||||||||
32051GSQ9 | 2,150,300 | 2,111,315 | 38,985 | 2,111,315 | 2,136,944 | 6/30/2022 | ||||||||||||||||||
59020UW43 | 484,507 | 422,353 | 62,154 | 422,353 | 438,518 | 6/30/2022 | ||||||||||||||||||
65535VSJ8 | 1,382,487 | 1,368,659 | 13,828 | 1,368,659 | 1,226,910 | 6/30/2022 | ||||||||||||||||||
69337BAH7 | 1,615,840 | 1,597,892 | 17,947 | 1,597,892 | 1,468,643 | 6/30/2022 | ||||||||||||||||||
74923HAQ4 | 591,952 | 582,904 | 9,048 | 582,904 | 527,598 | 6/30/2022 | ||||||||||||||||||
74928RAB0 | 299,181 | 295,529 | 3,652 | 295,529 | 312,097 | 6/30/2022 | ||||||||||||||||||
75115BAC3 | 1,263,859 | 1,260,657 | 3,203 | 1,260,657 | 1,287,590 | 6/30/2022 | ||||||||||||||||||
75116FBH1 | 1,660,615 | 1,655,476 | 5,139 | 1,655,476 | 1,511,249 | 6/30/2022 | ||||||||||||||||||
761118SC3 | 1,738,294 | 1,735,436 | 2,859 | 1,735,436 | 1,583,504 | 6/30/2022 | ||||||||||||||||||
863579J90 | 408,035 | 404,919 | 3,116 | 404,919 | 410,645 | 6/30/2022 | ||||||||||||||||||
87222EAB4 | 989,431 | 964,435 | 24,996 | 964,435 | 915,285 | 6/30/2022 | ||||||||||||||||||
87222EAC2 | 1,069,037 | 1,046,433 | 22,604 | 1,046,433 | 954,115 | 6/30/2022 | ||||||||||||||||||
F-38
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
| Present Value | OTTI Charge | |||||||||||||||||||||||
| Amortized Cost | of Projected | Recognized in | Amortized Cost | Fair Value at | Date | |||||||||||||||||||
CUSIP | Before OTTI | Cash Flows | Statement of Operations | After OTTI | Time of OTTI | Reported | ||||||||||||||||||
93934NAC9 | 550,457 | 525,641 | 24,815 | 525,641 | 469,111 | 6/30/2022 | ||||||||||||||||||
058931AT3 | 1,243,463 | 1,240,130 | 3,333 | 1,240,130 | 1,198,967 | 6/30/2022 | ||||||||||||||||||
073880AD8 | 1,276,813 | 1,222,687 | 54,126 | 1,222,687 | 1,154,766 | 6/30/2022 | ||||||||||||||||||
12544DAG4 | 95,844 | 90,011 | 5,833 | 90,011 | 85,172 | 6/30/2022 | ||||||||||||||||||
12545EAK2 | 1,550,474 | 1,490,197 | 60,276 | 1,490,197 | 1,329,130 | 6/30/2022 | ||||||||||||||||||
12638PAB5 | 744,092 | 736,605 | 7,487 | 736,605 | 600,312 | 6/30/2022 | ||||||||||||||||||
1266942H0 | 606,740 | 599,651 | 7,089 | 599,651 | 501,690 | 6/30/2022 | ||||||||||||||||||
126694HP6 | 655,886 | 535,926 | 119,960 | 535,926 | 506,396 | 6/30/2022 | ||||||||||||||||||
12669G3S8 | 1,421,943 | 1,403,926 | 18,017 | 1,403,926 | 1,272,912 | 6/30/2022 | ||||||||||||||||||
12669G4K4 | 2,882,965 | 2,860,499 | 22,466 | 2,860,499 | 2,654,538 | 6/30/2022 | ||||||||||||||||||
16162YAL9 | 406,596 | 387,094 | 19,502 | 387,094 | 351,124 | 6/30/2022 | ||||||||||||||||||
16165MAG3 | 2,063,370 | 2,039,505 | 23,865 | 2,039,505 | 1,824,783 | 6/30/2022 | ||||||||||||||||||
170257AE9 | 3,090,905 | 2,877,625 | 213,279 | 2,877,625 | 2,454,654 | 6/30/2022 | ||||||||||||||||||
17025AAH5 | 1,119,104 | 1,045,677 | 73,427 | 1,045,677 | 993,451 | 6/30/2022 | ||||||||||||||||||
225458L55 | 554,354 | 551,293 | 3,060 | 551,293 | 495,964 | 6/30/2022 | ||||||||||||||||||
362341XC8 | 963,117 | 959,504 | 3,613 | 959,504 | 830,593 | 6/30/2022 | ||||||||||||||||||
46631NAA7 | 819,190 | 805,803 | 13,387 | 805,803 | 733,833 | 6/30/2022 | ||||||||||||||||||
46631NDT3 | 7,735,758 | 7,037,790 | 697,968 | 7,037,790 | 7,196,047 | 6/30/2022 | ||||||||||||||||||
74958YAE2 | 335,485 | 319,458 | 16,027 | 319,458 | 327,784 | 6/30/2022 | ||||||||||||||||||
78473TAJ9 | 275,754 | 245,411 | 30,343 | 245,411 | 214,919 | 6/30/2022 | ||||||||||||||||||
863579XC7 | 1,415,676 | 1,337,580 | 78,096 | 1,337,580 | 1,408,287 | 6/30/2022 | ||||||||||||||||||
86363GAF1 | 1,733,928 | 1,673,515 | 60,413 | 1,673,515 | 1,636,845 | 6/30/2022 | ||||||||||||||||||
94985AAA7 | 227,339 | 217,876 | 9,463 | 217,876 | 211,415 | 6/30/2022 | ||||||||||||||||||
94986CAA2 | 328,420 | 320,452 | 7,968 | 320,452 | 302,929 | 6/30/2022 | ||||||||||||||||||
57430U301 | 1,330,669 | 1,004,371 | 326,298 | 1,004,371 | 803,430 | 9/30/2022 | ||||||||||||||||||
07325DAF1 | 291,282 | 290,354 | 928 | 290,354 | 286,720 | 9/30/2022 | ||||||||||||||||||
3622EAAA8 | 3,999,702 | 3,929,491 | 70,212 | 3,929,491 | 3,739,585 | 9/30/2022 | ||||||||||||||||||
61751DAE4 | 1,716,986 | 1,604,835 | 112,151 | 1,604,835 | 2,251,814 | 9/30/2022 | ||||||||||||||||||
617526AD0 | 2,717,720 | 2,314,163 | 403,557 | 2,314,163 | 2,489,016 | 9/30/2022 | ||||||||||||||||||
86358RXZ5 | 573,712 | 503,846 | 69,866 | 503,846 | 532,119 | 9/30/2022 | ||||||||||||||||||
07386XAH9 | 1,136,200 | 1,060,380 | 75,820 | 1,060,380 | 920,227 | 9/30/2022 | ||||||||||||||||||
12566UAE4 | 469,028 | 437,575 | 31,453 | 437,575 | 395,514 | 9/30/2022 | ||||||||||||||||||
12566UAN4 | 659,320 | 581,671 | 77,649 | 581,671 | 613,196 | 9/30/2022 | ||||||||||||||||||
12566XAM0 | 724,102 | 706,097 | 18,005 | 706,097 | 652,607 | 9/30/2022 | ||||||||||||||||||
12628LAD2 | 944,313 | 837,560 | 106,754 | 837,560 | 715,627 | 9/30/2022 | ||||||||||||||||||
126670JP4 | 799,425 | 751,737 | 47,688 | 751,737 | 748,985 | 9/30/2022 | ||||||||||||||||||
12667F4N2 | 2,337,848 | 2,296,401 | 41,448 | 2,296,401 | 2,234,566 | 9/30/2022 | ||||||||||||||||||
12668APC3 | 991,327 | 950,477 | 40,850 | 950,477 | 944,519 | 9/30/2022 | ||||||||||||||||||
17307GED6 | 1,519,753 | 1,448,105 | 71,648 | 1,448,105 | 1,466,554 | 9/30/2022 | ||||||||||||||||||
17309BAB3 | 228,895 | 224,462 | 4,433 | 224,462 | 201,398 | 9/30/2022 | ||||||||||||||||||
17309VAH6 | 845,828 | 839,340 | 6,488 | 839,340 | 792,523 | 9/30/2022 | ||||||||||||||||||
225470Q89 | 554,757 | 534,935 | 19,822 | 534,935 | 418,987 | 9/30/2022 | ||||||||||||||||||
32051GSQ9 | 2,037,561 | 1,989,697 | 47,865 | 1,989,697 | 2,018,934 | 9/30/2022 | ||||||||||||||||||
F-39
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
| Present Value | OTTI Charge | |||||||||||||||||||||||
| Amortized Cost | of Projected | Recognized in | Amortized Cost | Fair Value at | Date | |||||||||||||||||||
CUSIP | Before OTTI | Cash Flows | Statement of Operations | After OTTI | Time of OTTI | Reported | ||||||||||||||||||
46627MAD9 | 641,414 | 620,422 | 20,992 | 620,422 | 598,910 | 9/30/2022 | ||||||||||||||||||
46627MEJ2 | 1,290,004 | 1,214,983 | 75,022 | 1,214,983 | 1,045,674 | 9/30/2022 | ||||||||||||||||||
47232CAH7 | 1,899,848 | 1,899,428 | 420 | 1,899,428 | 2,091,390 | 9/30/2022 | ||||||||||||||||||
576434W59 | 231,800 | 180,887 | 50,912 | 180,887 | 133,506 | 9/30/2022 | ||||||||||||||||||
59020UW43 | 402,012 | 374,574 | 27,438 | 374,574 | 282,946 | 9/30/2022 | ||||||||||||||||||
643529AC4 | 566,063 | 512,432 | 53,631 | 512,432 | 615,937 | 9/30/2022 | ||||||||||||||||||
65535VMJ4 | 654,212 | 604,134 | 50,077 | 604,134 | 606,472 | 9/30/2022 | ||||||||||||||||||
65535VNL8 | 2,216,330 | 2,128,294 | 88,036 | 2,128,294 | 2,136,155 | 9/30/2022 | ||||||||||||||||||
65535VSJ8 | 1,353,591 | 1,314,301 | 39,290 | 1,314,301 | 1,150,059 | 9/30/2022 | ||||||||||||||||||
69337BAH7 | 1,588,255 | 1,531,076 | 57,179 | 1,531,076 | 1,357,354 | 9/30/2022 | ||||||||||||||||||
74923HAQ4 | 563,728 | 561,272 | 2,456 | 561,272 | 491,746 | 9/30/2022 | ||||||||||||||||||
74928RAB0 | 293,120 | 262,538 | 30,582 | 262,538 | 285,136 | 9/30/2022 | ||||||||||||||||||
75116CET9 | 263,844 | 166,578 | 97,266 | 166,578 | 229,893 | 9/30/2022 | ||||||||||||||||||
761118SC3 | 1,692,139 | 1,684,385 | 7,754 | 1,684,385 | 1,439,667 | 9/30/2022 | ||||||||||||||||||
863579J90 | 399,903 | 373,319 | 26,584 | 373,319 | 387,475 | 9/30/2022 | ||||||||||||||||||
87222EAB4 | 960,274 | 864,706 | 95,569 | 864,706 | 855,078 | 9/30/2022 | ||||||||||||||||||
87222EAC2 | 1,041,136 | 968,565 | 72,571 | 968,565 | 884,062 | 9/30/2022 | ||||||||||||||||||
93934FMD1 | 1,850,357 | 1,613,441 | 236,916 | 1,613,441 | 1,651,078 | 9/30/2022 | ||||||||||||||||||
45660LCK3 | 2,987,283 | 2,747,927 | 239,356 | 2,747,927 | 2,828,661 | 9/30/2022 | ||||||||||||||||||
05946XY72 | 1,121,255 | 1,064,056 | 57,199 | 1,064,056 | 1,039,216 | 9/30/2022 | ||||||||||||||||||
05949CHM1 | 788,146 | 770,794 | 17,352 | 770,794 | 776,150 | 9/30/2022 | ||||||||||||||||||
05949CKX3 | 1,593,696 | 1,495,795 | 97,900 | 1,495,795 | 1,483,476 | 9/30/2022 | ||||||||||||||||||
073880AD8 | 1,165,906 | 1,163,805 | 2,101 | 1,163,805 | 1,066,603 | 9/30/2022 | ||||||||||||||||||
12544DAG4 | 87,957 | 88,141 | (184 | ) | 88,141 | 76,266 | 9/30/2022 | |||||||||||||||||
12545EAK2 | 1,470,040 | 1,423,980 | 46,060 | 1,423,980 | 1,225,499 | 9/30/2022 | ||||||||||||||||||
12638PAB5 | 730,343 | 719,668 | 10,676 | 719,668 | 561,272 | 9/30/2022 | ||||||||||||||||||
1266942H0 | 586,626 | 561,203 | 25,423 | 561,203 | 472,137 | 9/30/2022 | ||||||||||||||||||
126694BE7 | 332,557 | 306,506 | 26,051 | 306,506 | 311,536 | 9/30/2022 | ||||||||||||||||||
126694CS5 | 3,094,276 | 3,091,476 | 2,800 | 3,091,476 | 2,504,248 | 9/30/2022 | ||||||||||||||||||
126694HP6 | 515,419 | 474,981 | 40,438 | 474,981 | 462,478 | 9/30/2022 | ||||||||||||||||||
12669DUS5 | 773,797 | 772,715 | 1,082 | 772,715 | 742,780 | 9/30/2022 | ||||||||||||||||||
12669G3S8 | 1,387,574 | 1,375,347 | 12,226 | 1,375,347 | 1,217,425 | 9/30/2022 | ||||||||||||||||||
12669G4K4 | 2,834,361 | 2,781,521 | 52,840 | 2,781,521 | 2,545,994 | 9/30/2022 | ||||||||||||||||||
12669GR45 | 534,792 | 525,148 | 9,644 | 525,148 | 485,346 | 9/30/2022 | ||||||||||||||||||
16162YAL9 | 380,468 | 361,472 | 18,995 | 361,472 | 327,514 | 9/30/2022 | ||||||||||||||||||
16165MAG3 | 1,961,306 | 1,944,718 | 16,588 | 1,944,718 | 1,661,310 | 9/30/2022 | ||||||||||||||||||
170257AE9 | 2,828,331 | 2,633,857 | 194,474 | 2,633,857 | 2,354,786 | 9/30/2022 | ||||||||||||||||||
17025AAH5 | 996,965 | 955,555 | 41,410 | 955,555 | 872,118 | 9/30/2022 | ||||||||||||||||||
2254582Y3 | 1,262,710 | 1,223,508 | 39,202 | 1,223,508 | 1,083,348 | 9/30/2022 | ||||||||||||||||||
362341XC8 | 925,615 | 890,329 | 35,286 | 890,329 | 775,076 | 9/30/2022 | ||||||||||||||||||
41161PCX9 | 222,673 | 219,523 | 3,150 | 219,523 | 217,809 | 9/30/2022 | ||||||||||||||||||
466247UG6 | 543,666 | 541,554 | 2,112 | 541,554 | 492,253 | 9/30/2022 | ||||||||||||||||||
466247ZP1 | 597,232 | 578,858 | 18,375 | 578,858 | 551,434 | 9/30/2022 | ||||||||||||||||||
F-40
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
| Present Value | OTTI Charge | |||||||||||||||||||||||
| Amortized Cost | of Projected | Recognized in | Amortized Cost | Fair Value at | Date | |||||||||||||||||||
CUSIP | Before OTTI | Cash Flows | Statement of Operations | After OTTI | Time of OTTI | Reported | ||||||||||||||||||
46628LAB4 | 52,197 | 43,653 | 8,544 | 43,653 | 46,321 | 9/30/2022 | ||||||||||||||||||
46631NAA7 | 787,350 | 768,303 | 19,047 | 768,303 | 654,423 | 9/30/2022 | ||||||||||||||||||
46631NDT3 | 6,957,695 | 6,448,656 | 509,039 | 6,448,656 | 6,565,975 | 9/30/2022 | ||||||||||||||||||
57643MLZ5 | 322,070 | 311,840 | 10,230 | 311,840 | 295,793 | 9/30/2022 | ||||||||||||||||||
59023PAB9 | 550,151 | 530,517 | 19,633 | 530,517 | 549,074 | 9/30/2022 | ||||||||||||||||||
863579RP5 | 630,863 | 612,560 | 18,302 | 612,560 | 593,202 | 9/30/2022 | ||||||||||||||||||
863579XC7 | 1,202,538 | 1,169,250 | 33,288 | 1,169,250 | 1,184,462 | 9/30/2022 | ||||||||||||||||||
86363GAF1 | 1,622,996 | 1,511,763 | 111,233 | 1,511,763 | 1,431,479 | 9/30/2022 | ||||||||||||||||||
885220KW2 | 2,336,973 | 2,265,171 | 71,802 | 2,265,171 | 2,217,726 | 9/30/2022 | ||||||||||||||||||
92979DAC9 | 2,889,617 | 2,736,750 | 152,866 | 2,736,750 | 2,880,781 | 9/30/2022 | ||||||||||||||||||
94984DAC8 | 391,725 | 391,939 | (214 | ) | 391,939 | 377,184 | 9/30/2022 | |||||||||||||||||
94986CAA2 | 319,103 | 297,142 | 21,962 | 297,142 | 281,932 | 9/30/2022 | ||||||||||||||||||
00176BAM54 | 221,912 | 204,829 | 17,083 | 204,829 | 145,456 | 12/31/2022 | ||||||||||||||||||
36157NFL3 | 34,787 | 33,507 | 1,280 | 33,507 | 49,479 | 12/31/2022 | ||||||||||||||||||
3622EAAA8 | 3,923,762 | 3,761,791 | 161,971 | 3,761,791 | 3,650,746 | 12/31/2022 | ||||||||||||||||||
61751DAE4 | 1,629,194 | 1,602,771 | 26,423 | 1,602,771 | 1,949,256 | 12/31/2022 | ||||||||||||||||||
759676AF6 | 379,733 | 378,947 | 785 | 378,947 | 359,320 | 12/31/2022 | ||||||||||||||||||
86358RXZ5 | 465,267 | 455,171 | 10,096 | 455,171 | 471,122 | 12/31/2022 | ||||||||||||||||||
02147XAR8 | 680,181 | 643,751 | 36,430 | 643,751 | 528,126 | 12/31/2022 | ||||||||||||||||||
058933AN2 | 919,353 | 889,825 | 29,529 | 889,825 | 821,517 | 12/31/2022 | ||||||||||||||||||
05951KAN3 | 696,878 | 683,150 | 13,728 | 683,150 | 647,406 | 12/31/2022 | ||||||||||||||||||
07386XAH9 | 1,011,656 | 911,593 | 100,063 | 911,593 | 863,150 | 12/31/2022 | ||||||||||||||||||
12566UAE4 | 337,542 | 337,076 | 465 | 337,076 | 317,476 | 12/31/2022 | ||||||||||||||||||
12566UAN4 | 576,035 | 576,010 | 25 | 576,010 | 628,281 | 12/31/2022 | ||||||||||||||||||
12566XAM0 | 699,177 | 699,339 | (162 | ) | 699,339 | 655,865 | 12/31/2022 | |||||||||||||||||
12628LAD2 | 834,249 | 776,091 | 58,158 | 776,091 | 675,639 | 12/31/2022 | ||||||||||||||||||
126670JP4 | 743,653 | 722,674 | 20,979 | 722,674 | 725,258 | 12/31/2022 | ||||||||||||||||||
12667F4N2 | 2,266,231 | 2,246,591 | 19,640 | 2,246,591 | 2,214,064 | 12/31/2022 | ||||||||||||||||||
12667GAC7 | 693,373 | 685,397 | 7,976 | 685,397 | 654,562 | 12/31/2022 | ||||||||||||||||||
12668APC3 | 924,868 | 924,886 | (18 | ) | 924,886 | 878,754 | 12/31/2022 | |||||||||||||||||
17025RAA3 | 1,550,324 | 1,306,829 | 243,495 | 1,306,829 | 1,552,445 | 12/31/2022 | ||||||||||||||||||
17307GED6 | 1,443,837 | 1,417,702 | 26,135 | 1,417,702 | 1,463,475 | 12/31/2022 | ||||||||||||||||||
17309BAB3 | 222,437 | 220,151 | 2,285 | 220,151 | 198,606 | 12/31/2022 | ||||||||||||||||||
17309VAH6 | 805,883 | 803,877 | 2,006 | 803,877 | 758,730 | 12/31/2022 | ||||||||||||||||||
225470Q89 | 521,333 | 522,356 | (1,023 | ) | 522,356 | 415,017 | 12/31/2022 | |||||||||||||||||
32051GT70 | 735,886 | 675,158 | 60,728 | 675,158 | 601,220 | 12/31/2022 | ||||||||||||||||||
36244SAD0 | 2,376,922 | 2,199,302 | 177,620 | 2,199,302 | 2,397,505 | 12/31/2022 | ||||||||||||||||||
43739EAP2 | 705,506 | 689,473 | 16,033 | 689,473 | 669,168 | 12/31/2022 | ||||||||||||||||||
46627MAD9 | 604,558 | 593,543 | 11,016 | 593,543 | 524,404 | 12/31/2022 | ||||||||||||||||||
46627MCY1 | 5,194,888 | 4,953,702 | 241,186 | 4,953,702 | 5,130,647 | 12/31/2022 | ||||||||||||||||||
46627MEJ2 | 1,195,047 | 1,170,943 | 24,104 | 1,170,943 | 982,410 | 12/31/2022 | ||||||||||||||||||
47232CAH7 | 1,899,914 | 1,890,225 | 9,689 | 1,890,225 | 2,006,775 | 12/31/2022 | ||||||||||||||||||
F-41
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
| Present Value | OTTI Charge | |||||||||||||||||||||||
| Amortized Cost | of Projected | Recognized in | Amortized Cost | Fair Value at | Date | |||||||||||||||||||
CUSIP | Before OTTI | Cash Flows | Statement of Operations | After OTTI | Time of OTTI | Reported | ||||||||||||||||||
59020UW43 | 366,342 | 237,303 | 129,039 | 237,303 | 284,957 | 12/31/2022 | ||||||||||||||||||
643529AC4 | 520,909 | 520,857 | 53 | 520,857 | 620,443 | 12/31/2022 | ||||||||||||||||||
65535VSJ8 | 1,311,192 | 1,265,976 | 45,215 | 1,265,976 | 1,124,326 | 12/31/2022 | ||||||||||||||||||
69337BAH7 | 1,434,530 | 1,431,323 | 3,207 | 1,431,323 | 1,273,601 | 12/31/2022 | ||||||||||||||||||
74923GAC7 | 1,755,192 | 1,490,490 | 264,702 | 1,490,490 | 1,608,920 | 12/31/2022 | ||||||||||||||||||
74923HAQ4 | 552,304 | 550,690 | 1,614 | 550,690 | 486,284 | 12/31/2022 | ||||||||||||||||||
74928RAB0 | 264,408 | 256,037 | 8,371 | 256,037 | 280,614 | 12/31/2022 | ||||||||||||||||||
75115BAC3 | 1,262,630 | 1,098,615 | 164,015 | 1,098,615 | 1,195,478 | 12/31/2022 | ||||||||||||||||||
75115DAA3 | 201,854 | 200,413 | 1,441 | 200,413 | 189,024 | 12/31/2022 | ||||||||||||||||||
76110HH85 | 270,810 | 243,642 | 27,169 | 243,642 | 261,417 | 12/31/2022 | ||||||||||||||||||
761118BU1 | 942,962 | 855,567 | 87,395 | 855,567 | 916,638 | 12/31/2022 | ||||||||||||||||||
761118GS1 | 1,175,777 | 1,156,524 | 19,253 | 1,156,524 | 1,119,101 | 12/31/2022 | ||||||||||||||||||
761118SC3 | 1,633,297 | 1,616,573 | 16,724 | 1,616,573 | 1,423,542 | 12/31/2022 | ||||||||||||||||||
761118UG1 | 524,740 | 522,750 | 1,990 | 522,750 | 437,178 | 12/31/2022 | ||||||||||||||||||
76112BNM8 | 5,289,750 | 4,895,126 | 394,624 | 4,895,126 | 5,091,696 | 12/31/2022 | ||||||||||||||||||
863579J90 | 348,530 | 349,527 | (997 | ) | 349,527 | 353,839 | 12/31/2022 | |||||||||||||||||
86360BAJ7 | 747,131 | 721,456 | 25,674 | 721,456 | 766,709 | 12/31/2022 | ||||||||||||||||||
87222EAB4 | 867,402 | 838,871 | 28,530 | 838,871 | 817,668 | 12/31/2022 | ||||||||||||||||||
87222EAC2 | 977,235 | 960,878 | 16,357 | 960,878 | 815,432 | 12/31/2022 | ||||||||||||||||||
93934FMD1 | 1,598,156 | 1,599,666 | (1,510 | ) | 1,599,666 | 1,669,656 | 12/31/2022 | |||||||||||||||||
93934NAC9 | 495,187 | 485,595 | 9,592 | 485,595 | 412,326 | 12/31/2022 | ||||||||||||||||||
026929AA7 | 1,760,841 | 1,592,703 | 168,138 | 1,592,703 | 1,705,416 | 12/31/2022 | ||||||||||||||||||
45660LCK3 | 2,750,918 | 2,656,466 | 94,452 | 2,656,466 | 2,796,920 | 12/31/2022 | ||||||||||||||||||
058931AT3 | 1,225,723 | 1,209,276 | 16,447 | 1,209,276 | 1,154,041 | 12/31/2022 | ||||||||||||||||||
05946XY72 | 1,048,037 | 1,046,371 | 1,666 | 1,046,371 | 1,028,271 | 12/31/2022 | ||||||||||||||||||
05949CKX3 | 1,262,077 | 1,203,570 | 58,507 | 1,203,570 | 1,250,063 | 12/31/2022 | ||||||||||||||||||
07386YAE4 | 2,032,756 | 1,895,938 | 136,818 | 1,895,938 | 1,823,359 | 12/31/2022 | ||||||||||||||||||
073880AD8 | 1,158,830 | 1,127,532 | 31,298 | 1,127,532 | 1,051,875 | 12/31/2022 | ||||||||||||||||||
07401CAS2 | 3,509,364 | 3,262,743 | 246,621 | 3,262,743 | 3,195,561 | 12/31/2022 | ||||||||||||||||||
12543XAD8 | 1,176,300 | 1,172,978 | 3,321 | 1,172,978 | 1,091,000 | 12/31/2022 | ||||||||||||||||||
12545EAK2 | 1,377,454 | 1,391,454 | (14,000 | ) | 1,391,454 | 1,221,449 | 12/31/2022 | |||||||||||||||||
12638PAB5 | 721,090 | 711,902 | 9,188 | 711,902 | 552,531 | 12/31/2022 | ||||||||||||||||||
1266942H0 | 554,299 | 556,124 | (1,824 | ) | 556,124 | 475,653 | 12/31/2022 | |||||||||||||||||
126694HP6 | 472,556 | 469,133 | 3,424 | 469,133 | 458,573 | 12/31/2022 | ||||||||||||||||||
126694UJ5 | 1,182,995 | 1,033,719 | 149,276 | 1,033,719 | 1,173,798 | 12/31/2022 | ||||||||||||||||||
12669DUS5 | 754,525 | 753,847 | 679 | 753,847 | 726,499 | 12/31/2022 | ||||||||||||||||||
12669G3S8 | 1,273,702 | 1,267,299 | 6,403 | 1,267,299 | 1,123,086 | 12/31/2022 | ||||||||||||||||||
12669G4K4 | 2,695,208 | 2,679,394 | 15,815 | 2,679,394 | 2,508,614 | 12/31/2022 | ||||||||||||||||||
12669GR45 | 521,474 | 499,857 | 21,618 | 499,857 | 477,045 | 12/31/2022 | ||||||||||||||||||
16162YAL9 | 353,219 | 351,895 | 1,324 | 351,895 | 327,680 | 12/31/2022 | ||||||||||||||||||
16165MAG3 | 1,899,055 | 1,872,274 | 26,782 | 1,872,274 | 1,610,464 | 12/31/2022 | ||||||||||||||||||
170257AE9 | 2,539,977 | 2,557,671 | (17,695 | ) | 2,557,671 | 2,070,574 | 12/31/2022 | |||||||||||||||||
F-42
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
| Present Value | OTTI Charge | |||||||||||||||||||||||
| Amortized Cost | of Projected | Recognized in | Amortized Cost | Fair Value at | Date | |||||||||||||||||||
CUSIP | Before OTTI | Cash Flows | Statement of Operations | After OTTI | Time of OTTI | Reported | ||||||||||||||||||
17025AAH5 | 938,958 | 899,184 | 39,774 | 899,184 | 873,057 | 12/31/2022 | ||||||||||||||||||
2254582Y3 | 244,640 | 244,638 | 3 | 244,638 | 216,789 | 12/31/2022 | ||||||||||||||||||
225458L55 | 544,944 | 541,599 | 3,344 | 541,599 | 471,470 | 12/31/2022 | ||||||||||||||||||
225470VF7 | 1,564,751 | 1,540,100 | 24,651 | 1,540,100 | 1,484,306 | 12/31/2022 | ||||||||||||||||||
32051GXQ3 | 1,362,980 | 1,279,943 | 83,036 | 1,279,943 | 1,285,425 | 12/31/2022 | ||||||||||||||||||
362341XC8 | 884,539 | 865,321 | 19,218 | 865,321 | 767,933 | 12/31/2022 | ||||||||||||||||||
36242DQY2 | 110,190 | 104,565 | 5,625 | 104,565 | 100,339 | 12/31/2022 | ||||||||||||||||||
466247J46 | 80,370 | 74,449 | 5,922 | 74,449 | 74,585 | 12/31/2022 | ||||||||||||||||||
466247UG6 | 541,686 | 527,981 | 13,705 | 527,981 | 520,360 | 12/31/2022 | ||||||||||||||||||
466247ZP1 | 571,804 | 565,679 | 6,125 | 565,679 | 545,586 | 12/31/2022 | ||||||||||||||||||
46628LAB4 | 43,495 | 42,157 | 1,338 | 42,157 | 44,190 | 12/31/2022 | ||||||||||||||||||
46630WAB6 | 922,039 | 888,065 | 33,974 | 888,065 | 822,318 | 12/31/2022 | ||||||||||||||||||
46630WAL4 | 544,230 | 517,582 | 26,648 | 517,582 | 489,602 | 12/31/2022 | ||||||||||||||||||
46631NAA7 | 754,017 | 754,676 | (659 | ) | 754,676 | 639,770 | 12/31/2022 | |||||||||||||||||
46631NDT3 | 6,401,145 | 6,374,664 | 26,481 | 6,374,664 | 6,427,560 | 12/31/2022 | ||||||||||||||||||
576433C53 | 505,306 | 453,037 | 52,269 | 453,037 | 513,969 | 12/31/2022 | ||||||||||||||||||
576433D52 | 534,258 | 502,735 | 31,523 | 502,735 | 444,494 | 12/31/2022 | ||||||||||||||||||
57643MLZ5 | 289,827 | 286,800 | 3,026 | 286,800 | 270,858 | 12/31/2022 | ||||||||||||||||||
59020UV77 | 34,748 | 33,720 | 1,027 | 33,720 | 33,150 | 12/31/2022 | ||||||||||||||||||
59023PAB9 | 513,508 | 509,687 | 3,821 | 509,687 | 530,373 | 12/31/2022 | ||||||||||||||||||
74958YAE2 | 312,432 | 299,278 | 13,154 | 299,278 | 304,434 | 12/31/2022 | ||||||||||||||||||
863579RP5 | 611,800 | 611,553 | 247 | 611,553 | 595,598 | 12/31/2022 | ||||||||||||||||||
863579XC7 | 1,153,338 | 1,124,061 | 29,277 | 1,124,061 | 1,170,138 | 12/31/2022 | ||||||||||||||||||
86363GAF1 | 1,513,354 | 1,415,604 | 97,750 | 1,415,604 | 1,437,559 | 12/31/2022 | ||||||||||||||||||
885220KW2 | 2,124,251 | 2,082,510 | 41,741 | 2,082,510 | 2,073,599 | 12/31/2022 | ||||||||||||||||||
94984DAC8 | 360,258 | 345,160 | 15,098 | 345,160 | 349,356 | 12/31/2022 | ||||||||||||||||||
94986CAA2 | 295,523 | 289,300 | 6,223 | 289,300 | 276,087 | 12/31/2022 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total | $ | 13,330,036 | ||||||||||||||||||||||
|
| |||||||||||||||||||||||
F-43
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
The following table shows the amount of assets pledged to others as collateral or otherwise restricted for the years ended December 31 (in millions):
| Gross | Restricted to | |||||||||||||||||||
| Restricted | Total | |||||||||||||||||||
| (Decrease)/ | to Total | Admitted | ||||||||||||||||||
Restricted Asset Category | 2023 | 2022 | Increase | Assets | Assets | |||||||||||||||
Letter stock or securities restricted as to sale | $ | 157.4 | $ | 241.4 | $ | (84.0 | ) | 0.3 | % | 0.3 | % | |||||||||
FHLB capital stock | 41.5 | 48.3 | (6.8 | ) | 0.1 | % | 0.1 | % | ||||||||||||
On deposit with states | 6.6 | 6.3 | 0.3 | 0.0 | % | 0.0 | % | |||||||||||||
Pledged as collateral to FHLB (including assets backing funding agreements) | 1,279.2 | 1,102.3 | 176.9 | 2.7 | % | 2.7 | % | |||||||||||||
Pledged as collateral not captured in other categories | 196.4 | 167.6 | 28.8 | 0.4 | % | 0.4 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total restricted assets | $ | 1,681.1 | $ | 1,565.9 | $ | 115.2 | 3.6 | % | 3.6 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net investment income consisted of the following for the years ended December 31 (in millions):
| 2023 | 2022 | 2021 | ||||||||||
Investment income: | ||||||||||||
Bonds | $ | 1,803.2 | $ | 1,436.1 | $ | 1,240.2 | ||||||
Equity securities | 23.7 | 9.3 | 28.5 | |||||||||
Mortgage loans | 200.3 | 116.5 | 74.6 | |||||||||
Real estate | — | — | 11.9 | |||||||||
Policy loans | 3.8 | 4.1 | 4.7 | |||||||||
Cash and short-term investments | 109.7 | 17.5 | 18.8 | |||||||||
Other invested assets | 131.9 | 96.1 | 75.8 | |||||||||
Derivative instruments | (41.3 | ) | (174.6 | ) | 543.7 | |||||||
Other | — | 2.9 | 2.0 | |||||||||
|
|
|
|
|
| |||||||
Gross investment income | 2,231.3 | 1,507.9 | 2,000.2 | |||||||||
Investment expenses | (72.2 | ) | (35.6 | ) | (49.2 | ) | ||||||
Ceded investment income | (240.7 | ) | (453.3 | ) | — | |||||||
|
|
|
|
|
| |||||||
Net investment income | $ | 1,918.4 | $ | 1,019.0 | $ | 1,951.0 | ||||||
|
|
|
|
|
| |||||||
F-44
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
D. INVESTMENTS (CONTINUED)
The carrying value of partnership and limited liability company holdings by annual statement category as of December 31 were (in millions):
| 2023 | 2022 | |||||||
Joint venture interests: | ||||||||
Common stocks - subsidiaries and affiliates | $ | 0.1 | $ | 9.4 | ||||
Common stocks - unaffiliated | 717.8 | 774.2 | ||||||
Real estate | 93.3 | 84.4 | ||||||
Bonds/preferred stock | 54.2 | 62.5 | ||||||
Mortgage loans | 172.9 | 117.7 | ||||||
Other | 110.2 | 29.8 | ||||||
Surplus notes | 213.6 | 199.8 | ||||||
Residual tranches | 44.7 | 85.4 | ||||||
Other | 1.0 | 0.2 | ||||||
|
|
|
| |||||
Total | $ | 1,407.8 | $ | 1,363.4 | ||||
|
|
|
| |||||
The Company held one affiliated partnership and limited liability company in a loss position with accumulated losses of less than $0.1 million as of December 31, 2023, and held none in a loss position as of December 31, 2022.
F-45
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
E. OTHER FINANCIAL INSTRUMENTS
The Company’s derivative strategy employs a variety of derivative financial instruments including interest rate and currency swaps, options, financial futures, and forward contracts. Investment risk is assessed on a portfolio basis and individual derivative financial instruments are not generally designated in hedging relationships; therefore, as allowed by statutory accounting practices, the Company intentionally has not applied hedge accounting.
MMALIC primarily utilizes a variety of financial instruments as part of its efforts to economically hedge and manage fluctuations in the fair value of its investment portfolio attributable to changes in general interest rate levels and to manage duration mismatch of assets and liabilities. Those instruments may include interest rate exchange agreements, equity index options purchased in either over-the-counter market or on the Chicago Board Options Exchange, payer swaptions, and commitments to extend credit. All instruments involve elements of credit and market risks in excess of the amounts recognized in the accompanying financial statements at a given point of time. The contract or notional amounts of those instruments reflect the extent of involvement in the various types of financial instruments.
Equity index options are contracts that give the purchaser the right, but not the obligation, to buy or sell securities at a specified price during a specified period. MMALIC’s equity index options backing fixed-indexed and registered index-linked annuities are based on an existing market index (generally the S&P 500). The equity index options expire ratably between 2024 and 2030. Under the indexed annuity products, the crediting rate is linked to changes in the equity indices or Exchanged Traded Funds (ETF) for specified periods and participation rates. The prices of the options purchased are calculated with reference to the underlying index or ETF, participation rates, caps, floors, durations and notional amounts of the underlying contracts. As a purchaser of options, MMALIC pays, at the beginning of the contract, a premium for transferring the risk of an unfavorable change in the price of the underlying financial instrument. As of January 1, 2022, options backing the fixed-indexed annuities for which the company is applying the OAC prescribed practice are now accounted for at amortized cost.
As of December 31, 2023, MMALIC has entered into twenty-three interest rate swaps to more closely match the cash flows of assets and liabilities. Interest rate swaps are also used to mitigate changes in the value of assets anticipated to be purchased and other anticipated transactions and commitments. The notional amounts of the interest rate swaps generally decline over each swap’s respective life (the swaps expire between 2024 and 2042).
The Company uses currency swaps for the purpose of managing currency exchange risks in its assets and liabilities.
The Company utilizes certain other agreements including forward contracts and financial futures. Currency forwards are contracts in which the Company agrees with other parties to exchange specified amounts of identified currencies at a specific future date. Typically, the exchange rate is agreed upon at the time of the contract. The Company’s futures contracts are exchange traded and have credit risk. Margin requirements are met with the deposit of securities. Futures contracts are generally settled with offsetting transactions. Forward contracts and financial futures are used by the Company to reduce exposures to various risks including interest rates and currency rates.
The Company enters derivative transactions through bilateral derivative agreements with counterparties, or through over the counter cleared derivatives with a counterparty and the use of a clearinghouse. To minimize credit risk for bilateral transactions, the Company and its counterparties generally enter into master netting agreements based on agreed upon requirements that outline the framework for how collateral is to be posted in the amount owed under each transaction, subject to certain minimums. For over the counter cleared derivative transactions between the Company and a counterparty, the parties enter into a series of master netting and other agreements that govern, among other things, clearing and collateral requirements. These transactions are cleared through a clearinghouse and each derivative counterparty is only exposed to the default risk of the clearinghouse. Certain interest rate swaps are considered cleared transactions. These cleared transactions require initial and daily variation margin collateral postings. These agreements allow for contracts in a positive position, in which amounts are due to the Company, to be offset by contracts in a negative position. This right of offset, combined with collateral obtained from counterparties, reduces the Company’s credit exposure.
Net collateral pledged by the counterparties was $789.0 million as of December 31, 2023 and $131.1 million as of December 31, 2022. In the event of default, the full market value exposure at risk in a net gain position, net of offsets and collateral, was $425.9 million as of December 31, 2023 and $194.2 million as of December 31, 2022. The statutory net amount at risk, defined as net collateral pledged and statement values excluding accrued interest, was $428.6 million as of December 31, 2023 and $80.4 million as of December 31, 2022.
F-46
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
E. OTHER FINANCIAL INSTRUMENTS (CONTINUED)
The following tables summarize the carrying values and notional amounts of the Company’s derivative financial instruments within the general account:
| December 31, 2023 | ||||||||||||||||
| Assets | Liabilities | |||||||||||||||
| Carrying | Notional | Carrying | Notional | |||||||||||||
| Value | Amount | Value | Amount | |||||||||||||
| (in millions) | ||||||||||||||||
Fixed-indexed options* | $ | 723.8 | $ | 19,765.4 | $ | 418.1 | $ | 16,036.9 | ||||||||
Interest rate swaps | 26.6 | 4,774.8 | 66.3 | 2,451.0 | ||||||||||||
Financial futures | 21.0 | 1,343.1 | — | — | ||||||||||||
Currency swaps | — | — | 38.8 | 443.5 | ||||||||||||
Forward contracts | — | 3.2 | 5.0 | 183.9 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 771.4 | $ | 25,886.5 | $ | 528.2 | $ | 19,115.3 | ||||||||
|
|
|
|
|
|
|
| |||||||||
*Beginning January 1, 2022, fixed-indexed options are held at amortized cost under OAC 3901-1-67. Prior to the adoption of OAC 3901-1-67, fixed-indexed options were carried at fair value. The fair value amount related to fixed-indexed options was $822.9 million as of December 31, 2023.
| December 31, 2022 | ||||||||||||||||
| Assets | Liabilities | |||||||||||||||
| Carrying | Notional | Carrying | Notional | |||||||||||||
| Value | Amount | Value | Amount | |||||||||||||
| (in millions) | ||||||||||||||||
Fixed-indexed options* | $ | 846.8 | $ | 18,948.0 | $ | 598.6 | $ | 17,176.5 | ||||||||
Interest rate swaps | 25.2 | 1,551.8 | 95.0 | 3,930.0 | ||||||||||||
Currency swaps | 0.9 | 38.4 | 4.8 | 142.4 | ||||||||||||
Forward contracts | 0.1 | 7.5 | 2.5 | 69.0 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 873.0 | $ | 20,545.7 | $ | 700.9 | $ | 21,317.9 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| * | Beginning January 1, 2022, fixed-indexed options are held at amortized cost under OAC 3901-1-67. Prior to the adoption of OAC 3901-1-67, fixed-indexed options were carried at fair value. The fair value amount related to fixed-indexed options was $287.4 million as of December 31, 2022. |
The following presents the Company’s gross notional interest rate swap positions:
| December 31, 2023 | December 31, 2022 | |||||||
| (in millions) | ||||||||
Open interest rate swaps in a fixed pay position | $ | 2,484.8 | $ | 1,551.8 | ||||
Open interest rate swaps in a fixed receive position | 4,741.0 | 3,930.0 | ||||||
|
|
|
| |||||
Total interest rate swaps | $ | 7,225.8 | $ | 5,481.8 | ||||
|
|
|
| |||||
F-47
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
E. OTHER FINANCIAL INSTRUMENTS (CONTINUED)
The following summarizes the Company’s net realized gains (losses) on closed contracts and change in net unrealized gains (losses) related to market fluctuations on open contracts by derivative type:
| Years Ended December 31, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| Net Realized Gains (Losses) on Closed Contracts | Change In Net Unrealized Gains (Losses) on Open Contracts | Net Realized Gains (Losses) on Closed Contracts | Change In Net Unrealized Gains (Losses) on Open Contracts | |||||||||||||
| (in millions) | ||||||||||||||||
Registered index-linked options | $ | 22.9 | $ | 203.7 | $ | (26.1 | ) | $ | (86.2 | ) | ||||||
Interest rate swaps | — | 30.0 | — | (111.6 | ) | |||||||||||
Currency swaps | (0.1 | ) | (35.0 | ) | — | (3.9 | ) | |||||||||
Forward contracts | 0.3 | (2.6 | ) | 0.7 | (2.4 | ) | ||||||||||
Financial futures | 0.2 | 21.0 | 3.1 | — | ||||||||||||
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Total | $ | 23.3 | $ | 217.1 | $ | (22.3 | ) | $ | (204.1 | ) | ||||||
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Fixed-indexed options are carried at amortized cost with amortization and expirations recorded in Net investment income. The Company recorded gains on expirations of $521.1 million and amortization of $537.7 million in 2023. The Company recorded gains on expirations of $273.9 million and amortization of $457.1 million in 2022.
The Company became a member of the Federal Home Loan Bank (“FHLB”) on August 14, 2009. The FHLB makes advances and provides other banking services to member institutions. The Company owned $20.0 million of FHLB Class B membership stock at December 31, 2023 and 2022. The Company has no membership stock eligible for redemption. Through its association with the FHLB and by purchasing a set amount of FHLB stock, the Company can enter into deposit-type contracts with the FHLB known as funding agreements.
In 2022, FHLB advanced MMALIC $300.0 million. At December 31, 2023 and 2022, MMALIC had $500.0 million (the maximum amount of borrowings, as permitted by the FHLB, during the reporting period was $500.0 million) in outstanding advances from the FHLB (included in liability for deposit-type contracts), bearing interest at rates ranging from 1.35% to 1.97% (average rate of 1.72% at December 31, 2023). The Company paid interest of approximately $8.6 million, $8.4 million, and $4.4 million on FHLB advances in 2023, 2022 and 2021, respectively. These advances must be repaid between 2025 and 2030 ($ 200.0 million in 2025 and $300.0 million in 2030). The Company has invested the proceeds from the advances in bonds for the purpose of earning a spread over the interest payments due to the FHLB. Per the funding agreement, the Company was required to purchase 215,252 shares ($21.5 million) of FHLB activity and excess stock.
The Company posted collateral to the FHLB of assets with a fair value of approximately $1,204.1 million and $1,030.9 million at December 31, 2023 and 2022, respectively. The Company posted collateral to the FHLB of assets with a carrying value of approximately $1,279.2 million and $1,102.3 million at December 31, 2023 and 2022, respectively. The Company’s FHLB borrowing capacity is based on the Company’s estimate of collateral eligible to be pledged with the FHLB. The deposit contract liabilities are reported in liability for deposit-type contracts in the balance sheet, and related assets are accounted for in the Company’s general account. FHLB capital stock is reported in Common stocks in the balance sheet.
F-48
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
E. OTHER FINANCIAL INSTRUMENTS (CONTINUED)
In the normal course of business, the Company enters into commitments to purchase certain investments. The majority of these commitments have funding periods that extend between one and five years. The Company is not required to fund commitments once the commitment period expires.
As of December 31, 2023, the Company had the following outstanding commitments:
| 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total | ||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||
Private Placements | $ | 135.5 | $ | 224.7 | $ | 262.4 | $ | 73.7 | $ | 33.4 | $ | 157.1 | $ | 886.8 | ||||||||||||||
Mortgage Loans | 192.0 | 123.5 | 305.9 | 36.9 | — | — | 658.3 | |||||||||||||||||||||
Real Estate | — | 6.0 | 1.2 | — | — | — | 7.2 | |||||||||||||||||||||
Partnerships and LLC | 27.8 | 10.7 | 38.9 | 13.3 | 19.8 | 160.2 | 270.7 | |||||||||||||||||||||
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Total | $ | 355.3 | $ | 364.9 | $ | 608.4 | $ | 123.9 | $ | 53.2 | $ | 317.3 | $ | 1,823.0 | ||||||||||||||
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In the normal course of business, the Company enters into commitments related to property lease arrangements, certain indemnities, investments and other business obligations. As of December 31, 2023 and 2022, the Company had no outstanding obligations attributable to these commitments.
F-49
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
F. REINSURANCE
The Company is contingently liable with respect to reinsurance ceded in that the liability for such reinsurance would become that of the Company upon failure of any reinsurer to meet its obligations under a particular reinsurance agreement. The Company currently reinsures its ordinary life insurance, LTC, other health products and a portion of fixed and fixed-indexed annuity products. The maximum amount the Company would retain on any single life insurance policy is $15 million.
On February 17, 2022, MMALIC entered into a Funds Withheld Coinsurance agreement effective February 1, 2022, with Martello Re Limited, a Bermuda-domiciled Class E life and annuity reinsurer launched in 2022. MMALIC ceded statutory reserves of approximately $14.2 billion on a closed block of fixed, fixed-indexed and payout annuity policies, in exchange for a $320 million ceding commission paid by Martello Re that was recorded to surplus net of tax. The Company has ceded approximately $10.0 billion and $12.6 billion of statutory annuity reserves at December 31, 2023 and 2022, respectively. The Company’s funds held under reinsurance treaties was approximately $10.0 billion and $12.7 billion at December 31, 2023 and 2022, respectively.
The impact of the Martello Re transaction on MMALIC’s income statement as of December 31, 2022 was as follows (in millions):
| 2022 | ||||
Premiums and other revenues: | ||||
Premiums and annuity considerations | $ | (14,113.4 | ) | |
Net investment income | (451.8 | ) | ||
Commissions and expense allowances and reserve adjustments on reinsurance ceded | 451.6 | |||
Charges and fees for deposit-type contracts and miscellaneous income | (34.6 | ) | ||
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Total premiums and other revenues | $ | (14,148.2 | ) | |
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Benefits and expenses: | ||||
Policyholders’ benefits | $ | (470.7 | ) | |
Surrender benefits | (1,604.8 | ) | ||
Change in policy and contract reserves | (12,416.6 | ) | ||
Other | 317.2 | |||
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Total benefits and expenses | $ | (14,174.9 | ) | |
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Effective January 1, 2007, MMALIC entered into a reinsurance agreement with Loyal American Life Insurance Company (“Loyal”), at the time an indirect wholly-owned insurance subsidiary domiciled in Ohio, whereby Loyal cedes 100% of certain fixed-indexed annuity business written to MMALIC. Annuity reserves assumed by MMALIC under this agreement were $10.7 million and $14.5 million at December 31, 2023 and 2022, respectively.
On August 31, 2012, in conjunction with and prior to the sale of certain affiliated insurance companies to Cigna, the Company entered into a reinsurance agreement with Cigna which ceded 100% of all accident and health policies, excluding LTC. Under this agreement, all activity on these policies after existing reinsurance is ceded to Loyal, a Cigna subsidiary and one of the sold companies.
Also, effective August 31, 2012, the Company entered into an agreement to retrocede 90% of the life and annuity business assumed from Loyal to Hannover Life Reassurance Company of America. This business was previously reinsured directly from Loyal to Hannover Life Reassurance of Ireland. This transaction did not have any significant impact on the operations and capital of MMALIC.
The Company entered into a coinsurance agreement with Great American Life Assurance Company (“GALAC”), an affiliated life insurance company domiciled in Ohio, effective June 30, 2011. Under this agreement the Company assumes 100% of GALAC’s life and annuity business, with statutory reserves of approximately $4.3 million and $4.4 million at December 31, 2023 and 2022, respectively. GALAC was sold to an unaffiliated insurance company on July 3, 2012, re-domiciled in Iowa, and is currently named Accordia Life and Annuity Company.
F-50
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
F. REINSURANCE (CONTINUED)
The Company entered into a coinsurance agreement with United Teacher Associates Insurance Company (“UTAIC”), a life insurance company domiciled in Texas, effective October 31, 2015. Under this agreement the Company assumes 100% of UTAIC’s life, annuity, and LTC business issued in the state of Florida. Effective December 31, 2016, UTAIC merged into Continental General Insurance Company, a life insurance company domiciled in Texas. Assumed reserves under this agreement were approximately $55.3 million and $53.7 million at December 31, 2023 and 2022, respectively.
The Company entered into a quota share indemnity reinsurance agreement on fixed-indexed annuity policies with Hannover Life Reassurance Company of America effective December 31, 2018. The reinsurance treaty transfers risk of certain surrender activity in MMALIC’s fixed-indexed annuity business. This treaty reduced statutory capital and surplus volatility related to MMALIC’s fixed-indexed annuity policies from stock market fluctuations, which could impact the Company’s risk-based capital. Effective January 1, 2022 the Company recaptured the fixed-indexed annuity policies ceded to Hannover Life Reassurance Company of America in the agreement that became effective on December 31, 2018. The financial impact of the reinsurance recapture was a decrease to statutory capital of $140.6 million.
The Company entered into a flow coinsurance agreement with Commonwealth, a subsidiary of Global Atlantic Financial Group, effective May 7, 2020. Under this agreement, the Company cedes certain newly issued traditional fixed and fixed-indexed annuities on a quota share coinsurance basis with such quota share percentages being up to 50%. The Company has ceded approximately $1,601.8 million and $1,417.8 million of deferred annuity reserves to Commonwealth under this agreement at December 31, 2023 and 2022, respectively.
The Company entered into a block coinsurance agreement with Commonwealth effective October 1, 2020. Under this agreement the Company ceded approximately $5.7 billion of deferred annuity reserves and transferred investments with a statutory carrying value of approximately $5.7 billion and market value of approximately $6.1 billion to Commonwealth. The Company has ceded approximately $3.6 billion and $4.5 billion of deferred annuity reserves under this agreement at December 31, 2023 and 2022, respectively.
The Company has reinsured with various insurance companies approximately $15,350.1 million and $18,719.6 million of reserves at December 31, 2023 and 2022, respectively.
The effect of reinsurance on premiums and annuity considerations for the years ended December 31 is as follows (in millions):
| 2023 | 2022 | 2021 | ||||||||||
Direct premiums and annuity considerations | $ | 8,775.8 | $ | 7,379.8 | $ | 5,797.3 | ||||||
Reinsurance assumed | 6.6 | 6.7 | 4.2 | |||||||||
Reinsurance ceded | (275.6 | ) | (14,584.8 | ) | (774.5 | ) | ||||||
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Net premium and annuity considerations | $ | 8,506.8 | $ | (7,198.3 | ) | $ | 5,027.0 | |||||
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The effect of reinsurance on benefits paid to policyholders and withdrawals on deposit-type contract funds during the years ended December 31 is as follows (in millions):
| 2023 | 2022 | 2021 | ||||||||||
Direct benefits paid to policyholders and withdrawals on deposit-type contracts | $ | 7,621.5 | $ | 5,063.7 | $ | 3,959.4 | ||||||
Reinsurance assumed | 37.1 | 26.8 | 26.2 | |||||||||
Reinsurance ceded | (4,354.9 | ) | (2,862.0 | ) | (798.9 | ) | ||||||
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Net benefits paid to policyholders and withdrawals on deposit-type contracts | $ | 3,303.7 | $ | 2,228.5 | $ | 3,186.7 | ||||||
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F-51
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
G. FEDERAL INCOME TAXES
On August 16th, 2022, the Inflation Reduction Act (“IRA”) was signed into law and includes certain corporate income tax provisions. Impacts to the Company could include the imposition of a CAMT applicable to tax years beginning after December 31, 2022. The CAMT imposes a 15% minimum tax on adjusted financial statement income on applicable corporations that have an average group wide adjusted financial statement income over $1 billion in the prior three-year period (2020-2022). As of the reporting date, the Company has determined that it is not an applicable corporation and therefore not liable for CAMT in 2023. The United States Treasury Secretary and the IRS have been authorized to issue further guidance and intend to publish proposed regulations in 2024.
The components of the net deferred tax assets at December 31 are as follows (in millions):
| 2023 | 2022 | Change | ||||||||||
DTAs resulting in book/tax differences in: | ||||||||||||
Ordinary: | ||||||||||||
Deferred acquisition costs | $ | 77.6 | $ | 61.6 | $ | 16.0 | ||||||
Reserves | 168.1 | 112.7 | 55.4 | |||||||||
Investment items | 111.7 | — | 111.7 | |||||||||
Deferred compensation | 0.2 | 0.2 | — | |||||||||
Accrued expenses | 5.8 | 4.6 | 1.2 | |||||||||
Other | 5.5 | 8.3 | (2.8 | ) | ||||||||
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Total ordinary DTAs | 368.9 | 187.4 | 181.5 | |||||||||
Capital: | ||||||||||||
Investment items | 78.4 | — | 78.4 | |||||||||
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Total capital DTAs | 78.4 | — | 78.4 | |||||||||
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Total DTAs | 447.3 | 187.4 | 259.9 | |||||||||
Deferred tax assets nonadmitted | (36.1 | ) | (2.2 | ) | (33.9 | ) | ||||||
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Admitted DTAs | 411.2 | 185.2 | 226.0 | |||||||||
DTLs resulting in book/tax differences in: | ||||||||||||
Ordinary: | ||||||||||||
Section 807(f) amortization | 21.7 | 3.9 | 17.8 | |||||||||
Investment items | 55.8 | — | 55.8 | |||||||||
Depreciation/other | 0.3 | 4.6 | (4.3 | ) | ||||||||
Reserve transition adjustment | 22.0 | 33.1 | (11.1 | ) | ||||||||
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Total ordinary DTLs | 99.8 | 41.6 | 58.2 | |||||||||
Capital: | ||||||||||||
Unrealized gains | 38.6 | 54.9 | (16.3 | ) | ||||||||
Investment items | — | 16.5 | (16.5 | ) | ||||||||
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Total capital DTLs | 38.6 | 71.4 | (32.8 | ) | ||||||||
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Total DTLs | 138.4 | 113.0 | 25.4 | |||||||||
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Total net deferred admitted tax assets | $ | 272.8 | $ | 72.2 | $ | 200.6 | ||||||
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Change in deferred tax assets nonadmitted | $ | (33.9 | ) | $ | 12.4 | |||||||
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F-52
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
G. FEDERAL INCOME TAXES (CONTINUED)
The results of the admissibility calculations at December 31 are as follows (in millions):
| 2023 | 2022 | Change | ||||||||||||||||||||||||||||||||||
| Ordinary | Capital | Total | Ordinary | Capital | Total | Ordinary | Capital | Total | ||||||||||||||||||||||||||||
a. Federal income taxes paid in prior years recoverable through loss carrybacks | $ | — | $ | 42.3 | $ | 42.3 | $ | — | $ | — | $ | — | $ | — | $ | 42.3 | $ | 42.3 | ||||||||||||||||||
b. Adjusted gross deferred tax assets expected to be realized (excluding the amount of deferred tax assets from (a) above) after application of the threshold limitation. (The lesser of (b)1 and (b)2 below) | 218.5 | 12.0 | 230.5 | 72.2 | — | 72.2 | 146.3 | 12.0 | 158.3 | |||||||||||||||||||||||||||
1. Adjusted gross deferred tax assets expected to be realized following the balance sheet date | 218.5 | 12.0 | 230.5 | 72.2 | — | 72.2 | 146.3 | 12.0 | 158.3 | |||||||||||||||||||||||||||
2. Adjusted gross deferred tax assets allowed per limitation threshold | XXX | XXX | 416.7 | XXX | XXX | 415.6 | XXX | XXX | 1.1 | |||||||||||||||||||||||||||
c. Adjusted gross deferred tax assets (excluding the amount of deferred tax assets from (a) and (b) above) offset by gross deferred tax liabilities | 114.3 | 24.1 | 138.4 | 41.6 | 71.4 | 113.0 | 72.7 | (47.3 | ) | 25.4 | ||||||||||||||||||||||||||
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d. Deferred tax assets admitted as the result of application of SSAP No. 101 | $ | 332.8 | $ | 78.4 | $ | 411.2 | $ | 113.8 | $ | 71.4 | $ | 185.2 | $ | 219.0 | $ | 7.0 | $ | 226.0 | ||||||||||||||||||
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The other admissibility criteria for the Company are as follows (dollars in millions):
| 2023 | 2022 | 2021 | ||||||||||
a. Ratio percentage used to determine recovery period and threshold limitation amount | 828 | % | 871 | % | 791 | % | ||||||
b. Amount of adjusted capital and surplus used to determine recovery period and threshold limitation in the table above | $ | 2,778.2 | $ | 2,770.8 | $ | 2,788.3 | ||||||
The impact of the Company’s tax planning strategies, which do not include the use of reinsurance, on the adjusted gross DTAs and net admitted adjusted gross DTAs by tax character is as follows:
| 2023 | 2022 | Change | ||||||||||||||||||||||
| Ordinary | Capital | Ordinary | Capital | Ordinary | Capital | |||||||||||||||||||
a. Adjusted gross DTAs | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||||||
b. Net admitted adjusted gross DTAs | 4 | % | 0 | % | 0 | % | 0 | % | 4 | % | 0 | % | ||||||||||||
F-53
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
G. FEDERAL INCOME TAXES (CONTINUED)
The provision for incurred income taxes on operating earnings and capital gains and the change in DTAs and DTLs for the years ended December 31 are as follows (in millions):
| 2023 | 2022 | 2021 | ||||||||||
Current federal income tax expense (benefit) on operations | $ | 241.8 | $ | 13.6 | $ | 45.5 | ||||||
Federal income tax expense (benefit) on net realized capital gains | (23.4 | ) | (14.3 | ) | 118.3 | |||||||
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Total federal income tax expense (benefit) | $ | 218.4 | $ | (0.7 | ) | $ | 163.8 | |||||
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Net DTA(L) | $ | 200.6 | $ | 10.5 | $ | 22.7 | ||||||
Less: Items not recorded in the change in net deferred tax asset: | ||||||||||||
Tax-effect of unrealized gains (losses) | (16.3 | ) | (31.2 | ) | 2.1 | |||||||
Tax-effect of correction of error | (3.6 | ) | — | — | ||||||||
Tax-effect of changes in nonadmitted DTA | 33.9 | (12.4 | ) | 14.6 | ||||||||
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Change in net deferred tax asset | $ | 214.6 | $ | (33.1 | ) | $ | 39.4 | |||||
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The Company’s income tax expense and change in DTA/DTL for the year ended December 31 differs from the amount obtained by applying the federal statutory rate of 21% to income from operations before federal income taxes for the following reasons (in millions):
| 12-2023 | 12-2022 | |||||||
Provision computed at federal statutory rate | $ | (29.6 | ) | $ | 40.3 | |||
Reinsurance items | 11.7 | 54.9 | ||||||
OAC 3901-1-67 adoption | — | (46.2 | ) | |||||
Investment items | (3.8 | ) | (10.4 | ) | ||||
Nonadmitted assets | 2.3 | (3.6 | ) | |||||
Tax credits | — | (0.1 | ) | |||||
Section 481 - change in accounting method | 25.2 | — | ||||||
Other | (2.0 | ) | (2.5 | ) | ||||
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Total statutory income tax expense (benefit) | $ | 3.8 | $ | 32.4 | ||||
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Federal and foreign income tax expense (benefit) | $ | 218.4 | $ | (0.7 | ) | |||
Change in net deferred income taxes | (214.6 | ) | 33.1 | |||||
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Total statutory income tax expense (benefit) | $ | 3.8 | $ | 32.4 | ||||
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F-54
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
G. FEDERAL INCOME TAXES (CONTINUED)
The Company’s income tax expense and change in DTA/DTL for the year ended December 31 differs from the amount obtained by applying the federal statutory rate of 21% to income from operations before federal income taxes for the following reasons (in millions):
| 2021 | ||||
Provision computed at statutory rate (operations and realized gains/losses, excluding amortization of IMR) | $ | 112.0 | ||
Permanent differences: | ||||
Company-owned life insurance | (1.3 | ) | ||
Dividend received deduction | (0.7 | ) | ||
Stock options | (0.2 | ) | ||
Tax exempt interest | (1.8 | ) | ||
Other | 0.6 | |||
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Total permanent differences | (3.4 | ) | ||
Timing adjustments: | ||||
Investment differences | (1.4 | ) | ||
Reserves | 43.8 | |||
DAC tax adjustment | 8.5 | |||
Provision to return adjustments | (20.0 | ) | ||
Sale of real estate and subs | 20.1 | |||
Other | 5.7 | |||
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Total timing adjustments | 56.7 | |||
Other adjustments: | ||||
Unrealized loss on equity index options | (1.6 | ) | ||
Miscellaneous items | 0.1 | |||
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Total other adjustments | (1.5 | ) | ||
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Federal income tax expense on operations and realized gains | $ | 163.8 | ||
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Federal income tax expense on operations and realized gains | $ | 163.8 | ||
Change in net deferred tax assets (excluding unrealized) | (39.4 | ) | ||
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Total statutory income tax expense (excluding unrealized) | $ | 124.4 | ||
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F-55
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
G. FEDERAL INCOME TAXES (CONTINUED)
As of December 31, 2023 and 2022, the Company does not have any operating loss carryforwards available to offset future net income subject to federal income taxes. As of December 31, 2023 and 2022, the Company does not have a pretax capital loss carryforward.
The following are income taxes incurred in the current and prior years that will be available for recoupment in the event of future net losses (in millions):
Year | Operations | Realized Gains | Total | |||||||||
2023 | $ | — | $ | — | $ | — | ||||||
2022 | $ | — | $ | 13.4 | $ | 13.4 | ||||||
2021 | $ | — | $ | 28.9 | $ | 28.9 | ||||||
As of December 31, 2023, MMALIC’s consolidated federal income tax returns for the 2021 through 2023 tax years remain subject to examination by the IRS.
The consolidated federal income tax returns include the following entities:
AAG Insurance Agency, LLC
Annuity Investors Life Insurance Company
| MM | Ascend Life Investor Services, LLC |
MassMutual Ascend Life Insurance Company
Manhattan National Holding, LLC
Manhattan National Life Insurance Company
The Company has determined that it is more likely than not that gross DTAs will be recoverable through future taxable income and that a valuation allowance is not necessary.
F-56
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
H. RELATED PARTY TRANSACTIONS
Certain administrative, management, accounting, actuarial, data processing, underwriting, claim, collection and investment services are provided under agreements between MMALIC and affiliates at charges not unfavorable to MMALIC or the insurance affiliates. The net amount received from affiliates was $8.4 million in 2023, the net amount received from affiliates was $13.1 million in 2022, and the net amount received from affiliates was $14.4 million in 2021, included in general insurance expenses in the Statement of Operations.
As of May 28, 2021, the Company has an agreement with Barings, LLC, an affiliate, which provides investment advisory services to the Company. MMALIC expensed investment management charges related to Barings, LLC of $34.8 million in 2023, $32.8 million in 2022 and $27.5 million during the last seven months of 2021, included in net investment income in the Statement of Operations. Prior to that agreement and to the sale of the Company to MassMutual, the Company and affiliated insurance companies had contracts with American Money Management Corporation (“AMMC”), which, subject to the direction of the Finance Committee, provided for management and accounting services related to the investment portfolios. MMALIC expensed investment management charges related to AMMC of $4.0 million in 2021, included in net investment income in the Statement of Operations.
For the first five months of 2021, AFG provided retirement benefits to qualified employees of participating companies through the AFG 401(k) Retirement and Savings Plan, a defined contribution plan. AFG made all contributions to the retirement fund portion of the plan and matched a percentage of employee contributions to the savings fund. Company contributions were expensed in the year for which they were declared. Beginning in June of 2021, the Company participates in the retirement plans of MMALIC. MMALIC sponsors funded (qualified 401(k) thrift savings) and unfunded (nonqualified deferred compensation thrift savings) defined contribution plans for its employees and retirees. The qualified 401(k) thrift savings plan’s net assets available for benefits were $58.7 million and $37.4 million as of December 31, 2023 and 2022, respectively. The Company matches a percentage of employee contributions to the qualified 401(k) thrift savings plan. MMALIC expensed approximately $4.5 million, $4.0 million, and $3.4 million in 2023, 2022, and 2021, respectively, for its retirement and employee savings plan.
In contemplation of the sale of MMALIC to Glidepath, effective May 28, 2021, a condition to the sale agreement was that MMALIC sell certain assets to AFG prior to sale, representing approximately $66 million of directly owned real estate and approximately $405 million of Schedule BA assets. The proceeds from these sales were approximately $579 million and the net gain recognized by MMALIC as a result of these sales was approximately $108 million (all on Schedule BA assets) recognized in the accompanying statements of operations statutory-basis.
MMALIC has an agreement with MassMutual Ascend Life Investor Services (“MMALIS,” formerly known as Great American Advisors, Inc.), a wholly-owned subsidiary of MMALIC, whereby MMALIS is the principal underwriter and distributor of MMALIC’s registered index-linked annuity contracts. MMALIC pays MMALIS for acting as underwriter under a distribution agreement. MMALIC paid $69.2 million in 2023 to MMALIS, 99% of which was paid to other broker/dealers as commissions. The remaining 1% of MMALIC commissions were paid to registered representatives of MMALIS. MMALIC paid $71.1 million in 2022 to MMALIS, 99% of which was paid to other broker/dealers as commissions. The remaining 1% of MMALIC commissions were paid to registered representatives of MMALIS. MMALIC paid $32.3 million in 2021 to MMALIS, 97% of which was paid to other broker/dealers as commissions. The remaining 3% of MMALIC commissions were paid to registered representatives of MMALIS. MMALIS exited the retail brokerage business on August 3, 2010 after MMALIC announced a definitive agreement with Lincoln Investment Planning, Inc., an independent broker dealer.
The Company paid $200 million in dividends to Glidepath in 2023, none in 2022 and paid $300.0 million in dividends to GAFRI, its former parent, in 2021.
F-57
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
I. ANNUITY RESERVES AND DEPOSIT-TYPE FUNDS
At December 31, 2023, MMALIC’s annuity (individual and group) reserves and deposit-type funds that are subject to discretionary withdrawal (with adjustment), subject to discretionary withdrawal (without adjustment), and not subject to discretionary withdrawal are summarized as follows (in millions):
A. Individual Annuities:
| General Account | Separate Account with Guarantees | Separate Account Nonguaranteed | Total | % of Total | ||||||||||||||||||
| 1. | Subject to discretionary withdrawal: | |||||||||||||||||||||
a. With market value adjustment | $ | 22,517.3 | $ | — | $ | — | $ | 22,517.3 | 51.5 | % | ||||||||||||
b. At book value less current surrender charge of 5% or more | 5,279.5 | — | — | 5,279.5 | 12.1 | % | ||||||||||||||||
c. At fair value | — | — | 387.5 | 387.5 | 0.9 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
d. Total with market value adjustment or at fair value (total of a through c) | 27,796.8 | — | 387.5 | 28,184.3 | 64.5 | % | ||||||||||||||||
e. At book value without adjustment (minimal or no charge or adjustment) | 13,422.5 | — | — | 13,422.5 | 30.7 | % | ||||||||||||||||
| 2. | Not subject to discretionary withdrawal | 2,063.5 | — | — | 2,063.5 | 4.7 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 3. | Total (gross: direct + assumed) | 43,282.8 | — | 387.5 | 43,670.3 | 100.0 | % | |||||||||||||||
|
| |||||||||||||||||||||
| 4. | Reinsurance ceded | 14,472.5 | — | — | 14,472.5 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 5. | Total (net) (3) - (4) | 28,810.3 | — | 387.5 | 29,197.8 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 6. | Amount included in A(1)b above that will move to A(1)e in the year after the statement date | $ | 970.2 | $ | — | $ | — | $ | 970.2 | |||||||||||||
B. Group Annuities:
| General Account | Separate Account with Guarantees | Separate Account Nonguaranteed | Total | % of Total | ||||||||||||||||||
| 1. | Subject to discretionary withdrawal: | |||||||||||||||||||||
a. With market value adjustment | $ | — | $ | — | $ | — | $ | — | 0.0 | % | ||||||||||||
b. At book value less current surrender charge of 5% or more | 116.0 | — | — | 116.0 | 6.8 | % | ||||||||||||||||
c. At fair value | — | — | — | — | 0.0 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
d. Total with market value adjustment or at fair value (total of a through c) | 116.0 | — | — | 116.0 | 6.8 | % | ||||||||||||||||
e. At book value without adjustment (minimal or no charge or adjustment) | 686.3 | — | — | 686.3 | 40.4 | % | ||||||||||||||||
| 2. | Not subject to discretionary withdrawal | 898.1 | — | — | 898.1 | 52.8 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 3. | Total (gross: direct + assumed) | 1,700.4 | — | — | 1,700.4 | 100.0 | % | |||||||||||||||
|
| |||||||||||||||||||||
| 4. | Reinsurance ceded | 481.2 | — | — | 481.2 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 5. | Total (net) (3) - (4) | 1,219.2 | — | — | 1,219.2 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 6. | Amount included in A(1)b above that will move to A(1)e in the year after the statement date | $ | 2,548.1 | $ | — | $ | — | $ | 2,548.1 | |||||||||||||
F-58
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
I. ANNUITY RESERVES AND DEPOSIT-TYPE FUNDS (CONTINUED)
C. Deposit-Type Funds
(no life contingencies):
| General Account | Separate Account with Guarantees | Separate Account Nonguaranteed | Total | % of Total | ||||||||||||||||||
| 1. | Subject to discretionary withdrawal: | |||||||||||||||||||||
a. With market value adjustment | $ | — | $ | — | $ | — | $ | — | 0.0 | % | ||||||||||||
b. At book value less current surrender charge of 5% or more | — | — | — | — | 0.0 | % | ||||||||||||||||
c. At fair value | — | — | — | — | 0.0 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
d. Total with market value adjustment or at fair value (total of a through c) | — | — | — | — | 0.0 | % | ||||||||||||||||
e. At book value without adjustment (minimal or no charge or adjustment) | — | — | — | — | 0.0 | % | ||||||||||||||||
| 2. | Not subject to discretionary withdrawal | 903.6 | — | — | 903.6 | 100.0 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 3. | Total (gross: direct + assumed) | 903.6 | — | — | 903.6 | 100.0 | % | |||||||||||||||
|
| |||||||||||||||||||||
| 4. | Reinsurance ceded | 115.6 | — | — | 115.6 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 5. | Total (net) (3) - (4) | 788.0 | — | — | 788.0 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 6. | Amount included in A(1)b above that will move to A(1)e in the year after the statement date | $ | — | $ | — | $ | — | $ | — | |||||||||||||
D. Reconciliation to total annuity reserves and deposit-type funds:
Net annuity reserves | $ | 30,028.6 | ||
Net supplementary contracts | 0.9 | |||
Deposit-type funds | 788.0 | |||
Separate account nonguaranteed liabilities | 387.5 | |||
|
| |||
Total | $ | 31,205.0 | ||
|
|
F-59
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
I. ANNUITY RESERVES AND DEPOSIT-TYPE FUNDS (CONTINUED)
At December 31, 2022, MMALIC’s annuity (individual and group) reserves and deposit-type funds that are subject to discretionary withdrawal (with adjustment), subject to discretionary withdrawal (without adjustment), and not subject to discretionary withdrawal are summarized as follows (in millions):
A. Individual Annuities:
| General Account | Separate Account with Guarantees | Separate Account Nonguaranteed | Total | % of Total | ||||||||||||||||||
| 1. | Subject to discretionary withdrawal: | |||||||||||||||||||||
a. With market value adjustment | $ | 17,148.9 | $ | — | $ | — | $ | 17,148.9 | 42.2 | % | ||||||||||||
b. At book value less current surrender charge of 5% or more | 7,044.3 | — | — | 7,044.3 | 17.3 | % | ||||||||||||||||
c. At fair value | — | — | 30.6 | 30.6 | 0.1 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
d. Total with market value adjustment or at fair value (total of a through c) | 24,193.0 | — | 30.6 | 24,223.8 | 59.6 | % | ||||||||||||||||
e. At book value without adjustment (minimal or no charge or adjustment) | 14,464.8 | — | — | 14,464.8 | 35.5 | % | ||||||||||||||||
| 2. | Not subject to discretionary withdrawal | 1,985.4 | — | — | 1,985.4 | 4.9 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 3. | Total (gross: direct + assumed) | 40,643.3 | — | 30.6 | 40,674.0 | 100.0 | % | |||||||||||||||
|
| |||||||||||||||||||||
| 4. | Reinsurance ceded | 17,817.8 | — | — | 17,817.8 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 5. | Total (net) (3) - (4) | 22,825.5 | — | 30.6 | 22,856.2 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 6. | Amount included in A(1)b above that will move to A(1)e in the year after the statement date | $ | 2,241.2 | $ | — | $ | — | $ | — | |||||||||||||
B. Group Annuities:
| General Account | Separate Account with Guarantees | Separate Account Nonguaranteed | Total | % of Total | ||||||||||||||||||
| 1. | Subject to discretionary withdrawal: | |||||||||||||||||||||
a. With market value adjustment | $ | — | $ | — | $ | — | $ | — | 0.0 | % | ||||||||||||
b. At book value less current surrender charge of 5% or more | 118.9 | — | — | 118.9 | 6.7 | % | ||||||||||||||||
c. At fair value | — | — | — | — | 0.0 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
d. Total with market value adjustment or at fair value (total of a through c) | 118.9 | — | — | 118.9 | 6.7 | % | ||||||||||||||||
e. At book value without adjustment (minimal or no charge or adjustment) | 723.0 | — | — | 723.0 | 40.5 | % | ||||||||||||||||
| 2. | Not subject to discretionary withdrawal | 943.3 | — | — | 943.3 | 52.8 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 3. | Total (gross: direct + assumed) | 1,785.2 | — | — | 1,785.2 | 100.0 | % | |||||||||||||||
|
| |||||||||||||||||||||
| 4. | Reinsurance ceded | 496.7 | — | — | 496.7 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 5. | Total (net) (3) - (4) | 1,288.5 | — | — | 1,288.5 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 6. | Amount included in A(1)b above that will move to A(1)e in the year after the statement date | $ | 2.7 | $ | — | $ | — | $ | — | |||||||||||||
F-60
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
I. ANNUITY RESERVES AND DEPOSIT-TYPE FUNDS (CONTINUED)
C. Deposit-Type Funds
(no life contingencies):
| General Account | Separate Account with Guarantees | Separate Account Nonguaranteed | Total | % of Total | ||||||||||||||||||
| 1. | Subject to discretionary withdrawal: | |||||||||||||||||||||
a. With market value adjustment | $ | — | $ | — | $ | — | $ | — | 0.0 | % | ||||||||||||
b. At book value less current surrender charge of 5% or more | — | — | — | — | 0.0 | % | ||||||||||||||||
c. At fair value | — | — | — | — | 0.0 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
d. Total with market value adjustment or at fair value (total of a through c) | — | — | — | — | 0.0 | % | ||||||||||||||||
e. At book value without adjustment (minimal or no charge or adjustment) | — | — | — | — | 0.0 | % | ||||||||||||||||
| 2. | Not subject to discretionary withdrawal | 889.6 | — | — | 889.6 | 100.0 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 3. | Total (gross: direct + assumed) | 889.6 | — | — | 889.6 | 100.0 | % | |||||||||||||||
|
| |||||||||||||||||||||
| 4. | Reinsurance ceded | 109.8 | — | — | 109.8 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 5. | Total (net) (3) - (4) | 779.8 | — | — | 779.8 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 6. | Amount included in A(1)b above that will move to A(1)e in the year after the statement date | $ | — | $ | — | $ | — | $ | — | |||||||||||||
D. Reconciliation to total annuity reserves and deposit-type funds:
Net annuity reserves | $ | 24,113.2 | ||
Net supplementary contracts | 0.9 | |||
Deposit-type funds | 779.8 | |||
Separate account nonguaranteed liabilities | 30.6 | |||
|
| |||
Total | $ | 24,924.5 | ||
|
|
F-61
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
J. LIFE RESERVES
At December 31, 2023, MMALIC’s account value, cash value and reserves for the breakouts of life insurance by withdrawal characteristics for general account products are summarized as follows (in millions):
| December 31, 2023 | ||||||||||||
| General Account | ||||||||||||
| Account Value | Cash Value | Reserve | ||||||||||
A. Subject to discretionary withdrawal, surrender values, or policy loans: | ||||||||||||
Universal Life | $ | 105.4 | $ | 104.6 | $ | 104.6 | ||||||
Other Permanent Cash Value Life Insurance | — | 48.7 | 48.7 | |||||||||
B. Not subject to discretionary withdrawal or no cash values | ||||||||||||
Term Policies without Cash Value | XXX | XXX | 184.2 | |||||||||
Accidental Death Benefits | XXX | XXX | 0.1 | |||||||||
Disability - Active Lives | XXX | XXX | 0.1 | |||||||||
Disability - Disabled Lives | XXX | XXX | 3.4 | |||||||||
Miscellaneous Reserves | XXX | XXX | 5.5 | |||||||||
|
|
|
|
|
| |||||||
C. Total (gross: direct + assumed) | 105.4 | 153.3 | 346.6 | |||||||||
D. Reinsurance ceded | 64.2 | 93.9 | 216.3 | |||||||||
|
|
|
|
|
| |||||||
E. Total (net) (C) - (D) | $ | 41.2 | $ | 59.4 | $ | 130.3 | ||||||
|
|
|
|
|
| |||||||
F. | ||||||||||||
| Amount | ||||
Reconciliation to total life reserves: | ||||
Life insurance, total (net) | $ | 125.2 | ||
Accidental death benefits, total (net) | — | |||
Disability - active lives, total (net) | — | |||
Disability - disabled lives, total (net) | 1.3 | |||
Miscellaneous reserves, total (net) | 3.8 | |||
|
| |||
Total | $ | 130.3 | ||
|
| |||
F-62
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
J. LIFE RESERVES (CONTINUED)
At December 31, 2022, MMALIC’s account value, cash value and reserves for the breakouts of life insurance by withdrawal characteristics for general account products are summarized as follows (in millions):
| December 31, 2022 | ||||||||||||
| General Account | ||||||||||||
| Account Value | Cash Value | Reserve | ||||||||||
A. Subject to discretionary withdrawal, surrender values, or policy loans: | $ | 107.6 | $ | 107.6 | $ | 107.6 | ||||||
Universal Life | ||||||||||||
Other Permanent Cash Value Life Insurance | — | 51.3 | 51.3 | |||||||||
B. Not subject to discretionary withdrawal or no cash values | ||||||||||||
Term Policies without Cash Value | XXX | XXX | 209.6 | |||||||||
Accidental Death Benefits | XXX | XXX | 0.1 | |||||||||
Disability - Active Lives | XXX | XXX | 0.1 | |||||||||
Disability - Disabled Lives | XXX | XXX | 3.6 | |||||||||
Miscellaneous Reserves | XXX | XXX | 5.6 | |||||||||
|
|
|
|
|
| |||||||
C. Total (gross: direct + assumed) | 107.6 | 158.9 | 377.9 | |||||||||
D. Reinsurance ceded | 66.9 | 97.8 | 232.1 | |||||||||
|
|
|
|
|
| |||||||
E. Total (net) (C) - (D) | $ | 40.7 | $ | 61.1 | $ | 145.8 | ||||||
|
|
|
|
|
| |||||||
F. | ||||||||||||
| Amount | ||||
Reconciliation to total life reserves: | ||||
Life insurance, total (net) | $ | 140.2 | ||
Accidental death benefits, total (net) | — | |||
Disability - active lives, total (net) | — | |||
Disability - disabled lives, total (net) | 1.5 | |||
Miscellaneous reserves, total (net) | 4.1 | |||
|
| |||
Total | $ | 145.8 | ||
|
| |||
F-63
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
K. CAPITAL AND SURPLUS
The portion of the Company’s unassigned funds represented or reduced by each item below is as follows at December 31 (in millions):
| 2023 | 2022 | 2021 | ||||||||||
Unrealized gains and losses (excluding subsidiaries) | $ | 339.7 | $ | 213.4 | $ | 678.1 | ||||||
Nonadmitted asset values | $ | (54.7 | ) | $ | (31.9 | ) | $ | (27.2 | ) | |||
Asset valuation reserve | $ | (528.4 | ) | $ | (577.1 | ) | $ | (504.1 | ) | |||
Life/health insurance companies are subject to certain Risk-Based Capital (“RBC”) requirements as specified by the NAIC. Under those requirements, the amount of capital and surplus maintained by a life/health insurance company is to be determined based on the various risk factors related to it. At December 31, 2023 and 2022, MMALIC exceeds the RBC requirements.
The maximum amount of dividends which can be paid to stockholders by life insurance companies domiciled in the State of Ohio without prior approval of the Insurance Commissioner is the greater of 10% of surplus as regards policyholders or net income as of the preceding December 31, but only to the extent of earned surplus as of the preceding December 31. The maximum amount of dividends payable in 2024 without prior approval is $ 304.9 million based on 10% of surplus as regards to policyholders as of the preceding December 31. At December 31, 2023, surplus as regards policyholders was $3,049.4 million, earned surplus was $1,962.7 million, and 2023 net loss was $5.1 million.
F-64
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
L. SEPARATE ACCOUNT
The Company utilizes a non-unitized separate account to record and account for assets and liabilities for individual registered index-linked annuities. MMALIC maintains the separate account pursuant to the laws of Ohio for the purpose of supporting the obligation to adjust the indexed strategy values based on the daily value calculation or rise and fall of the index. The assets of the separate account are held in MMALIC’s name on behalf of the separate account and legally belong to MMALIC. The assets in the separate account are not chargeable with liabilities arising out of any other business the Company conducts. MMALIC may invest these assets in hedging instruments, including derivative contracts as well as other assets permitted under state law (ORC 3907.15). To support the Company’s obligations to adjust the index strategy values, the Company may move funds between the separate account and the general account. MMALIC is not obligated to invest the assets of the separate account according to any particular plan except as the Company may be required to by state insurance laws (MMALIC does have a derivative use plan).
In accordance with the products and transactions recorded within the separate account, all assets are considered legally insulated from the general account and are not chargeable with liabilities incurred in any other business operation of the Company. As of December 31, 2023 and 2022, the Company’s separate account statement included legally insulated registered index-linked annuity assets of $443.3 million and $103.7 million, respectively.
With regard to the products and transactions recorded within the separate account, registered index-linked annuity products have guarantees backed by the general account. The separate account does not remit any risk charges to the general account for guaranteed benefits for the registered index-linked annuity products. The general account has not paid any guarantees for registered index-linked annuity products through December 31, 2023.
Net transfers to or (from) the Company’s separate account for the years ended December 31, 2023, 2022, and 2021 were $356.8 million, ($22.0) million and $36.8 million, respectively.
All separate account reserves are non-guaranteed and subject to discretionary withdrawal at fair value. Investments in the separate account at December 31, 2023 had a cost of $232.6 million and fair value of $387.5 million. The notional amount of these investments at December 31, 2023 was $5,650.5 million. Investments in the separate account at December 31, 2022 had a cost of $79.5 million and fair value of $30.6 million. The notional amount of these investments at December 31, 2022 was $3,800.5 million.
F-65
SUPPLEMENTARY INFORMATION
F-66
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
NOTE TO SUPPLEMENTAL SCHEDULE OF SELECTED STATUTORY-BASIS FINANCIAL DATA
AND SUPPLEMENTAL INVESTMENT DISCLOSURES
DECEMBER 31, 2023
Basis of Presentation
The accompanying supplemental schedules and interrogatories present selected statutory-basis financial data as of December 31, 2023 and for the year then ended for purposes of complying with the National Association of Insurance Commissioners’ (“NAIC”) Annual Statement Instructions and the NAIC’s Accounting Practices and Procedures Manual, and agrees to or is included in the amounts reported in the Company’s 2023 Statutory Annual Statement as amended and filed with the Ohio Department of Insurance.
Captions not presented were not applicable to the Company.
F-67
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
SUPPLEMENTAL SCHEDULE OF SELECTED STATUTORY-BASIS FINANCIAL DATA
DECEMBER 31, 2023
(Dollars in millions)
Investment income earned: | ||||
U.S. Government bonds | $ | 7.8 | ||
Bonds exempt from U.S. tax | — | |||
Other bonds (unaffiliated) | 1,779.1 | |||
Bonds of affiliates | 16.3 | |||
Preferred stocks (unaffiliated) | 11.5 | |||
Common stocks (unaffiliated) | 12.2 | |||
Common stocks (affiliated) | — | |||
Mortgage loans | 200.3 | |||
Real estate | — | |||
Policy loans | 3.8 | |||
Cash, cash equivalents and short-term investments | 109.7 | |||
Derivative instruments | (41.3 | ) | ||
Other invested assets | 131.9 | |||
|
| |||
Gross investment income | $ | 2,231.3 | ||
|
| |||
Real estate owned (book value less encumbrances) | $ | — | ||
|
| |||
Mortgage loans - book value: | ||||
Residential mortgages | $ | 2,777.0 | ||
Commercial mortgages | 1,479.5 | |||
|
| |||
Total mortgage loans | $ | 4,256.5 | ||
|
| |||
Mortgage loans by standing - book value | ||||
Good standing | $ | 4,256.5 | ||
|
| |||
Interest overdue more than 90 days, not in foreclosure | $ | — | ||
|
| |||
Other long term assets - statement value | $ | 1,407.8 | ||
|
| |||
Bonds and stocks of parents, subsidiaries and affiliates - book value | ||||
Bonds | $ | — | ||
|
| |||
Common stocks | $ | 445.2 | ||
|
| |||
Bonds (including short-term investments and cash equivalents) by expected maturity - statement value | ||||
Due within one year or less | $ | 4,463.5 | ||
Over 1 year through 5 years | 14,032.5 | |||
Over 5 years through 10 years | 10,975.9 | |||
Over 10 years through 20 years | 4,761.5 | |||
Over 20 years | 2,680.0 | |||
|
| |||
Total by maturity | $ | 36,913.4 | ||
|
| |||
Bonds (including short-term investments and cash equivalents) by NAIC designation - statement value | ||||
NAIC 1 | $ | 20,587.6 | ||
NAIC 2 | 14,265.4 | |||
NAIC 3 | 1,252.4 | |||
NAIC 4 | 494.4 | |||
NAIC 5 | 271.7 | |||
NAIC 6 | 41.9 | |||
Total by NAIC designation | $ | 36,913.4 | ||
|
| |||
Total bonds publicly traded | $ | 13,705.1 | ||
|
| |||
Total bonds privately placed | $ | 23,208.3 | ||
|
| |||
Preferred stocks - statement value | $ | 201.0 | ||
|
| |||
Common stocks - market value | $ | 716.4 | ||
|
| |||
Short-term investments - book value | $ | 424.2 | ||
|
| |||
Derivative instruments owned - statement value | $ | 243.2 | ||
|
| |||
Cash on deposit | $ | (157.3 | ) | |
|
| |||
Cash equivalents | $ | 1,944.4 | ||
|
|
(Continued)
F-68
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
SUPPLEMENTAL SCHEDULE OF SELECTED STATUTORY-BASIS FINANCIAL DATA
(CONTINUED)
DECEMBER 31, 2023
(Dollars in millions)
Life insurance in force: | ||||
Ordinary | $ | 4,074.2 | ||
|
| |||
Group life | $ | 12.7 | ||
|
| |||
Amount of accidental death insurance in-force under ordinary policies: | $ | 67.6 | ||
|
| |||
Life insurance with disability provisions in-force: | ||||
Ordinary | $ | 75.8 | ||
|
| |||
Group life | $ | — | ||
|
| |||
Annuities: | ||||
Ordinary: | ||||
Immediate - amount of income payable | $ | 178.9 | ||
|
| |||
Deferred - fully paid account balance | $ | 26,918.9 | ||
|
| |||
Deferred - not fully paid - account balance | $ | 13,332.4 | ||
|
| |||
Group | ||||
Amount of income payable | $ | 74.3 | ||
|
| |||
Fully paid account balance | $ | 93.7 | ||
|
| |||
Not fully paid - account balance | $ | 711.0 | ||
|
| |||
Accident and health insurance - premiums in force: | ||||
Ordinary | $ | 3.0 | ||
|
| |||
Claim payments 2023 | ||||
Other accident and health: | ||||
2023 | $ | 3.8 | ||
|
|
See accompanying independent auditors’ report.
68
F-69
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
SUPPLEMENTAL INVESTMENT DISCLOSURES
DECEMBER 31, 2023
(Dollars in millions)
| 1. | MMALIC’s total admitted assets as reported on page two of its Annual Statement excluding separate account assets are $46,545.4 million. |
| 2. | Following are the 10 largest exposures to a single issuer/borrower/investment, by investment category, excluding: (i) U.S. Government, U.S. Government agency securities and those U.S. Government money market funds listed in the appendix to the SVO Practices and Procedures Manual as exempt, (ii) property occupied by MMALIC, and (iii) policy loans. |
Issuer | Amount | Percent of Total Admitted Assets | ||||||
NP Inc/US | $ | 570.8 | 1.2 | % | ||||
Annuity Investors Life (AILIC) Common St | 427.5 | 0.9 | % | |||||
Penny Mac Loan Services LLC | 399.3 | 0.9 | % | |||||
LOAN ASSET ISSUER LLC SER 2021 M-2 | 234.6 | 0.5 | % | |||||
Churchill Finance LLC | 217.5 | 0.5 | % | |||||
Herlan Peak Funding Trust | 192.8 | 0.4 | % | |||||
Deephaven Mortgage LLC | 171.3 | 0.4 | % | |||||
Conrex Corp | 160.4 | 0.3 | % | |||||
ERAC USA Finance LLC | 144.2 | 0.3 | % | |||||
CIP VIII Holdings Spv LP Inc | 136.3 | 0.3 | % | |||||
| 3. | MMALIC’s total admitted assets held in bonds (including short-term investments and cash equivalents) and preferred stocks by NAIC rating, are as follows: |
Bonds | ||||||||
NAIC Rating | Amount | Percentage of Total Admitted Assets | ||||||
NAIC-1 | $ | 20,587.6 | 44.2 | % | ||||
NAIC-2 | 14,265.4 | 30.6 | % | |||||
NAIC-3 | 1,252.4 | 2.7 | % | |||||
NAIC-4 | 494.4 | 1.1 | % | |||||
NAIC-5 | 271.7 | 0.6 | % | |||||
NAIC-6 | 41.9 | 0.1 | % | |||||
|
|
|
| |||||
Total | $ | 36,913.4 | 79.3 | % | ||||
|
|
|
| |||||
Preferred Stocks | ||||||||
NAIC Rating | Amount | Percentage of Total Admitted Assets | ||||||
P/RP-1 | $ | 4.9 | 0.0 | % | ||||
P/RP-2 | 161.9 | 0.3 | % | |||||
P/RP-3 | 7.0 | 0.0 | % | |||||
P/RP-4 | 3.0 | 0.0 | % | |||||
P/RP-5 | 24.1 | 0.1 | % | |||||
P/RP-6 | 0.0 | 0.0 | % | |||||
|
|
|
| |||||
Total | $ | 201.0 | 0.4 | % | ||||
|
|
|
| |||||
| 4. | Assets held in foreign investments: |
| Amount | Percent of Total Admitted Assets | |||||||
Total admitted assets held in foreign investments | $ | 7,789.9 | 16.7 | % | ||||
Foreign-currency-denominated investments | — | 0.0 | % | |||||
Insurance liabilities denominated in that same foreign currency | — | 0.0 | % | |||||
(Continued)
F-70
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
SUPPLEMENTAL INVESTMENT DISCLOSURES (CONTINUED)
DECEMBER 31, 2023
(Dollars in millions)
| 5. | Aggregate foreign investment exposure categorized by NAIC sovereign rating: |
| Amount | Percent of Total Admitted Assets | |||||||
Countries rated NAIC-1 | $ | 5,006.0 | 10.8 | % | ||||
Countries rated NAIC-2 | 1,934.8 | 4.2 | % | |||||
Countries rated NAIC-3 or below | 849.1 | 1.8 | % | |||||
| 6. | Two largest foreign investment exposures to a single country, categorized by the country’s NAIC sovereign rating: |
| Amount | Percent of Total Admitted Assets | |||||||
Countries rated NAIC-1: | ||||||||
Cayman Islands | $ | 3,514.3 | 7.6 | % | ||||
Jersey | 297.0 | 0.6 | % | |||||
Countries rated NAIC-2 | ||||||||
United Kingdom | $ | 429.0 | 0.9 | % | ||||
Cayman Islands | 378.8 | 0.8 | % | |||||
Countries rated NAIC-3 or below | ||||||||
Cayman Islands | $ | 254.8 | 0.5 | % | ||||
United Kingdom | 73.6 | 0.2 | % | |||||
| 7. | The Company does not have any unhedged foreign currency exposure. |
| 8. | The Company does not have any unhedged foreign currency exposure. |
| 9. | The Company does not have any unhedged foreign currency exposure. |
| 10. | Ten largest non-sovereign (i.e. non-governmental) foreign issues: |
Issuer | NAIC Rating | Amount | Percent of Total Admitted Assets | |||||||
NP Inc/ Us | Mortgage Loan | $ | 192.0 | 0.4 | % | |||||
CIP VIII Holdings Spv LP Inc | 1.F PL | 136.3 | 0.3 | % | ||||||
Barings Loan Partners CLO Ltd 3 | 1.A Z | 107.0 | 0.2 | % | ||||||
Barings Clo Ltd 2023-I | 1.C FE | 103.6 | 0.2 | % | ||||||
Elis SA | 2.C PL | 88.0 | 0.2 | % | ||||||
Seaspan Holdco III Ltd | 2.B PL | 80.0 | 0.2 | % | ||||||
Modec Finance B.V. | 2.C PL | 75.0 | 0.2 | % | ||||||
Vodafone Group PLC | 2.B FE | 62.0 | 0.1 | % | ||||||
Zais Clo 6 Ltd | 1.A FE | 55.8 | 0.1 | % | ||||||
Hildene TruPS Financials Note Securitization 2018-1 Ltd | 1.B FE | 54.9 | 0.1 | % | ||||||
| 11. | Assets held in Canadian investments are less than 2.5% of the Company’s total admitted assets. |
| 12. | Assets held with contractual sales restrictions are less than 2.5% of the Company’s total admitted assets. |
(Continued)
F-71
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
SUPPLEMENTAL INVESTMENT DISCLOSURES (CONTINUED)
DECEMBER 31, 2023
(Dollars in millions)
| 13. | Following are MMALIC’s total admitted assets held in the largest 10 equity interests: |
Name of Issuer | Amount | Percentage of Total Admitted Assets | ||||||
Annuity Investors Life (AILIC) Common St | $ | 427.5 | 0.9 | % | ||||
CGL Holdings LLC | 63.9 | 0.1 | % | |||||
FEDERAL HOME LOAN BANK CINCINNATI-R | 41.5 | 0.1 | % | |||||
NexBank Capital Inc Noncumulative Perpet | 39.0 | 0.1 | % | |||||
AT&T Mobility II LLC Preferred Equity | 23.3 | 0.1 | % | |||||
Farm Credit Bank of Texas | 21.7 | 0.0 | % | |||||
Apollo Global Management Inc | 20.0 | 0.0 | % | |||||
TS Opco Holding LLC | 19.7 | 0.0 | % | |||||
MANHATTAN NATIONAL HOLDING LLC | 16.8 | 0.0 | % | |||||
Lincoln National Corp | 16.4 | 0.0 | % | |||||
| 14. | Following are MMALIC’s largest three investments held in nonaffiliated, privately placed equities: |
Name of Issuer | Amount | Percentage of Total Admitted Assets | ||||||
CGL Holdings LLC | $ | 63.9 | 0.1 | % | ||||
FEDERAL HOME LOAN BANK CINCINNATI-R | 41.5 | 0.1 | % | |||||
NexBank Capital Inc | 39.0 | 0.1 | % | |||||
| 15. | Assets held in general partnership interests are less than 2.5% of the Company’s total admitted assets. |
| 16. | Following are MMALIC’s total admitted assets held in the largest 10 mortgage loans: |
Type (Residential, Commercial, Agricultural) | Amount | Percentage of Total Admitted Assets | ||||||
NP Inc (Residential) | $ | 568.8 | 1.2 | % | ||||
PennyMac Loan Services LLC (Residential) | 399.3 | 0.9 | % | |||||
Churchill Finance LLC (Residential) | 217.5 | 0.5 | % | |||||
Herlan Peak Funding Trust (Residential) | 192.8 | 0.4 | % | |||||
Deephaven Mortgage LLC (Residential) | 171.3 | 0.4 | % | |||||
Conrex Corp (Residential) | 160.4 | 0.3 | % | |||||
Quontic Bank (Residential) | 129.5 | 0.3 | % | |||||
Luxury Mortgage Corp (Residential) | 124.5 | 0.3 | % | |||||
Churchill Financial LLC (Residential) | 108.2 | 0.2 | % | |||||
Deephaven Mortgage Trust (Residential) | 100.4 | 0.2 | % | |||||
| 17. | Following are MMALIC’s loan-to-value ratios as determined from the most current appraisal: |
Loan-to-Value | Residential | Commercial | Agricultural | |||||||||||||||||||||
above 95% | $ | 2,770.0 | 5.9 | % | $ | 76.7 | 0.2 | % | $ | — | 0.0 | % | ||||||||||||
91% to 95% | 7.0 | 0.0 | % | — | 0.0 | % | — | 0.0 | % | |||||||||||||||
81% to 90% | — | 0.0 | % | 130.5 | 0.3 | % | — | 0.0 | % | |||||||||||||||
71% to 80% | — | 0.0 | % | 212.3 | 0.5 | % | — | 0.0 | % | |||||||||||||||
below 70% | — | 0.0 | % | 1,060.0 | 2.3 | % | — | 0.0 | % | |||||||||||||||
| 18. | The assets held in real estate are less than 2.5% of the Company’s total admitted assets. |
| 19. | Investments in mezzanine real estate loans are less than 2.5% of the Company’s total admitted assets. |
| 20. | The Company has no admitted assets subject to securities lending agreements, repurchase agreements, reverse repurchase agreements, dollar repurchase agreements, or dollar reverse repurchase agreements. |
(Continued)
F-72
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
SUPPLEMENTAL INVESTMENT DISCLOSURES (CONTINUED)
DECEMBER 31, 2023
(Dollars in millions)
| 21. | The Company owns $305.7 million in hedging options. |
| 22. | The Company’s potential exposure for swaps and forwards is $89.8 million. |
| 23. | The Company’s potential exposure for financial futures is $22.7 million. |
F-73
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
SUPPLEMENTAL INVESTMENT DISCLOSURES (CONTINUED)
DECEMBER 31, 2023
(Dollars in millions)
| Gross Investment Holdings* | Admitted Assets as Reported in the Annual Statement | |||||||||||||||||||||||||||
| Investment Categories | Amount | Percentage of Column 1 Line 13 | Amount | Securities Lending Reinvested Collateral Amount | Total (Col 3 +4) Amount | Percentage of Column 5 Line 13 | ||||||||||||||||||||||
| 1. | Long-Term Bonds: | |||||||||||||||||||||||||||
| 1.01 | U.S. Governments | $ | 186.7 | 0.4 | % | $ | 186.7 | $ | — | $ | 186.7 | 0.4 | % | |||||||||||||||
| 1.02 | All Other Governments | 19.2 | 0.0 | % | 19.2 | — | 19.2 | 0.0 | % | |||||||||||||||||||
| 1.03 | U.S. States, Territories and Possessions etc., Guaranteed | 180.4 | 0.4 | % | 180.4 | — | 180.4 | 0.4 | % | |||||||||||||||||||
| 1.04 | U.S. Political Subdivisions of States, Territories and Possessions, Guaranteed | 231.5 | 0.5 | % | 231.5 | — | 231.5 | 0.5 | % | |||||||||||||||||||
| 1.05 | U.S. Special Revenue and Special Assessment Obligations, etc., Non-Guaranteed | 1,920.8 | 4.3 | % | 1,920.8 | — | 1,920.8 | 4.3 | % | |||||||||||||||||||
| 1.06 | Industrial and Miscellaneous | 27,812.7 | 62.4 | % | 27,812.7 | — | 27,812.7 | 62.4 | % | |||||||||||||||||||
| 1.07 | Hybrid Securities | 772.6 | 1.7 | % | 772.6 | — | 772.6 | 1.7 | % | |||||||||||||||||||
| 1.08 | Parent, Subsidiaries and Affiliates | 745.2 | 1.7 | % | 745.2 | — | 745.2 | 1.7 | % | |||||||||||||||||||
| 1.09 | SVO Identified Funds | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
| 1.10 | Unaffiliated Bank Loans | 3,103.2 | 6.9 | % | 3,103.2 | — | 3,103.2 | 6.9 | % | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
| 1.11 | Total Long-Term Bonds | 34,972.3 | 78.3 | % | 34,972.3 | — | 34,972.3 | 78.3 | % | |||||||||||||||||||
| 2. | Preferred Stocks: | |||||||||||||||||||||||||||
| 2.01 | Industrial and Misc. (Unaffiliated) | 201.0 | 0.4 | % | 201.0 | — | 201.0 | 0.4 | % | |||||||||||||||||||
| 2.02 | Parent, Subsidiaries and Affiliates | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
| 2.03 | Total Preferred Stock | 201.0 | 0.4 | % | 201.0 | — | 201.0 | 0.4 | % | |||||||||||||||||||
| 3. | Common Stocks: | |||||||||||||||||||||||||||
| 3.01 | Industrial and Miscellaneous Publicly Traded (Unaffiliated) | 107.7 | 0.2 | % | 107.7 | — | 107.7 | 0.2 | % | |||||||||||||||||||
| 3.02 | Industrial and Miscellaneous Other (Unaffiliated) | 162.9 | 0.4 | % | 162.9 | — | 162.9 | 0.4 | % | |||||||||||||||||||
| 3.03 | Parent, Subsidiaries and Affiliates Publicly Traded | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
| 3.04 | Parent, Subsidiaries and Affiliates Other | 445.2 | 1.0 | % | 445.2 | — | 445.2 | 1.0 | % | |||||||||||||||||||
| 3.05 | Mutual Funds | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
| 3.06 | Unit Investment Trusts | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
| 3.07 | Closed-End Funds. | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
| 3.08 | Exchange traded funds | 0.6 | 0.0 | % | 0.6 | — | 0.6 | 0.0 | % | |||||||||||||||||||
|
|
|
|
|
|
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|
|
|
|
| |||||||||||||||||
| 3.09 | Total Common Stocks | 716.4 | 1.6 | % | 716.4 | — | 716.4 | 1.6 | % | |||||||||||||||||||
| 4. | Mortgage Loans: | |||||||||||||||||||||||||||
| 4.01 | Farm Mortgages | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
| 4.02 | Residential Mortgages | 2,777.0 | 6.2 | % | 2,777.0 | — | 2,777.0 | 6.2 | % | |||||||||||||||||||
| 4.03 | Commercial Mortgages | 1,431.9 | 3.2 | % | 1,431.9 | — | 1,431.9 | 3.2 | % | |||||||||||||||||||
| 4.04 | Mezzanine Real Estate Loans | 47.6 | 0.1 | % | 47.6 | — | 47.6 | 0.1 | % | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
| 4.05 | Total Mortgage Loans | 4,256.5 | 9.5 | % | 4,256.5 | — | 4,256.5 | 9.5 | % | |||||||||||||||||||
| 5. | Real estate: | |||||||||||||||||||||||||||
| 5.01 | Properties Occupied by Company | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
| 5.02 | Properties Held for Production of Income | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
| 5.03 | Properties Held for Sale | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
| 5.04 | Total Real Estate | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
| 6. | Cash, Cash Equivalents, and Short-Term Investments: | |||||||||||||||||||||||||||
| 6.01 | Cash | (157.3 | ) | -0.4 | % | (157.3 | ) | — | (157.3 | ) | -0.4 | % | ||||||||||||||||
| 6.02 | Cash Equivalents | 1,944.4 | 4.4 | % | 1,944.4 | — | 1,944.4 | 4.4 | % | |||||||||||||||||||
| 6.03 | Short-Term Investments | 424.2 | 0.9 | % | 424.2 | — | 424.2 | 0.9 | % | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
| 6.04 | Total Cash, Cash Equivalents, and Short-Term Investments | 2,211.3 | 4.9 | % | 2,211.3 | — | 2,211.3 | 4.9 | % | |||||||||||||||||||
| 7. | Contract Loans | 30.0 | 0.1 | % | 30.0 | — | 30.0 | 0.1 | % | |||||||||||||||||||
| 8. | Derivatives | 771.4 | 1.7 | % | 771.4 | — | 771.4 | 1.7 | % | |||||||||||||||||||
| 9. | Other Invested Assets | 1,407.8 | 3.1 | % | 1,407.8 | — | 1,407.8 | 3.1 | % | |||||||||||||||||||
| 10. | Receivables for Securities | 165.4 | 0.4 | % | 165.4 | — | 165.4 | 0.4 | % | |||||||||||||||||||
| 11. | Securities Lending | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
| 12. | Other Invested Assets | — | 0.0 | % | — | — | — | 0.0 | % | |||||||||||||||||||
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| |||||||||||||||||
| 13. | Total Invested Assets | 44,732.1 | 100.0 | % | 44,732.1 | — | 44,732.1 | 100.0 | % | |||||||||||||||||||
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| |||||||||||||||||
| * | Gross investment holdings as valued in compliance with NAIC SAP. |
See accompanying independent auditors’ report.
F-74
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
SUPPLEMENTAL SCHEDULE OF LIFE AND HEALTH REINSURANCE DISCLOSURES
FOR THE YEAR ENDED DECEMBER 31, 2023
(Dollars in millions)
The following information regarding reinsurance contracts is presented to satisfy the disclosure requirements in SSAP No. 61R, Life, Deposit-Type and Accident and Health Reinsurance, which apply to reinsurance contracts entered into, renewed or amended on or after January 1, 1996.
| 1. | Has MassMutual Ascend Life Insurance Company reinsured any risk with any other entity under a reinsurance contract (or multiple contracts with the same reinsurer or its affiliates) that is subject to Appendix A-791, Life and Health Reinsurance Agreements, and includes a provision that limits the reinsurer’s assumption of significant risks identified in Appendix A-791? |
Examples of risk-limiting features include provisions such as a deductible, a loss ratio corridor, a loss cap, an aggregate limit or other provisions that result in similar effects.
Yes ☐ No ☒
If yes, indicate the number of reinsurance contracts to which such provisions apply: |
If yes, indicate if deposit accounting was applied for all contracts subject to Appendix A-791 that limit significant risks.
Yes ☐ No ☐ N/A ☒
| 2. | Has MassMutual Ascend Life Insurance Company reinsured any risk with any other entity under a reinsurance contract (or multiple contracts with the same reinsurer or its affiliates) that is not subject to Appendix A-791, for which reinsurance accounting was applied and includes a provision that limits the reinsurer’s assumption of risk? |
Examples of risk-limiting features include provisions such as a deductible, a loss ratio corridor, a loss cap, an aggregate limit or other provisions that result in similar effects.
Yes ☐ No ☒
If yes, indicate the number of reinsurance contracts to which such provisions apply: |
If yes, indicate whether the reinsurance credit was reduced for the risk-limiting features.
Yes ☐ No ☐ N/A ☒
| 3. | Does MassMutual Ascend Life Insurance Company have any reinsurance contracts (other than reinsurance contracts with a federal or state facility) that contain one or more of the following features which may result in delays in payment in form or in fact: |
| (a) | Provisions that permit the reporting of losses to be made less frequently than quarterly; |
| (b) | Provisions that permit settlements to be made less frequently than quarterly; |
| (c) | Provisions that permit payments due from the reinsurer to not be made in cash within ninety (90) days of the settlement date (unless there is no activity during the period); or |
| (d) | The existence of payment schedules, accumulating retentions from multiple years, or any features inherently designed to delay timing of the reimbursement to the ceding entity. |
Yes ☐ No ☒
(Continued)
F-75
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
SUPPLEMENTAL SCHEDULE OF LIFE AND HEALTH REINSURANCE DISCLOSURES
(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 2023
(Dollars in millions)
| 4. | Has MassMutual Ascend Life Insurance Company reflected reinsurance accounting credit for any contracts that are not subject to Appendix A-791 and not yearly renewable term reinsurance, which meet the risk transfer requirements of SSAP No. 61R? |
Type of contract: | Response: | Identify reinsurance contract(s): | Has the insured | |||
| Assumption reinsurance – new for the reporting period | Yes ☐ No ☒ | N/A | ||||
| Non-proportional reinsurance, which does not result in significant surplus relief | Yes ☐ No ☒ | Yes ☐ No ☐ N/A ☒ | ||||
| 5. | Has MassMutual Ascend Life Insurance Company ceded any risk, which is not subject to Appendix A-791 and not yearly renewable term reinsurance, under any reinsurance contract (or multiple contracts with the same reinsurer or its affiliates) during the period covered by the financial statements, and either: |
| (a) | Accounted for that contract as reinsurance under statutory accounting principles (SAP) and as a deposit under generally accepted accounting principles (GAAP); or |
Yes ☐ No ☒ N/A ☐
| (b) | Accounted for that contract as reinsurance under GAAP and as a deposit under SAP? |
Yes ☐ No ☒ N/A ☐
If the answer to item (a) or item (b) is yes, include relevant information regarding GAAP to SAP differences from the accounting policy footnote to the audited statutory-basis financial statements to explain why the contract(s) is treated differently for GAAP and SAP below:
See accompanying independent auditors’ report
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PART II — INFORMATION NOT REQUIRED IN PROSPECTUS
| Item 13. | Other Expenses of Issuance and Distribution |
The following is a list of the estimated expenses to be incurred in connection with the securities being offered.
Estimated Accounting Fees | $ | 1,784,320 | ||
Estimated Filing Fees | $ | 0 | ||
Estimated Legal Fees | $ | 200,000 | ||
Registration Fees | $ | 0 |
| Item 14. | Indemnification of Directors and Officers |
Ohio Revised Code, Section 1701.13(E), allows indemnification by the Registrant to any person made or threatened to be made a party to any proceedings, other than a proceeding by or in the right of the Registrant, by reason of the fact that he is or was a director, officer, employee or agent of the Registrant, against expenses, including judgment and fines, if he acted in good faith and in a manner reasonably believed to be in or not opposed to our best interests and, with respect to criminal actions, in which he had no reasonable cause to believe that his conduct was unlawful. Similar provisions apply to actions brought by or in the right of the Registrant, except that no indemnification shall be made in such cases when the person shall have been adjudged to be liable for negligence or misconduct to the Registrant unless deemed otherwise by the court. Indemnifications are to be made by a majority vote of a quorum of disinterested directors or the written opinion of independent counsel or by the shareholders or by the court.
Article VII of the Registrant’s Amended and Restated Code of Regulations includes the following provisions related to indemnification of its directors, officers, employees and agents.
ARTICLE VII INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved (including, without limitation, as a witness) in any actual or threatened action, claim, suit investigation or proceeding, of any nature whatsoever (hereinafter “proceeding”), by reason of the fact that he or she is or was a director, board member, committee member, partner, trustee, officer or employee of any foreign or domestic organization or any separate investment account, or any individual who serves in any capacity with respect to any employee benefit plan, or that, being or having been such a director, board member, committee member, partner, trustee, officer or employee of any foreign or domestic organization or any separate investment account or any individual who serves in any capacity with respect to any employee benefit plan, he or she is or was serving at the request of an executive officer of the Corporation as a director, board member, committee member, partner, trustee, officer, employee or agent of another corporation or of a partnership, joint venture, trust, limited liability company or other enterprise, including service with respect to an employee benefit plan (hereinafter an “indemnitee”), whenever the basis of such proceeding is alleged action in an official capacity as such shall be indemnified and held harmless by the Corporation to the fullest extent permitted by law, as the same exists or may hereinafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), or by other applicable law as then in effect, against all costs and reasonable counsel fees, fines, penalties, judgments or awards of any kind, and the amount of reasonable settlements, whether or not payable to the Corporation or to any of the other entities described above actually incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, board member, committee member, partner, trustee, officer or employee of any foreign or domestic organization or any separate investment account or any individual who serves in any capacity with respect to any employee benefit plan and shall inure to the benefit of the indemnitee’s heirs, executors, legal representatives and administrators. To the extent any of the indemnification provisions set forth above prove to be ineffective for any reason in furnishing the indemnification provided, each of the persons named above shall be indemnified by the Corporation to the fullest extent not prohibited by applicable law.
Notwithstanding the foregoing, no indemnification shall be provided with respect to:
1. any matter as to which the person shall have been adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his or her action was in the best interests of the Corporation or, to the extent that such matter relates to service with respect to any employee benefit plan, in the best interests of the participants or beneficiaries of such employee benefit plan;
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2. any liability to any entity which is registered as an investment company under the Federal Investment Company Act of 1940 or to the security holders thereof, where the basis for such liability is willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office; and
3. any action, claim or proceeding voluntarily initiated by any person seeking indemnification, unless such action, claim or proceeding had been authorized by the Board or unless such person’s indemnification is awarded by vote of the Board.
In any matter disposed of by settlement or in the event of an adjudication which in the opinion of the General Counsel or his or her delegate does not make a sufficient determination of conduct which could preclude or permit indemnification in accordance with the preceding paragraphs, the person shall be entitled to indemnification unless, as determined by the majority of the disinterested directors or in the opinion of counsel (who may be an officer of the Corporation or outside counsel employed by the Corporation), such person’s conduct was such as precludes indemnification under any such paragraph. The termination of any action, claim, suit, investigation or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in the best interests of the Corporation.
1.1 Advancements. The Corporation may at its option indemnify for expenses incurred in connection with any action or proceeding in advance of its final disposition, upon receipt of a satisfactory undertaking for repayment if it be subsequently determined that the person thus indemnified is not entitled to indemnification under this Article VII.
Section 2. Procedures for the Submission of Claims. The Board may establish reasonable procedures for the submission of claims for indemnification pursuant to this ARTICLE VII, determination of the entitlement of any person thereto, and review of any such determination.
Massachusetts Mutual Life Insurance Company (“MassMutual”), the Registrant’s parent company, maintains, at its expense, Directors and Officers Liability and Company Reimbursement Liability Insurance. The Directors and Officers Liability portion of such policy covers all directors and officers of MassMutual and of the companies which are, directly or indirectly, more than 50% owned by MassMutual, which includes the Registrant. The policy provides for payment on behalf of the directors and officers, up to the policy limits and after expenditure of a specified deductible, of all Loss (as defined) from claims made against them during the policy period for defined wrongful acts, and neglect or breach of duty by directors and officers in the discharge of their individual or collective duties as such. The insurance includes the cost of investigations and defenses, appeals, and settlements and judgments, but not fines or penalties imposed by law. The insurance does not cover any claims arising out of acts alleged to have been committed prior to December 31,1996, or in the case of companies directly or indirectly 50% owned by MassMutual, which includes the Registrant, such later date as MassMutual or its predecessors may be deemed to control the company. The prior acts effective date for the Registrant is May 28, 2021. The policy contains various exclusions and reporting requirements.
| Item 15. | Recent Sales of Unregistered Securities |
Not applicable
| Item 16. | Exhibits and Financial Statement Schedules |
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(24)
| (a) | Power of Attorney – Dominic L. Blue is filed herewith. | |||
| (b) | Power of Attorney – Susan M. Cicco is filed herewith. | |||
| (c) | Power of Attorney – Geoffrey J. Craddock is filed herewith. | |||
| (d) | Power of Attorney – Roger W. Crandall is filed herewith. | |||
| (e) | Power of Attorney – Paul A. LaPiana is filed herewith. | |||
| (f) | Power of Attorney – Sears Merritt is filed herewith. | |||
| (g) | Power of Attorney – Mark F. Muething is filed herewith. | |||
| (h) | Power of Attorney – Michael J. O’Connor is filed herewith. | |||
| (i) | Power of Attorney – Eric W. Partlan is filed herewith. | |||
| (j) | Power of Attorney – Arthur W. Wallace is filed herewith. | |||
| (k) | Power of Attorney – Elizabeth A. Ward is filed herewith. | |||
| (25) | Statement of Eligibility of Trustee—Not applicable. | |||
| (26) | Invitation for Competitive Bids—Not applicable. | |||
| (99) | Additional Exhibits – None | |||
| (101) | Interactive Data File - Not applicable. | |||
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| (b) | Financial Statements |
| Report of Independent Auditors (KPMG) | F-1 | |
| Statutory-Basis Financial Statements | ||
Balance Sheet as of December 31, 2023 and 2022—Statutory-Basis | F-4 | |
Statement of Operations for the years ended December 31, 2023, 2022, and 2021—Statutory-Basis | F-5 | |
Statement of Changes in Capital and Surplus for the years ended December 31, 2023, 2022, and 2021—Statutory-Basis | F-6 | |
Statement of Cash Flow for the years ended December 31, 2023, 2022, and 2021—Statutory-Basis | F-7 | |
Notes to Statutory-Basis Financial Statements | F-8 |
| (c) |
| Item 17. | Undertakings |
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
| (i) | To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; |
| (ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) (§ 230.424(b) of this chapter) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement. |
| (iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A (§ 230.430A of this chapter), shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
| (i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (§ 230.424 of this chapter); |
| (ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
| (iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
| (iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
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(6) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
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INDEX TO EXHIBITS
MASSMUTUAL ASCEND LIFE INSURANCE COMPANY
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement on Form S-1 for the Individual Index-linked Modified Single Premium Deferred Annuity Contracts to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cincinnati, State of Ohio, on April 26, 2024.
| MassMutual Ascend Life Insurance Company | ||||||
| April 26, 2024 | By: | /s/ Brian P. Sponaugle | ||||
| Brian P. Sponaugle | ||||||
| Senior Vice President and Treasurer | ||||||
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-1 for the Individual Index-linked Modified Single Premium Deferred Annuity Contracts has been signed by the following persons in the capacities and on the dates indicated.
Signature | Capacity | Date | ||
/s/ Dominic L. Blue* Dominic L. Blue* | Director Chief Executive Officer (principal executive officer) | April 26, 2024 | ||
/s/ Susan M. Cicco* Susan M. Cicco* | Director | April 26, 2024 | ||
/s/ Geoffrey J. Craddock* Geoffrey J. Craddock* | Director | April 26, 2024 | ||
/s/ Roger W. Crandall* Roger W. Crandall* | Director | April 26, 2024 | ||
/s/ Paul A. LaPiana* Paul A. LaPiana* | Director | April 26, 2024 | ||
/s/ Sears Merritt* Sears Merritt* | Director | April 26, 2024 | ||
/s/ Mark F. Muething* Mark F. Muething* | President Director | April 26, 2024 | ||
/s/ Michael J. O’Connor* Michael J. O’Connor* | Director | April 26, 2024 | ||
/s/ Eric W. Partlan* Eric W. Partlan* | Director | April 26, 2024 | ||
/s/ Brian P. Sponaugle Brian P. Sponaugle | Principal Accounting Officer | April 26, 2024 | ||
/s/ Arthur W. Wallace* Arthur W. Wallace* | Director | April 26, 2024 | ||
/s/ Elizabeth A. Ward* Elizabeth A. Ward* | Chief Financial Officer (principal financial officer) Director | April 26, 2024 | ||
*By: | /s/ John P. Gruber | As Attorney-in-Fact pursuant to powers of attorney filed herewith | ||||
John P. Gruber |
Date: April 26, 2024
