REGISTRATION NO. 333-186795
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-l/A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MONY LIFE INSURANCE COMPANY OF
AMERICA
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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ARIZONA
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
6311
(PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER)
86-0222062
(I. R. S. EMPLOYER IDENTIFICATION NUMBER)
1290 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10104
(212) 554-1234
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRAT'S PRINCIPAL EXECUTIVE OFFICES)
-----------------
DODIE KENT
VICE PRESIDENT AND ASSOCIATE GENERAL COUNSEL
AXA EQUITABLE LIFE INSURANCE COMPANY
1290 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10104
(212) 554-1234
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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PLEASE SEND COPIES OF ALL COMMUNICATIONS TO:
CHRISTOPHER E. PALMER, ESQ.
GOODWIN PROCTER LLP
901 NEW YORK AVENUE, N.W.
WASHINGTON, D.C. 20001
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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: [X]
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 (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. [_]
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. [_]
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Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [_] Accelerated filer [_]
Non-accelerated filer [X] (Do not check if a smaller reporting company) Smaller reporting company [_]
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CALCULATION OF REGISTRATION FEE
============================================================================
Title of
each class
of Proposed Proposed
securities Amount maximum maximum
to be to be offering price aggregate Amount of
registered registered per unit offering price registration fee
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Market
value
Adjustment
Interests
under
Flexible
Premium
Annuity
Contracts. $109,852,134(2) (1) $ $1
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(1)The securities are not issued in predetermined amounts or units.
(2)Of the $140,000,000 of units of interest under annuity contracts registered
under the Registration Statement File No. 333-177419 on Form S-3 on
October 20, 2011, for which a filing fee of $5,959.20 was paid, $109,852,134
(for a filing fee of $14,983.83) are being carried forward pursuant to Rule
415(a)(6).
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Individual Flexible Payment Variable Annuity Contract
Issued by MONY Life Insurance Company of America with variable investment
options under MONY America's MONY America Variable Account A
PROSPECTUS DATED MAY 1, 2013
PLEASE READ AND KEEP THIS PROSPECTUS FOR FUTURE REFERENCE. IT CONTAINS
IMPORTANT INFORMATION THAT YOU SHOULD KNOW BEFORE PURCHASING, OR TAKING ANY
OTHER ACTION UNDER YOUR CONTRACT. ALSO, YOU SHOULD READ THE PROSPECTUSES FOR
EACH TRUST, WHICH CONTAIN IMPORTANT INFORMATION ABOUT THEIR PORTFOLIOS.
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MONY Life Insurance Company of America (the "Company") issues the flexible
payment variable annuity contract described in this prospectus. This prospectus
is a disclosure document and describes all of the contract's material features,
benefits, rights and obligations, as well as other information. The description
of the contract's material provisions in this prospectus is current as of the
date of this prospectus. If certain material provisions under the contract are
changed after the date of this prospectus in accordance with the contract,
those changes will be described in a supplement to this prospectus. You should
carefully read this prospectus in conjunction with any applicable supplements.
This Contract is no longer being sold. This prospectus is used with current
contract owners only. We will continue to accept Purchase Payments under
existing Contracts. You should note that your Contract features and charges,
and your investment options, may vary depending on your state and/or the date
on which you purchased your Contract. For more information about the particular
features, charges and options applicable to you, please contact your financial
professional and/or refer to your Contract.
You can tell us what to do with your Purchase Payments. You can also tell us
what to do with the fund value your Contract may create for you resulting from
those Purchase Payments.
You may allocate some or all of your Purchase Payments into the subaccounts.
Each subaccount is a subaccount of Separate Account MONY America Variable
Account A. Both the value of your Contract before annuitization and the amount
of income afterward will depend on the investment performance of the portfolios
you select. You bear the investment risk of investing in the portfolios. The
subaccounts invest in shares of the following portfolios of AXA Premier VIP
Trust, Dreyfus Stock Index Fund, Inc., EQ Advisors Trust, Fidelity Variable
Insurance Products (VIP), Franklin Templeton Variable Insurance Products Trust,
Janus Aspen Series, Oppenheimer Variable Account Funds, PIMCO Variable
Insurance Trust and ProFunds VP (the "Funds").
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SUBACCOUNTS
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.. All Asset Growth-Alt 20 . EQ/Money Market
.. AXA Aggressive Allocation/(1)/ . EQ/Montag & Caldwell Growth
.. AXA Conservative Allocation/(1)/ . EQ/Morgan Stanley Mid Cap Growth
.. AXA Conservative-Plus Allocation/(1)/ . EQ/PIMCO Ultra Short Bond
.. AXA Moderate Allocation/(1)/ . EQ/Quality Bond PLUS
.. AXA Moderate-Plus Allocation/(1)/ . EQ/T. Rowe Price Growth Stock
.. Dreyfus Stock Index . EQ/UBS Growth and Income
.. EQ/BlackRock Basic Value Equity . Fidelity VIP Contrafund(R)
.. EQ/Boston Advisors Equity Income . Franklin Income Securities
.. EQ/Calvert Socially Responsible . Franklin Rising Dividends Securities
.. EQ/Capital Guardian Research . Janus Aspen Balanced
.. EQ/Core Bond Index . Janus Aspen Enterprise
.. EQ/Equity Growth PLUS . Janus Aspen Forty
.. EQ/GAMCO Mergers and Acquisitions . Janus Aspen Global Research/(2)/
.. EQ/GAMCO Small Company Value . Multimanager Small Cap Growth
.. EQ/Intermediate Government Bond . Oppenheimer Global Fund/VA/(3)/
.. EQ Large Cap Value Index . PIMCO Global Bond (Unhedged)
.. EQ/MFS International Growth . ProFund VP Bear
.. EQ/Mid Cap Index . ProFund VP Rising Rates Opportunity
.. EQ/Mid Cap Value PLUS . ProFund VP UltraBull
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NOT ALL OF THESE PORTFOLIOS MAY BE AVAILABLE IN ALL STATES OR ALL MARKETS.
(1)The "AXA Allocation" portfolios.
(2)This is the variable investment option's new name, effective on or about May
1, 2013. Please see "The Funds" later in this prospectus for the variable
investment option's former name.
(3)This is the variable investment option's new name, effective on or about
April 30, 2013. Please see "The Funds" later in this prospectus for the
variable investment option's former name.
You may also allocate some or all of your Purchase Payments and fund value into
our Guaranteed Interest Account with Market Value Adjustment, which is
discussed later in this prospectus.
A Statement of Additional Information dated May 1, 2013 containing additional
information about the contract is incorporated herein by reference. It has been
filed with the Securities and Exchange Commission and is available from the
Company without charge upon written request. You may request one by writing to
our processing office located at MONY Life Insurance Company of America,
Policyholder Services, 100 Madison Street, Syracuse, New York 13202, or by
telephoning 1-800-487-6669 or by accessing the SEC's website at www.sec.gov.
The table of contents of the Statement of Additional Information can be found
in the back of this prospectus.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. THE CONTRACTS ARE NOT INSURED BY THE FDIC OR ANY OTHER
AGENCY. THEY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK
GUARANTEED. THEY ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL.
MLA-CM
#416994
Contents of this Prospectus
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1. SUMMARY OF THE CONTRACT 4
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Definitions 4
Purpose of the Contract 4
Purchase Payments and fund value 4
Minimum Purchase Payments 4
MONY America Variable Account A 4
Guaranteed Interest Account with Market Value Adjustment 5
The Market Value Adjustment 5
Transfer of fund value 5
Contract loans 5
Surrender 5
Charges and deductions 5
Right to return contract provision 5
Death benefit 5
Fee tables 6
Example 6
Other contracts 7
Condensed financial information 7
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2.WHO IS MONY LIFE INSURANCE COMPANY OF AMERICA? 8
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MONY Life Insurance Company of America 8
How to reach us 9
MONY America Variable Account A 9
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3. THE FUNDS 11
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Purchase of portfolio shares by MONY America Variable
Account A 15
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4. DETAILED INFORMATION ABOUT THE CONTRACT 16
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Payment and allocation of Purchase Payments 16
Telephone/fax/web transactions 19
Disruptive transfer activity 20
Termination of the Contract 21
2
CONTENTS OF THIS PROSPECTUS
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5.SURRENDERS 22
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6.LOANS 23
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7.DEATH BENEFIT 24
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Death benefit provided by the Contract 24
Enhanced death benefit options 24
Election and effective date of election 25
Payment of death benefit 25
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8.CHARGES AND DEDUCTIONS 26
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Deductions from Purchase Payments 26
Charges against Fund Value 26
Deductions from Fund Value 27
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9.ANNUITY PROVISIONS 29
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Annuity payments 29
Election and change of settlement option 29
Settlement options 29
Frequency of annuity payments 30
Additional provisions 30
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10.OTHER PROVISIONS 31
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Ownership 31
Provision required by Section 72(s) of the Code 31
Provision required by Section 401(a)(9) of the Code 31
Secondary annuitant 32
Assignment 32
Change of beneficiary 32
Substitution of securities 32
Changes to Contracts 32
Change in operation of MONY America Variable Account A 33
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11.VOTING RIGHTS 34
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12.DISTRIBUTION OF THE CONTRACTS 35
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13.FEDERAL TAX STATUS 37
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Introduction 37
Spousal status 37
Taxation of annuities in general 37
Retirement plans 38
Tax treatment of the Company 38
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14.LEGAL PROCEEDINGS 39
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15.FINANCIAL STATEMENTS 40
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About the general account 40
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APPENDIX
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I -- Condensed financial information I-1
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STATEMENT OF ADDITIONAL INFORMATION
Table of contents
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3
CONTENTS OF THIS PROSPECTUS
1. Summary of the Contract
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THIS SUMMARY PROVIDES YOU WITH A BRIEF OVERVIEW OF THE MORE IMPORTANT ASPECTS
OF YOUR CONTRACT. IT IS NOT INTENDED TO BE COMPLETE. MORE DETAILED INFORMATION
IS CONTAINED IN THIS PROSPECTUS ON THE PAGES FOLLOWING THIS SUMMARY AND IN YOUR
CONTRACT. THIS SUMMARY AND THE ENTIRE PROSPECTUS WILL DESCRIBE THE PART OF THE
CONTRACT INVOLVING MONY AMERICA VARIABLE ACCOUNT A. THE PROSPECTUS ALSO BRIEFLY
WILL DESCRIBE THE GUARANTEED INTEREST ACCOUNT WITH MARKET VALUE ADJUSTMENT AND
THE PORTFOLIOS OFFERED BY AXA PREMIER VIP TRUST, DREYFUS STOCK INDEX FUND,
INC., EQ ADVISORS TRUST, FIDELITY VARIABLE INSURANCE PRODUCTS, FRANKLIN
TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST, JANUS ASPEN SERIES, OPPENHEIMER
VARIABLE ACCOUNT FUNDS, PIMCO VARIABLE INSURANCE TRUST AND PROFUNDS VP. MORE
DETAILED INFORMATION ABOUT THE GUARANTEED INTEREST ACCOUNT WITH MARKET VALUE
ADJUSTMENT IS CONTAINED IN THE PROSPECTUS ATTACHED TO THIS PROSPECTUS AND IN
YOUR CONTRACT. SEE APPLICABLE FUND PROSPECTUSES FOR MORE DETAILED INFORMATION
ABOUT THE PORTFOLIOS OFFERED BY THE FUNDS.
DEFINITIONS
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SPECIALIZED TERMS WILL BE DEFINED ON THE PAGE WHERE THEY FIRST APPEAR ENCLOSED
IN A BOX.
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PURPOSE OF THE CONTRACT
The Contract is an Individual Flexible Payment Variable Annuity Contract (the
"Contract" or "Contracts"). As of January 31, 2005, we no longer offer this
Contract. We will continue to accept Purchase Payments under existing Contracts.
The Contract is designed to allow an owner to make Purchase Payments to the
Company under the Contract. Those Purchase Payments are allocated at the
owner's choice among the subaccounts of MONY America Variable Account A and the
Guaranteed Interest Account with Market Value Adjustment. Those Purchase
Payments can accumulate for a period of time and create fund value for the
owner. The owner can choose the length of time that such Purchase Payments may
accumulate. The owner may choose at some point in the future to receive annuity
benefits based upon that accumulated fund value.
An owner may use the Contract's design to accumulate fund value for various
purposes including retirement or to supplement other retirement programs. Some
of these retirement programs (the "Qualified Plans") may qualify for federal
income tax advantages available under certain Sections of the Internal Revenue
Code (the "Code"), Sections 401, 403 (other than Section 403(b)), 408, 408A and
457, for example.
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QUALIFIED PLANS -- RETIREMENT PLANS THAT MAY RECEIVE FAVORABLE TAX TREATMENT
UNDER CERTAIN SECTIONS OF THE INTERNAL REVENUE CODE.
QUALIFIED CONTRACTS -- CONTRACTS ISSUED UNDER QUALIFIED PLANS.
NON-QUALIFIED CONTRACTS -- CONTRACTS NOT ISSUED UNDER QUALIFIED PLANS.
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The Contract is also designed to allow the owner to request payments of part or
all of the accumulated fund value before the owner begins to receive annuity
benefits. This payment may result in the imposition of a surrender charge and a
market value adjustment. The market value adjustment will not apply to
Contracts issued in certain states. It may also be subject to income and other
taxes.
PURCHASE PAYMENTS AND FUND VALUE
You may allocate your Purchase Payments to one or more of the subaccounts of
MONY America Variable Account A that are available under the Contract and/or to
the Guaranteed Interest Account with Market Value Adjustment. The Purchase
Payments you allocate among the various subaccounts of MONY America Variable
Account A may increase or decrease in value on any day depending on the
investment experience of the subaccounts you select. There is no guarantee that
the value of the Purchase Payments you allocate to any of the subaccounts of
MONY America Variable Account A will increase or that the Purchase Payments you
make will not lose value.
MINIMUM PURCHASE PAYMENTS
The minimum Purchase Payment for individuals varies depending upon the
purchaser of the Contract and the method of paying the Purchase Payments. See
"Payment and allocation of Purchase Payments."
Additional Purchase Payments may be made at any time. However, for certain
automatic payment plans, the smallest additional payment is $50. (See "Issuance
of the Contract.") The Company may change this requirement in the future.
MONY AMERICA VARIABLE ACCOUNT A
MONY America Variable Account A is a separate investment account of MONY Life
Insurance Company of America (the "Company"). MONY America Variable Account A's
assets are owned by the Company, but are not chargeable with liabilities
arising from any other business the Company conducts.
The subaccounts of MONY America Variable Account A invest in shares of the
Funds at their net asset value. (See "The Funds.") Owners bear the entire
investment risk for all amounts allocated to MONY America Variable Account A
subaccounts.
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FUND -- ANY OPEN-END MANAGEMENT INVESTMENT COMPANY OR UNIT INVESTMENT TRUST IN
WHICH A SUBACCOUNT INVESTS.
OWNER -- THE PERSON SO DESIGNATED IN THE APPLICATION TO WHOM ALL RIGHTS,
BENEFITS, OPTIONS AND PRIVILEGES APPLY WHILE THE ANNUITANT IS LIVING. IF A
CONTRACT HAS BEEN ABSOLUTELY ASSIGNED, THE ASSIGNEE BECOMES THE OWNER.
PURCHASE PAYMENT -- AN AMOUNT PAID TO THE COMPANY BY THE OWNER OR ON THE
OWNER'S BEHALF AS CONSIDERATION FOR THE BENEFITS PROVIDED BY THE CONTRACT.
NET PURCHASE PAYMENT -- PURCHASE PAYMENT LESS ANY APPLICABLE TAX CHARGES.
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4
SUMMARY OF THE CONTRACT
GUARANTEED INTEREST ACCOUNT WITH MARKET VALUE ADJUSTMENT
The Guaranteed Interest Account with Market Value Adjustment is part of the
Company's General Account. It consists of all the Company's assets other than
assets allocated to segregated investment accounts of the Company. Net Purchase
Payments allocated to the Guaranteed Interest Account with Market Value
Adjustment will be credited with interest at rates guaranteed by the Company
for specified periods. (See the prospectus for the Guaranteed Interest Account
with Market Value Adjustment which accompanies this prospectus for further
details)
THE MARKET VALUE ADJUSTMENT
Amounts that are surrendered or transferred (including transfers for the
purpose of obtaining a Loan) from an Accumulation Period more than 30 days
before the Maturity Date will be subject to an MVA. An MVA will not apply upon
payment of a death benefit upon the death of the annuitant. The MVA is
determined through the use of a factor, which is known as the MVA Factor. This
factor is discussed in detail in the section entitled "The Market Value
Adjustment." The MVA could cause an increase or decrease or no change at all in
the amount of the distribution from an Accumulation Period.
A market value adjustment will be imposed on transfers or surrenders (partial
or full) from the Guaranteed Interest Account with Market Value Adjustment in
most states. A MARKET VALUE ADJUSTMENT WILL NOT BE IMPOSED ON CONTRACTS ISSUED
IN THE STATES OF MARYLAND, THE COMMONWEALTH OF MASSACHUSETTS, NEW JERSEY,
OKLAHOMA, OREGON, THE COMMONWEALTH OF PENNSYLVANIA, SOUTH CAROLINA, TEXAS AND
WASHINGTON; HOWEVER, RESTRICTIONS ON TRANSFERS APPLY IN THESE STATES. The
adjustment can be either a positive or negative adjustment. No adjustment is
made for the amount withdrawn or transferred within 30 days before the end of
the accumulation period.
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FUND VALUE -- THE AGGREGATE DOLLAR VALUE AS OF ANY BUSINESS DAY OF ALL AMOUNTS
ACCUMULATED UNDER EACH OF THE SUBACCOUNTS, THE GUARANTEED INTEREST ACCOUNT WITH
MARKET VALUE ADJUSTMENT, AND THE LOAN ACCOUNT OF THE CONTRACT.
BUSINESS DAY -- OUR "BUSINESS DAY" IS GENERALLY ANY DAY THE NEW YORK STOCK
EXCHANGE IS OPEN FOR REGULAR TRADING AND GENERALLY ENDS AT 4:00 P.M. EASTERN
TIME (OR AS OF AN EARLIER CLOSE OF REGULAR TRADING). A BUSINESS DAY DOES NOT
INCLUDE A DAY ON WHICH WE ARE NOT OPEN DUE TO EMERGENCY CONDITIONS DETERMINED
BY THE SECURITIES AND EXCHANGE COMMISSION. WE MAY ALSO CLOSE EARLY DUE TO SUCH
EMERGENCY CONDITIONS.
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TRANSFER OF FUND VALUE
You may transfer Fund Value among the subaccounts and to or from the Guaranteed
Interest Account with Market Value Adjustment. Transfers from the Guaranteed
Interest Account with Market Value Adjustment may be subject to a Market Value
Adjustment for contracts issued in certain states. Transfers may be made by
telephone, facsimile or via the web if the proper form has been completed,
signed, and received by the Company at its Operations Center. See the cover
page for how to contact the Operations Center. (See "Transfers.")
CONTRACT LOANS
Under certain qualified contracts, you may borrow up to 50% of your Contract's
Fund Value from the Company. Your Contract will be the only security required
for the loan. Contracts issued to 401(k) plans are generally the only Contracts
which permit loans. An amount equal to the amount of the loan is transferred to
the loan account as security for the loan. The loan account is part of the
Company's General Account.
We will charge you interest on the amount borrowed. If you do not pay the
interest when due, the amount due will be borrowed from the Contract's Fund
Value.
SURRENDER
You may surrender all or part of the Contract at any time and receive its cash
value while the Annuitant is alive prior to the annuity starting date. We may
impose a surrender charge and market value adjustment (if applicable). The
amounts you receive upon surrender may be subject to income taxes and a 10%
penalty tax if you are younger than 59 1/2 at the time of surrender. (See
"Federal tax status.")
CHARGES AND DEDUCTIONS
The Contract provides for the deduction of various charges and expenses from
the Fund Value of the Contract.
RIGHT TO RETURN CONTRACT PROVISION
This information is no longer applicable, as these contracts are no longer
available to new purchasers.
You have the right to examine the Contract when you receive it. You may return
the Contract for any reason during the "right to return contract period"
(usually within ten days from the day you receive it. You will receive a refund
of the Purchase Payments received by the Company, less any partial surrender
you made. During the right to return contract period, Purchase Payments will be
retained in the Company's General Account and will earn interest at a rate not
less than 3.50% per year. If you have not returned the Contract at the end of
the right to return contract period, we transfer the Net Purchase Payments with
interest to the subaccounts and/or the Guaranteed Interest Account.
DEATH BENEFIT
If the Annuitant (and the Secondary Annuitant, if any) dies before the annuity
starting date a death benefit will be payable to the Beneficiary. Under certain
circumstances, an enhanced death benefit may be payable. If the Annuitant dies
after annuity payments start, no death benefit is payable except as may be
payable under the settlement option selected. (See "Death benefit" and
"Enhanced death benefit.")
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ANNUITANT -- THE PERSON UPON WHOSE CONTINUATION OF LIFE ANY ANNUITY PAYMENT
DEPENDS.
SECONDARY ANNUITANT -- THE PARTY DESIGNATED BY THE OWNER TO BECOME THE
ANNUITANT, SUBJECT TO CERTAIN CONDITIONS, ON THE DEATH OF THE ANNUITANT.
BENEFICIARY -- THE PARTY ENTITLED TO RECEIVE BENEFITS PAYABLE AT THE DEATH OF
THE ANNUITANT OR (IF APPLICABLE) THE SECONDARY ANNUITANT.
ANNUITY STARTING DATE -- ATTAINMENT OF AGE 95, OR AT THE DISCRETION OF THE
OWNER OF THE CONTRACT, A DATE THAT IS AT LEAST TEN YEARS FROM THE EFFECTIVE
DATE OF THE CONTRACT.
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5
SUMMARY OF THE CONTRACT
FEE TABLES
The following tables describe the fees and expenses that you will pay when
buying, owning, and surrendering the Contract.
The first table describes the fees and expenses that you will pay at the time
that you buy the Contract, surrender the Contract, transfer Fund Value between
investment options, or for Contracts funding 401(k) plans only, take a loan. A
charge for taxes may also be deducted.
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OWNER TRANSACTION EXPENSES:
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Maximum deferred sales load (surrender charge) (as a
percentage of Purchase Payments surrendered) 7.00%/(1)/
Loan interest spread (effective annual rate) 2.50%/(2)/
Maximum transfer charge $25/(3)/
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The next table describes the fees and expense that you will pay
periodically during the time that you own the Contract, not
including Fund portfolio company fees and expenses.
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Maximum annual contract charge $50/(4)/
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SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF
AVERAGE ANNUAL FUND VALUE IN MONY AMERICA VARIABLE
ACCOUNT A):
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Maximum mortality and expense risk fees 1.35%/(5)/
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Total separate account annual expenses 1.35%/(5)/
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(1)The surrender charge percentage, which reduces to zero, is determined under
a surrender charge schedule. (See "Deductions from fund value -- Amount of
surrender charge.") The surrender charge may be reduced under certain
circumstances which include reduction in order to guarantee that certain
amounts may be received free of surrender charge. (See "Charges against fund
value -- Free partial surrender amount.")
(2)The loan interest spread is the difference between the amount of interest we
charge on loans and the amount of interest we credit to amounts held in the
loan account to secure loans.
(3)The transfer charge currently is $0. However, the Company has reserved the
right to impose a charge for each transfer, which will not exceed $25
(except for Contracts issued in the states of South Carolina and Texas where
it will not exceed $10). (See "Charges against fund value -- Transfer
charge.")
(4)The annual contract charge is currently $0. However, the Company may in the
future change the amount of the charge to an amount not exceeding $50 per
contract year (except for contracts issued in the states of Maryland,
Massachusetts, New Jersey, Oklahoma, Oregon, Commonwealth of Pennsylvania,
South Carolina, Texas and Washington where the charge may not exceed $30).
(See "Charges against fund value -- Annual contract charge.")
(5)The mortality and expense risk charge is deducted daily equivalent to a
current annual rate of 1.35% (and is guaranteed not to exceed a daily rate
equivalent to an annual rate of 1.35%) from the value of the net assets of
MONY America Variable Account A.
The next item shows the minimum and maximum total operating expenses charged by
the portfolio companies for the year ended December 31, 2012. You may pay
portfolio company operating expenses periodically during the time that you own
the Contract. Certain variable investment options invest in a corresponding
portfolio of one of the Trusts or other unaffiliated investment companies. Each
portfolio, in turn, invests in shares of other portfolios of the Trusts and/or
shares of unaffiliated portfolios ("underlying portfolios"). More detail
concerning each Fund portfolio company's fees and expenses is contained in the
prospectus for each portfolio.
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TOTAL ANNUAL FUND PORTFOLIO OPERATING EXPENSES
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Total Annual Portfolio Operating Expenses for 2012
(expenses that are deducted from portfolio assets including
management fees, 12b-1 fees, service fees, and/or other Lowest Highest
expenses)/(1)/ 0.28% 1.84%
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(1)"Total Annual Portfolio Operating Expenses" are based, in part, on estimated
amounts for options added during the fiscal year 2012, if applicable, and
for the underlying portfolios. In addition, the "Lowest" represents the
total annual operating expenses of the Dreyfus Stock Index Portfolio --
Initial Shares. The "Highest" represents the total annual operating expenses
of the ProFund VP Ultra Bull Portfolio.
EXAMPLE
This example is intended to help you compare the cost of investing in the
Contract with the cost of investing in other variable annuity contracts. These
costs include Owner transaction expenses, contract fees, separate account
annual expenses, and Fund fees and expenses for the year ended December 31,
2012.
6
SUMMARY OF THE CONTRACT
The example assumes that you invest $10,000 in the Contract for the time
periods indicated. The example also assumes that your investment has a 5%
return each year. The example assumes the maximum contract charges and annual
expenses of any of the Fund portfolios (before expense limitations) set forth
in the previous charts. Although your actual costs may be higher or lower,
based on these assumptions, your costs would be:
1. a.If you surrender your Contract at the end of the applicable time period
(assuming maximum fees and expenses of any of the Fund portfolios):
---------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------
$1,010 $1,691 $2,387 $3,941
---------------------------------
b.If you surrender your Contract at the end of the applicable time period
(assuming minimum fees and expenses of any of the Fund portfolios):
--------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------
$864 $1,257 $1,664 $2,462
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2. a.If you do not surrender your Contract (assuming maximum fees and expenses
of any of the Fund portfolios):
--------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------
$371 $1,129 $1,906 $3,941
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b.If you do not surrender your Contract (assuming minimum fees and expenses
of any of the Fund portfolios):
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1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------
$216 $667 $1,144 $2,462
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3. a.If you annuitize your Contract and the proceeds are settled under
Settlement Options 3 or 3A (life income with annuity options) (assuming
maximum fees and expenses of any of the Fund portfolios):
--------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------
$1,010 $1,129 $1,906 $3,941
--------------------------------
b.If you annuitize your Contract and the proceeds are settled under
Settlement Options 3 or 3A (life income with annuity options) (assuming
minimum fees and expenses of any of the Fund portfolios):
--------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------
$864 $667 $1,144 $2,462
--------------------------------
4. a.If you annuitize your Contract and the proceeds are settled under
Settlement Options 1, 2 or 4 (annuity income without life contingencies)
(assuming maximum fees and expenses of any of the Fund portfolios):
--------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------
$1,010 $1,691 $2,387 $3,941
--------------------------------
b.If you annuitize your Contract and the proceeds are settled under
Settlement Options 1, 2 or 4 (annuity income without life contingencies)
(assuming minimum fees and expenses of any of the Fund portfolios):
--------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------
$864 $1,257 $1,664 $2,462
--------------------------------
For the purposes of the Fee Tables and the Example, we assume that the Contract
is owned during the accumulation period. (See "Charges and Deductions.") On and
after the annuity starting date, different fees and charges will apply.
OTHER CONTRACTS
We offer a variety of fixed and variable annuity Contracts. They may offer
features, including investment options, fees and/or charges that are different
from those in the Contracts offered by this prospectus. Not every Contract is
offered through the same distributor. Upon request, your registered
representative can show you information regarding other annuity Contracts that
he or she distributes. You can also contact us to find out more about any of
MONY Life Insurance Company of America annuity Contracts.
CONDENSED FINANCIAL INFORMATION
Please see Appendix I at the end of this prospectus for the unit values and the
number of units outstanding as of the end of the period shown for each of the
variable investment options available as of December 31, 2012.
7
SUMMARY OF THE CONTRACT
2. Who is MONY Life Insurance Company of America?
--------------------------------------------------------------------------------
MONY LIFE INSURANCE COMPANY OF AMERICA
We are MONY Life Insurance Company of America (the "Company"), an Arizona stock
life insurance corporation organized in 1969. MONY Life Insurance Company of
America is an indirect wholly owned subsidiary of AXA Financial, Inc., which is
an indirect wholly owned subsidiary of AXA S.A. ("AXA"), a French holding
company for an international group of insurance and related financial services
companies. As the ultimate sole shareholder of the Company, AXA exercises
significant influence over the operations and capital structure of the Company.
No company other than the Company, however, has any legal responsibility to pay
amounts that the Company owes under the Contracts.
AXA Financial, Inc. and its consolidated subsidiaries managed approximately
$537 billion in assets as of December 31, 2012. The Company is licensed to sell
life insurance and annuities in forty-nine states (not including New York), the
District of Columbia, the U.S. Virgin Islands and Puerto Rico. Our home office
is located at 1290 Avenue of the Americas, New York, NY 10104.
8
WHO IS MONY LIFE INSURANCE COMPANY OF AMERICA?
HOW TO REACH US
To obtain (1) any forms you need for communicating with us, (2) unit values and
other values under your policy, and (3) any other information or materials that
we provide in connection with your Contract or the Portfolios, you may
communicate with our processing office as listed below for the purposes
described. Please refer to "Telephone/ Fax/Web Transactions" for effective
dates for processing telephone, Internet, and facsimile requests, later in this
prospectus. Certain methods of contacting us, such as by telephone or
electronically may be unavailable or delayed (for example our fax service may
not be available at all times and/or we may be unavailable due to emergency
closing). In addition, the level and type of service available may be
restricted based on criteria established by us. In order to avoid delays in
processing, please send your correspondence and check to the appropriate
location, as follows:
--------------------------------------------------------------------------------
FOR CORRESPONDENCE WITH CHECKS:
FOR SUBSEQUENT CONTRIBUTIONS SENT BY REGULAR MAIL:
MONY Life Insurance Company of America
P.O. Box 5064
New York, NY 10087-5064
FOR SUBSEQUENT CONTRIBUTIONS SENT BY EXPRESS DELIVERY:
JPMorgan Chase -- Lockbox Processing
Lockbox -- MONY Life Insurance Company of America -- LBX 5064
4 Chase Metrotech Center
7th Floor East
Brooklyn, NY 11245
--------------------------------------------------------------------------------
FOR CORRESPONDENCE WITHOUT CHECKS:
FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS, OR
REQUIRED NOTICES) SENT BY MAIL:
MONY Life Insurance Company of America
Policyholder Services
100 Madison Street
Syracuse, New York 13202
Your correspondence will be picked up at the mailing address noted above and
delivered to our processing office. Your correspondence, however, is not
considered received by us until it is received at our processing office. Where
this prospectus refers to the day when we receive a contribution, request,
election, notice, transfer or any other transaction request from you, we mean
the day on which that item (or the last thing necessary for us to process that
item) arrives in complete and proper form at our processing office or via the
appropriate telephone or fax number if the item is a type we accept by those
means. There are two main exceptions: if the item arrives (1) on a day that is
not a business day or (2) after the close of a business day, then, in each
case, we are deemed to have received that item on the next business day. Our
processing office is: 100 Madison Street, Syracuse, New York 13202.
--------------------------------------------------------------------------------
BY TOLL-FREE PHONE:
Customer service representatives are available weekdays from 9:00 a.m. to 5:00
p.m., Eastern Time at 1-800-487-6669.
--------------------------------------------------------------------------------
BY INTERNET:
Clients may access Online Account Access by visiting our Website at
www.axa-equitable.com. Our Website provides access to account information and
customer service. After enrolling and setting up a password, you can view
account details, perform certain transactions, print customer service forms and
find answers to Frequently Asked Questions (FAQs).
You can also change your allocation percentages, transfer among investment
options, make a payment, and/or change your address (1) by toll-free phone,
(2) over the Internet, through Online Account Access, or (3) by writing our
Operations Center. For more information about the transaction requests you can
make by phone, fax or internet, see "Telephone/fax/web transactions" later in
this prospectus.
MONY AMERICA VARIABLE ACCOUNT A
MONY America Variable Account A is a separate investment account of the
Company. Presently, only Purchase Payments for individual flexible payment
variable annuity contracts are permitted to be allocated to MONY America
Variable Account A. The assets in MONY America Variable Account A are kept
separate from the General Account assets and other separate accounts of the
Company.
The Company owns the assets in MONY America Variable Account A. The Company is
required to keep assets in MONY America Variable Account A that equal the total
market value of the contract liabilities funded by MONY America Variable
Account A. Realized or unrealized income gains or losses of MONY America
Variable Account A are credited or charged against MONY America Variable
Account A assets without regard to the other income, gains or losses of the
Company. Reserves and other liabilities under the contracts are assets of MONY
America Variable Account A. MONY America Variable Account A assets are not
chargeable with liabilities of the Company's other businesses. The assets of
MONY America Variable Account A are, however, available to cover the
liabilities of the Company's General Account to the extent that the assets of
MONY America Variable Account A exceed the liabilities of the Contracts
supported by it. The amount of some of our obligations under the Contracts is
based on the assets in MONY America Variable Account A. However, the
obligations themselves are obligations of the Company.
MONY America Variable Account A was authorized by the Board of Directors of the
Company and established under Arizona law on March 27, 1987. MONY America
Variable Account A is registered under the Investment Company Act of 1940 (the
"1940 Act") and is registered and classified under that act as a "unit
investment trust". The SEC, however, does not manage or supervise the Company
or MONY America Variable Account A. Although MONY America Variable Account A is
registered, the Securities and Exchange Commission (the "SEC") does not monitor
the activity of MONY America Variable Account A on a daily basis. The Company
is not required to register, and is not registered, as an investment company
under the "1940 Act". A unit investment trust is a type of investment company.
For state law purposes, MONY America Variable Account A is treated as a part or
division of the Company.
MONY America Variable Account A is divided into subdivisions called
subaccounts. Each subaccount invests only in shares of a designated portfolio
of the Funds. For example, the EQ/Core Bond Index Subaccount invests solely in
shares of the EQ/Core Bond Index Portfolio
9
WHO IS MONY LIFE INSURANCE COMPANY OF AMERICA?
of the EQ Advisors Trust. These portfolios serve only as the underlying
investment for variable annuity and variable life insurance contracts issued
through separate accounts of the Company or other life insurance companies. The
portfolios may also be available to certain pension accounts. The portfolios
are not available directly to individual investors. In the future, we reserve
the right, in compliance with the laws that apply, to establish additional
subaccounts; eliminate subaccounts; combine any two or more subaccounts;
transfer the assets we determine to be the shares of the class of contracts to
which the contracts belong from any subaccount to another subaccount; restrict
or eliminate any voting rights as to the MONY America Variable Account A; and
cause one or more subaccounts to invest
some or all of their assets in one or more other trusts or investment companies
of MONY America Variable Account A if marketing needs, tax conditions, or
investment conditions warrant. Future subaccounts may invest in other
portfolios of the Funds or in other securities, as permitted by applicable law.
Any new subaccounts may be made available to existing contracts on a basis to
be determined by us. If any of these changes are made, we may, by appropriate
endorsement, change the Contract to reflect the change.
10
WHO IS MONY LIFE INSURANCE COMPANY OF AMERICA?
3. The Funds
--------------------------------------------------------------------------------
Each available subaccount of MONY America Variable Account A will invest only
in the shares of the Funds. We offer both affiliated and unaffiliated Funds,
which in turn offer one or more portfolios. There is a separate subaccount,
which corresponds to each portfolio of a fund offered under the Contract. AXA
Equitable Funds Management Group, LLC, a wholly owned subsidiary of AXA
Equitable, serves as the investment manager of the portfolios of AXA Premier
VIP Trust and EQ Advisors Trust. For some portfolios, AXA Equitable Funds
Management Group, LLC has entered into sub-advisory agreements with investment
advisers (the "sub-advisers") to carry out the day-to-day investment decisions
for the portfolios. As such, among other responsibilities, AXA Equitable Funds
Management Group, LLC oversees the activities of the sub-advisers with respect
to the Trusts and is responsible for retaining or discontinuing the services of
those sub-advisers. The chart below indicates the sub-adviser(s) for each
portfolio, if any. The chart below also shows the currently available
portfolios and their investment objectives.
You should be aware that AXA Advisors, LLC and AXA Distributors, LLC (together,
the "Distributors") directly or indirectly receive 12b-1 fees from affiliated
portfolios for providing certain distribution and/or shareholder support
services. These fees will not exceed 0.25% of the portfolios' average daily net
assets. The affiliated portfolios' sub-advisers and/or their affiliates may
also contribute to the cost of expenses for sales meetings or seminar
sponsorships that may relate to the policies and/or the sub-advisers'
respective portfolios. It may be more profitable for us to offer affiliated
portfolios than to offer unaffiliated portfolios.
The Funds are registered with the SEC under the 1940 Act. The Funds, or any of
them, may withdraw from sale any or all the respective portfolios as allowed by
applicable law. Not all Funds may be available in all states or in all markets.
AXA Equitable or the Distributors may directly or indirectly receive 12b-1 fees
and additional payments from certain unaffiliated portfolios, their advisers,
sub-advisers, distributors or affiliates, for providing certain administrative,
marketing, distribution and/or shareholder support services. These fees and
payments range from 0% to 0.60% of the unaffiliated portfolios' average daily
net assets. The Distributors may also receive payments from the advisers or
sub-advisers of the unaffiliated portfolios or their affiliates for certain
distribution services, including expenses for sales meetings or seminar
sponsorships that may relate to the contracts and/or the advisers' respective
portfolios.
As a contract owner, you may bear the costs of some or all of these fees and
payments through your indirect investment in the portfolios. (See the
portfolios' prospectuses for more information.) These fees and payments will
reduce the underlying portfolios' investment returns. AXA Equitable may profit
from these fees and payments.
AXA Equitable considers the availability of these fees and payment arrangements
during the selection process for the underlying portfolios. These fees and
payment arrangements may create an incentive for us to select portfolios (and
classes of shares of portfolios) that pay us higher amounts.
You should note that some portfolios have objectives and strategies that are
substantially similar to those of certain funds that are purchased directly
rather than under a variable insurance product such as the Contract. These
portfolios may even have the same manager(s) and/or a similar name. However,
there are numerous factors that can contribute to differences in performance
between two investments, particularly over short periods of time. Such factors
include fees; the timing of stock purchases and sales; differences in fund cash
flows; and specific strategies employed by the portfolio manager.
The AXA Allocation Portfolios offer contract owners a convenient opportunity to
invest in other portfolios that are managed and have been selected for
inclusion in the AXA Allocation Portfolios by AXA Equitable Funds Management
Group, LLC, the investment manager of the AXA Premier VIP Trust and EQ Advisors
Trust. AXA Advisors, LLC, an affiliated broker-dealer of the Company, may
promote the benefits of such portfolios to contract owners and/or suggest,
incidental to the sale of this Contract, that contract owners consider whether
allocating some or all of their account value to such portfolios is consistent
with their desired investment objectives. In doing so, AXA Equitable, and/or
its affiliates, may be subject to conflicts of interest insofar as AXA
Equitable may derive greater revenues from the AXA Allocation Portfolios than
certain other portfolios available to you under your Contract. Please see
"Payment and allocation of Purchase Payments" in "Detailed information about
the Contract" for more information about your role in managing your allocations.
As described in more detail in the underlying Fund prospectuses, the AXA
Allocation Portfolios and certain other affiliated Portfolios, use futures and
options to reduce the Portfolio's equity exposure during periods when certain
market indicators indicate that market volatility is high. This strategy is
designed to reduce the risk of market losses from investing in equity
securities. However, this strategy may result in periods of underperformance,
including those when the specified benchmark index is appreciating, but market
volatility is high. As a result, your Fund Value may rise less than it would
have without these defensive actions. If you have an enhanced death benefit,
this strategy may also indirectly suppress the value of your enhanced death
benefit.
The investment strategies of the Portfolios are designed to reduce the overall
volatility of your Fund Value. The reduction in volatility permits us to more
effectively and efficiently provide the benefits under the contract. This
approach, while reducing volatility, may also suppress the investment
performance of your contract and the value of your enhanced death benefit.
11
THE FUNDS
---------------------------------------------------------------------------------------------------
AXA PREMIER VIP INVESTMENT MANAGER (OR
TRUST SUB-ADVISER(S), AS
PORTFOLIO NAME SHARE CLASS OBJECTIVE APPLICABLE)
---------------------------------------------------------------------------------------------------
AXA AGGRESSIVE Class B Seeks to achieve long-term capital . AXA Equitable
ALLOCATION/(1)/ appreciation. Funds Management
Group, LLC
---------------------------------------------------------------------------------------------------
AXA CONSERVATIVE Class B Seeks to achieve a high level of current . AXA Equitable
ALLOCATION/(1)/ income. Funds Management
Group, LLC
---------------------------------------------------------------------------------------------------
AXA Class B Seeks to achieve current income and . AXA Equitable
CONSERVATIVE-PLUS growth of capital, with a greater Funds Management
ALLOCATION/(1)/ emphasis on current income. Group, LLC
---------------------------------------------------------------------------------------------------
AXA MODERATE Class B Seeks to achieve long-term capital . AXA Equitable
ALLOCATION/(1)/ appreciation and current income. Funds Management
Group, LLC
---------------------------------------------------------------------------------------------------
AXA MODERATE-PLUS Class B Seeks to achieve long-term capital . AXA Equitable
ALLOCATION/(1)/ appreciation and current income, with a Funds Management
greater emphasis on capital appreciation. Group, LLC
---------------------------------------------------------------------------------------------------
MULTIMANAGER SMALL Class B Seeks to achieve long-term growth of capi- . AXA Equitable
CAP GROWTH tal with an emphasis on risk-adjusted re- Funds Management
turns and managing volatility in the Group, LLC
Portfolio. . BlackRock
Investment
Management, LLC
. Lord, Abbett &
Co. LLC
. Morgan Stanley
Investment
Management Inc.
. NorthPointe
Capital, LLC
------------------------------------------------------------------------------------------------------------
EQ ADVISORS TRUST INVESTMENT MANAGER (OR
PORTFOLIO NAME SHARE CLASS OBJECTIVE SUB-ADVISER(S), AS APPLICABLE)
------------------------------------------------------------------------------------------------------------
ALL ASSET Class IB Seeks long-term capital appreciation and . AXA Equitable
GROWTH-ALT 20 current income. Funds Management
Group, LLC
------------------------------------------------------------------------------------------------------------
EQ/BLACKROCK BASIC Class IB Seeks to achieve capital appreciation and . BlackRock
VALUE EQUITY secondarily, income. Investment
Management, LLC
------------------------------------------------------------------------------------------------------------
EQ/BOSTON ADVISORS Class IB Seeks a combination of growth and . Boston Advisors,
EQUITY INCOME income to achieve an above-average and LLC
consistent total return.
------------------------------------------------------------------------------------------------------------
EQ/CALVERT SOCIALLY Class IA Seeks to achieve long-term capital . Calvert
RESPONSIBLE appreciation. Investment
Management, Inc.
------------------------------------------------------------------------------------------------------------
EQ/CAPITAL GUARDIAN Class IA Seeks to achieve long-term growth of . Capital Guardian
RESEARCH capital. Trust Company
------------------------------------------------------------------------------------------------------------
EQ/CORE BOND INDEX Class IA Seeks to achieve a total return before . AXA Equitable
expenses that approximates the total Funds Management
return performance of the Barclays Group, LLC
Intermediate U.S. Government/Credit . SSgA Funds
Index, including reinvestment of Management, Inc.
dividends, at a risk level consistent with
that of the Barclays Intermediate U.S.
Government/Credit Index.
------------------------------------------------------------------------------------------------------------
EQ/EQUITY GROWTH Class IB Seeks to achieve long-term growth of . AXA Equitable
PLUS capital with an emphasis on risk-adjusted Funds Management
returns and managing volatility in the Group, LLC
Portfolio. . BlackRock Capital
Management, Inc.
. BlackRock
Investment
Management, LLC
------------------------------------------------------------------------------------------------------------
EQ/GAMCO MERGERS Class IB Seeks to achieve capital appreciation. . GAMCO Asset
AND ACQUISITIONS Management, Inc.
------------------------------------------------------------------------------------------------------------
EQ/GAMCO SMALL Class IB Seeks to maximize capital appreciation. . GAMCO Asset
COMPANY VALUE Management, Inc.
------------------------------------------------------------------------------------------------------------
12
THE FUNDS
------------------------------------------------------------------------------------------------------------
EQ ADVISORS TRUST INVESTMENT MANAGER (OR
PORTFOLIO NAME SHARE CLASS OBJECTIVE SUB-ADVISER(S), AS APPLICABLE)
------------------------------------------------------------------------------------------------------------
EQ/INTERMEDIATE Class IA Seeks to achieve a total return before . AXA Equitable
GOVERNMENT BOND expenses that approximates the total Funds Management
return performance of the Barclays Group, LLC
Intermediate U.S. Government Bond . SSgA Funds
Index, including reinvestment of Management, Inc.
dividends, at a risk level consistent with
that of the Barclays Intermediate U.S.
Government Bond Index.
------------------------------------------------------------------------------------------------------------
EQ/LARGE CAP VALUE Class IA Seeks to achieve a total return before . SSgA Funds
INDEX expenses that approximates the total Management, Inc.
return performance of the Russell 1000
Value Index, including reinvestment of
dividends, at a risk level consistent with
that of the Russell 1000 Value Index.
------------------------------------------------------------------------------------------------------------
EQ/MFS Class IB Seeks to achieve capital appreciation. . Massachusetts
INTERNATIONAL Financial
GROWTH Services Company
d/b/a MFS
Investment
Management
------------------------------------------------------------------------------------------------------------
EQ/MID CAP INDEX Class IA Seeks to achieve a total return before . SSgA Funds
expenses that approximates the total Management, Inc.
return performance of the S&P Mid Cap
400 Index, including reinvestment of
dividends, at a risk level consistent with
that of the S&P Mid Cap 400 Index.
------------------------------------------------------------------------------------------------------------
EQ/MID CAP VALUE Class IA Seeks to achieve long-term capital . AXA Equitable
PLUS appreciation with an emphasis on risk- Funds Management
adjusted returns and managing volatility Group, LLC
in the Portfolio. . BlackRock
Investment
Management, LLC
. Wellington
Management
Company, LLP
------------------------------------------------------------------------------------------------------------
EQ/MONEY MARKET Class IA Seeks to obtain a high level of current . The Dreyfus
income, preserve its assets and maintain Corporation
liquidity.
------------------------------------------------------------------------------------------------------------
EQ/MONTAG & Class IB Seeks to achieve capital appreciation. . Montag &
CALDWELL GROWTH Caldwell, LLC
------------------------------------------------------------------------------------------------------------
EQ/MORGAN STANLEY Class IA Seeks to achieve capital growth. . Morgan Stanley
MID CAP GROWTH Investment
Management Inc.
------------------------------------------------------------------------------------------------------------
EQ/PIMCO ULTRA Class IB Seeks to generate a return in excess of . Pacific
SHORT BOND traditional money market products while Investment
maintaining an emphasis on preservation Management
of capital and liquidity. Company, LLC
------------------------------------------------------------------------------------------------------------
EQ/QUALITY BOND PLUS Class IB Seeks to achieve high current income . AllianceBernstein
consistent with moderate risk to capital. L.P.
------------------------------------------------------------------------------------------------------------
EQ/T. ROWE PRICE Class IB Seeks to achieve long-term capital . T. Rowe Price
GROWTH STOCK appreciation and secondarily, income. Associates, Inc.
------------------------------------------------------------------------------------------------------------
EQ/UBS GROWTH AND Class IB Seeks to achieve total return through . UBS Global Asset
INCOME capital appreciation with income as a Management
secondary consideration. (Americas) Inc.
----------------------------------------------------------------------------------------
INVESTMENT MANAGER
DREYFUS STOCK (OR
INDEX FUND, INC. SUB-ADVISER(S), AS
- INITIAL SHARES OBJECTIVE APPLICABLE)
----------------------------------------------------------------------------------------
DREYFUS STOCK INDEX The fund seeks to match the total return . The Dreyfus
FUND, INC. of the Standard & Poor's(R) 500 Composite Corporation
Stock Price Index. . Index Fund
Manager: Mellon
Capital Management
----------------------------------------------------------------------------------------
13
THE FUNDS
------------------------------------------------------------------------------------
FIDELITY(R)
VARIABLE INSURANCE INVESTMENT MANAGER
PRODUCTS (VIP) - (OR SUB-ADVISER(S), AS
SERVICE CLASS OBJECTIVE APPLICABLE)
------------------------------------------------------------------------------------
FIDELITY(R) VIP Seeks long-term capital appreciation. . Fidelity
CONTRAFUND(R) Management and
PORTFOLIO Research Company
(FMR)
------------------------------------------------------------------------------------
FRANKLIN
TEMPLETON
VARIABLE
INSURANCE
PRODUCTS
TRUST - CLASS INVESTMENT MANAGER
2 PORTFOLIO (OR SUB-ADVISER(S), AS
NAME OBJECTIVE APPLICABLE)
------------------------------------------------------------------------------------
FRANKLIN Seeks to maximize income while . Franklin
INCOME maintaining prospects for capital Advisers, Inc.
SECURITIES appreciation.
FUND
------------------------------------------------------------------------------------
FRANKLIN Seeks long-term capital appreciation, with . Franklin Advisory
RISING preservation of capital as an important Services, LLC
DIVIDENDS consideration.
SECURITIES
FUND
------------------------------------------------------------------------------------
JANUS ASPEN
SERIES INVESTMENT MANAGER
- INSTITUTIONAL (OR SUB-ADVISER(S), AS
SHARES OBJECTIVE APPLICABLE)
------------------------------------------------------------------------------------
BALANCED PORTFOLIO Seeks long-term capital growth, . Janus Capital
consistent with preservation of capital Management LLC
and balanced by current income.
------------------------------------------------------------------------------------
ENTERPRISE Seeks long-term growth of capital. . Janus Capital
PORTFOLIO Management LLC
------------------------------------------------------------------------------------
FORTY Seeks long-term growth of capital. . Janus Capital
PORTFOLIO/(2)/ Management LLC
------------------------------------------------------------------------------------
GLOBAL RESEARCH Seeks long-term growth of capital. . Janus Capital
PORTFOLIO/(3)/ Management LLC
------------------------------------------------------------------------------------
OPPENHEIMER
VARIABLE ACCOUNT INVESTMENT MANAGER
FUNDS - SERVICE (OR SUB-ADVISER(S), AS
CLASS OBJECTIVE APPLICABLE)
------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL The fund seeks capital appreciation. . OFI Global Asset
FUND/VA/(4)/ Management, Inc.
(Investment
Manager)
. OppenheimerFunds,
Inc. (Sub-Adviser)
------------------------------------------------------------------------------------
PIMCO VARIABLE
INSURANCE TRUST
- INVESTMENT MANAGER
ADMINISTRATIVE (OR SUB-ADVISER(S), AS
CLASS OBJECTIVE APPLICABLE)
------------------------------------------------------------------------------------
PIMCO GLOBAL Seeks maximum total return, consistent . Pacific
BOND PORTFOLIO with preservation of capital and prudent Investment
(UNHEDGED) investment management. Management
Company, LLC
-----------------------------------------------------------------------------------
PROFUNDS
VP - INVESTMENT MANAGER
PORTFOLIO (OR SUB-ADVISER(S), AS
NAME OBJECTIVE APPLICABLE)
-----------------------------------------------------------------------------------
PROFUND VP Seeks daily investment results, before fees . ProFund Advisors,
BEAR and expenses, that correspond to the LLC
inverse (-1x) of the daily performance of
the S&P 500(R).
-----------------------------------------------------------------------------------
PROFUND VP Seeks daily investment results, before fees . ProFund Advisors,
RISING and expenses, that correspond to one and LLC
RATES one-quarter times the inverse (-1.25x) of
OPPORTUNITY the daily price movement of the most
recently issued 30-year U.S. Treasury
Bond ("Long Bond").
-----------------------------------------------------------------------------------
PROFUND VP Seeks daily investment results, before fees . ProFund Advisors,
ULTRABULL and expenses that correspond to twice LLC
(2x) the daily performance of the S&P
500(R).
-----------------------------------------------------------------------------------
(1)The "AXA Allocation" portfolios.
(2)Unlike the other Funds, the Janus Aspen Forty Portfolio is a nondiversified,
open-end management investment company. A nondiversified Fund may hold a
larger position in a smaller number of securities than a diversified Fund.
This means that a single security's increase or decrease in value may have a
greater impact on the return and net asset value of a nondiversified Fund
than a diversified Fund.
(3)This is the portfolio's new name, effective on or about May 1, 2013. The
portfolio's former name was Janus Aspen Worldwide Portfolio.
(4)This is the portfolio's new name, effective on or about April 30, 2013. The
portfolio's former name was Oppenheimer Global Securities Fund/VA.
14
THE FUNDS
YOU SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS AND CHARGES AND EXPENSES
OF THE PORTFOLIOS CAREFULLY BEFORE INVESTING. SHARE CLASSES, WHERE APPLICABLE,
ARE DEFINED IN THE CORRESPONDING FUND PROSPECTUS. THE PROSPECTUSES FOR THE FUND
CONTAIN THIS AND OTHER IMPORTANT INFORMATION ABOUT THE PORTFOLIOS. THE
PROSPECTUSES SHOULD BE READ CAREFULLY BEFORE INVESTING. IN ORDER TO OBTAIN
COPIES OF FUND PROSPECTUSES THAT DO NOT ACCOMPANY THIS PROSPECTUS, YOU MAY CALL
ONE OF OUR CUSTOMER SERVICE REPRESENTATIVES AT 1-800-487-6669.
Each Owner should periodically review their allocation of Purchase Payments and
Fund Value among the subaccounts and the Guaranteed Interest Account with
Market Value Adjustment in light of their current objectives, the current
market conditions, and the risks of investing in each of the Funds' various
portfolios. A full description of the objectives, policies, restrictions, risks
and expenses for each of the Funds' portfolios can be found in the prospectus
for each of the Funds.
PURCHASE OF PORTFOLIO SHARES BY MONY AMERICA VARIABLE ACCOUNT A
MONY America Variable Account A will buy and redeem shares from the Funds at
net asset value. Shares will be redeemed when needed for the Company to:
.. collect charges under the Contracts;
.. pay Cash Value on full surrenders of the Contract;
.. fund partial surrenders;
.. provide benefits under the Contracts; and
.. transfer assets from one subaccount to another or between one or more
subaccounts of MONY America Variable Account A and the Guaranteed Interest
Account with Market Value Adjustment as requested by Owners.
Any dividend or capital gain distribution received from a portfolio of a Fund
will be:
.. reinvested immediately at net asset value in shares of that portfolio; and
.. kept as assets of the corresponding subaccount.
--------------------------------------------------------------------------------
CASH VALUE -- THE CONTRACT'S FUND VALUE, LESS (1) ANY APPLICABLE SURRENDER
CHARGE, (2) ANY OUTSTANDING DEBT, AND (3) ANY APPLICABLE MARKET VALUE
ADJUSTMENT.
--------------------------------------------------------------------------------
Shares of the Funds are not sold directly to the general public. They are sold
to the Company, and may be sold to other insurance companies that issue
variable annuity and variable life insurance contracts. In addition, they may
be sold to retirement plans.
When a Fund sells shares in any of its portfolios both to variable annuity and
to variable life insurance company separate accounts, it engages in mixed
funding. When a Fund sells shares in any of its portfolios to separate accounts
of unaffiliated life insurance companies, it engages in shared funding. Each
Fund may engage in mixed and shared funding. Therefore, due to differences in
redemption rates or tax treatment, or other considerations, the interests of
various shareholders participating in a Fund could conflict.
The Board of Directors or Trustees of each of the Funds monitors the respective
Fund for the existence of material irreconcilable conflict between the
interests of variable annuity Owners and variable life insurance Owners. The
Boards shall report any such conflict to the boards of the Company and its
affiliates. The Boards of Directors of the Company and its affiliates have
agreed to be responsible for reporting any potential or existing mixed and
shared funding conflicts to the Directors and Trustees of each of the relevant
Funds. The Boards of Directors of the Company and its affiliates will remedy
any conflict at their own cost. The remedy may include establishing a new
registered management investment company and segregating the assets underlying
the variable annuity contracts and the variable life insurance contracts.
The investment objectives and policies of certain portfolios are similar to the
investment objectives and policies of other portfolios that may be managed by
the same investment adviser or manager. The investment results of the
portfolios, however, may be higher or lower than the results of such other
portfolios. There can be no assurance, and no representation is made that the
investment results of any of the portfolios will be comparable to the
investment results of any other portfolio, even if the other portfolio has the
same investment adviser or manager, or if the other portfolio has a similar
name.
15
THE FUNDS
4. Detailed information about the Contract
--------------------------------------------------------------------------------
The Fund Value in MONY America Variable Account A and in the Guaranteed
Interest Account with Market Value Adjustment provide many of the benefits of
your Contract. The information in this section describes the benefits,
features, charges and major provisions of the Contract and the extent to which
those depend upon the Fund Value, particularly the Fund Value in MONY America
Variable Account A. There may be differences in your Contract, such as
differences in fees, charges and benefits because of the state where we issued
your Contract. We will include any such differences in your Contract.
PAYMENT AND ALLOCATION OF PURCHASE PAYMENTS
ISSUANCE OF THE CONTRACT
Disclosure regarding contract issuance and minimum initial Purchase Payments is
for informational purposes only. This Contract is no longer available to new
purchasers.
The Contract is between you and the Company. The Contract is not an investment
advisory account, and the Company is not providing any investment advice or
managing the allocations under your Contract. In the absence of a specific
written arrangement to the contrary, you as the owner of the Contract, have the
sole authority to make investment allocations and other decisions under the
Contract. Your AXA Advisors' financial professional is acting as a
broker-dealer registered representative, and is not authorized to act as an
investment advisor or to manage the allocations under your Contract. If your
financial professional is a registered representative with a broker-dealer
other than AXA Advisors, you should speak with him/her regarding any different
arrangements that may apply.
Individuals who want to buy a Contract must:
(1)Complete an application;
(2)Personally deliver the application to;
(a)a licensed agent of the Company who is also a registered representative
of AXA Advisors, LLC or AXA Distributors, LLC (together, the
"Distributors") who act as the principal underwriters for the Contracts,
or
(b)a licensed agent who is also a registered representative of a broker
dealer which had been authorized by the Distributors to sell the
Contract; and
(3)Pay the minimum initial Purchase Payment.
If we receive a completed application and all other information necessary for
processing a purchase order at our Operations Center, we will apply your
initial Purchase Payment no later than two Business Days after we receive the
order. While attempting to finish an incomplete application, we may hold your
initial Purchase Payment for no more than five Business Days. If an incomplete
application cannot be completed within those five days, we will inform you of
the reasons, and will return your Purchase Payment immediately (unless you
specifically authorize us to keep it until the application is complete). Once
you complete your application, we must apply the initial Purchase Payment
within two Business Days. We will apply any additional Purchase Payments you
make on the Business Day we receive them at our Operations Center.
The Contract may be used with certain tax qualified plans. The Contract
includes attributes such as tax deferral on accumulated earnings. Qualified
retirement plans provide their own tax deferral benefit; the purchase of this
Contract does not provide additional tax deferral benefits beyond those
provided in the Qualified Plan. Accordingly, if you are purchasing this
Contract, you should purchase it for its death benefit, annuity benefits, and
other non-tax related benefits. Please consult a tax adviser for information
specific to your circumstances in order to determine whether the Contract is an
appropriate investment for you.
The minimum initial Purchase Payment for individuals varies depending upon the
use of the Contract and the method of purchase. The chart below shows the
minimum initial Purchase Payment for each situation.
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USE OF CONTRACT OR METHOD OF MAKING
PURCHASE PAYMENT MINIMUM INITIAL PURCHASE PAYMENT
---------------------------------------------------------------------------------
Individual retirement accounts and $2,000
annuities under Section 408 of the Code
(other than Simplified Employee
Pensions), including Roth IRAs under
Section 408A of the Code
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Non-Qualified Contracts $2,000
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H.R. 10 plans (self-employed $600
individuals' retirement plans under
Section 401 of the Code), certain
corporate or association retirement
plans, and Simplified Employee Pensions
under Section 408 of the Code
---------------------------------------------------------------------------------
Annuity purchase plans sponsored by $600
certain tax-exempt organizations,
governmental entities and deferred
compensation plans under Section 457 of
the Code
---------------------------------------------------------------------------------
Payroll deduction and automatic Annualized rate of $600 (i.e., $600
checking account withdrawal plans per year, $300 semiannually, $150
quarterly or $50 per month)
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Government Allotment Plans $50 per month
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DETAILED INFORMATION ABOUT THE CONTRACT
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GOVERNMENT ALLOTMENT PLANS -- PAYROLL DEDUCTION PLANS USED FOR FINANCIAL
PRODUCTS BY GOVERNMENT EMPLOYEES.
--------------------------------------------------------------------------------
Additional Purchase Payments may be made at any time before the Annuity
starting date as long as the Annuitant is living. However, for certain
automatic payment plans, the smallest additional payment is $50. The Company
reserves the right to revise its rules from time to time to specify different
minimum Purchase Payments for such plans. In addition, the prior approval of
the Company is needed before it will accept a Purchase Payment if, with that
Payment, that would cause Cumulative Purchase Payments, less any partial
surrenders and their surrender charges and market value adjustment, to exceed
$1,500,000.
The Company reserves the right to reject an application for any reason
permitted by law.
Net Purchase Payments received before the Effective Date will be held in the
Company's General Account and will be credited with interest at not less than
3.50% per year if:
(1)the Contract is issued by the Company, and
(2)the Contract is delivered to the Owner.
No interest will be paid if the Contract is not issued or if it is declined by
the Owner.
These amounts will be held in the General Account pending end of the right to
return contract period. (See below.)
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EFFECTIVE DATE -- THE DATE THE CONTRACT BEGINS AS SHOWN IN THE CONTRACT.
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TAX-FREE "SECTION 1035" EXCHANGES
This information is no longer applicable to the purchase of these Contracts as
these Contracts are no longer available to new purchasers.
The Owner can generally exchange one annuity contract for another in a
"tax-free exchange" under Section 1035 of the Internal Revenue Code. Similar
rules may apply to changing the funding vehicle in a Qualified Plan. Before
making the exchange, the Owner should compare both contracts carefully.
Remember that if you exchange another contract for the one described in this
prospectus, you might have to pay a surrender charge on the old contract. There
will be a new surrender charge period for this Contract and other charges may
be higher (or lower) and the benefits may be different. If the exchange does
not qualify for Section 1035 treatment, the Owner may have to pay federal
income tax, and penalty taxes on the exchange. The Owner should not exchange
another contract for this one unless he or she determines, after knowing all
the facts, that the exchange is in the Owner's best interest and not just
better for the person trying to sell the Owner this Contract (that person will
generally earn a commission if the Owner buys this Contract through an exchange
or otherwise).
RIGHT TO RETURN CONTRACT PROVISION
This information is no longer applicable, as these contracts are no longer
available to new purchasers.
The Owner may return the Contract during the right to return contract period
(usually within 10 days of the delivery date). The Contract must be returned to
the Company or any agent of the Company. When the Company receives the
Contract, it will be voided as if it were never in effect. The amount to be
refunded is equal to the Purchase Payments received by the Company less any
partial surrender you made. During the right to return contract period,
Purchase Payments will be retained in the Company's General Account and will
earn interest at a rate not less than 3.50% per year. If you have not returned
the Contract at the end of the right to return contract period, we transfer the
Net Purchase Payments with interest to the subaccounts and/or the Guaranteed
Interest Account.
For contracts issued in the State of Washington, an additional 10% penalty will
be added to any Purchase Payment refund due that is not paid within 30 days of
return of the Contract to the Company. For contracts issued in the State of
Oklahoma, if payment is delayed more than 30 days, the Company will pay
interest on the proceeds at a rate required by Oklahoma law.
ALLOCATION OF PURCHASE PAYMENTS AND FUND VALUE
ALLOCATION OF PAYMENTS. On the application, the Owner may allocate Net Purchase
Payments to any of the available subaccounts of MONY America Variable Account A
or to the Guaranteed Interest Account with Market Value Adjustment. Net
Purchase Payments (and any interest thereon) are held in the General Account if
they are received before the end of the right to return contract period. The
Net Purchase Payments will earn interest at a rate not less than 3.50% per year
beginning on the later of:
(1)the Effective Date of the Contract, or
(2)the date the Payment is received at the Company's Operations Center.
Net Purchase Payments will continue to earn 3.50% annual interest until the
right to return contract period expires. (See "Right to return contract
provision" above.) After the right to return contract period has expired, the
Contract's Fund Value will automatically be transferred to MONY America
Variable Account A subaccount(s) or to the Guaranteed Interest Account with
Market Value Adjustment according to the Owner's allocation instructions.
After the right to return contract period ends, under a non-automatic payment
plan, if the Owner does not:
(1)specify the amount to be allocated among subaccounts, or
(2)specify the percentage to be allocated among subaccounts, or
(3)the amount or percentage specified is incorrect or incomplete,
the Net Purchase Payments will be allocated under the Owner's most recent
instructions on record with the Company. The percentage specified must not be
less than 10% of the Net Purchase Payment. For automatic payment plans, Net
Purchase Payments will be allocated according to the Owner's most recent
instructions on record.
The Owner may change the specified allocation formula for future Net Purchase
Payments at any time without charge by sending written notification to the
Company at the Operations Center. Prior allocation instructions may also be
changed by telephone, facsimile or via the Web subject to the rules of the
Company and its right to terminate or modify telephone, facsimile or via the
Web allocation. The Company reserves the right to deny any telephone, facsimile
or via the Web allocation request. (See "Telephone/fax/web transactions.") Any
such
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DETAILED INFORMATION ABOUT THE CONTRACT
change, whether made in writing or by telephone, facsimile or via the Web, will
be effective within 7 days of the date we receive notice of the change.
Net Purchase Payments may be allocated in whole percentages to any of the
available subaccounts and to the Guaranteed Interest Account. Allocations must
be in whole percentages, and no allocation may be for less than 10% of a Net
Purchase Payment. Allocation percentages must total 100%. Contracts issued in
the states of Maryland, New Jersey, Oklahoma, Oregon, South Carolina, Texas and
Washington and the Commonwealths of Massachusetts and Pennsylvania must
maintain a minimum fund value balance of $2,500 in the Guaranteed Interest
Account when an allocation to said account is chosen.
CALCULATING UNIT VALUES FOR EACH SUBACCOUNT
When allocated Purchase Payments are received they are credited to subaccounts
of MONY America Variable Account A in the form of units. The number of units is
determined by dividing the dollar amount allocated to a particular subaccount
by the unit value for that subaccount for the Business Day on which the
Purchase Payment is received.
To determine the unit value of a subaccount on each Business Day, the Company
takes the prior Business Day's unit value and multiplies it by the Net
Investment Factor for the current Business Day. The Net Investment Factor is
used to measure the investment performance of a subaccount from one Business
Day to the next. The Net Investment Factor for each subaccount equals:
(1)the net asset value per share of each Fund held in the subaccount at the end
of the current Business Day divided by
(2)the net asset value per share of each Fund held in the subaccount at the end
of the prior Business day, minus
(3)the daily mortality and expense risk charge and any other applicable charges
adjusted for the number of calendar days in the period.
The unit value of these subaccounts may increase, decrease or remain the same
from Business Day to Business Day. The unit value depends on the investment
performance of the portfolio of the Fund in which the subaccount invests and
any expenses and charges deducted from MONY America Variable Account A. The
Owner bears the entire investment risk. Owners should periodically review their
allocations of payments and values in light of market conditions and overall
financial planning requirements.
CALCULATION OF GUARANTEED INTEREST ACCOUNT WITH MARKET VALUE ADJUSTMENT FUND
VALUE
Net Purchase Payments to be allocated to the Guaranteed Interest Account with
Market Value Adjustment will be credited to the Accumulation Period chosen by
the Owner on:
(1)the date received at the Operations Center, or
(2)if the day Net Purchase Payments are received is not a Business Day, then on
the next Business Day.
Interest will be credited daily.
CALCULATION OF FUND VALUE
The Contract's Fund Value will reflect:
.. The investment performance of the selected subaccount(s) of MONY America
Variable Account A;
.. Amounts credited (including interest) to the Guaranteed Interest Account
with Market Value Adjustment;
.. Any amount in the loan account;
.. Any Net Purchase Payments;
.. Any transfer charges;
.. Any partial surrenders; and
.. All contract charges (including surrender charges and market value
adjustments) imposed.
There is no guaranteed minimum Fund Value, except to the extent Net Purchase
Payments have been allocated to the Guaranteed Interest Account with Market
Value Adjustment. Because a Contract's Fund Value at any future date will be
dependent on a number of variables, it cannot be predetermined.
The Fund Value will be computed first on the Effective Date and thereafter on
each Business Day. On the Effective Date, the Contract's Fund Value will be the
Net Purchase Payments received plus any interest credited on those Payments
during the period when Net Purchase Payments are held in the General Account.
(See "Issuance of the Contract.")
After amounts allocated to the subaccounts are transferred from the General
Account to MONY America Variable Account A, on each Business Day, the
Contract's Fund Value will be computed as follows:
(1)Determine the aggregate of the Fund Values attributable to the Contract in
each of the subaccounts on that Business Day. This is done by multiplying
the subaccount's unit value on that date by the number of subaccount units
allocated to the Contract. The computation of the Contract's Fund Value in
the subaccount is done before any other Contract transactions on that
Business Day.
(2)Add any amount credited to the Guaranteed Interest Account with Market Value
Adjustment before that Business Day. This amount is the aggregate of all Net
Purchase Payments allocated to the Guaranteed Interest Account with Market
Value Adjustment and:
.. The addition of any interest credited.
.. Addition or subtraction of any amounts transferred.
.. Subtraction of any partial surrenders.
.. Subtraction of any contract charges, surrender charges, transfer charges,
and any Market Value Adjustments
(3)Add the value held in the loan account to secure contract loans and interest
credited on that day on that amount;
(4)Add any Net Purchase Payment received on that Business Day;
(5)Subtract any partial surrender amount (reflecting any surrender charge and
Market Value Adjustment) made on that Business Day;
18
DETAILED INFORMATION ABOUT THE CONTRACT
(6)Subtract any annual contract charge and/or transfer charge deductible on
that Business Day.
Regarding (1) above, for each subaccount we multiply the number of units
credited to that subaccount by its unit value on that Business Day. The
multiplication is done BEFORE the purchase or redemption of any units on that
Business Day.
If a transaction would ordinarily require that the Contract's Fund Value be
computed for a day that is not a Business Day, the next following Business Day
will be used.
TRANSFERS. You may transfer the value of the Contract among the subaccounts
after the right to return contract period has expired by sending a proper
written request to the Company's Operations Center. Transfers may be made by
telephone, facsimile or via the web if you have proper authorization. (See
"Telephone/fax/web transactions.") Transfers from a subaccount will be executed
at the net asset value next calculated by the Company if the transfer
instruction is received and acknowledged by 4:00 p.m., Eastern Time on a day on
which the New York Stock Exchange is open for business. If the New York Stock
Exchange is not open for business on the day of receipt, the transfer
instruction will be executed at the net asset value calculated at the close of
business on the first day thereafter on which the New York Stock Exchange is
open for business. Such transfers are subject to the Company's rules and
conditions for such privilege. Currently, there are no limitations on the
number of transfers between subaccounts. Our current transfer restrictions are
set forth in the "Disruptive transfer activity" section below.
Transfers among, to and from subaccounts may be postponed for any period during
which:
(1)the New York Stock Exchange is closed other than customary weekend and
holiday closings, or
(2)trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission, or
(3)an emergency exists as a result of which disposal of securities held by the
Fund is not reasonably practicable or it is not reasonably practicable to
determine the value of the net assets of the Fund.
A transfer charge is not currently imposed on transfers. (See "Charges against
fund value -- Transfer charge.") However, the Company reserves the right to
impose a charge which will not exceed $25 per transfer (except for contracts
issued in the states of South Carolina and Texas where it will not exceed $10).
If imposed the charge will be deducted from the first subaccount(s) or the
Guaranteed Interest Account with Market Value Adjustment Accumulation Period
you designate funds to be transferred from. This charge is in addition to the
amount transferred. All transfers in a single request are treated as one
transfer transaction. A transfer resulting from the first reallocation of Fund
Value at the end of the right to return contract period and transfers made at
the end of an Accumulation Period of amounts allocated to the Guaranteed
Interest Account with Market Value Adjustment (see below) will not be subject
to a transfer charge. Under present law, transfers are not taxable transactions.
--------------------------------------------------------------------------------
EFFECTIVE DATE -- THE DATE SHOWN AS THE EFFECTIVE DATE OF THE CONTRACT.
--------------------------------------------------------------------------------
TRANSFERS INVOLVING THE GUARANTEED INTEREST ACCOUNT WITH MARKET VALUE
ADJUSTMENT. Transfers may be made from the Guaranteed Interest Account with
Market Value Adjustment at any time, but, if they are made before the end of
the 3, 5, 7, or 10 year accumulation period there will be a market value
adjustment for contracts issued in most states. If the transfer request is
received within 30 days before the end of the Accumulation Period, no market
value adjustment will apply.
Contracts issued in Maryland, New Jersey, Oklahoma, South Carolina, Texas and
Washington and the Commonwealths of Massachusetts and Pennsylvania, to the
extent the Owner allocates investments to the Guaranteed Interest Account, must
maintain a minimum Fund Value in the Guaranteed Interest Account of $2,500.
Please see "Payment and allocation of Purchase Payments" earlier in this
section for more information about your role in managing your allocations.
PORTFOLIO REBALANCING
Our portfolio rebalancing program can help prevent a well-conceived investment
strategy from becoming diluted over time. Investment performance will likely
cause the allocation percentages you originally selected to shift. With this
program, you may instruct us to periodically reallocate values in your
Contract. The program does not guarantee an investment gain or protect against
an investment loss. You may elect or terminate the rebalancing program at any
time. You may also change your allocations under the program at any time.
Requesting a transfer while enrolled in our rebalancing program will
automatically terminate your participation in the program. This means that your
account will no longer be rebalanced on a periodic basis. You must provide us
with written instructions if you wish your account to be rebalanced in the
future.
TELEPHONE/FAX/WEB TRANSACTIONS
Prior allocation instructions may be changed or transfers requested by
telephone, fax or via the web subject to the Company's guidelines (which we
believe to be reasonable) and the Company's right to modify or terminate the
telephone/fax/web privilege. The Company reserves the right to deny any
telephone, fax or web request.
If all telephone lines are busy or the internet is not available (for example,
during periods of substantial market fluctuations), Owners may be unable to
request telephone, fax or web allocation changes or transfers by telephone, fax
or web. In such cases, an Owner would submit a written request.
We have adopted guidelines relating to changes of allocations and transfers by
telephone, fax or the web which, among other things, outlines procedures
designed to prevent unauthorized instructions. If the Owner does not follow
these procedures:
(1)the Company shall not be liable for any loss as a result of following
fraudulent telephone, fax or web instructions; and
(2)the Owner will, therefore, bear the entire risk of loss due to fraudulent
telephone, fax or web instructions.
A copy of the guidelines and our form for electing telephone/facsimile transfer
privileges is available from your financial professional or by calling us at
1-800-487-6669, Monday through Friday, 9 a.m. to 5 p.m., Eastern Time. Web
transfer privileges and a copy of the
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DETAILED INFORMATION ABOUT THE CONTRACT
guidelines and forms are available online at www.axa-equitable.com. The
telephone or fax allocation and transfer privileges may also be elected by
completing the telephone or fax authorization. The Company's form or a Contract
application with a completed telephone or fax authorization must be signed and
received at the Company's Operations Center before telephone or fax allocation
instructions will be accepted. To elect web allocation and transfer privileges,
you must log on to www.axa-equitable.com, and register for online account
access. This online application must be electronically signed and received by
the Company via the internet before web transaction instructions will be
accepted.
SPECIAL NOTE ON RELIABILITY. Please note that the internet and our telephone
system may not always be available. Any system, whether it is yours, your
service provider's, or your registered representative's, can experience
unscheduled 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 are experiencing problems,
you can make your transactions by writing our Operations Center.
DISRUPTIVE TRANSFER ACTIVITY
You should note that the Contract is not designed for professional "market
timing" organizations, or other organizations or individuals engaging in a
market timing strategy. The Contract is not designed to accommodate programmed
transfers, frequent transfers or transfers that are large in relation to the
total assets of the underlying portfolio.
Frequent transfers, including market timing and other program trading or
short-term trading strategies, may be disruptive to the underlying portfolios
in which the subaccounts invest. Disruptive transfer activity may adversely
affect performance and the interests of long-term investors by requiring a
portfolio to maintain larger amounts of cash or to liquidate portfolio holdings
at a disadvantageous time or price. For example, when market timing occurs, a
portfolio may have to sell its holdings to have the cash necessary to redeem
the market timer's investment. This can happen when it is not advantageous to
sell any securities, so the portfolio's performance may be hurt. When large
dollar amounts are involved, market timing can also make it difficult to use
long-term investment strategies because a portfolio cannot predict how much
cash it will have to invest. In addition, disruptive transfers or purchases and
redemptions of portfolio investments may impede efficient portfolio management
and impose increased transaction costs, such as brokerage costs, by requiring
the portfolio manager to effect more frequent purchases and sales of portfolio
securities. Similarly, a portfolio may bear increased administrative costs as a
result of the asset level and investment volatility that accompanies patterns
of excessive or short-term trading. Portfolios that invest a significant
portion of their assets in foreign securities or the securities of small- and
mid-capitalization companies tend to be subject to the risks associated with
market timing and short-term trading strategies to a greater extent than
portfolios that do not. Securities trading in overseas markets present time
zone arbitrage opportunities when events affecting portfolio securities values
occur after the close of the overseas market but prior to the close of the U.S.
markets. Securities of small- and mid-capitalization companies present
arbitrage opportunities because the market for such securities may be less
liquid than the market for securities of larger companies, which could result
in pricing inefficiencies. Please see the prospectuses for the underlying
portfolios for more information on how portfolio shares are priced.
We currently use the procedures described below to discourage disruptive
transfer activity. You should understand, however, that these procedures are
subject to the following limitations: (1) they primarily rely on the policies
and procedures implemented by the underlying portfolios; (2) they do not
eliminate the possibility that disruptive transfer activity, including market
timing, will occur or that portfolio performance will be affected by such
activity; and (3) the design of market timing procedures involves inherently
subjective judgments, which we seek to make in a fair and reasonable manner
consistent with the interests of all policy and contract owners.
We offer subaccounts with underlying portfolios that are part of the AXA
Premier VIP Trust and EQ Advisors Trust, as well as subaccounts with underlying
portfolios of outside trusts with which AXA Equitable has entered participation
agreements (the "unaffiliated trusts" and, collectively with AXA Premier VIP
Trust and EQ Advisors Trust, the "trusts"). The trusts have adopted policies
and procedures regarding disruptive transfer activity. They discourage frequent
purchases and redemptions of portfolio shares and will not make special
arrangements to accommodate such transactions. They aggregate inflows and
outflows for each portfolio on a daily basis. On any day when a portfolio's net
inflows or outflows exceed an established monitoring threshold, the trust
obtains from us contract owner trading activity. The affiliated trusts
currently consider transfers into and out of (or vice versa) the same
subaccount within a five business day period as potentially disruptive transfer
activity.
When a Contract is identified in connection with potentially disruptive
transfer activity for the first time, a letter is sent to the Contract owner
explaining that there is a policy against disruptive transfer activity and that
if such activity continues certain transfer privileges may be eliminated. If
and when the contract owner is identified a second time as engaged in
potentially disruptive transfer activity under the Contract, we currently
prohibit the use of voice, fax and automated transaction services. We currently
apply such action for the remaining life of each affected contract. We or a
trust may change the definition of potentially disruptive transfer activity,
the monitoring procedures and thresholds, any notification procedures, and the
procedures to restrict this activity. Any new or revised policies and
procedures will apply to all contract owners uniformly. We do not permit
exceptions to our policies restricting disruptive transfer activity.
Each unaffiliated trust may have its own policies and procedures regarding
disruptive transfer activity. If an unaffiliated trust advises us that there
may be disruptive activity from one of our contract owners, we will work with
the unaffiliated trust to review contract owner trading activity. Each trust
reserves the right to reject a transfer that it believes, in its sole
discretion, is disruptive (or potentially disruptive) to the management of one
of its portfolios. Please see the prospectuses for the trusts for more
information.
It is possible that a trust may impose a redemption fee designed to discourage
frequent or disruptive trading by contract owners. As of the date of this
prospectus, the trusts had not implemented such a fee. If a redemption fee is
implemented by a trust, that fee, like any other trust fee, will be borne by
the contract owner.
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DETAILED INFORMATION ABOUT THE CONTRACT
Contract owners should note that it is not always possible for us and the
underlying trusts to identify and prevent disruptive transfer activity. In
addition, because we do not monitor for all frequent trading at the separate
account level, contract owners may engage in frequent trading which may not be
detected, for example, due to low net inflows or outflows on the particular
day(s). Therefore, no assurance can be given that we or the trusts will
successfully impose restrictions on all potentially disruptive transfers.
Because there is no guarantee that disruptive trading will be stopped, some
contract owners may be treated differently than others, resulting in the risk
that some contract owners may be able to engage in frequent transfer activity
while others will bear the effect of that frequent transfer activity. The
potential effects of frequent transfer activity are discussed above.
TERMINATION OF THE CONTRACT
The Contract will remain in effect until the earlier of:
(1)the date the Contract is surrendered in full,
(2)the date annuity payments start,
(3)the Contract Anniversary on which, after deduction for any annual contract
charge then due, no Fund Value in the subaccounts and the Guaranteed
Interest Account with Market Value Adjustment remains in the Contract, or
(4)the date the death benefit is payable under the Contract.
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DETAILED INFORMATION ABOUT THE CONTRACT
5. Surrenders
--------------------------------------------------------------------------------
The Owner may elect to make a surrender of all or part of the Contract's Fund
Value provided it is:
.. on or before the annuity payments start, and
.. during the lifetime of the Annuitant.
Any such election shall specify the amount of the surrender. The surrender will
be effective on the date a proper written request is received by the Company at
its Operations Center.
The amount of the surrender may be equal to the Contract's Cash Value, which is
its Fund Value less:
(1)any applicable surrender charge,
(2)any applicable Market Value Adjustment, and
(3)any outstanding debt.
The Surrender may also be for a lesser amount (a "partial surrender").
Requested partial surrenders that would leave a Cash Value of less than $1,000
are treated and processed as a full surrender. In such case, the entire Cash
Value will be paid to the Owner. For a partial surrender, any surrender charge
or any applicable market value adjustment will be in addition to the amount
requested by the Owner.
A surrender will result in the cancellation of units of the particular
subaccounts and the withdrawal of amounts credited to the Guaranteed Interest
Account Accumulation Periods as chosen by the Owner. The aggregate value of the
surrender will be equal to the dollar amount of the surrender plus, if
applicable, any surrender charge and any applicable market value adjustment.
For a partial surrender, the Company will cancel Units of the particular
subaccounts and withdraw amounts from the Guaranteed Interest Account with
Market Value Adjustment Accumulation Period under the allocation specified by
the Owner. The unit value will be calculated as of the Business Day the
surrender request is received. Allocations may be by either amount or
percentage. Allocations by percentage must be in whole percentages (totaling
100%). At least 10% of the partial surrender must be allocated to any
subaccount or an Accumulation Period in the Guaranteed Interest Account with
Market Value Adjustment designated by the Owner. The request will not be
accepted if:
.. there is insufficient Fund Value in the Guaranteed Interest Account with
Market Value Adjustment or a subaccount to provide for the requested
allocation against it, or
.. the request is incomplete or incorrect.
Any surrender charge will be allocated against the Guaranteed Interest Account
with Market Value Adjustment and each subaccount in the same proportion that
each allocation bears to the total amount of the partial surrender. Contracts
issued in the States of Maryland, New Jersey, Oklahoma, South Carolina, Texas
and Washington and the Commonwealths of Massachusetts and Pennsylvania, to the
extent the Owner allocates investments to the Guaranteed Interest Account, must
maintain a minimum Fund Value in the Guaranteed Interest Account of $2,500.
The amount of any surrender or transfer payable from MONY America Variable
Account A will be paid in accordance with the requirements of state insurance
departments and the 1940 Act. However, the Company may be permitted to postpone
such payment under the 1940 Act. Postponement is currently permissible only for
any period during which:
(1)the New York Stock Exchange is closed other than customary weekend and
holiday closings, or
(2)trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission, or
(3)an emergency exists as a result of which disposal of securities held by the
Fund is not reasonably practicable or it is not reasonably practicable to
determine the value of the net assets of the Fund.
Any surrender involving payment from amounts credited to the Guaranteed
Interest Account with Market Value Adjustment may be postponed, at the option
of the Company, for up to 6 months from the date the request for a surrender is
received by the Company. Surrenders involving payment from the Guaranteed
Interest Account with Market Value Adjustment may in certain circumstances and
in certain states also be subject to a market value adjustment, in addition to
a surrender charge. The Owner may elect to have the amount of a surrender
settled under one of the settlement options of the Contract. (See "Annuity
provisions".)
Contracts offered by this prospectus may be issued in connection with
retirement plans meeting the requirements of certain sections of the Internal
Revenue Code. Owners should refer to the terms of their particular retirement
plan for any limitations or restrictions on cash surrenders.
The tax results of a surrender should be carefully considered. (See "Federal
tax status".)
Please note: if mandated under applicable law, we may be required to reject a
Purchase Payment. In addition, we may also be required to block an Owner's
account and thereby refuse to honor any request for transfers, partial
surrenders, loans, or death benefits until instructions are secured from the
appropriate regulator. We may be required to provide additional information
about your account to government regulators.
22
SURRENDERS
6. Loans
--------------------------------------------------------------------------------
Qualified Contracts issued under an Internal Revenue Code Section 401(k) plan
will have a loan provision (except in the case of contracts issued in Vermont)
under which a loan can be taken using the Contract as collateral for the loan.
All of the following conditions apply in order for the amount to be considered
a loan, rather than a (taxable) partial surrender:
.. The term of the loan must be 5 years or less.
.. Repayments are required at least quarterly and must be substantially level.
.. The loan amount is limited to certain dollar amounts as specified by the
IRS.
The Owner (Plan Trustee) must certify that these conditions are satisfied.
In any event, the maximum outstanding loan on a Contract is 50% of the Fund
Value in the subaccounts and/or the Guaranteed Interest Account with Market
Value Adjustment. Loans are not permitted before the end of the right to return
contract period. In requesting a loan, the Owner must specify the subaccounts
from which Fund Value equal to the amount of the loan requested will be taken.
Loans from the Guaranteed Interest Account with Market Value Adjustment are not
taken until Fund Value in the subaccounts is exhausted. If Fund Value must be
taken from the Guaranteed Interest Account with Market Value Adjustment in
order to provide the Owner with the amount of the loan requested, the Owner
must specify the Accumulation Periods from which Fund Values equal to such
amount will be taken. If the Owner fails to specify subaccounts and
Accumulation Periods, the request for a loan will be returned to the Owner.
Values are transferred to a loan account that earns interest at an annual rate
of 3.50%. The annual loan interest rate charged on outstanding loan amounts
will be 6%. If interest is not repaid each year, it will be added to the
principal of the loan.
Loan repayments must be specifically earmarked as loan repayment and will be
allocated to the subaccounts and/or the Guaranteed Interest Account with Market
Value Adjustment using the most recent payment allocation on record. Otherwise,
we will treat the payment as a Net Purchase Payment.
--------------------------------------------------------------------------------
LOAN -- AVAILABLE UNDER A CONTRACT ISSUED UNDER SECTION 401(K) OF THE CODE;
SUBJECT TO AVAILABILITY. TO BE CONSIDERED A LOAN: (1) THE TERM MUST BE NO MORE
THAN FIVE YEARS, (2) REPAYMENTS MUST BE AT LEAST QUARTERLY AND SUBSTANTIALLY
LEVEL, AND (3) THE AMOUNT IS LIMITED TO DOLLAR AMOUNTS SPECIFIED BY THE CODE,
NOT TO EXCEED 50% OF THE FUND VALUE.
LOAN ACCOUNT -- A PART OF THE GENERAL ACCOUNT WHERE FUND VALUE IS HELD AS
COLLATERAL FOR A LOAN. AN OWNER MAY TRANSFER FUND VALUE IN THE SUBACCOUNTS,
AND/OR GUARANTEED INTEREST ACCOUNT WITH MARKET VALUE ADJUSTMENT TO THE LOAN
ACCOUNT.
--------------------------------------------------------------------------------
23
LOANS
7. Death benefit
--------------------------------------------------------------------------------
DEATH BENEFIT PROVIDED BY THE CONTRACT
The Company will pay a death benefit to the Beneficiary if:
(1)the Annuitant dies, and
(2)the death occurs before the annuity payments start.
The amount of the death benefit will be the greater of:
(1)the Fund Value less any outstanding debt on the date of the Annuitant's
death;
(2)the Purchase Payments paid, less any partial surrenders and their surrender
charges and market value adjustment and less any outstanding debt; or
(3)an enhanced death benefit.
If there are funds allocated to the Guaranteed Interest Account with market
value adjustment at the time of death, any applicable market value adjustment
will be waived. If the death of the Annuitant occurs on or after the annuity
payments start, no death benefit will be payable except as may be provided
under the settlement option elected.
In general, on the death of an Owner who is not the Annuitant, amounts must be
distributed from the Contract. (See "Provisions required by Section 72(s) of
the Code" later in this prospectus.) We will impose applicable surrender
charges. (See "Charges and deductions" later in this prospectus.)
ENHANCED DEATH BENEFIT OPTIONS
Your Contract provides a choice of two enhanced death benefit options when it
is issued. If the Annuitant is age 0-75, the Owner may choose either enhanced
death benefit -- 5 Year or enhanced death benefit -- 1 Year described below. If
the Annuitant does not choose an option when the Contract is issued, the
Annuitant will automatically receive the enhanced death benefit -- 5 Year. If
your Contract was issued on or before August 16, 2000, you may have elected the
enhanced death benefit -- 1 Year during the period from August 16, 2000 to
September 22, 2000. Owners with these Contracts not making the election will
retain the enhanced death benefit -- 5 Year.
ENHANCED DEATH BENEFIT -- 5 YEAR
On the 5th Contract anniversary and each subsequent 5th Contract anniversary
prior to the Annuitant's 71st birthday, the enhanced death benefit may be
increased. If the Annuitant is age 65 or over on the date of issue, the
enhanced death benefit will be recalculated once on the 5th Contract
anniversary. Thereafter the enhanced death benefit remains at its last value.
ENHANCED DEATH BENEFIT -- 1 YEAR
On the first Contract Anniversary and each subsequent Contract Anniversary
prior to the Annuitant's 80th birthday, the enhanced death benefit may be
increased. After the Annuitant reaches age 80, this enhanced death benefit
provision expires. This option may not be currently available in all states.
AMOUNT OF THE ENHANCED DEATH BENEFIT PAYABLE ON DEATH UNDER ENHANCED DEATH
BENEFIT OPTIONS
The recalculated enhanced death benefit is equal to the greater of:
(1)the Fund Value on the date the enhanced death benefit is to be recalculated;
and
(2)the current enhanced death benefit proportionately reduced by any partial
surrenders including surrender charges and any applicable market value
adjustments assessed since the last recalculation of the enhanced death
benefit.
The enhanced death benefit payable under both enhanced death benefit options is
the enhanced death benefit on the date of death of the Annuitant, reduced
proportionately for each partial surrender (including surrender charges and
market value adjustments, if applicable) since the last recalculation date and
less any outstanding debt.
In no event will the enhanced death benefit payable on death exceed 200% of:
.. the total Purchase Payments reduced proportionately for each partial
surrender (including surrender charges and applicable market value
adjustments,), and LESS
.. any outstanding debt.
The proportionate reduction for each partial surrender will be equal to:
(1)the amount of that partial surrender (including any surrender charges and
applicable Market Value Adjustment assessed), DIVIDED BY
(2)the Fund Value immediately before that partial surrender, MULTIPLIED BY,
(3)the enhanced death benefit immediately before the surrender.
Once the last value is set for the enhanced death benefit, it will not be
recalculated. The last value is set for the 5 Year option prior to the
Annuitant's 71st birthday or on the first 5th anniversary if the Contract is
purchased on or after the Annuitant's age 65. The last value is set for the 1
Year option on the Contract Anniversary prior to the Annuitant's age 80. After
the Annuitant reaches age 80, this enhanced death benefit provision expires.
All other basic death benefits as described in this prospectus continue to
apply. The largest death benefit under any of these provisions will be paid.
The cost of an enhanced death benefit option is reflected in the mortality and
expense risk charge.
24
DEATH BENEFIT
ELECTION AND EFFECTIVE DATE OF ELECTION
The Owner may elect to have the death benefit of the Contract applied under one
of four settlement options to effect an annuity for the Beneficiary as payee
after the death of the Annuitant. The election must take place:
(1)during the lifetime of the Annuitant, and
(2)before the annuity payments start.
If no election of a settlement option for the death benefit is in effect on the
date when proceeds become payable, the Beneficiary may elect:
(1)to receive the death benefit in the form of a lump sum payment; or
(2)to have the death benefit applied under one of the settlement options.
(See "Settlement options.") If an election by the payee is not received by the
Company within one month following the date proceeds become payable, the payee
will be considered to have elected a lump sum payment. Either election
described above may be made by filing a written election with the Company in
such form as it may require. Any proper election of a method of settlement of
the death benefit by the Owner will become effective on the date it is signed.
However, any election will be subject to any payment made or action taken by
the Company before receipt of the notice at the Company's Operations Center.
Settlement option availability may be restricted by the terms of any applicable
retirement plan and any applicable legislation for any limitations or
restrictions on the election of a method of settlement and payment of the death
benefit.
PAYMENT OF DEATH BENEFIT
If the death benefit is to be paid in one sum to the Beneficiary, payment will
be made within seven (7) days of the date:
(1)the election becomes effective, or
(2)the election is considered to become effective, and
(3)due proof of death of the Annuitant is received.
The Company may be permitted to postpone such payment from amounts payable from
MONY America Variable Account A under the 1940 Act. If the death benefit is to
be paid in one sum to the Successor Beneficiary, or to the estate of the
deceased Annuitant, payment will be made within seven (7) days of the date due
proof of the death of the Annuitant and the Beneficiary is received by the
Company. Unless another election is made, the death benefit proceeds will be
transferred to an interest bearing checking account. The Beneficiary may make
partial or full withdrawals from such account through a checkbook provided to
the Beneficiary.
-
25
DEATH BENEFIT
8. Charges and deductions
--------------------------------------------------------------------------------
The following table summarizes the charges and deductions under the Contract
(See "Summary of the Contract -- Fee tables" for more detailed information):
DEDUCTIONS FROM PURCHASE PAYMENTS
---------------------------------------------------------------------------------------------
TAX CHARGEe Range for State and local -- 0%-3.50%/(1)/.
FEDERAL -- Currently 0% (Company reserves
the right to charge in the future.)
DAILY DEDUCTIONS FROM MONY AMERICA VARIABLE ACCOUNT A
---------------------------------------------------------------------------------------------
MORTALITY & EXPENSE RISK CHARGE Maximum daily rate -- 0.003699%
Annual Rate deducted daily from average Maximum Annual rate -- 1.35%
daily net assets
DEDUCTIONS FROM FUND VALUE
---------------------------------------------------------------------------------------------
ANNUAL CONTRACT CHARGE Maximum of $50 ($30 in some states) on 30
days written notice Current charge is $0
---------------------------------------------------------------------------------------------
TRANSACTION AND OTHER CHARGES Maximum of $25
Transfer charge Current charge is $0
---------------------------------------------------------------------------------------------
SURRENDER CHARGE See grading schedule and "Charges and
Grades from 7% to 0% of Fund Value deductions -- Charges against fund value"
surrendered based on a schedule. for details of how it is computed.
---------------------------------------------------------------------------------------------
LOAN INTEREST SPREAD 2.50%
---------------------------------------------------------------------------------------------
(1)Company currently assumes responsibility; current charge to Owner 0%.
The following provides additional details of the charges and deductions under
the Contract.
The amount of the charge may not necessarily correspond to the costs associated
with providing the services or benefits indicated by the designation of the
charge. For example, the surrender charge we collect may not fully cover all of
the sales and distribution expenses we actually incur. We also may realize a
profit on one or more of the charges. We may use such profits for any corporate
purpose, including the payment of sales expenses.
DEDUCTIONS FROM PURCHASE PAYMENTS
Deductions may be made from Purchase Payments for a charge for state and local
premium or similar taxes prior to allocation of any Net Purchase Payment among
the subaccounts. Currently, the Company makes no deduction, but may do so with
respect to future Purchase Payments. If the Company is going to make deductions
for such tax from future Purchase Payments, it will give 30 days notice to each
affected Owner.
CHARGES AGAINST FUND VALUE
DAILY DEDUCTION FROM MONY AMERICA VARIABLE ACCOUNT A
MORTALITY AND EXPENSE RISK CHARGE. The Company assumes mortality and expense
risks. A charge for assuming such risks is deducted daily from the net assets
of MONY America Variable Account A. This daily charge from MONY America
Variable Account A is deducted at a current daily rate equivalent to an annual
rate of 1.35% from the value of the net assets of MONY America Variable Account
A. The rate is guaranteed not to exceed a daily rate equivalent to an annual
rate of 1.35% from the value of the net assets of MONY America Variable Account
A. The charge is deducted from MONY America Variable Account A, and therefore
the subaccounts, on each Business Day. The mortality and expense risk charges
will not be deducted from the Guaranteed Interest Account with Market Value
Adjustment. Where the previous day (or days) was not a Business Day, the
deduction currently on the next Business Day will be 0.003699% (guaranteed not
to exceed 0.003699%) multiplied by the number of days since the last Business
Day.
The Company believes that this level of charge is within the range of industry
practice for comparable individual flexible payment variable annuity contracts.
The mortality risk assumed by the Company is that Annuitants may live for a
longer time than projected. If that occurs, an aggregate amount of annuity
benefits greater than that projected will be payable. In making this
projection, the Company has used the mortality rates from the 1983 Table "a"
(discrete functions without projections for future mortality), with 3.50%
interest. The expense risk assumed is that expenses incurred in issuing and
administering the Contracts will exceed the administrative charges provided in
the Contracts.
If the amount of the charge exceeds the amount needed, the excess will be kept
by the Company in its General Account. If the amount of the charge is
inadequate, the Company will pay the difference out of its General Account.
26
CHARGES AND DEDUCTIONS
DEDUCTIONS FROM FUND VALUE
ANNUAL CONTRACT CHARGE. The Company has primary responsibility for the
administration of the Contract and MONY America Variable Account A. An annual
contract charge helps to reimburse the Company for administrative expenses
related to the maintenance of the Contract. Ordinary administrative expenses
expected to be incurred include premium collection, recordkeeping, processing
death benefit claims and surrenders, preparing and mailing reports, and
overhead costs. In addition, the Company expects to incur certain additional
administrative expenses in connection with the issuance of the Contract,
including the review of applications and the establishment of Contract records.
The Company intends to administer the Contract itself through an arrangement
whereby it may buy some administrative services from AXA Equitable and such
other sources as may be available.
Currently, there is no annual contract charge. The Company may in the future
impose an annual contract charge. The charge will never, however, exceed $50.
The Owner will receive a written notice 30 days in advance of any change in the
charge. Any applicable charge will be assessed once per year on the Contract
Anniversary, starting on the first Contract Anniversary.
If imposed, the annual contract charge is deducted from the Fund Value on each
Contract Anniversary before the date annuity payments start.
The amount of the charge will be allocated against the Guaranteed Interest
Account with Market Value Adjustment and each subaccount of MONY America
Variable Account A in the same proportion that the Fund Value in those accounts
bears to the Fund Value of the Contract. The Company does not expect to make
any profit from the annual contract charge.
TRANSFER CHARGE. Contract value may be transferred among the subaccounts or to
or from the Guaranteed Interest Account with Market Value Adjustment and one or
more of the subaccounts (including transfers made by telephone, if permitted by
the Company). The Company reserves the right to impose a transfer charge for
each transfer instructed by the Owner in a Contract Year. The transfer charge
compensates the Company for the costs of effecting the transfer. The transfer
charge will not exceed $25 (except for contracts issued in the states of South
Carolina and Texas where it will not exceed $10). The Company does not expect
to make a profit from the transfer charge. If imposed, the transfer charge will
be deducted from the Contract's Fund Value held in the subaccount(s) or from
the Guaranteed Interest Account with Market Value Adjustment from which the
first transfer is made.
SURRENDER CHARGE. A contingent deferred sales charge (called a "surrender
charge") will be imposed when a full or partial surrender is requested or at
the start of annuity benefits if it is during the first eight years of the
Contract.
The surrender charge will never exceed 7% of total Fund Value. The surrender
charge is intended to reimburse the Company for expenses incurred in
distributing the Contract. To the extent such charge is insufficient to cover
all distribution costs, the Company will make up the difference. The Company
will use funds from its General Account, which may contain funds deducted from
MONY America Variable Account A to cover mortality and expense risks borne by
the Company. (See "Charges against fund value -- Mortality and expense risk
charge.")
We impose a surrender charge when a full or partial surrender is made during
the first eight (8) Contract Years, except as provided below.
A surrender charge will not be imposed:
(1)Against Fund Value surrendered after the eighth Contract Year.
(2)To the extent necessary to permit the Owner to obtain an amount equal to the
free partial surrender amount (See "Free partial surrender amount").
(3)If the Contract is surrendered after the third Contract Year and the
surrender proceeds are paid under either Settlement Option 3 or Settlement
Option 3A (See "Settlement options"). The elimination of a Surrender Charge
in this situation does not apply to contracts issued in the State of Texas.
In no event will the aggregate surrender charge exceed 7% of the Fund Value.
Further, in no event will the surrender charges imposed, when added to any
surrender charges previously paid on the Contract, exceed 9% of aggregate
Purchase Payments made to date for the Contract.
The Owner may specify whether he/she wants the surrender charge to be deducted
from the amount requested for surrender or the Fund Value remaining. If not
specified or if the Fund Value remaining is not sufficient, then the surrender
charge will be deducted from the amount requested for surrender. If it is
specified that the surrender charge will come from the remaining Fund Value and
it is sufficient, then the Company will determine the appropriate amount to be
surrendered in order to pay the surrender charge. Any surrender charge will be
allocated against the Guaranteed Interest Account with Market Value Adjustment
and each subaccount of MONY America Variable Account A in the same proportion
that the amount of the partial surrender allocated against those accounts bears
to the total amount of the partial surrender.
If any surrender from the Guaranteed Interest Account with Market Value
Adjustment occurs prior to the Maturity Date for any particular Accumulation
Period elected by the Owner, the amount surrendered will be subject to a Market
Value Adjustment in addition to Surrender Charges.
No surrender charge will be deducted from Death Benefits except as described in
"Death benefit."
If The MONYMaster variable annuity contract issued by MONY Life Insurance
Company of America has been exchanged for this Contract, a separate effective
date was assigned to this Contract by endorsement for purposes of determining
the amount of any surrender charge. The surrender charge effective date of this
Contract with the endorsement is the effective date of The MONYMaster variable
annuity contract. Your agent can provide further details.
A separate surrender charge effective date does not apply in states where the
endorsement has not been approved. We reserve the right to disallow exchanges
for this Contract at any time.
27
CHARGES AND DEDUCTIONS
AMOUNT OF SURRENDER CHARGE. The amount of the surrender charge is equal to a
varying percentage of Fund Value during the first 8 Contract Years. The
percentage is determined by multiplying the surrender charge percentage for the
Contract Year by the amount of Fund Value requested as follows:
-----------------------------------------------------------------------------------
SURRENDER CHARGE PERCENTAGE TABLE
-----------------------------------------------------------------------------------
SURRENDER CHARGE (AS A PERCENTAGE OF
CONTRACT YEAR FUND VALUE SURRENDERED)
-----------------------------------------------------------------------------------
1 7%
-----------------------------------------------------------------------------------
2 7
-----------------------------------------------------------------------------------
3 6
-----------------------------------------------------------------------------------
4 6
-----------------------------------------------------------------------------------
5 5
-----------------------------------------------------------------------------------
6 4
-----------------------------------------------------------------------------------
7 3
-----------------------------------------------------------------------------------
8 2
-----------------------------------------------------------------------------------
9 (or more) 0
-----------------------------------------------------------------------------------
The amount of the surrender charge is in addition to any applicable Market
Value Adjustment that may be made if the surrender is made from Fund Value in
the Guaranteed Interest Account with Market Value Adjustment. (See the
prospectus for the Guaranteed Interest Account with Market Value Adjustment
which accompanies this prospectus for further details.)
FREE PARTIAL SURRENDER AMOUNT. The surrender charge may be reduced by using the
free partial surrender amount provided for in the Contract. The surrender
charge will not be deducted in the following circumstances:
(1)For Qualified Contracts, (other than contracts issued for IRA and SEP-IRA),
an amount each Contract Year up to the greater of:
(a)$10,000 (but not more than the Contract's Fund Value), or
(b)10% of the Contract's Fund Value at the beginning of the Contract Year
(except, if the surrender is requested during the first Contract Year,
then 10% of the Contract's Fund Value at the time the first surrender is
requested).
(2)For Non-Qualified Contracts (and contracts issued for IRA and SEP-IRA), an
amount up to 10% of the Fund Value at the beginning of the Contract Year
(except, if the surrender is requested during the first Contract Year, then
10% of the Contract's Fund Value at the time the first surrender is
requested) may be received in each Contract Year without a surrender charge.
Free partial surrenders may only be made to the extent Cash Value in the
subaccounts and/or Guaranteed Interest Account is available. For example, the
Fund Value in MONY America Variable Account A could decrease (due to
unfavorable investment experience) after part of the 10% was withdrawn. In that
case it is possible that there may not be enough Cash Value to provide the
remaining part of the 10% free partial surrender amount.
Contract Fund Value here means the Fund Value in the subaccounts (and the
Guaranteed Interest Account with Market Value Adjustment not the Loan Account).
This reduction of surrender charge does not affect any applicable Market Value
Adjustment that may be made if the surrender is made from Fund Value in the
Guaranteed Interest Account with Market Value Adjustment. (See the prospectus
for the Guaranteed Interest Account with Market Value Adjustment which
accompanies this prospectus for further details.)
TAXES
Currently, no charge will be made against MONY America Variable Account A for
federal income taxes. However, the Company may make such a charge in the future
if income or gains within MONY America Variable Account A will incur any
federal income tax liability. Charges for other taxes, if any, attributable to
MONY America Variable Account A may also be made. (See "Federal tax status".)
INVESTMENT ADVISORY FEE
Each portfolio in which the MONY America Variable Account A invests incurs
certain fees and charges. To pay for these fees and charges, the portfolio
makes deductions from its assets. Certain portfolios available under the
Contract in turn invest in shares of other portfolios of AXA Premier VIP Trust
and EQ Advisors Trust and/or shares of unaffiliated portfolios (collectively
the "underlying portfolios"). The underlying portfolios each have their own
fees and expenses, including management fees, operating expenses, and
investment related expenses such as brokerage commissions. The portfolio
expenses are described more fully in each Fund prospectus.
We sell the Contracts through registered representatives of broker-dealers.
These registered representatives are also appointed and licensed as insurance
agents of the Company. We pay commissions to the broker-dealers for selling the
Contracts. You do not directly pay these commissions, we do. We intend to
recover commissions, marketing, administrative and other expenses and the cost
of Contract benefits through the fees and charges imposed under the Contracts.
(See "Distribution of the Contracts" for more information.)
28
CHARGES AND DEDUCTIONS
9. Annuity provisions
--------------------------------------------------------------------------------
ANNUITY PAYMENTS
Annuity payments under a Contract will begin on the date that is selected by
the Owner when the Contract is applied for. The date chosen for the start of
annuity payments may be:
(1)no earlier than the 10th Contract Anniversary, and
(2)no later than the Contract Anniversary after the Annuitant's 95th birthday.
The minimum number of years from the Effective Date to the start of annuity
payments is 10. The date when annuity payments start may be:
(1)Advanced to a date that is not earlier than the 10th Contract Anniversary.
(2)Deferred from time to time by the Owner by written notice to the Company.
The date when annuity payments start will be advanced or deferred if:
(1)Notice of the advance or deferral is received by the Company prior to the
current date for the start of annuity payments.
(2)The new start date for annuity payments is a date which is not later than
the Contract Anniversary after the Annuitant's 95th birthday.
A particular retirement plan may contain other restrictions.
When annuity payments begin, unless Settlement Option 3 or 3A is elected, the
Contract's Cash Value, less any tax charge which may be imposed, will be
applied to provide an annuity or any other option previously chosen by the
Owner and permitted by the Company. If Settlement Option 3 or 3A is elected,
the Contract's Fund Value (less any state taxes imposed when annuity payments
begin) will be applied to provide an annuity.
A supplementary contract will be issued when proceeds are applied to a
settlement option. That contract will describe the terms of the settlement. No
payments may be requested under the Contract's surrender provisions after
annuity payments start. No surrender will be permitted except as may be
available under the settlement option elected.
For Contracts issued in connection with retirement plans, reference should be
made to the terms of the particular retirement plan for any limitations or
restrictions on when annuity payments start.
ELECTION AND CHANGE OF SETTLEMENT OPTION
During the lifetime of the Annuitant and prior to the start of annuity
payments, the Owner may elect:
.. one or more of the settlement options described below, or
.. another settlement option as may be agreed to by the Company.
The Owner may also change any election if written notice of the change is
received by the Company at its Operation Center prior to the start of annuity
payments. If no election is in effect when annuity payments start, a lump sum
payment will be considered to have been elected. For contracts issued in the
State of Texas, if no election is in effect when annuity payments start,
Settlement Option 3 with a period certain of 10 years will be considered to
have been elected.
Settlement options may also be elected by the Owner or the Beneficiary as
provided in the "Death benefit" and "Surrenders" sections of this prospectus.
(See "Death benefit" and "Surrenders").
Where applicable, reference should be made to the terms of a particular
retirement plan and any applicable legislation for any limitations or
restrictions on the options that may be elected.
SETTLEMENT OPTIONS
Proceeds settled under the settlement options listed below or otherwise
currently available will not participate in the investment experience of the
MONY America Variable Account A. Unless you select Settlement Option 1, the
settlement option may not be changed once payments begin.
SETTLEMENT OPTION 1 -- INTEREST INCOME: Interest on the proceeds at a rate (not
less than 2.75% per year) set by the Company each year. The Option will
continue until the earlier of the date that the payee dies or the date you
elect another settlement option. Under certain contracts, this option is not
available if the Annuitant is the payee.
SETTLEMENT OPTION 2 -- INCOME FOR SPECIFIED PERIOD: Fixed monthly payments for
a specified period of time, as elected. The payments may, at the Company's
option, be increased by additional interest each year.
SETTLEMENT OPTION 3 -- SINGLE LIFE INCOME: Payments for the life of the payee
and for a period certain. The period certain may be (a) 0 years, 10 years, or
20 years, or (b) the period required for the total income payments to equal the
proceeds (refund period certain). The amount of the income will be determined
by the Company on the date the proceeds become payable.
SETTLEMENT OPTION 3A -- JOINT LIFE INCOME: Payments during the joint lifetime
of the payee and one other person, and during the lifetime of the survivor. The
survivor's monthly income may be equal to either (a) the income payable during
the joint lifetime or (b) two-thirds of that income. If a person for whom this
option is chosen dies before the first monthly payment is made, the survivor
will receive proceeds instead under Settlement Option 3, with 10 years certain.
SETTLEMENT OPTION 4 -- INCOME OF SPECIFIED AMOUNT: Income, of an amount chosen,
for as long as the proceeds and interest last. The amount chosen to be received
as income in each year may not be less than 10 percent of the proceeds settled.
Interest will be credited annually on the amount remaining unpaid at a rate
determined annually by the Company. This rate will not be less than 2.75% per
year.
29
ANNUITY PROVISIONS
The Contract contains annuity payment rates for Settlement Options 3 and 3A
described in this prospectus. The rates show, for each $1,000 applied, the
dollar amount of the monthly fixed annuity payment, when this payment is based
on minimum guaranteed interest as described in the Contract.
The annuity payment rates may vary according to the Settlement Option elected
and the age of the payee. The mortality table used in determining the annuity
payment rates for Settlement Options 3 and 3A is the 1983 Table "a" (discrete
functions, without projections for future mortality), with 3.50% interest per
year.
Under Settlement Option 3, if income based on the period certain elected is the
same as the income provided by another available period or periods certain, the
Company will consider the election to have been made of the longest period
certain.
In Qualified Plans, settlement options available to Owners may be restricted by
the terms of the plans.
FREQUENCY OF ANNUITY PAYMENTS
At the time the settlement option is chosen, the payee may request that it be
paid:
.. Quarterly:
.. Semiannually: or
.. Annually
If the payee does not request a particular installment payment schedule, the
payments will be made in monthly installments. However, if the net amount
available to apply under any settlement option is less than $1,000, the Company
has the right to pay such amount in one lump sum. In addition, if the payments
provided for would be less than $25, the Company shall have the right to change
the frequency of the payments to result in payments of at least $25.
ADDITIONAL PROVISIONS
The Company may require proof of the age of the Annuitant before making any
life annuity payment under the Contract. If the Annuitant's age has been
misstated, the amount payable will be the amount that would have been provided
under the settlement option at the correct age. Once life income payments
begin, any underpayments will be made up in one sum with the next annuity
payment. Overpayments will be deducted from the future annuity payments until
the total is repaid.
For contracts issued in the State of Washington, any underpayment by the
Company will be paid in a single sum after the correction of the misstatement.
The Contract may be required to be returned upon any settlement. Prior to any
settlement of a death claim, proof of the Annuitant's death must be submitted
to the Company.
Where any benefits under the Contract are contingent upon the recipient's being
alive on a given date, the Company requires proof satisfactory to it that such
condition has been met.
The Contracts described in this prospectus contain annuity payment rates that
distinguish between men and women. On July 6, 1983, the Supreme Court held in
ARIZONA GOVERNING COMMITTEE V. NORRIS that optional annuity benefits provided
under an employer's deferred compensation plan could not, under Title VII of
the Civil Rights Act of 1964, vary between men and women on the basis of sex.
Because of this decision, the annuity payment rates that apply to Contracts
purchased under an employment-related insurance or benefit program may in some
cases not vary on the basis of the Annuitant's sex. Unisex rates to be provided
by the Company will apply for Qualified Plans.
Employers and employee organizations should consider, in consultation with
legal counsel, the impact of NORRIS , and Title VII, generally and any
comparable state laws that may apply, on any employment-related plan for which
a Contract may be purchased.
The Contract is incontestable from its date of issue.
30
ANNUITY PROVISIONS
10. Other provisions
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OWNERSHIP
The Owner has all rights and may receive all benefits under the Contract.
During the lifetime of the Annuitant (and Secondary Annuitant if one has been
named), the Owner is the person so designated in the application, unless:
(1)a change in Owner is requested, or
(2)a Successor Owner becomes the Owner.
The Owner may name a Successor Owner or a new Owner at any time. If the Owner
dies, the Successor Owner, if living, becomes the Owner. Any request for change
must be:
(1)made in writing, and
(2)received at the Company.
The change will become effective as of the date the written request is signed.
A new choice of Owner or Successor Owner will apply to any payment made or
action taken by the Company after the request for the change is received.
Owners should consult a competent tax adviser prior to changing Owners.
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SUCCESSOR OWNER -- THE LIVING PERSON WHO, AT THE DEATH OF THE OWNER, BECOMES
THE NEW OWNER.
--------------------------------------------------------------------------------
PROVISION REQUIRED BY SECTION 72(S) OF THE CODE
The entire interest under a Non-Qualified Contract must be distributed within
five years after the Owner's death if:
(1)the Owner dies
(a)before the start of annuity payments, and
(b)while the Annuitant is living; and
(2)that Owner's spouse is not the Successor Owner as of the date of the Owner's
death.
Satisfactory proof of death must be provided to the Company.
Spousal status is determined under federal law for this purpose.
The surrender proceeds may be paid over the life of the Successor Owner if:
(1)the Successor Owner is the Beneficiary, and
(2)the Successor Owner chooses that option.
Payments must begin no later than one year after the date of death. If the
Successor Owner is a surviving spouse, then the surviving spouse will be
treated as the new Owner of the Contract. Under such circumstances, it is not
necessary to surrender the Contract.
However, under the terms of the Contract, if the spouse is not the Successor
Owner:
(1)the Contract will be surrendered as of the date of death, and
(2)the proceeds will be paid to the Beneficiary.
This provision shall not extend the term of the Contract beyond the date when
death proceeds become payable.
If the Owner dies on or after annuity payments start, any remaining portion of
the proceeds will be distributed using a method that is at least as quick as
the one used as of the date of the Owner's death.
PROVISION REQUIRED BY SECTION 401(A)(9) OF THE CODE
The entire interest of a Qualified Plan participant in the Contract generally
will begin to be distributed no later than the required beginning date. For
this purpose "Qualified Plans" include those intended to qualify under Sections
401 and 408 of the Code. Distribution will occur either by or beginning not
later than April 1 of the calendar year following the calendar year the
Qualified Plan Participant attains age 70 1/2. The interest is distributed:
(1)over the life of such Participant, or
(2)the lives of such Participant and designated Beneficiary.
If (i) required minimum distributions have begun, and (ii) the Participant dies
before the Owner's entire interest has been distributed to him/her, the
remaining distributions will be made using a method that is at least as rapid
as that used as of the date of the Participant's death.
The Contract generally will be surrendered as of the Participant's death if:
(1)the Participant dies before the start of such distributions, and
(2)there is no designated Beneficiary.
The surrender proceeds generally must be distributed within 5 years after the
date of death. But, the surrender proceeds may be paid over the life of any
designated Beneficiary at his/her option. In such case, distributions will
begin not later than one year after the December 31 following the Participant's
death. If the designated Beneficiary is the surviving spouse (as defined by
federal law) of the Participant, distributions will begin not earlier than the
December 31 following the date on which the Participant would have attained age
70 1/2. If the surviving spouse dies before distributions to him/her begin, the
provisions of this paragraph shall be applied as if the surviving spouse were
the Participant. If the Plan is an IRA under Section 408 of the Code, the
surviving spouse may elect to forgo distribution and treat the IRA as his/her
own plan. Although the lifetime required minimum distribution rules do not
apply to Roth IRAs under Section 408A of the Code, the post-death distribution
rules apply.
It is the Owner's responsibility to assure that distribution rules imposed by
the Code will be met. The Owner should consider the effect of recent revisions
to the distribution rules which could increase the minimum distribution amount
required from annuity contracts funding Qualified Plans where certain
additional benefits are purchased
31
OTHER PROVISIONS
under the Contract, such as enhanced death benefits. For this purpose
additional annuity contract benefits may include, but are not limited to,
guaranteed minimum income benefits and enhanced death benefits. The Owner may
want to consult a tax advisor concerning the potential application of these
complex rules before purchasing this annuity Contract or purchasing additional
features under this annuity Contract or making additional Purchase Payments
under this annuity Contract.
SECONDARY ANNUITANT
Except where the Contract is issued in connection with a Qualified Plan, a
Secondary Annuitant may be designated by the Owner. Such designation may be
made once before annuity payments begin, either:
(1)in the application for the Contract, or
(2)after the Contract is issued, by written notice to the Company at its
Operations Center.
The Secondary Annuitant may be deleted by written notice to the Company at its
Operations Center. A designation or deletion of a Secondary Annuitant will take
effect as of the date the written election was signed. The Company, however,
must first accept and record the change at its Operations Center. The change
will be subject to:
(1)any payment made by the Company, or
(2)action taken by the Company before the receipt of the notice at the
Company's Operations Center.
You cannot change the Secondary Annuitant, but you can delete the Secondary
Annuitant.
The Secondary Annuitant will be deleted from the Contract automatically by the
Company as of the Contract Anniversary following the Secondary Annuitant's 95th
birthday.
On the death of the Annuitant, the Secondary Annuitant will become the
Annuitant, under the following conditions:
(1)the death of the Annuitant must have occurred before the Annuity starting
date;
(2)the Secondary Annuitant is living on the date of the Annuitant's death;
(3)if the Annuitant was the Owner on the date of death, the Successor Owner
must have been the Annuitant's spouse (as defined by federal law); and
(4)if the date annuity payments start is later than the Contract Anniversary
nearest the Secondary Annuitant's 95th birthday, the date annuity payments
start will be automatically advanced to that Contract Anniversary.
EFFECT OF SECONDARY ANNUITANT'S BECOMING THE ANNUITANT. If the Secondary
Annuitant becomes the Annuitant, the Death Benefit proceeds will be paid to the
Beneficiary only on the death of the Secondary Annuitant. If the Secondary
Annuitant was the Beneficiary on the Annuitant's death, the Beneficiary will be
automatically changed to the person who was the successor Beneficiary on the
date of death. If there was no successor Beneficiary, then the Secondary
Annuitant's executors or administrators, unless the Owner directed otherwise,
will become the Beneficiary. All other rights and benefits under the Contract
will continue in effect during the lifetime of the Secondary Annuitant as if
the Secondary Annuitant were the Annuitant.
ASSIGNMENT
The Owner may assign the Contract. However, the Company will not be bound by
any assignment until the assignment (or a copy) is received by the Company at
its Administrative Office. The Company is not responsible for determining the
validity or effect of any assignment. The Company shall not be liable for any
payment or other settlement made by the Company before receipt of the
assignment.
If the Contract is issued under certain retirement plans, then it may not be
assigned, pledged or otherwise transferred except under conditions allowed
under applicable law.
Because an assignment may be a taxable event, a Owner should consult a
competent tax adviser before assigning the Contract.
CHANGE OF BENEFICIARY
So long as the Contract is in effect the Owner may change the Beneficiary or
successor Beneficiary. A change is made by submitting a written request to the
Company at its Operations Center. The form of the request must be acceptable to
the Company. The Contract need not be returned unless requested by the Company.
The change will take effect as of the date the request is signed. The Company
will not, however, be liable for any payment made or action taken before
receipt and acknowledgement of the request at its Operations Center.
SUBSTITUTION OF SECURITIES
The Company may substitute shares of another mutual fund for shares of the
Funds already purchased or to be purchased in the future by Contract Purchase
Payments if:
(1)the shares of any portfolio of the Funds is no longer available for
investment by MONY America Variable Account A, or
(2)in the judgment of the Company's Board of Directors, further investment in
shares of one or more of the portfolios of the Funds is inappropriate based
on the purposes of the Contract.
The new portfolios may have higher fees and charges than the ones they
replaced, and not all portfolios may be available to all classes of contracts.
We will notify you before we substitute securities in any subaccount, and, to
the extent required by law, we will obtain prior approval from the Securities
and Exchange Commission and the Arizona Insurance Department. We also will
obtain any other required approvals (See "Who is MONY Life Insurance Company of
America -- MONY America Variable Account A" for more information about changes
we may make to the subaccounts).
CHANGES TO CONTRACTS
The Company reserves the right, subject to compliance with laws that apply, to
unilaterally change your Contract in order to comply with any applicable laws
and regulations, including but not limited to changes in the Internal Revenue
Code, in Treasury regulations or in published rulings of the Internal Revenue
Service, ERISA and in Department of Labor regulations.
32
OTHER PROVISIONS
Any change in the Contract must be in writing and made by our authorized
officer. We will provide notice of any contract change.
CHANGE IN OPERATION OF MONY AMERICA VARIABLE ACCOUNT A
MONY America Variable Account A may be operated as a management company under
the 1940 Act or it may be deregistered under the 1940 Act in the event the
registration is no longer required, or MONY America Variable Account A may be
combined with any of other subaccounts.
Deregistration of MONY America Variable Account A requires an order by the
Securities and Exchange Commission. If there is a change in the operation of
MONY America Variable Account A under this provision, the Company may make
appropriate endorsement to the Contract to reflect the change and take such
other action as may be necessary and appropriate to effect the change.
33
OTHER PROVISIONS
11. Voting rights
--------------------------------------------------------------------------------
All of the assets held in the subaccounts of MONY America Variable Account A
will be invested in shares of the designated portfolios of the Funds. The
Company is the legal holder of these shares.
To the extent required by law, the Company will vote the shares of each of the
Funds held in MONY America Variable Account A (whether or not attributable to
contract owners).
We will determine the number of votes which you have the right to cast by
applying your percentage interest in a subaccount to the total number of votes
attributable to that subaccount. In determining the number of votes, we will
recognize fractional shares.
We will vote portfolio shares of a class held in a subaccount for which we
received no timely instructions in proportion to the voting instructions which
we received for all contracts participating in that subaccount. We will apply
voting instructions to abstain on any item to be voted on a pro rata basis to
reduce the number of votes eligible to be cast.
Whenever a Fund calls a shareholder's meeting, each person having a voting
interest in a subaccount will receive proxy voting material, reports, and other
materials relating to the relevant portfolio. Since each Fund may engage in
shared funding, other persons or entities besides the Company may vote Fund
shares.
34
VOTING RIGHTS
12. Distribution of the Contracts
--------------------------------------------------------------------------------
The Contracts are distributed by both AXA Advisors, LLC ("AXA Advisors") and
AXA Distributors, LLC ("AXA Distributors") (together, the "Distributors"). The
Distributors serve as principal underwriters of MONY America Variable Account
A. The offering of the Contracts is intended to be continuous.
AXA Advisors is an affiliate of the Company, and AXA Distributors is an
indirect wholly owned subsidiary of the Company. The Distributors are under the
common control of AXA Financial, Inc. Their principal business address is 1290
Avenue of the Americas, New York, NY 10104. The Distributors are registered
with the SEC as broker-dealers and are members of the Financial Industry
Regulatory Authority, Inc. ("FINRA"). Both broker-dealers also act as
distributors for the Company's life and annuity products.
The Contracts are sold by financial professionals of AXA Advisors and its
affiliates. The Contracts are also sold by financial professionals of
unaffiliated broker-dealers that have entered into selling agreements with the
Distributors ("Selling broker-dealers").
The Company pays compensation to both Distributors based on Contracts sold. The
Company may also make additional payments to the Distributors, and the
Distributors may, in turn, make additional payments to certain Selling
broker-dealers. All payments will be in compliance with all applicable FINRA
rules and other laws and regulations.
Although the Company takes into account all of its distribution and other costs
in establishing the level of fees and charges under its Contracts, none of the
compensation paid to the Distributors or the Selling broker-dealers discussed
in this section of the prospectus are imposed as separate fees or charges under
your Contract. The Company, however, intends to recoup amounts it pays for
distribution and other services through the fees and charges of the Contract
and payments it receives for providing administrative, distribution and other
services to the Portfolios. For information about the fees and charges under
the Contract, see "Summary of the Contract" and "Charges and deductions"
earlier in this prospectus.
COMPENSATION PAID TO THE DISTRIBUTORS. The Company pays compensation to the
Distributors based on Purchase Payments made on the Contracts sold through the
Distributors ("contribution-based compensation"). The contribution-based
compensation will generally not exceed 6.50% of the total Purchase Payments
made under the Contracts, plus, starting in the second Contract Year, up to
0.25% of the Fund Value of the Contracts ("asset-based compensation"). The
Distributors, in turn, may pay a portion of the compensation received from the
Company to the Distributors financial professional and/or the Selling
broker-dealer making the sale. The compensation paid by the Distributors varies
among financial professionals and among Selling broker-dealers. The
Distributors also pay a portion of the compensation it receives to its
managerial personnel. When a Contract is sold by a Selling broker-dealer, the
Selling broker-dealer, not the Distributors, determines the amount and type of
compensation paid to the Selling broker-dealer's financial professional for the
sale of the Contract. Therefore, you should contact your financial professional
for information about the compensation he or she receives and any related
incentives, as described below.
AXA Advisors may receive compensation, and, in turn, pay its financial
professionals a portion of such fee, from third party investment advisors to
whom its financial professionals refer customers for professional management of
the assets within their contract.
AXA Advisors also pays its financial professionals and managerial personnel
other types of compensation including service fees, expense allowance payments
and health and retirement benefits. AXA Advisors also pays its financial
professionals, managerial personnel and Selling broker-dealers sales bonuses
(based on selling certain products during specified periods) and persistency
bonuses. AXA Advisors may offer sales incentive programs to financial
professionals and Selling broker-dealers who meet specified production levels
for the sales of both the Company Contracts and Contracts offered by other
companies. These incentives provide non-cash compensation such as stock options
awards and/or stock appreciation rights, expense-paid trips, expense-paid
education seminars and merchandise.
The Company also pays AXA Distributors compensation to cover its operating
expenses and marketing services under the terms of the Company's distribution
agreements with AXA Distributors.
DIFFERENTIAL COMPENSATION PAID BY AXA ADVISORS. In an effort to promote the
sale of the Company's products, AXA Advisors may pay its financial
professionals and managerial personnel a greater percentage of
contribution-based compensation and/or asset-based compensation for the sale of
the Company's Contract than it pays for the sale of a Contract or other
financial product issued by a company other than the Company. AXA Advisors may
pay higher compensation on certain products in a class than others based on a
group or sponsored arrangement, or between older and newer versions or series
of the same contract. This practice is known as providing "differential
compensation." Differential compensation may involve other forms of
compensation to AXA Advisors personnel. Certain components of the compensation
paid to managerial personnel are based on whether the sales involve the
Company's Contracts. Managers earn higher compensation (and credits toward
awards and bonuses) if the financial professionals they manage sell a higher
percentage of the Company's Contracts than products issued by other companies.
Other forms of compensation provided to its financial professionals include
health and retirement benefits, expense reimbursements, marketing allowances
and contribution-based payments, known as "overrides." For tax reasons, AXA
Advisors financial professionals qualify for health and retirement benefits
based solely on their sales of the Company's Contracts and products sponsored
by affiliates.
The fact that AXA Advisors financial professionals receive differential
compensation and additional payments may provide an incentive for those
financial professionals to recommend the Company's Contract over a Contract or
other financial product issued by a company not affiliated with the Company.
However, under applicable rules of
35
DISTRIBUTION OF THE CONTRACTS
FINRA, AXA Advisors financial professionals may only recommend to you products
that they reasonably believe are suitable for you based on the facts that you
have disclosed as to your other security holdings, financial situation and
needs. In making any recommendation, financial professionals of AXA Advisors
may nonetheless face conflicts of interest because of the differences in
compensation from one product category to another, and because of differences
in compensation among products in the same category. For more information,
contact your financial professional.
ADDITIONAL PAYMENTS BY AXA DISTRIBUTORS TO SELLING BROKER-DEALERS. AXA
Distributors may pay, out of its assets, certain Selling broker-dealers and
other financial intermediaries additional compensation in recognition of
services provided or expenses incurred. AXA Distributors may also pay certain
Selling broker-dealers or other financial intermediaries additional
compensation for enhanced marketing opportunities and other services (commonly
referred to as "marketing allowances"). Services for which such payments are
made may include, but are not limited to, the preferred placement of the
Company products on a company and/or product list; sales personnel training;
product training; business reporting; technological support; due diligence and
related costs; advertising, marketing and related services; conference; and/or
other support services, including some that may benefit the Contract owner.
Payments may be based on ongoing sales, on the aggregate account value
attributable to Contracts sold through a Selling broker-dealer or such payments
may be a fixed amount. For certain selling broker-dealers, AXA Distributors
increases the marketing allowance as certain sales thresholds are met. AXA
Distributors may also make fixed payments to Selling broker-dealers, for
example in connection with the initiation of a new relationship or the
introduction of a new product.
Additionally, as an incentive for the financial professionals of Selling
broker-dealers to promote the sale of the Company products, AXA Distributors
may increase the sales compensation paid to the Selling broker-dealer for a
period of time (commonly referred to as "compensation enhancements"). AXA
Distributors also has entered into agreements with certain selling
broker-dealers in which the selling broker-dealer agrees to sell certain AXA
Equitable contracts exclusively.
These additional payments may serve as an incentive for Selling broker-dealers
to promote the sale of the Company Contracts over Contracts and other products
issued by other companies. Not all Selling broker-dealers receive additional
payments, and the payments vary among Selling broker-dealers. The list below
includes the names of Selling broker-dealers that we are aware (as of
December 31, 2012) received additional payments. These additional payments
ranged from $200 to $5,352,846. The Company and its affiliates may also
have other business relationships with Selling broker-dealers, which may
provide an incentive for the Selling broker-dealers to promote the sale of the
Company's contracts over contracts and other products issued by other
companies. The list below includes any such Selling broker-dealer. For more
information, ask your financial professional.
1st Global Capital Corporation
Allstate Financial Services
American Portfolios Financial Services
Ameriprise Financial Services, Inc.
Ash Brokerage Corporation
BBVA Compass Investment Solutions, Inc.
CCO Investment Services Corporation
Centaurus Financial, Inc.
Citigroup Global Markets, Inc.
Commonwealth Financial Network
CUSO Financial Services, L.P.
Farmers Financial Solutions
Financial Network Investment Corporation
First Allied Securities, Inc.
First Citizens Investor Services, Inc.
First Tennessee Brokerage, Inc.
Geneos Wealth Management, Inc.
H.D. Vest Investment Securities, Inc.
Harvest Capital, LLC
ING Financial Partners
Investacorp, Inc.
Investment Professionals, Inc.
Investors Capital Corporation
James T. Borello & Co.
Janney Montgomery Scott, LLC
Key Investment Services, LLC
LPL Financial Corporation
Lucia Securities
Meridian Financial Group
Merrill Lynch Life Agency Inc.
Morgan Keegan & Co., Inc.
Morgan Stanley Smith Barney
Multi-Financial Securities Corporation
National Planning Holdings, Inc.
Next Financial Group, Inc.
NFP Securities, Inc.
PNC Investments
Prime Capital Services
PrimeVest Financial Services, Inc.
Raymond James Financial Services
RBC Capital Markets Corporation
Robert W Baird & Company
Securities America, Inc.
Stifel, Nicolaus & Company, Inc.
Summit Brokerage Services, Inc
SunTrust Investments
The Advisor Group
Transamerica Financial Advisors, Inc.
Triad Advisors
U.S. Bancorp Investments, Inc.
UBS Financial Services, Inc.
Wells Fargo Network
36
DISTRIBUTION OF THE CONTRACTS
13. Federal tax status
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INTRODUCTION
The Contract described in this prospectus is designed for use in connection
with certain types of Qualified Plans and on a nonqualified basis. The ultimate
effect of federal income taxes on
.. the value of the Contract's Fund Value,
.. annuity payments,
.. death benefit, and
.. economic benefit to the Owner, Annuitant, and the Beneficiary
may depend upon
.. the type of retirement plan for which the Contract is purchased, and
.. the tax and employment status of the individual concerned.
The following discussion of the treatment of the Contract and of the Company
under the federal income tax laws is general in nature. The discussion is based
on the Company's understanding of current federal income tax laws, and is not
intended as tax advice. These federal income tax laws may change without
notice. We cannot predict whether, when, or how these rules could change. Any
change could affect contracts purchased before the change. Congress may also
consider proposals in the future to comprehensively reform or overhaul the
United States tax and retirement systems, which if enacted, could affect the
tax benefits of a contract. We cannot predict what, if any legislation will
actually be proposed or enacted. Any person considering the purchase of a
contract or making additional Purchase Payments under this Contract should
consult a qualified tax adviser. Additional information of the treatment of the
Contract under federal income tax laws is contained in the Statement of
Additional Information. THE COMPANY DOES NOT MAKE ANY GUARANTEE REGARDING ANY
TAX STATUS, FEDERAL, STATE, OR LOCAL, OF ANY CONTRACT OR ANY TRANSACTION
INVOLVING THE CONTRACT.
SPOUSAL STATUS
The determination of spousal status is made under applicable state law. Certain
states provide that for purposes of insurance laws, policies, eligibility and
benefits, a spouse in a same-gender marriage or civil union and a spouse in an
opposite sex marriage are to be treated identically. Such laws typically
provide that a party to a same-gender marriage or civil union shall be included
in any definition or use of the terms "spouse," "family," "immediate family,"
"dependent," "next of kin," and other terms descriptive of spousal
relationships as those terms are used throughout state law. This includes the
terms "marriage" or "married" or variations thereon. While same-gender marriage
or civil union spouses are afforded the same rights as married spouses under
state law and while an employer's plan may provide for certain benefits,
tax-related advantages are derived from federal tax law. State law does not and
cannot alter federal law. The federal Defense of Marriage Act excludes
same-gender marriages and civil unions and same-gender spouses and civil union
partners from the meaning of the word "marriage" or "spouse" in all federal
laws. Therefore, a same-gender spouse or civil union spouse does not qualify
for the same tax advantages provided to an opposite sex spouse under federal
law, including the tax benefits afforded to the surviving spouse of an owner of
an annuity contract or any rights under specified tax-favored savings or
retirement plans or arrangements.
TAXATION OF ANNUITIES IN GENERAL
The Contract described in this prospectus is designed for use in connection
with Qualified Plans and on a nonqualified basis. All or a portion of the
contributions to such plans will be used to make Purchase Payments under the
Contract. In general, contributions to Qualified Plans and income earned on
contributions to all plans are tax-deferred until distributed to plan
participants or their beneficiaries. Such tax deferral is not, however,
available for Non-Qualified Contracts if the Owner is other than a natural
person unless the Contract is held as an agent for a natural person. Annuity
payments made under a contract are generally taxable to the Annuitant as
ordinary income except to the extent of:
.. Participant after-tax contributions (in the case of Qualified Plans), or
.. Owner contributions (in the case of Non-Qualified Contracts).
Owners, Annuitants, and Beneficiaries should seek advice from their own tax
advisers about the tax consequences of distributions, withdrawals and payments
under Non-Qualified Contracts and under any Qualified Plan in connection with
which the Contract is purchased. For Non-Qualified Contracts, individuals
should discuss with their own tax advisers the potential application of an
additional surtax of 3.8% on specified net investment income, including annuity
contract income, for taxable years beginning after December 31, 2012. For
Qualified Plan Contracts, among other things individuals should discuss with
their tax advisors are the "required minimum distribution rules" which
generally require distributions to be made after age 70 1/2 and after death,
including requirements applicable to the calculation of such required
distributions from annuity contracts funding Qualified Plans.
Federal tax law imposes requirements for determining the amount includable in
gross income with respect to distributions not received as an annuity.
Distributions include, but are not limited to, transfers, including gratuitous
transfers, and pledges of the contract both of which are treated the same as
distributions. Distributions from all annuity contracts issued during any
calendar year by the same company (or an affiliate) to the Owner (other than
those issued to qualified retirement plans) in the same year will be treated as
distributed from one annuity contract. The IRS is given power to prescribe
additional rules to prevent avoidance of this rule through serial purchases of
contracts or otherwise. None of these rules affects Qualified Plans.
37
FEDERAL TAX STATUS
The Company will withhold and remit to the United States Government and, where
applicable, to state and local governments, part of the taxable portion of each
distribution made under a contract unless the Owner or Annuitant
(1)provides his or her taxpayer identification number to the Company, and
(2)notifies the Company that he or she chooses not to have amounts withheld.
Distributions of plan benefits from qualified retirement plans, other than
traditional individual retirement arrangements ("traditional IRAs"), generally
will be subject to mandatory federal income tax withholding unless they are:
(1)Part of a series of substantially equal periodic payments (at least
annually) for
(a)the participant's life or life expectancy,
(b)the joint lives or life expectancies of the participant and his/ her
beneficiary,
(c)or a period certain of not less than 10 years;
(2)Required minimum distributions; or
(3)Qualifying hardship distributions.
The withholding can be avoided if the participant's interest is directly rolled
over by the old plan to another eligible retirement plan, including an IRA. A
direct rollover transfer to the new plan can be made only in accordance with
the terms of the old plan.
The Company may be liable for payment of the generation skipping transfer tax
under certain circumstances. In the event that the Company determines that such
liability exists, an amount necessary to pay the generation skipping transfer
tax may be subtracted from the death benefit proceeds.
RETIREMENT PLANS
Aside from Contracts purchased on a non-qualified basis the Contract described
in this prospectus currently is designed for use with the following types of
retirement plans:
(1)Pension and Profit Sharing Plans established by business employers and
certain associations, as permitted by Sections 401(a) and 401(k) of the
Code, including those purchasers who would have been covered under the rules
governing H.R. 10 (Keogh) Plans;
(2)Individual Retirement Annuities permitted by Section 408(b) of the Code,
including Simplified Employee Pensions established by employers pursuant to
Section 408(k);
(3)Roth IRAs permitted by Section 408A of the Code; and
(4)Deferred compensation plans provided by certain governmental entities and
tax-exempt organizations under Section 457.
The tax rules applicable to participants in such retirement plans vary
according to the type of plan and its terms and conditions. Therefore, no
attempt is made here to provide more than general information about the use of
the Contract with the various types of retirement plans. Participants in such
plans as well as Owners, Annuitants, and Beneficiaries are cautioned that the
rights of any person to any benefits under these plans are subject to the terms
and conditions of the plans themselves, regardless of the terms and conditions
of the Contract. The Company will provide purchasers of Contracts used in
connection with Individual Retirement Annuities with such supplementary
information as may be required by the Internal Revenue Service or other
appropriate agency. Any person contemplating the purchase of a Contract should
consult a qualified tax adviser.
TAX TREATMENT OF THE COMPANY
Under existing federal income tax laws, the income of MONY America Variable
Account A, to the extent that it is applied to increase reserves under the
Contract, is substantially nontaxable to the Company.
The Company is entitled to certain tax benefits related to the investment of
company assets, including assets of the separate accounts. These tax benefits,
which may include the foreign tax credit and the corporate dividends received
deduction, are not passed back to you, since the Company is the owner of the
assets from which tax benefits may be derived.
38
FEDERAL TAX STATUS
14. Legal proceedings
--------------------------------------------------------------------------------
MONY Life Insurance Company of America and its affiliates are parties to
various legal proceedings. In our view, none of these proceedings would be
considered material with respect to a Contract owner's interest in MONY America
Variable Account A, nor would any of these proceedings be likely to have a
material adverse effect upon MONY America Variable Account A, our ability to
meet our obligations under the contracts, or the distribution of the contracts.
39
LEGAL PROCEEDINGS
15. Financial statements
--------------------------------------------------------------------------------
The audited financial statements of MONY America Variable Account A and the
Company are set forth in the Statement of Additional Information. These
financial statements have been audited by PricewaterhouseCoopers LLP, an
independent registered public accounting firm.
The financial statements of the Company should be considered only as bearing
upon the ability of the Company to meet its obligations under the Contracts.
You should not consider the financial statements of the Company as affecting
investment performance of assets in the Variable Account.
PricewaterhouseCoopers LLP also provides independent audit services and certain
other non-audit services to the Company as permitted by the applicable SEC
independence rules. PricewaterhouseCoopers LLP's address is 300 Madison Avenue,
New York, New York 10017.
ABOUT THE GENERAL ACCOUNT
This Contract was offered to customers through various financial institutions,
brokerage firms and their affiliate insurance agencies. No financial
institution, brokerage firm or insurance agency has any liability with respect
to a Contract's account value or any guaranteed benefits with which the
Contract was issued. The Company is solely responsible to the Contract owner
for the Contract's account value and such guaranteed benefits. The general
obligations and any guaranteed benefits under the contract are supported by the
Company's general account and are subject to the Company's claims paying
ability. An owner should look to the financial strength of the Company for its
claims-paying ability. Assets in the general account are not segregated for the
exclusive benefit of any particular Contract or obligation. General account
assets are also available to the insurer's general creditors and the conduct of
its routine business activities, such as the payment of salaries, rent and
other ordinary business expenses. For more information about the Company's
financial strength, you may review its financial statements and/or check its
current rating with one or more of the independent sources that rate insurance
companies for their financial strength and stability. Such ratings are subject
to change and have no bearing on the performance of the variable investment
options. You may also speak with your financial representative.
The general account is subject to regulation and supervision by the Insurance
Department of the State of Arizona and to the insurance laws and regulations of
all jurisdictions where we are authorized to do business. Interests under the
contracts in the general account have not been registered and are not required
to be registered under the Securities Act of 1933 because of exemptions and
exclusionary provisions that apply. The general account is not required to
register as an investment company under the Investment Company Act of 1940 and
it is not registered as an investment company under the Investment Company Act
of 1940. The contract is a "covered security" under the federal securities laws.
We have been advised that the staff of the SEC has not reviewed the portions of
this prospectus that relate to the general account. The disclosure with regard
to the general account, however, may be subject to certain provisions of the
federal securities laws relating to the accuracy and completeness of statements
made in prospectuses.
40
FINANCIAL STATEMENTS
Appendix I: Condensed financial information
--------------------------------------------------------------------------------
MONY LIFE INSURANCE COMPANY OF AMERICA
MONY AMERICA VARIABLE ACCOUNT A
ACCUMULATION UNIT VALUES
------------------------------------------------------------------------------------------------------------------------
UNIT VALUE
-----------------------------------------------------------------------------------------
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
SUBACCOUNT 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
------------------------------------------------------------------------------------------------------------------------
All Asset Growth-Alt 20 $11.12 $10.06 $10.57 $ 9.32 $ 7.49 $10.90 $10.57 $ 9.73 $ 9.37 $ 8.75
------------------------------------------------------------------------------------------------------------------------
AXA Aggressive Allocation 8.65 7.68 8.41 7.54 6.00 10.01 -- -- -- --
------------------------------------------------------------------------------------------------------------------------
AXA Conservative Allocation 10.80 10.47 10.41 9.84 9.08 10.34 -- -- -- --
------------------------------------------------------------------------------------------------------------------------
AXA Conservative-Plus
Allocation 10.23 9.66 9.86 9.16 8.11 10.21 -- -- -- --
------------------------------------------------------------------------------------------------------------------------
AXA Moderate Allocation 9.84 9.17 9.52 8.78 7.60 10.20 -- -- -- --
------------------------------------------------------------------------------------------------------------------------
AXA Moderate-Plus Allocation 9.32 8.47 9.03 8.20 6.82 10.13 -- -- -- --
------------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund, Inc. 10.76 9.42 9.38 8.27 6.64 10.69 10.30 9.04 8.75 8.01
------------------------------------------------------------------------------------------------------------------------
EQ/BlackRock Basic Value
Equity 11.64 10.38 10.86 9.81 7.63 12.19 12.21 10.24 -- --
------------------------------------------------------------------------------------------------------------------------
EQ/Boston Advisors Equity
Income 14.22 12.24 12.46 10.92 9.92 14.85 14.51 12.68 12.10 10.41
------------------------------------------------------------------------------------------------------------------------
EQ/Calvert Socially
Responsible 7.72 6.70 6.76 6.07 4.69 8.66 7.80 -- -- --
------------------------------------------------------------------------------------------------------------------------
EQ/Capital Guardian Research 10.26 8.86 8.61 7.52 5.78 9.69 -- -- -- --
------------------------------------------------------------------------------------------------------------------------
EQ/Core Bond Index 13.45 13.21 12.75 12.18 12.00 13.32 13.06 -- -- --
------------------------------------------------------------------------------------------------------------------------
EQ/Equity Growth PLUS 11.32 10.04 10.85 9.54 7.57 12.85 11.42 10.58 -- --
------------------------------------------------------------------------------------------------------------------------
EQ/GAMCO Mergers and
Acquisitions 14.50 13.96 13.96 12.91 11.22 13.20 12.93 11.69 11.33 10.90
------------------------------------------------------------------------------------------------------------------------
EQ/GAMCO Small Company Value 35.42 30.46 32.00 24.45 17.52 25.61 23.75 20.26 19.68 16.50
------------------------------------------------------------------------------------------------------------------------
EQ/Intermediate Government
Bond 14.11 14.16 13.60 13.19 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------
EQ/Large Cap Value Index 13.27 11.54 -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------
EQ/MFS International Growth 13.69 11.60 13.16 11.61 8.57 14.55 12.69 10.24 9.18 8.84
------------------------------------------------------------------------------------------------------------------------
EQ/Mid Cap Index 15.72 13.61 14.10 11.34 8.41 16.77 -- -- -- --
------------------------------------------------------------------------------------------------------------------------
EQ/Mid Cap Value PLUS 14.25 12.18 13.58 11.23 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------
EQ/Money Market 10.35 10.49 10.63 10.77 10.88 10.77 10.40 10.07 -- --
------------------------------------------------------------------------------------------------------------------------
EQ/Montag & Caldwell Growth 12.28 11.05 10.89 10.20 7.97 12.04 10.10 9.49 9.12 8.88
------------------------------------------------------------------------------------------------------------------------
EQ/Morgan Stanley Mid Cap
Growth 18.89 17.61 19.29 14.74 9.49 18.21 -- -- -- --
------------------------------------------------------------------------------------------------------------------------
EQ/PIMCO Ultra Short Bond 12.13 12.11 12.30 12.36 11.60 12.26 11.14 11.25 11.31 10.94
------------------------------------------------------------------------------------------------------------------------
EQ/Quality Bond PLUS 15.95 15.75 15.77 15.05 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------
EQ/T. Rowe Price Growth Stock 10.79 9.20 9.51 8.28 5.88 10.32 9.75 10.30 10.04 8.96
------------------------------------------------------------------------------------------------------------------------
EQ/UBS Growth and Income 12.00 10.78 11.24 10.08 7.71 13.04 13.06 11.60 10.79 9.66
------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Contrafund(R)
Portfolio 15.99 13.93 14.51 12.56 9.38 16.57 14.29 12.98 11.26 9.90
------------------------------------------------------------------------------------------------------------------------
Franklin Income Securities
Fund 18.71 16.84 16.67 14.99 11.21 16.15 15.78 13.53 13.49 12.01
------------------------------------------------------------------------------------------------------------------------
Franklin Rising Dividends
Securities Fund 17.04 15.43 14.76 12.40 10.71 14.89 15.51 13.42 13.15 12.01
------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Balanced
Portfolio 17.45 15.57 15.53 14.52 11.69 14.08 12.91 11.82 11.10 10.37
------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Enterprise
Portfolio 12.16 10.51 10.80 8.70 6.09 10.97 9.11 8.13 7.33 6.16
------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Forty
Portfolio 14.22 11.61 12.61 11.97 8.29 15.05 11.14 10.32 9.27 7.95
------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Worldwide
Portfolio 9.26 7.81 9.18 8.03 5.91 10.83 10.02 8.59 8.22 7.95
------------------------------------------------------------------------------------------------------------------------
I-1
APPENDIX I: CONDENSED FINANCIAL INFORMATION
--------------------------------------------------------------------------------------------------------------------------------
UNIT VALUE
-----------------------------------------------------------------------------------------
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
SUBACCOUNT 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
--------------------------------------------------------------------------------------------------------------------------------
Multimanager Small Cap Growth $16.57 $15.08 $18.13 $14.40 $10.85 $18.99 $18.57 $17.07 $16.08 $14.49
--------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Securities Fund/VA 21.85 18.31 20.29 17.77 12.93 21.96 20.98 18.12 16.10 13.73
--------------------------------------------------------------------------------------------------------------------------------
PIMCO Variable Insurance Trust
Global Bond Portfolio (Unhedged) 20.28 19.22 18.11 16.44 14.26 14.57 13.46 13.04 14.15 12.97
--------------------------------------------------------------------------------------------------------------------------------
ProFund VP Bear 3.72 4.52 5.03 6.20 8.71 6.31 6.36 6.97 7.16 8.09
--------------------------------------------------------------------------------------------------------------------------------
ProFund VP Rising Rates Opportunity 2.96 3.23 5.23 6.32 4.84 7.92 8.46 7.79 8.57 9.75
--------------------------------------------------------------------------------------------------------------------------------
ProFund VP UltraBull 13.04 10.25 10.92 9.06 6.35 19.74 19.84 16.34 16.14 13.96
--------------------------------------------------------------------------------------------------------------------------------
I-2
APPENDIX I: CONDENSED FINANCIAL INFORMATION
----------------------------------------------------------------------------------------------------------------------------
UNITS OUTSTANDING
-------------------------------------------------------------------------------------------------------
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
SUBACCOUNT 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
----------------------------------------------------------------------------------------------------------------------------
All Asset
Growth-Alt 20 1,922,201 2,249,246 2,681,015 3,190,836 3,976,044 5,513,287 7,300,951 9,232,209 11,109,364 13,202,566
----------------------------------------------------------------------------------------------------------------------------
AXA Aggressive
Allocation 111,649 131,557 125,972 109,441 57,982 23,678 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
AXA Conservative
Allocation 182,536 170,983 221,943 178,106 171,180 25,364 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
AXA
Conservative-Plus
Allocation 85,402 112,840 155,794 158,842 191,867 84,997 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
AXA Moderate
Allocation 317,251 358,670 371,177 476,016 592,487 235,127 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
AXA Moderate-Plus
Allocation 179,305 175,273 269,294 293,026 202,158 44,505 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index
Fund, Inc. 1,265,037 1,488,411 1,831,626 2,258,134 3,003,891 4,131,405 5,268,532 6,734,123 8,132,629 9,138,583
----------------------------------------------------------------------------------------------------------------------------
EQ/BlackRock Basic
Value
Equity 132,606 148,549 181,943 245,928 378,596 588,447 162,707 138,603 -- --
----------------------------------------------------------------------------------------------------------------------------
EQ/Boston Advisors
Equity
Income 476,308 544,646 661,133 866,996 1,228,517 1,872,979 2,493,147 3,121,754 3,207,756 2,990,192
----------------------------------------------------------------------------------------------------------------------------
EQ/Calvert Socially
Responsible 146,303 169,267 204,371 264,142 305,886 392,763 491,154 -- -- --
----------------------------------------------------------------------------------------------------------------------------
EQ/Capital Guardian
Research 189,628 222,032 277,556 346,955 464,204 704,758 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
EQ/Core Bond Index 1,038,202 1,223,634 1,617,336 2,064,117 770,250 1,462,548 1,907,446 -- -- --
----------------------------------------------------------------------------------------------------------------------------
EQ/Equity Growth
PLUS 581,025 672,128 814,368 1,015,952 1,340,581 2,049,590 2,697,953 3,382,866 -- --
----------------------------------------------------------------------------------------------------------------------------
EQ/GAMCO Mergers and
Acquisitions 89,008 124,211 145,562 181,250 228,727 307,858 355,264 281,983 226,652 191,335
----------------------------------------------------------------------------------------------------------------------------
EQ/GAMCO Small
Company Value 1,050,951 1,240,734 1,525,805 1,863,329 2,470,253 3,497,734 4,619,713 6,024,921 7,075,206 7,841,899
----------------------------------------------------------------------------------------------------------------------------
EQ/Intermediate
Government Bond 529,083 616,021 725,776 946,198 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
EQ/Large Cap Value
Index 226,296 262,505 -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
EQ/MFS International
Growth 407,540 464,762 566,604 733,386 951,223 1,314,677 1,619,060 1,680,543 1,911,713 2,103,075
----------------------------------------------------------------------------------------------------------------------------
EQ/Mid Cap Index 47,235 67,501 63,808 72,187 126,854 166,194 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
EQ/Mid Cap Value
PLUS 394,593 486,345 647,302 822,335 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
EQ/Money Market 1,009,821 1,016,824 1,476,653 1,814,818 2,886,956 3,268,106 3,783,141 4,407,396 -- --
----------------------------------------------------------------------------------------------------------------------------
EQ/Montag & Caldwell
Growth 2,928,876 3,408,649 4,022,399 5,040,656 6,247,168 8,542,516 12,014,014 16,339,010 16,012,029 18,983,764
----------------------------------------------------------------------------------------------------------------------------
EQ/Morgan Stanley
Mid
Cap Growth 181,900 236,450 284,685 314,142 373,739 616,094 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
EQ/PIMCO Ultra Short
Bond 200,733 241,075 303,672 462,400 453,559 444,115 607,070 800,622 925,861 915,521
----------------------------------------------------------------------------------------------------------------------------
EQ/Quality Bond PLUS 402,636 496,868 678,561 868,263 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
EQ/T. Rowe Price
Growth
Stock 1,080,159 1,271,301 1,517,985 1,837,732 2,322,411 3,097,303 4,266,241 5,964,804 7,351,694 8,435,080
----------------------------------------------------------------------------------------------------------------------------
EQ/UBS Growth and
Income 1,288,206 1,545,593 1,877,719 2,301,746 2,986,644 4,058,934 5,288,888 6,768,008 8,081,277 9,561,842
----------------------------------------------------------------------------------------------------------------------------
I-3
APPENDIX I: CONDENSED FINANCIAL INFORMATION
-----------------------------------------------------------------------------------------------------------------------------
UNITS OUTSTANDING
---------------------------------------------------------------------------------------------------
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
SUBACCOUNT 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
-----------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP
Contrafund(R)
Portfolio 1,249,805 1,496,304 1,814,712 2,228,837 2,979,630 4,309,960 4,132,884 4,769,384 5,109,618 5,524,076
-----------------------------------------------------------------------------------------------------------------------------
Franklin Income
Securities
Fund 252,307 307,638 407,327 491,997 711,395 1,026,999 1,032,610 924,609 587,543 241,886
-----------------------------------------------------------------------------------------------------------------------------
Franklin Rising Dividends
Securities Fund 138,568 165,260 163,952 173,655 246,117 358,103 418,715 347,075 333,759 216,239
-----------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series
Balanced Portfolio 853,186 1,012,978 1,184,523 1,470,007 1,954,684 2,761,884 3,539,301 4,375,862 5,057,432 5,892,043
-----------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series
Enterprise Portfolio 822,747 940,015 1,131,580 1,419,916 1,722,276 2,242,169 2,826,266 3,502,925 4,107,171 4,901,662
-----------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Forty
Portfolio 710,450 812,913 1,010,518 1,289,315 1,547,604 1,997,448 2,485,058 3,187,808 3,832,050 4,588,875
-----------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series
Worldwide Portfolio 827,150 981,953 1,206,618 1,502,931 1,795,688 2,357,570 2,964,196 3,890,586 4,838,805 5,937,772
-----------------------------------------------------------------------------------------------------------------------------
Multimanager Small Cap
Growth 411,235 507,768 599,656 773,448 997,235 1,431,540 2,003,547 2,557,971 3,066,363 3,596,274
-----------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global
Securities Fund/VA 170,316 194,493 240,081 329,171 528,621 879,138 1,058,049 995,554 764,151 262,808
-----------------------------------------------------------------------------------------------------------------------------
PIMCO Variable Insurance
Trust Global Bond
Portfolio (Unhedged) 131,524 144,199 165,708 224,099 311,052 444,312 568,823 672,896 649,315 539,620
-----------------------------------------------------------------------------------------------------------------------------
ProFund VP Bear 50,931 43,007 54,582 46,231 117,167 38,052 37,753 32,469 28,387 11,301
-----------------------------------------------------------------------------------------------------------------------------
ProFund VP Rising Rates
Opportunity 32,762 39,800 45,613 71,161 54,450 96,834 195,027 263,771 345,652 205,410
-----------------------------------------------------------------------------------------------------------------------------
ProFund VP UltraBull 18,290 50,540 75,957 120,086 67,276 74,392 93,443 123,690 157,450 125,726
-----------------------------------------------------------------------------------------------------------------------------
I-4
APPENDIX I: CONDENSED FINANCIAL INFORMATION
Statement of additional information
--------------------------------------------------------------------------------
TABLE OF CONTENTS
MAY 1, 2013
PAGE
Additional information about the Company 2
About our independent registered public accounting firm 2
Sale of the contracts 2
Federal tax status 2
Financial statements 4
If you would like to receive a copy of the MONY America Variable Account A
Statement of Additional Information, please return this request to:
MONY Life Insurance Company of America
Policyholder Services
100 Madison Street
Syracuse, New York 13202
1-800-487-6669
www.axa-equitable.com.
----------------------------------------------------------------------------------
Please send me a copy of the MONY America Variable Account A Statement
of Additional Information.
----------------------------------------------------------------------------------
Name
----------------------------------------------------------------------------------
Address
----------------------------------------------------------------------------------
City State Zip
MLA-CM
MONY Life Insurance Company of America
SUPPLEMENT DATED MAY 1, 2013 TO THE CURRENT PROSPECTUSES FOR
MONY CUSTOM MASTER
THE MONYMASTER
MONY CUSTOM EQUITY MASTER
THE MONYEQUITY MASTER
--------------------------------------------------------------------------------
This Supplement modifies certain information in each above-referenced
prospectus, supplements to prospectus and statement of additional information
(together the "Prospectus") offered by MONY Life Insurance Company of America.
You should read this Supplement in conjunction with your Prospectus and retain
it for future reference. This Supplement incorporates the Prospectus by
reference. Unless otherwise indicated, all other information included in your
Prospectus remains unchanged. The terms we use in this Supplement have the same
meaning as in your Prospectus. We will send you another copy of any prospectus
or supplement without charge upon request. Please contact the customer service
center referenced in your Prospectus.
On April 10, 2013, MONY Life Insurance Company of America ("MONY America"), an
indirect wholly-owned subsidiary of AXA Financial, Inc., entered into a
reinsurance transaction with Protective Life Insurance Company ("Protective"),
whereby Protective will reinsure a substantial portion of MONY America's life
insurance and annuity business (the "Reinsured Business"). Your contract is
included in the Reinsured Business.
The structure of this transaction, which is common in the insurance industry,
is designed to provide strong protection of assets supporting policyholder
benefits. Following the closing of the transaction, Protective will reinsure
all of the insurance risks of the Reinsured Business and will be responsible
for customer service and administration for all policies comprising the
Reinsured Business. However, MONY America will continue as your insurer and the
terms, features and benefits of your insurance contract will NOT change as a
result of the transaction.
The transaction, which is subject to regulatory approvals and the satisfaction
of other customary conditions, is expected to close in the second half of 2013.
If required by law, you will receive further notice at the time of completion
of the transaction.
Co-distributed by affiliates AXA Advisors, LLC and AXA Distributors, LLC, 1290
Avenue of the Americas, New York, NY 10104.
Copyright 2013 MONY Life Insurance Company of America. All rights reserved.
MONY Life Insurance Company of America
1290 Avenue of the Americas
New York, NY 10104
212-554-1234
Custom Master, Custom Equity
Master, MONYMaster,
MONYEquity Master IF #519839
Guaranteed Interest Account with Market Value Adjustment under Flexible Payment
Variable Annuity Contracts
PROSPECTUS DATED MAY 1, 2013
ISSUED BY
MONY Life Insurance Company of America
--------------------------------------------------------------------------------
MONY Life Insurance Company of America (the "Company") issues the Guaranteed
Interest Account with Market Value Adjustment described in this prospectus. The
Guaranteed Interest Account with Market Value Adjustment is available only
under certain variable annuity contracts that we offer.
This Contract is no longer being sold. This prospectus is used with current
contract owners only. We will continue to accept Purchase Payments under
existing Contracts. You should note that your contract features and charges,
and your investment options, may vary depending on your state and/or the date
on which you purchased your Contract. For more information about the particular
options, features and charges applicable to you, please contact your financial
professional and/or refer to your contract.
Among the many terms of the Guaranteed Interest Account with Market Value
Adjustment are:
.. Guaranteed interest to be credited for specific periods (referred to as
"Accumulation Periods").
.. Three (3), five (5), seven (7), and ten (10) year Accumulation Periods are
available.
.. Interest will be credited for the entire Accumulation Period on a daily
basis. Different rates apply to each Accumulation Period and are determined
by the Company from time to time at its sole discretion.
.. A market value adjustment may be charged if part or all of the Guaranteed
Interest Account with Market Value Adjustment is surrendered or transferred
before the end of the Accumulation Period.
.. Potential purchasers should carefully consider the factors described in
"Risk Factors" as well as the other information contained in this
prospectus before allocating Purchase Payments or Fund Values to the
Guaranteed Interest Account with Market Value Adjustment offered herein.
--------------------------------------------------------------------------------
THESE ARE ONLY SOME OF THE TERMS OF THE GUARANTEED INTEREST ACCOUNT WITH MARKET
VALUE ADJUSTMENT. PLEASE READ THIS PROSPECTUS AND THE PROSPECTUS FOR THE
VARIABLE ANNUITY CONTRACT CAREFULLY FOR MORE COMPLETE DETAILS OF THE CONTRACT.
--------------------------------------------------------------------------------
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE CONTRACTS ARE NOT
INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED. THEY ARE SUBJECT TO
INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL.
#482217
GIA w/MVA
Table of contents
--------------------------------------------------------------------------------
-----------------------------------------------------------------
1. DEFINITIONS 4
-----------------------------------------------------------------
-----------------------------------------------------------------
2.SUMMARY 5
-----------------------------------------------------------------
Purpose of the Guaranteed Interest Account with Market Value
Adjustment 5
Purchase Payments 5
The Accumulation Periods 5
Crediting of interest 5
The Market Value Adjustment 5
Transfers, Surrenders and Loans 5
Death Benefit 7
Other provisions of the contract 7
-----------------------------------------------------------------
3.RISK FACTORS 8
-----------------------------------------------------------------
-----------------------------------------------------------------
4.DESCRIPTION OF THE GUARANTEED INTEREST ACCOUNT
WITH MARKET VALUE ADJUSTMENT 9
-----------------------------------------------------------------
General 9
Allocations to the Guaranteed Interest Account with Market
Value Adjustment 9
Specified interest rates and the accumulation periods 9
End of accumulation periods 10
The Market Value Adjustment 10
Contract charges 11
Guaranteed Interest Account at annuitization 11
-----------------------------------------------------------------
5.FEDERAL TAX STATUS 12
-----------------------------------------------------------------
Introduction 12
Taxation of annuities in general 12
Retirement plans 13
Tax treatment of the company 13
2
TABLE OF CONTENTS
-------------------------------------------------------
6.INVESTMENTS 14
-------------------------------------------------------
-------------------------------------------------------
7.CONTRACTS AND THE DISTRIBUTION OF THE GUARANTEED
INTEREST ACCOUNT WITH MARKET VALUE ADJUSTMENT 15
-------------------------------------------------------
-------------------------------------------------------
8.MONY LIFE INSURANCE COMPANY OF AMERICA 17
-------------------------------------------------------
-------------------------------------------------------
9.LEGAL PROCEEDINGS 18
-------------------------------------------------------
-------------------------------------------------------
10.ADDITIONAL INFORMATION 19
-------------------------------------------------------
-------------------------------------------------------
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE
COMPANY OF AMERICA
-------------------------------------------------------
3
TABLE OF CONTENTS
1. Definitions
--------------------------------------------------------------------------------
ACCUMULATION PERIOD -- Currently 3, 5, 7 and 10 years. The Accumulation Period
starts on the Business Day and falls on, or next follows the date the Purchase
Payment is transferred into the Guaranteed Interest Account with Market Value
Adjustment and ends on the monthly Contract Anniversary immediately prior to
the last day of that Accumulation Period.
ANNUITANT -- The person upon whose continuation of any life annuity payment
depends.
ANNUITY STARTING DATE -- Attainment of age 95, or at the discretion of the
Owner of the Contract, a date that is at least ten years from the Effective
Date of the Contract.
BUSINESS DAY -- Our "business day" is generally any day the New York Stock
Exchange is open for regular trading and generally ends at 4.00 p.m. Eastern
Time (or as of an earlier close of regular trading). A business day does not
include a day on which we are not open due to emergency conditions determined
by the Securities and Exchange Commission. We may also close early due to such
emergency conditions.
CASH VALUE -- The Contract's Fund Value, less (1) any applicable Surrender
Charge, (2) any outstanding debt, and (3) any applicable market value
adjustment.
CODE -- The Internal Revenue Code of 1986, as amended.
COMPANY -- MONY Life Insurance Company of America, the issuer of the Contract.
CONTRACT -- Individual Flexible Payment Variable Annuity Contract.
CONTRACT ANNIVERSARY -- An anniversary of the Effective Date of the Contract.
CONTRACT YEAR -- Any period of twelve (12) months commencing with the Effective
Date and each Contract Anniversary hereafter.
EFFECTIVE DATE -- The date the contract begins as shown in the Contract.
FUND VALUE -- The aggregate dollar value as of any Business Day of all amounts
accumulated under each of the Subaccounts, the Guaranteed Interest Account, and
the Loan Account of the Contract.
GENERAL ACCOUNT -- The General Account of the Company which consists of all of
the Company's assets other than those assets allocated to the Company's
separate accounts.
GUARANTEED INTEREST ACCOUNT -- An account which is part of the General Account.
LOAN -- Available under a Contract issued under Section 401(k) of the Code;
subject to availability. To be considered a Loan: (1) the term must be no more
than five years, (2) repayments must be at least quarterly and substantially
level, and (3) the amount is limited to dollar amounts specified by the Code,
not to exceed 50% of the Fund Value.
LOAN ACCOUNT -- A part of the General Account where Fund Value is held as
collateral for a loan. An Owner may transfer Fund Value in the Subaccounts,
and/or Guaranteed Interest Account with Market Value Adjustment to the Loan
Account.
MARKET VALUE ADJUSTMENT -- An amount added to or deducted from the amount
surrendered or transferred from the Guaranteed Interest Account with Market
Value Adjustment for contracts issued in certain states.
MONTHLY CONTRACT ANNIVERSARY -- The date of each month corresponding to the
Effective Date of the Contract. For example, for a Contract with a June 15
Effective Date, the Monthly Contract Anniversary is the 15th of each month. If
a Contract's Effective Date falls on the 29th, 30th or 31st day of a month, the
Monthly Contract Anniversary will be the earlier of that day or the last day of
the particular month in question.
OWNER -- The person so designated in the application to whom all rights,
benefits, options, and privileges apply while the Annuitant is living. If a
Contract has been absolutely assigned, the assignee becomes the Owner.
PURCHASE PAYMENT -- An amount paid to the Company by the Owner or on the
Owner's behalf as consideration for the benefits provided by the Contract.
SUBACCOUNT -- A division of MONY America Variable Account A.
SURRENDER CHARGE -- A deferred sales load, expressed as a percentage of Fund
Value surrendered.
4
DEFINITIONS
2. Summary
--------------------------------------------------------------------------------
THIS SUMMARY PROVIDES YOU WITH A BRIEF OVERVIEW OF THE MORE IMPORTANT ASPECTS
OF THE CONTRACT'S GUARANTEED INTEREST ACCOUNT WITH MARKET VALUE ADJUSTMENT. IT
IS NOT INTENDED TO BE COMPLETE. MORE DETAILED INFORMATION IS CONTAINED IN THIS
PROSPECTUS ON THE PAGES FOLLOWING THIS SUMMARY AND IN THE CONTRACT. THIS
SUMMARY AND THE ENTIRE PROSPECTUS WILL DESCRIBE ONLY THE GUARANTEED INTEREST
ACCOUNT WITH MARKET VALUE ADJUSTMENT. OTHER PARTS OF THE CONTRACT ARE DESCRIBED
IN THE CONTRACT AND IN THE PROSPECTUS FOR THAT CONTRACT. BEFORE ALLOCATING YOUR
PURCHASE PAYMENTS TO THE GUARANTEED INTEREST ACCOUNT WITH MARKET VALUE
ADJUSTMENT, WE URGE YOU TO READ BOTH PROSPECTUSES CAREFULLY.
PURPOSE OF THE GUARANTEED INTEREST ACCOUNT WITH MARKET VALUE ADJUSTMENT
The Guaranteed Interest Account with Market Value Adjustment is designed to
provide you with an opportunity to receive a guaranteed fixed rate of interest.
You can choose the period of time over which the guaranteed fixed rate of
interest will be paid. That period of time is known as the Accumulation Period.
The Guaranteed Interest Account with Market Value Adjustment is also designed
to provide you with the opportunity to transfer part or all of the Guaranteed
Interest Account with Market Value Adjustment to the Subaccounts available to
you under the Contract. It is also designed to provide you with the opportunity
to surrender part or all of the Guaranteed Interest Account with Market Value
Adjustment before the end of the Accumulation Period. If you ask us to transfer
or surrender part or all of the Guaranteed Interest Account, we may apply a
market value adjustment ("MVA"). This adjustment may be positive, negative, or
zero.
PURCHASE PAYMENTS
The Purchase Payments you make for the Contract are received by the Company.
Currently earnings on those Purchase Payments are not subject to taxes imposed
by the U.S. Government or any state or local government.
You may allocate all or part of your Purchase Payments to the Guaranteed
Interest Account with Market Value Adjustment.
THE ACCUMULATION PERIODS
There are 4 different Accumulation Periods currently available: a 3-year
Accumulation Period, a 5-year Accumulation Period, a 7-year Accumulation
Period, and a 10-year Accumulation Period. You may allocate initial or
additional Purchase Payments made under the Contract to one or more
Accumulation Periods. You may also ask us to transfer Fund Values from the
Subaccounts available under the Contract to one or more of the Accumulation
Periods subject to any applicable MVA. There is no minimum amount required for
allocation or transfer to an Accumulation Period. (See "Allocations to the
Guaranteed Interest Account with Market Value Adjustment.")
Each Accumulation Period starts on the Business Day that falls on, or next
follows, the date on which allocations are made and Purchase Payments are
received or Fund Values are transferred. Each Accumulation Period ends on the
Monthly Contract Anniversary immediately prior to the 3, 5, 7 or 10 year
anniversary of the start of the Accumulation Period (the "Maturity Date"). This
means that the Accumulation Period for a 3, 5, 7 or 10 year Accumulation Period
may be up to 31 days shorter than 3, 5, 7 or 10 years, respectively. (See
"Specified interest rates and the accumulation periods.")
CREDITING OF INTEREST
The Company will credit amounts allocated to an Accumulation Period with
interest at an annual rate not less than 3.50%. This interest rate is referred
to as the Specified Interest Rate. It will be credited for the duration of the
Accumulation Period. Specified Interest Rates for each Accumulation Period are
declared periodically at the sole discretion of the Company. (See "Specified
interest rates and the accumulation periods.")
At least 15 days and at most 45 days prior to the Maturity Date of an
Accumulation Period, Owners having Fund Values allocated to such Accumulation
Periods will be notified of the impending Maturity Date. Owners will then have
the option of directing the surrender or transfer (including transfers for the
purpose of obtaining a Loan) of the Fund Value within 30 days before the end of
the Accumulation Period without application of any MVA.
The Specified Interest Rate will be credited to amounts allocated to an
Accumulation Period, so long as such allocations are neither surrendered nor
transferred prior to the Maturity Date for the Allocation Period. The Specified
Interest Rate is credited daily, providing an annual effective yield. (See
"Specified interest rates and the accumulation periods.")
THE MARKET VALUE ADJUSTMENT
Amounts that are surrendered or transferred (including transfers for the
purpose of obtaining a Loan) from an Accumulation Period more than 30 days
before the Maturity Date will be subject to an MVA. An MVA will not apply upon
annuitization or upon payment of a death benefit. The MVA is determined through
the use of a factor, which is known as the MVA Factor. This factor is discussed
in detail in the section entitled "The Market Value Adjustment." The MVA could
cause an increase or decrease or no change at all in the amount of the
distribution from an Accumulation Period.
TRANSFERS, SURRENDERS AND LOANS
When you as Owner request that Contract Fund Value from the Guaranteed Interest
Account with Market Value Adjustment be transferred to MONY America Variable
Account A, surrendered, loaned to you, or used to pay any charge imposed in
accordance with the Contract, you should tell the Company the source by
interest rate Accumulation
5
SUMMARY
Period of amounts you request be transferred, surrendered, loaned, or used to
pay charges. We will not process the surrender unless you tell us the source by
interest rate Accumulation Period to use. If you do not specify an Accumulation
Period, your transaction will be processed using the Accumulation Periods in
the order in which money was most recently allocated.
TRANSFERS
Transfers may be made from the Guaranteed Interest Account with Market Value
Adjustment at any time, but, if they are made before the end of the 3, 5, 7, or
10 year accumulation period there will be a market value adjustment for
contracts issued in most states. If the transfer request is received within 30
days before the end of the Accumulation Period, no market value adjustment will
apply. If multiple Accumulation Periods are in effect, your transfer request
must specify from which Accumulation Period(s) we are to make the transfer.
Contracts issued in Maryland, Massachusetts, New Jersey, Oklahoma, Oregon,
Pennsylvania, South Carolina, Texas and Washington with Fund Value must
maintain a minimum Fund Value in the Guaranteed Interest Account with Market
Value Adjustment of $2,500.
SURRENDERS
The Owner may elect to make a surrender of all or part of the Contract's Fund
Value provided it is:
.. on or before the annuity payments start, and
.. during the lifetime of the Annuitant.
Any such election shall specify the amount of the surrender. The surrender will
be effective on the date a proper written request is received by the Company at
its Operations Center.
The amount of the surrender may be equal to the Contract's Cash Value, which is
its Fund Value less:
(1)any applicable surrender charge, and
(2)any applicable Market Value Adjustment.
The surrender may also be for a lesser amount (a "partial surrender").
Requested partial surrenders that would leave a Cash Value of less than $1,000
are treated and processed as a full surrender. In such case, the entire Cash
Value will be paid to the Owner. For a partial surrender, any surrender charge
or any applicable Market Value Adjustment will be in addition to the amount
requested by the Owner. A partial surrender may reduce your death benefit
proportionately by the same percentage that the surrender (including any
surrender charge and any market value adjustment, if applicable) reduced Fund
Value.
A surrender will result in the cancellation of units of the particular
subaccounts and the withdrawal of amounts credited to the Guaranteed Interest
Account with Market Value Adjustment Accumulation Periods as chosen by the
Owner. The aggregate value of the surrender will be equal to the dollar amount
of the surrender plus, if applicable, any surrender charge and any applicable
Market Value Adjustment. For a partial surrender, the Company will cancel units
of the particular subaccounts and withdraw amounts from the Guaranteed Interest
Account with Market Value Adjustment Accumulation Period under the allocation
specified by the Owner. The unit value will be calculated as of the end of the
Business Day the surrender request is received. The Owner can specify partial
surrender allocations by either amount or percentage. Allocations by percentage
must be in whole percentages (totaling 100%). The minimum percentage of
allocation for a partial surrender is 10% of any subaccount or Guaranteed
Interest Account with Market Value Adjustment designated by the Owner. The
request will not be accepted if:
.. there is insufficient Fund Value in the Guaranteed Interest Account with
Market Value Adjustment or a subaccount to provide for the requested
allocation against it, or
.. the request is incomplete or incorrect.
Any surrender charge will be allocated against the Guaranteed Interest Account
with Market Value Adjustment and each subaccount in the same proportion that
each allocation bears to the total amount of the partial surrender. Contracts
issued in Maryland, the Commonwealth of Massachusetts, New Jersey, Oklahoma,
Oregon, the Commonwealth of Pennsylvania, South Carolina, Texas and Washington
must maintain a minimum Fund Value in the Guaranteed Interest Account with
Market Value Adjustment of $2,500.
The amount of any surrender, death benefit, or transfer payable from MONY
America Variable Account A amount will be paid in accordance with the
requirements of the 1940 Act. However, the Company may be permitted to postpone
such payment under the 1940 Act. Postponement is currently permissible only for
any period during which:
(1)the New York Stock Exchange is closed other than customary weekend and
holiday closings, or
(2)trading on the New York Stock Exchange is restricted as deter- mined by the
Securities and Exchange Commission, or
(3)an emergency exists as a result of which disposal of securities held by the
Fund is not reasonably practicable or it is not reasonably practicable to
determine the value of the net assets of the Fund.
Any surrender involving payment from amounts credited to the Guaranteed
Interest Account with Market Value Adjustment may be postponed, at the option
of the Company, for up to 6 months from the date the request for a surrender is
received by the company. Surrenders involving payment from the Guaranteed
Interest Account with Market Value Adjustment may in certain circumstances and
in certain states also be subject to a Market Value Adjustment, in addition to
a surrender charge.
Please note: If mandated under applicable law, we may be required to reject a
Purchase Payment. In addition, we may also be required to block an Owner's
account and thereby refuse to honor any request for transfers, partial
surrenders, loans or death benefits until instructions are secured from the
appropriate regulator. We may also be required to provide additional
information about your account to government regulators.
LOANS
Qualified Contracts issued under an Internal Revenue Code Section 401(k) plan
will have a loan provision (except in the case of Contracts issued in Vermont)
under which a loan can be taken using the Contract as collateral for the loan.
All of the following conditions apply
6
SUMMARY
in order for the amount to be considered a loan, rather than a (taxable)
partial surrender:
.. The term of the loan must be 5 years or less.
.. Repayments are required at least quarterly and must be substantially level.
.. The loan amount is limited to certain dollar amounts as specified by the
IRS.
The Owner (Plan Trustee) must certify that these conditions are satisfied.
In any event, the maximum outstanding loan on a Contract is 50% of the Fund
Value in the subaccounts and/or the Guaranteed Interest Account with Market
Value Adjustment. Loans are not permitted before the end of the right to return
contract period. In requesting a loan, the Owner must specify the subaccounts
from which Fund Value equal to the amount of the loan requested will be taken.
Loans from the Guaranteed Interest Account with Market Value Adjustment are not
taken until Fund Value in the subaccounts is exhausted. If in order to provide
the Owner with the amount of the loan requested, and Fund Values must be taken
from the Guaranteed Interest Account with Market Value Adjustment, then the
Owner must specify the Accumulation Periods from which Fund Values equal to
such amount will be taken. If the Owner fails to specify subaccounts and
Accumulation Periods, the request for a loan will be returned to the Owner.
Values are transferred to a loan account that earns interest at an annual rate
of 3.50%. The annual loan interest rate charged on outstanding loans will be 6%
in arrears. Any interest not paid when due will be added to the loan and bear
interest at the 6% annual rate.
Loan repayments must be specifically earmarked as loan repayment and will be
allocated to the subaccounts and/or the Guaranteed Interest Account with Market
Value Adjustment using the most recent payment allocation on record. Otherwise,
we will treat the payment as a Net Purchase Payment.
DEATH BENEFIT
Upon payment of a death benefit, if there are funds allocated to the Guaranteed
Interest Account with Market Value Adjustment at the time of death, any
applicable market value adjustment will be waived.
OTHER PROVISIONS OF THE CONTRACT
This summary and this prospectus do not describe the other provisions of the
Contract. Please refer to the prospectus for MONY America Variable Account A
and to the Contract for the details of these provisions.
7
SUMMARY
3. Risk factors
--------------------------------------------------------------------------------
Potential purchasers should carefully consider the factors described in this
section as well as the other information contained in this prospectus before
allocating Purchase Payments or Fund Values to the Guaranteed Interest Account
with Market Value Adjustment offered herein. Such Risk factors include:
(i)the risk of losses on real estate and commercial mortgage loans,
(ii)other risks relating to the Company's investment portfolio that could
affect the profitability of the Company,
(iii)the risk that interest rate changes could make certain of the Company's
products less profitable to the Company or less attractive to customers,
(iv)risks with respect to certain sales practice litigation that could result
in substantial judgments against the Company,
(v)the risk of increased surrenders of certain annuities as the Surren- der
Charges with respect to such annuities expire that could eliminate sources
of revenues (charges under the annuities) and/or exhaust the Company's
liquid assets and force the Company to liquidate other assets, perhaps on
unfavorable terms,
(vi)risks associated with certain economic and market factors,
(vii)the risk of variations in claims experience that could be different than
the assumptions management used in pricing the Compa- ny's products,
(viii)risks related to certain insurance regulatory matters -- i.e., that
certain issues raised during examinations of the Company could have a
material impact on the Company,
(ix)risks of competition,
(x)risks with respect to claims paying ability ratings and financial strength
ratings that could adversely affect the Company's ability to compete, and
(xi)risks of potential adoption of new Federal income tax legislation that
could adversely affect the Company and its ability to com- pete with
non-insurance products and the demand for certain insurance products.
8
RISK FACTORS
4. Description of the Guaranteed Interest Account with Market Value Adjustment
--------------------------------------------------------------------------------
GENERAL
The Guaranteed Interest Account with Market Value Adjustment is an allocation
option available under certain variable annuity contracts issued by the
Company. Not all of the variable annuity contracts issued by the Company offer
the Guaranteed Interest Account with Market Value Adjustment, nor is the
Guaranteed Interest Account with Market Value Adjustment available in every
state jurisdiction. The variable annuity contract that offers the Guaranteed
Interest Account with Market Value Adjustment clearly discloses whether the
Guaranteed Interest Account with Market Value Adjustment is available as an
allocation choice to the Owner. If the Guaranteed Interest Account with Market
Value Adjustment is available under a variable annuity issued by the Company,
the prospectus for the variable annuity contract and this prospectus must be
read carefully together in the same manner that prospectuses for underlying
mutual funds must be read with the prospectus for the contracts.
The guarantees associated with the Guaranteed Interest Account with Market
Value Adjustment are borne exclusively by the Company. The guarantees
associated with the Guaranteed Interest Account with Market Value Adjustment
are legal obligations of the Company. Fund Values allocated to the Guaranteed
Interest Account with Market Value Adjustment are held in the General Account
of the Company. Amounts allocated to the General Account of the Company are
subject to the liabilities arising from the business the Company conducts. The
Company has sole investment discretion over the investment of the assets of its
General Account. Owners having allocated amounts to a particular Accumulation
Period of the Guaranteed Interest Account with Market Value Adjustment,
however, will have no claim against any particular assets of the Company.
The Guaranteed Interest Account with Market Value Adjustment provides for a
Specified Interest Rate, which is a guaranteed interest rate that will be
credited as long as any amount allocated to the Guaranteed Interest Account
with Market Value Adjustment is not distributed for any reason prior to the
Maturity Date of the particular Accumulation Period chosen by the Owner.
Generally, a 3-year Accumulation Period offers guaranteed interest at a
Specified Interest Rate over three years, a 5-year Accumulation Period offers
guaranteed interest at a Specified Interest Rate over five years, and so on.
Because the Maturity Date is the Monthly Contract Anniversary immediately prior
to the 3, 5, 7 or 10 year anniversary of the start of the Accumulation Period,
the Accumulation Period may be up to 31 days shorter than the 3, 5, 7 or 10
years, respectively.
Although the Specified Interest Rate will continue to be credited as long as
Fund Value remains in an Accumulation Period of the Guaranteed Interest Account
with Market Value Adjustment prior to the Maturity Date of that Accumulation
Period, surrenders or transfers (including transfers to the Loan Account as a
result of a request by the Owner for a Loan) will be subject to a Market Value
Adjustment, as described below. Market Value Adjustments do not apply upon
annuitization or upon payment of a death benefit.
ALLOCATIONS TO THE GUARANTEED INTEREST ACCOUNT WITH MARKET VALUE ADJUSTMENT
There are three sources from which allocations to the Guaranteed Interest
Account with Market Value Adjustment may be made:
(1)an initial Purchase Payment made under a Contract may be wholly or partially
allocated to the Guaranteed Interest Account with Market Value Adjustment;
(2)a subsequent or additional Purchase Payment made under a Contract may be
partially or wholly allocated to the Guaranteed Interest Account with Market
Value Adjustment; and
(3)amounts transferred from Subaccounts available under the Con- tract may be
wholly or partially allocated to the Guaranteed Interest Account with Market
Value Adjustment.
There is no minimum amount of any allocation of either Purchase Payments or
transfers of Fund Value to the Guaranteed Interest Account with Market Value
Adjustment. The Contract provides that the prior approval of the Company is
required before it will accept a Purchase Payment where, with that Purchase
Payment, cumulative Purchase Payments made under the Contract held by the
Owner, less the amount of any prior partial surrenders and their Surrender
Charges, the MVA, and any debt, exceed $1,500,000. This limit applies to the
aggregate of Fund Values in the Guaranteed Interest Account with Market Value
Adjustment, the Subaccounts and the Loan Account of the Contract.
SPECIFIED INTEREST RATES AND THE ACCUMULATION PERIODS
SPECIFIED INTEREST RATES
The Specified Interest Rate, at any given time, is the rate of interest
guaranteed by the Company to be credited to allocations made to the
Accumulation Period for the Guaranteed Interest Account with Market Value
Adjustment chosen by the Owner, so long as no portion of the allocation is
distributed for any reason prior to the Maturity Date of the Accumulation
Period. Different Specified Interest Rates may be established for the four
different Accumulation Periods which are currently available (3, 5, 7 and 10
years).
The Company declares Specified Interest Rates for each of the available
Accumulation Periods from time to time. Normally, new Specified Interest Rates
will be declared monthly; however, depending on interest rate fluctuations,
declarations of new Specified Interest Rates may occur more or less frequently.
The Company observes no specific method in the establishment of the Specified
Interest Rates, but generally will attempt to declare Specified Interest Rates
which are related to interest rates associated with fixed-income investments
available at the time and having durations and cash flow attributes compatible
with the Accumulation Periods then available for the Guaranteed Interest
Account with Market Value Adjustment. In addition, the establishment of
Specified Interest Rates may be influenced
9
DESCRIPTION OF THE GUARANTEED INTEREST ACCOUNT WITH MARKET VALUE ADJUSTMENT
by other factors, including competitive considerations, administrative costs
and general economic trends. The Company has no way of predicting what
Specified Interest Rates may be declared in the future and there is no
guarantee that the Specified Interest Rate for any of the Accumulation Periods
will exceed the guaranteed minimum effective annual interest rate of 3.50%.
OWNERS BEAR THE RISK THAT THE SPECIFIED INTEREST RATE WILL NOT EXCEED THE
GUARANTEED MINIMUM RATE.
The period of time during which a particular Specified Interest Rate is in
effect for new allocations to the then available Accumulation Periods is
referred to as the Investment Period. All allocations made to an Accumulation
Period during an Investment Period are credited with the Specified Interest
Rate in effect. An Investment Period ends only when a new Specified Interest
Rate relative to the Accumulation Period in question is declared. Subsequent
declarations of new Specified Interest Rates have no effect on allocations made
to Accumulation Periods during prior Investment Periods. All such prior
allocations will be credited with the Specified Interest Rate in effect when
the allocation was made for the duration of the Accumulation Period selected.
Information concerning the Specified Interest Rates in effect for the various
Accumulation Periods can be obtained by contacting an agent of the Company who
is also a registered representative of AXA Advisors, LLC or by calling the
following toll free telephone number: (800) 487-6669.
The Specified Interest Rate is credited on a daily basis to allocations made to
an Accumulation Period elected by the Owner, resulting in an annual effective
yield which is guaranteed by the Company, unless amounts are surrendered,
transferred or paid out on death of Annuitant from that Accumulation Period for
any reason prior to the Maturity Date for that Accumulation Period. The
Specified Interest Rate will be credited for the entire Accumulation Period. If
amounts are surrendered or transferred from the Accumulation Period for any
reason prior to the Maturity Date, a Market Value Adjustment will be applied to
the amount surrendered or transferred.
ACCUMULATION PERIODS
For each Accumulation Period, the Specified Interest Rate in effect at the time
of the allocation to that Accumulation Period is guaranteed. An Accumulation
Period always ends on a Maturity Date, which is the Monthly Contract
Anniversary immediately prior to the 3, 5, 7 or 10 year anniversary of the
start of the Accumulation Period. Therefore, the Specified Interest Rate may be
credited for up to 31 days less than the full 3, 5, 7 or 10 years.
For example, if the Effective Date of a Contract is August 10, 2000 and an
allocation is made to a 10 year Accumulation Period on August 15, 2000 and the
funds for a new Purchase Payment are received on that day, the Accumulation
Period will begin on August 15, 2000 and end on August 10, 2010, during which
period the Specified Interest Rate will be credited.
All Accumulation Periods for the 3, 5, 7, and 10 year Accumulation Periods,
respectively, will be determined in a manner consistent with the foregoing
example.
END OF ACCUMULATION PERIODS
At least fifteen days and at most forty-five days prior to the end of an
Accumulation Period, the Company will send notice to the Owner of the impending
Maturity Date. The notice will include the projected Fund Value held in the
Accumulation Period on the Maturity Date and will specify the various options
Owners may exercise with respect to the Accumulation Period:
(1)During the thirty-day period before the Maturity Date, the Owner may wholly
or partially surrender the Fund Value held in that Accumulation Period
without a Market Value Adjustment; however, Surrender Charges under the
Contract, if applicable, will be assessed.
(2)During the thirty-day period before the Maturity Date, the Owner may wholly
or partially transfer the Fund Value held in that Accumulation Period,
without a Market Value Adjustment, to any Subaccount then available under
the Contract or may elect that the Fund Value held in that Accumulation
Period be held for an additional Accumulation Period of the same number of
years or for another Accumulation Period of a different number of years
which may at the time be available. A confirmation of any such transfer or
election will be sent immediately after the transfer or election is
processed.
(3)If the Owner does not make an election within thirty days following the
Maturity Date, the entire Fund Value held in the maturing Accumulation
Period will be transferred to an Accumulation Period of the same number of
years as the Accumulation Period which matured. The start of the new
Accumulation Period is the ending date of the previous Accumulation Period.
However, if that period would extend beyond the Annuity Starting Date of the
Contract or if that period is not then made available by the Company, the
Fund Value held in the maturing Accumulation Period will be automatically
transferred to the Money Market Subaccount at the end of the Maturity
Period. A confirmation will be sent immediately after the automatic transfer
is executed.
During the thirty-day period following the Maturity Date, and prior to any of
the transactions set forth in (1), (2), or (3) above, the Specified Value held
in the maturing Accumulation Period will continue to be credited with the
Specified Interest Rate in effect before the Maturity Date.
THE MARKET VALUE ADJUSTMENT
GENERAL INFORMATION REGARDING THE MVA
A surrender or transfer (including a transfer to the Loan Account as a result
of a request by the Owner for a Loan) from the Guaranteed Interest Account with
Market Value Adjustment prior to the Maturity Date of that particular
Accumulation Period, will be subject to a Market Value Adjustment. A Market
Value Adjustment will not apply upon annuitization or upon payment of a death
benefit. The Market Value Adjustment is determined by the multiplication of an
MVA Factor by the Specified Value, or the portion of the Specified Value being
surrendered or transferred (including transfers for the purpose of obtaining a
Loan). The Specified Value is the amount of the allocation of Purchase Payments
and transfers of Fund Value to an Accumulation Period of the Guaranteed
Interest Account with Market Value Adjustment, plus interest accrued at the
Specified Interest Rate minus prior distributions. The Market Value Adjustment
may either increase or decrease the amount of the distribution. It will not
apply to requests for transfer or full or partial surrenders received at our
administrative office within 30 days before the end of the applicable
Accumulation Period.
10
DESCRIPTION OF THE GUARANTEED INTEREST ACCOUNT WITH MARKET VALUE ADJUSTMENT
The Market Value Adjustment is intended to approximate, without duplicating,
the experience of the Company when it liquidates assets in order to satisfy
contractual obligations. Such obligations arise when Owners request surrenders
or transfers (including transfers for the purpose of obtaining a Loan). When
liquidating assets, the Company may realize either a gain or a loss.
If prevailing interest rates are higher at the time of a surrender or transfer
(including transfers for the purpose of obtaining a Loan) than the Specified
Interest Rate in effect at the time the Accumulation Period commences, the
Company will realize a loss when it liquidates assets in order to process a
surrender or transfer (including transfers for the purpose of obtaining a
Loan); therefore, application of the Market Value Adjustment under such
circumstances will decrease the amount of the surrender or transfer (including
transfers for the purpose of obtaining a Loan).
Generally, if prevailing interest rates are lower than the Specified Interest
Rate in effect at the time the Accumulation Period commences, the Company will
realize a gain when it liquidates assets in order to process a surrender or
transfer (including transfers for the purpose of obtaining a Loan); therefore,
application of the MVA under such circumstances will generally increase the
amount of the surrender or transfer (including transfers for the purpose of
obtaining a Loan).
The Company measures the relationship between prevailing interest rates and the
Specified Interest Rates it declares through the MVA Factor. The MVA Factor is
described more fully below.
THE MVA FACTOR
The formula for determining the MVA Factor is:
[(1+a)/(1+b)]/((n-t)/12)/ -1
Where:
a =the Specified Interest Rate for the Accumulation Period from which the
surrender, transfer or loan is to be taken;
b =the Specified Interest Rate declared at the time a surrender or transfer is
requested for an Accumulation Period equal to the time remaining in the
Accumulation Period from which the surrender or transfer (including transfer
to the Loan Account as a result of a request by the Owner for a Loan) is
requested, plus 0.25%;
n =the Accumulation Period from which the surrender or transfer occurs in
months; and
t =the number of elapsed months (or portion thereof) in the Accumulation Period
from which the surrender or transfer occurs.
If an Accumulation Period equal to the time remaining is not issued by the
Company, the rate will be an interpolation between two available Accumulation
Periods. If two such Accumulation Periods are not available, we will use the
rate for the next closest available Accumulation Period.
If the Company is no longer declaring rates on new payments, we will use
Treasury yields adjusted for investment risk as the basis for the Market Value
Adjustment.
The MVA Factor shown above also accounts for some of the administrative and
processing expenses incurred when fixed-interest investments are liquidated.
This is represented in the addition of
0.25% in the MVA Factor.
The MVA Factor will be multiplied by that portion of the Fund Value being
surrendered, transferred, or distributed for any other reason. If the result is
greater than 0, a gain will be realized by the Owner; if less than 0, a loss
will be realized. If the MVA Factor is exactly 0, no gain or loss will be
realized by the Owner.
CONTRACT CHARGES
The Contracts under which the Guaranteed Interest Account with Market Value
Adjustment are made available have various fees and charges, some of which may
be assessed against allocations made to the Guaranteed Interest Account with
Market Value Adjustment.
Surrender Charges, if applicable, will be assessed against full or partial
surrenders from the Guaranteed Interest Account with Market Value Adjustment.
If any such surrender occurs prior to the Maturity Date for any particular
Accumulation Period elected by the Owner, the amount surrendered will be
subject to a Market Value Adjustment in addition to Surrender Charges. The
variable annuity prospectus fully describes the Surrender Charges. Please refer
to the variable annuity prospectus for complete details regarding the Surrender
Charges under the Contracts.
Mortality and expense risk charges which may be assessed under Contracts will
not be assessed against any allocation to the Guaranteed Interest Account with
Market Value Adjustment. Such charges apply only to the Fund Value allocated to
the Subaccounts.
GUARANTEED INTEREST ACCOUNT AT ANNUITIZATION
On the Annuity Starting Date, the Contract's Cash Value, including the
Specified Value of all Accumulation Periods of the Guaranteed Interest Account
with Market Value Adjustment, will be applied to provide an annuity or any
other option previously chosen by the Owner and permitted by the Company.
Because the Annuity Starting Date will always coincide with or follow the
Maturity Date of any Guaranteed Interest Account with Market Value Adjustment,
no Market Value Adjustment will apply at annuitization. For more information
about annuitization and annuity options, please refer to the prospectus for
MONY America Variable Account A and to the Contract.
11
DESCRIPTION OF THE GUARANTEED INTEREST ACCOUNT WITH MARKET VALUE ADJUSTMENT
5. Federal tax status
--------------------------------------------------------------------------------
INTRODUCTION
The Contract described in this prospectus is designed for use in connection
with certain types of Qualified Plans and on a nonqualified basis. The ultimate
effect of federal income taxes on
.. the value of the Contract's Fund Value,
.. annuity payments,
.. death benefit, and
.. economic benefit to the Owner, Annuitant, and the Beneficiary
may depend upon
.. the type of retirement plan for which the Contract is purchased, and
.. the tax and employment status of the individual concerned.
The following discussion of the treatment of the Contract and of the Company
under the federal income tax laws is general in nature. The discussion is based
on the Company's understanding of current federal income tax laws, and is not
intended as tax advice. These federal income tax laws may change without
notice. We cannot predict whether, when, or how these rules could change. Any
change could affect contracts purchased before the change. Congress may also
consider proposals in the future to comprehensively reform or overhaul the
United States tax and retirement systems, which if enacted, could affect the
tax benefits of a Contract. We cannot predict what, if any, legislation will
actually be proposed or enacted based on these options. Any person considering
the purchase of a Contract should consult a qualified tax adviser. THE COMPANY
DOES NOT MAKE ANY GUARANTEE REGARDING ANY TAX STATUS, FEDERAL, STATE, OR LOCAL,
OF ANY CONTRACT OR ANY TRANSACTION INVOLVING THE CONTRACT.
TAXATION OF ANNUITIES IN GENERAL
The Contract described in this prospectus is designed for use in connection
with certain types of Qualified Plans and on a nonqualified basis. All or a
portion of the contributions to such Qualified Plans will be used to make
Purchase Payments under the Contract. In general, contributions to Qualified
Plans and income earned on contributions to all plans are tax-deferred until
distributed to plan participants or their beneficiaries. Such tax deferral of
interest earned on contributions is not, however, available for Non-Qualified
Contracts if the Owner is other than a natural person unless the Contract is
held as an agent for a natural person. Annuity payments made under a Contract
are generally taxable to the Annuitant as ordinary income except to the extent
of:
.. Participant after-tax contributions (in the case of Qualified Plans), or
.. Owner contributions (in the case of Non-Qualified Contracts).
Owners, Annuitants, and beneficiaries should seek advice from their own tax
advisers about the tax consequences of distributions, withdrawals and payments
under Non-Qualified Contracts and under any Qualified Plan in connection with
which the Contract is purchased. For Non-Qualified Contracts, individuals
should discuss with their own tax advisers the potential application of an
additional surtax of 3.8% on specified net investment income, including annuity
contract income, for taxable years beginning after December 31, 2012. For
Qualified Plan Contracts, among other things individuals should discuss with
their tax advisers are the "required minimum distribution rules" which
generally require distributions to be made after age 70 1/2 and after death,
including requirements applicable to the calculation of such required
distributions from annuity contracts funding Qualified Plans.
Federal tax law imposes requirements for determining the amount includable in
gross income with respect to amounts not received as an annuity. Amounts
include, but are not limited to, distributions, transfers, including gratuitous
transfers, and pledges of the Contract. Amounts from all annuity contracts
issued during any calendar year by the same company or an affiliate (other than
those under certain qualified retirement plans) in the same year will be
treated as distributed from one annuity contract. The Internal Revenue Service
is given power to prescribe additional rules to prevent avoidance of this rule
through serial purchases of contracts or otherwise. These rules do not apply to
Qualified Plans.
The Company will withhold and remit to the U.S. Government and, where
applicable to state and local governments, part of the taxable portion of each
distribution made under a Contract unless the Owner or Annuitant:
(1)provides his or her taxpayer identification number to the Company, and
(2)notifies the Company that he or she chooses not to have amounts withheld.
Distributions of plan benefits from qualified retirement plans, other than
traditional individual retirement arrangements ("traditional IRAs"), generally
will be subject to mandatory federal income tax withholding unless they are:
(1)Part of a series of substantially equal periodic payments (at least
annually) for
(a)the participant's life or life expectancy,
(b)the joint lives or life expectancies of the participant and his/ her
beneficiary,
(c)or a period certain of not less than 10 years;
(2)Required minimum distributions; or
(3)Qualifying hardship distributions.
The withholding can be avoided if the participant's interest in the plan is
directly rolled over by the old plan to another eligible retirement plan,
including a traditional IRA. A direct rollover to the new plan can be made only
in accordance with the terms of the old plan.
12
FEDERAL TAX STATUS
Under the generation skipping transfer tax, the Company may be liable for
payment of this tax under certain circumstances. In the event that the Company
determines that such liability exists, an amount necessary to pay the
generation skipping transfer tax may be subtracted from the death benefit
proceeds.
RETIREMENT PLANS
Aside from Contracts purchased on a non-qualified basis, the Contract described
in this prospectus currently is designed for use with the following types of
retirement plans:
(1)Pension and Profit Sharing Plans established by eligible employ- ers, as
permitted by Sections 401(a) and 401(k) of the Code, including those
purchasers who would have been covered under the rules governing H.R. 10
(Keogh) Plans;
(2)Individual Retirement Annuities permitted by Section 408(b) of the Code,
including Simplified Employee Pensions established by employers pursuant to
Section 408(k);
(3)Roth IRAs permitted by Section 408A of the Code; and
(4)Deferred compensation plans provided by certain governmental entities and
tax-exempt organizations under Section 457.
The tax rules applicable to participants in such retirement plans vary
according to the type of plan and its terms and conditions. Therefore, no
attempt is made here to provide more than general information about the use of
the Contract with the various types of retirement plans. Participants in such
plans as well as Owners, Annuitants, and Beneficiaries are cautioned that the
rights of any person to any benefits under these plans are subject to the terms
and conditions of the plans themselves, regardless of the terms and conditions
of the Contract. The Company will provide purchasers of Contracts used in
connection with Individual Retirement Annuities with such supplementary
information as may be required by the Internal Revenue Service or other
appropriate agency. Any person contemplating the purchase of a Contract should
consult a qualified tax adviser.
TAX TREATMENT OF THE COMPANY
Under existing federal income tax laws, the income of the Guaranteed Interest
Account with Market Value Adjustment, to the extent it exceeds amounts applied
to increase reserves under the Contract, excess interest credited to the
Contract and the Guaranteed Interest Account with Market Value Adjustment's
allocable share of ordinary and necessary business expenses and other business
deductions, is taxable to the Company.
13
FEDERAL TAX STATUS
6. Investments
--------------------------------------------------------------------------------
Amounts allocated to the Guaranteed Interest Account with Market Value
Adjustment are transferred to the General Account of the Company. Amounts
allocated to the General Account of the Company are subject to the liabilities
arising from the business the Company conducts. This is unlike amounts
allocated to the Subaccounts of the Variable Account A, which are not subject
to the liabilities arising from the business the Company conducts.
The Company has sole investment discretion over the investment of the assets of
the General Account. We will invest these amounts primarily in investment-grade
fixed income securities including: securities issued by the U.S. Government or
its agencies or instrumentalities, which issues may or may not be guaranteed by
the U.S. Government; debt securities that have an investment grade, at the time
of purchase, within the four highest grades assigned by Moody's Investor
Services, Inc., Standard & Poor's Corporation, or any other nationally
recognized rating service; mortgage-backed securities collateralized by real
estate mortgage loans or securities collateralized by other assets, that are
insured or guaranteed by the Federal Home Loan Mortgage Association, the
Federal National Home Mortgage Association, or the Government National Mortgage
Association, or that have an investment grade at the time of purchase within
the four highest grades described above; commercial and agricultural mortgage
loans; other debt instruments; commercial paper; cash or cash equivalents.
Variable Annuity Owners having allocated amounts to a particular Accumulation
Period of the Guaranteed Interest Account with Market Value Adjustment will not
have a direct or indirect interest in these investments, nor will they have a
claim against any particular assets of the Company. The overall investment
performance of the General Account will not increase or decrease their claim
against the Company.
There is no specific formula for establishing Specified Interest Rates. The
Specified Interest Rates declared by the Company for the various Accumulation
Periods will not necessarily correspond to the performance of any group of
assets of the General Account. We will consider certain factors in determining
these rates, such as regulatory and tax environment, sales commissions,
administrative expenses borne by us, and competitive factors. The Company's
management will make the final determination of these rates. However, the
Specified Interest Rate will never be less than 3.50%.
14
INVESTMENTS
7. Contracts and the distribution of the Guaranteed Interest Account with Market
Value Adjustment
--------------------------------------------------------------------------------
Interests in the Guaranteed Interest Account with Market Value Adjustment are
only available through certain Contracts issued by the Company. The appropriate
variable annuity prospectus and statement of additional information also
contain information regarding the distribution of the Contracts.
The Contracts are distributed by both AXA Advisors, LLC ("AXA Advisors") and
AXA Distributors, LLC ("AXA Distributors") (together, the "Distributors"). The
Distributors serve as principal underwriters of MONY America Variable Account
A. The offering of the Contracts is intended to be continuous.
AXA Advisors is an affiliate of the Company, and AXA Distributors is an
indirect wholly owned subsidiary of the Company. The Distributors are under the
common control of AXA Financial, Inc. Their principal business address is 1290
Avenue of the Americas, New York, NY 10104. The Distributors are registered
with the SEC as broker-dealers and are members of the Financial Industry
Regulatory Authority, Inc. ("FINRA"). Both broker-dealers also act as
distributors for the Company's life and annuity products.
The Contracts are sold by financial professionals of AXA Advisors and its
affiliates. The Contracts are also sold by financial professionals of
unaffiliated broker-dealers that have entered into selling agreements with the
Distributors ("Selling broker-dealers").
The Company pays compensation to both Distributors based on contracts sold. The
Company may also make additional payments to the Distributors, and the
Distributors may, in turn, make additional payments to certain Selling
broker-dealers. All payments will be in compliance with all applicable FINRA
rules and other laws and regulations.
Although the Company takes into account all of its distribution and other costs
in establishing the level of fees and charges under its Contracts, none of the
compensation paid to the Distributors or the Selling broker-dealers discussed
in this section of the prospectus are imposed as separate fees or charges under
your Contract. The Company, however, intends to recoup amounts it pays for
distribution and other services through the fees and charges of the Contract
and payments it receives for providing administrative, distribution and other
services to the Portfolios. For information about the fees and charges under
the Contract, see "Summary of the Contract" and "Charges and deductions"
earlier in this prospectus.
COMPENSATION PAID TO THE DISTRIBUTORS The Company pays compensation to the
Distributors based on Purchase Payments made on the Contracts sold through the
Distributors ("contribution-based compensation"). The contribution-based
compensation will generally not exceed 6.50% of total Purchase Payments made
under the Contracts, plus, starting in the second Contract Year, up to 0.25% of
the cash value of the Contracts ("asset-based compensation"). The Distributors,
in turn, may pay a portion of the compensation received from the Company to the
Distributors financial professional and/or the Selling broker-dealer making the
sale. The compensation paid by the Distributors varies among financial
professionals and among Selling broker-dealers. The Distributors also pay a
portion of the compensation it receives to its managerial personnel. When a
Contract is sold by a Selling broker-dealer, the Selling broker-dealer, not the
Distributors, determines the amount and type of compensation paid to the
Selling broker-dealer's financial professional for the sale of the Contract.
Therefore, you should contact your financial professional for information about
the compensation he or she receives and any related incentives, as described
below.
AXA Advisors may receive compensation, and, in turn, pay its financial
professionals a portion of such fee, from third party investment advisors to
whom its financial professionals refer customers for professional management of
the assets within their contract.
AXA Advisors also pays its financial professionals and managerial personnel
other types of compensation including service fees, expense allowance payments
and health and retirement benefits. AXA Advisors also pays its financial
professionals, managerial personnel and Selling broker-dealers sales bonuses
(based on selling certain products during specified periods) and persistency
bonuses. AXA Advisors may offer sales incentive programs to financial
professionals and Selling broker-dealers who meet specified production levels
for the sales of both the Company's Contracts and Contracts offered by other
companies. These incentives provide non-cash compensation such as stock options
awards and/or stock appreciation rights, expense-paid trips, expense-paid
education seminars and merchandise.
The Company also pays AXA Distributors compensation to cover its operating
expenses and marketing services under the terms of the Company's distribution
agreements with AXA Distributors.
DIFFERENTIAL COMPENSATION PAID BY AXA ADVISORS. In an effort to promote the
sale of the Company's products, AXA Advisors may pay its financial
professionals and managerial personnel a greater percentage of
contribution-based compensation and/or asset-based compensation for the sale of
the Company's contract than it pays for the sale of a Contract or other
financial product issued by a company other than the Company. AXA Advisors may
pay higher compensation on certain products in a class than others based on a
group or sponsored arrangement, or between older and newer versions or series
of the same contract. This practice is known as providing "differential
compensation." Differential compensation may involve other forms of
compensation to AXA Advisors personnel. Certain components of the compensation
paid to managerial personnel are based on whether the sales involve the
Company's Contracts. Managers earn higher compensation (and credits toward
awards and bonuses) if the financial professionals they manage sell a higher
percentage of the Company's Contracts than products issued by other companies.
Other forms of compensation provided to its financial professionals include
health and retirement benefits, expense reimbursements, marketing allowances
and contribution-based payments, known as "overrides." For tax reasons, AXA
Advisors financial professionals qualify for health and retirement benefits
based solely on their sales of the Company's Contracts and products sponsored
by affiliates.
15
CONTRACTS AND THE DISTRIBUTION OF THE GUARANTEED INTEREST ACCOUNT WITH MARKET
VALUE ADJUSTMENT
The fact that AXA Advisors financial professionals receive differential
compensation and additional payments may provide an incentive for those
financial professionals to recommend the Company's Contract over a Contract or
other financial product issued by a company not affiliated with the Company.
However, under applicable rules of FINRA, AXA Advisors financial professionals
may only recommend to you products that they reasonably believe are suitable
for you based on the facts that you have disclosed as to your other security
holdings, financial situation and needs. In making any recommendation,
financial professionals of AXA Advisors may nonetheless face conflicts of
interest because of the differences in compensation from one
product category to another, and because of differences in compensation among
products in the same category. For more information, contact your financial
professional.
ADDITIONAL PAYMENTS BY AXA DISTRIBUTORS TO SELLING BROKER-DEALERS. AXA
Distributors may pay, out of its assets, certain Selling broker-dealers and
other financial intermediaries additional compensation in recognition of
services provided or expenses incurred. AXA Distributors may also pay certain
Selling broker-dealers or other financial intermediaries additional
compensation for enhanced marketing opportunities and other services (commonly
referred to as "marketing allowances"). Services for which such payments are
made may include, but are not limited to, the preferred placement of the
Company's products on a company and/or product list; sales personnel training;
product training; business reporting; technological support; due diligence and
related costs; advertising, marketing and related services; conference; and/or
other support services, including some that may benefit the contract owner.
Payments may be based on ongoing sales, on the aggregate account value
attributable to contracts sold through a Selling broker-dealer or such payments
may be a fixed amount. For certain selling broker-dealers, AXA Distributors
increases the marketing allowance as certain sales thresholds are met. AXA
Distributors may also make fixed payments to Selling broker-dealers, for
example in connection with the initiation of a new relationship or the
introduction of a new product.
Additionally, as an incentive for the financial professionals of Selling
broker-dealers to promote the sale of the Company's products, AXA Distributors
may increase the sales compensation paid to the Selling broker-dealer for a
period of time (commonly referred to as "compensation enhancements"). AXA
Distributors also has entered into agreements with certain selling
broker-dealers in which the selling broker-dealer agrees to sell certain AXA
Equitable contracts exclusively.
These additional payments may serve as an incentive for Selling broker-dealers
to promote the sale of the Company contracts over contracts and other products
issued by other companies. Not all Selling broker-dealers receive additional
payments, and the payments vary among Selling broker-dealers. The list below
includes the names of Selling broker-dealers that we are aware (as of
December 31, 2012) received additional payments. These additional payments
ranged from $200 to $5,352,846. The Company and its affiliates may also
have other business relationships with Selling broker-dealers, which may
provide an incentive for the Selling broker-dealers to promote the sale of the
Company's contracts over contracts and other products issued by other
companies. The list below includes any such Selling broker-dealer. For more
information, ask your financial professional.
1st Global Capital Corporation
Allstate Financial Services
American Portfolios Financial Services
Ameriprise Financial Services, Inc.
Ash Brokerage Corporation
BBVA Compass Investment Solutions, Inc.
CCO Investment Services Corporation
Centaurus Financial, Inc.
Citigroup Global Markets, Inc.
Commonwealth Financial Network
CUSO Financial Services, L.P.
Farmers Financial Solutions
Financial Network Investment Corporation
First Allied Securities, Inc.
First Citizens Investor Services, Inc.
First Tennessee Brokerage, Inc.
Geneos Wealth Management, Inc.
H.D. Vest Investment Securities, Inc.
Harvest Capital, LLC
ING Financial Partners
Investacorp, Inc.
Investment Professionals, Inc.
Investors Capital Corporation
James T. Borello & Co.
Janney Montgomery Scott, LLC
Key Investment Services, LLC
LPL Financial Corporation
Lucia Securities
Meridian Financial Group
Merrill Lynch Life Agency Inc.
Morgan Keegan & Co., Inc.
Morgan Stanley Smith Barney
Multi-Financial Securities Corporation
National Planning Holdings, Inc.
Next Financial Group, Inc.
NFP Securities, Inc.
PNC Investments
Prime Capital Services
PrimeVest Financial Services, Inc.
Raymond James Financial Services
RBC Capital Markets Corporation
Robert W Baird & Company
Securities America, Inc.
Stifel, Nicolaus & Company, Inc.
Summit Brokerage Services, Inc
SunTrust Investments
The Advisor Group
Transamerica Financial Advisors, Inc.
Triad Advisors
U.S. Bancorp Investments, Inc.
UBS Financial Services, Inc.
Wells Fargo Network
16
CONTRACTS AND THE DISTRIBUTION OF THE GUARANTEED INTEREST ACCOUNT WITH MARKET
VALUE ADJUSTMENT
8. MONY Life Insurance Company of America
--------------------------------------------------------------------------------
The Guaranteed Interest Account with Market Value Adjustment is issued by MONY
Life Insurance Company of America (the "Company"), an Arizona stock life
insurance corporation organized in 1969. MONY Life Insurance Company of America
is an indirect wholly owned subsidiary of AXA Financial, Inc., which is an
indirect wholly owned subsidiary of AXA S.A. ("AXA"), a French holding company
for an international group of insurance and related financial services
companies. As the ultimate sole shareholder of the Company, AXA exercises
significant influence over the operations and capital structure of the Company.
No company other than the Company, however, has any legal responsibility to pay
amounts that the Company owes under the Contracts. The Company is obligated to
pay all amounts promised under the Guaranteed Interest Account with Market
Value Adjustment.
AXA Financial, Inc. and its consolidated subsidiaries managed approximately
$537 billion in assets as of December 31, 2012. The Company is licensed to sell
life insurance and annuities in forty-nine states (not including New York), the
District of Columbia, and Puerto Rico. Our home office is located at 1290
Avenue of the Americas, New York, NY 10104
17
MONY LIFE INSURANCE COMPANY OF AMERICA
9. Legal proceedings
--------------------------------------------------------------------------------
MONY Life Insurance Company of America and its affiliates are parties to
various legal proceedings. In our view, none of these proceedings would be
considered material with respect to a Contract owner's interest in MONY
America, nor would any of these proceedings be likely to have a material
adverse effect upon MONY America, our ability to meet our obligations under the
contracts, or the distribution of the contracts.
18
LEGAL PROCEEDINGS
10. Additional information
--------------------------------------------------------------------------------
Rule 12h-7 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") exempts an insurance company from filing reports under the Exchange Act
when the insurance company issues certain types of insurance products that are
registered under the Securities Act of 1933 and such products are regulated
under state law. The units of the Guaranteed Interest Account with Market Value
Adjustment described in this prospectus fall within the exemption provided
under rule 12h-7. The Company relies on the exemption provided under rule 12h-7
and does not file reports under the Exchange Act.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The financial statements of MONY Life Insurance Company of America at December
31, 2012 and 2011 and for each of the three years in the period ended December
31, 2012 are incorporated by reference herein in reliance on the reports of
PricewaterhouseCoopers LLP, an independent registered public accounting firm,
given on the authority of said firm as experts in auditing and accounting.
PricewaterhouseCoopers LLP provides independent audit services and certain
other non-audit services to MONY Life Insurance Company of America as permitted
by the applicable SEC independence rules. PricewaterhouseCoopers LLP's address
is 300 Madison Avenue, New York, New York 10017.
19
ADDITIONAL INFORMATION
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
Table of Contents: Page
Risk Factors.............................................................. 1
Description of Business................................................... 10
Description of Property................................................... 17
Legal Proceedings......................................................... 18
Financial Statements and Notes to Financial Statements.................... 19
Selected Financial Data................................................... 59
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 61
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.............................................................. 84
Quantitative and Qualitative Disclosures About Market Risk................ 85
Directors, Executive Officers, Promoters and Control Persons.............. 86
Executive Compensation.................................................... 92
Security Ownership of Certain Beneficial Owners and Management............ 123
Transactions with Related Persons, Promoters and Certain Control Persons.. 125
i
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
RISK FACTORS
IN THE COURSE OF CONDUCTING OUR BUSINESS OPERATIONS, WE COULD BE EXPOSED TO A
VARIETY OF RISKS. THIS "RISK FACTORS" SECTION PROVIDES A SUMMARY OF SOME OF THE
SIGNIFICANT RISKS THAT HAVE AFFECTED AND COULD AFFECT OUR BUSINESS, RESULTS OF
OPERATIONS OR FINANCIAL CONDITION. IN THIS SECTION, THE TERMS "WE," "US" AND
"OUR" REFER TO MONY LIFE INSURANCE COMPANY OF AMERICA. UNLESS OTHERWISE DEFINED
HEREIN, CAPITALIZED TERMS USED IN THE "RISK FACTORS" ARE DEFINED IN THE
"DESCRIPTION OF BUSINESS" THAT IMMEDIATELY FOLLOWS THIS SECTION.
CONTINUED DIFFICULT CONDITIONS IN THE GLOBAL CAPITAL MARKETS AND THE ECONOMY
HAVE AFFECTED AND MAY CONTINUE TO MATERIALLY ADVERSELY AFFECT OUR BUSINESS,
RESULTS OF OPERATIONS AND FINANCIAL CONDITION AND THESE CONDITIONS MAY NOT
IMPROVE IN THE NEAR TERM.
Our business, results of operations and financial condition are materially
affected by conditions in the global capital markets and the economy generally.
Concerns over the pace of the economic recovery, the level of U.S. national
debt, the European sovereign debt crisis, unemployment, the availability and
cost of credit, the U.S. housing market, inflation levels, and geopolitical
issues have contributed to increased volatility and diminished confidence for
the economy and the capital markets going forward. Given our interest rate and
equity market exposure, these events have had and may continue to have an
adverse effect on us. Our revenues may decline, our profit margins could erode
and we could incur significant losses.
Factors such as consumer spending, business investment, government spending,
the volatility and strength of the equity markets, interest rates, deflation
and inflation all affect the business and economic environment and, ultimately,
the amount and profitability of our business. In an economic downturn
characterized by higher unemployment, lower family income, lower corporate
earnings, lower business investment and lower consumer spending, the demand for
our financial and insurance products could be adversely affected. In addition,
the levels of surrenders and withdrawals of our variable life and annuity
contracts we face may be adversely impacted. Our policyholders may choose to
defer paying insurance premiums or stop paying insurance premiums altogether.
Adverse changes in the economy could affect earnings negatively and could have
a material adverse effect on our business, results of operations and financial
condition. See "Description of Business - Products" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Results of Operations."
PROLONGED PERIODS OF LOW INTEREST RATES AND INTEREST RATE FLUCTUATIONS HAVE
NEGATIVELY IMPACTED AND SHOULD THEY PERSIST WOULD CONTINUE TO NEGATIVELY IMPACT
OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
Some of our life insurance and annuities products and certain of our investment
products, and our investment returns, are sensitive to interest rate
fluctuations, and changes in interest rates may adversely affect our investment
returns and results of operations, including in the following respects:
. changes in interest rates may reduce the spread on some of our products
between the amounts that we are required to pay under the contracts and
the rate of return we are able to earn on our general account investments
supporting the contracts. When interest rates decline, we have to
reinvest the cash income from our investments in lower yielding
instruments, potentially reducing net investment income. Since many of
our policies and contracts have guaranteed minimum interest or crediting
rates or limit the resetting of interest rates, the spreads could
decrease and potentially become negative. When interest rates rise, we
may not be able to replace the assets in our general account as quickly
with the higher yielding assets needed to fund the higher crediting rates
necessary to keep these products and contracts competitive, which may
result in higher lapse rates;
. when interest rates rise, policy loans and surrenders and withdrawals of
life insurance policies and annuity contracts may increase as
policyholders seek to buy products with perceived higher returns,
requiring us to sell investment assets potentially resulting in realized
investment losses, or requiring us to accelerate the amortization of DAC
or VOBA;
. a decline in interest rates accompanied by unexpected prepayments of
certain investments may result in reduced investment income and a decline
in our profitability. An increase in interest rates accompanied by
unexpected extensions of certain lower yielding investments may result in
a decline in our profitability;
. changes in the relationship between long-term and short-term interest
rates may adversely affect the profitability of some of our products;
. changes in interest rates may adversely impact our liquidity and increase
our costs of financing;
. our mitigation efforts with respect to interest rate risk are primarily
focused on maintaining an investment portfolio with diversified
maturities that has a weighted average duration that is approximately
equal to the duration of our estimated liability cash flow profile.
However, our estimate of the liability cash flow profile may turn out to
be inaccurate. In addition, there are practical and capital market
limitations on our ability to accomplish this matching. Due to these and
other factors we may need to liquidate investments prior to maturity at a
loss in order to satisfy liabilities or be forced to reinvest funds in a
lower rate environment; and
1
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
. for certain of our products, a delay between the time we make changes in
interest rate and other assumptions used for product pricing and the time
we are able to reflect these assumptions in products available for sale
may negatively impact the long-term profitability of products sold during
the intervening period.
Recent periods have been characterized by low interest rates and the Federal
Reserve Board has committed to keeping interest rates low until unemployment
falls below 6.5%. A prolonged period during which interest rates remain at
levels lower than those anticipated may result in greater costs associated with
certain of our product features which guarantee death benefits or income
streams for stated periods or for life; or shortfalls in investment income on
assets supporting policy obligations as our portfolio earnings decline over
time, each of which may require us to record charges to increase reserves. In
addition to compressing spreads and reducing net investment income, such an
environment may cause policies to remain in force for longer periods than we
anticipated in our pricing, potentially resulting in greater claims costs than
we expected and resulting in lower overall returns on business in force.
EQUITY MARKET DECLINES AND VOLATILITY MAY ADVERSELY AFFECT OUR BUSINESS,
RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
Declines or volatility in the equity markets can negatively impact our
investment returns as well as our business and profitability. For example,
equity market declines and/or volatility may, among other things:
. decrease the account values of our variable life and annuity contracts
which, in turn, reduces the amount of revenue we derive from fees charged
on those account and asset values. At the same time, for annuity
contracts that provide enhanced guarantee features, equity market
declines and/or volatility increases the amount of our potential
obligations related to such enhanced guarantee features. This could
result in an increase in claims and reserves related to those contracts,
net of any reinsurance reimbursements;
. can influence policyholder behavior, which may adversely impact the
levels of surrenders, withdrawals and amounts of withdrawals of our
variable life and annuity contracts or cause policyholders to reallocate
a portion of their account balances to more conservative investment
options (which may have lower fees), which could negatively impact our
future profitability and/or increase our benefit obligations particularly
if they were to remain in such options during an equity market increase;
. negatively impact the value of equity securities we hold for investment,
including our investment in AllianceBernstein, thereby reducing our
statutory capital;
. reduce demand for variable products relative to fixed products;
. lead to changes in estimates underlying our calculations of deferred
acquisition costs ("DAC") that, in turn, could accelerate our DAC and
value of business acquired ("VOBA") amortization and reduce our current
earnings; and
. result in changes to the fair value of our GMIB reinsurance contracts,
which could increase the volatility of our earnings.
OUR REINSURANCE PROGRAMS MAY BE INADEQUATE TO PROTECT US AGAINST THE FULL
EXTENT OF THE EXPOSURE OR LOSSES WE SEEK TO MITIGATE.
Certain of our products, including especially our variable annuity products,
include guarantees of income streams for stated periods or for life. Downturns
in equity markets, increased equity volatility, or reduced interest rates could
result in an increase in the valuation of liabilities associated with such
products, resulting in increases in reserves and reductions in net income. In
the normal course of business, we seek to mitigate some of these risks to which
our business is subject through our reinsurance programs. However, these
programs cannot eliminate all of the risks and no assurance can be given as to
the extent to which such programs will be effective in reducing such risks. We
utilize reinsurance to mitigate a portion of the risks that we face,
principally in certain of our in-force life insurance and annuity products with
regard to mortality, and in certain of our annuity products with regard to a
portion of the enhanced guarantee features. Under our reinsurance arrangements,
other insurers assume a portion of the obligation to pay claims and related
expenses to which we are subject. However, we remain liable as the direct
insurer on all risks we reinsure and, therefore, are subject to the risk that
our reinsurer is unable or unwilling to pay or reimburse claims at the time
demand is made. Although we evaluate periodically the financial condition
(including the applicable capital requirements) of our reinsurers, the
inability or unwillingness of a reinsurer to meet its obligations to us (or the
inability to collect under our reinsurance treaties for any other reason) could
have a material adverse impact on our results of operations and financial
condition. See "Description of Business -- Reinsurance" and Notes 7 and 8 of
Notes to Financial Statements.
We are continuing to utilize reinsurance to mitigate a portion of our risk on
certain new life insurance sales. Prolonged or severe adverse mortality or
morbidity experience could result in increased reinsurance costs, and
ultimately, may reduce the availability of reinsurance for future life
insurance sales. If, for new sales, we are unable to maintain our current level
of reinsurance or purchase new reinsurance protection
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
in amounts that we consider sufficient, we would either have to be willing to
accept an increase in our net exposures, revise our pricing to reflect higher
reinsurance premiums or limit the amount of new business written on any
individual life. If this were to occur, we may be exposed to reduced
profitability and cash flow strain or we may not be able to price new business
at competitive rates.
WE ARE HEAVILY REGULATED, AND CHANGES IN REGULATION MAY REDUCE OUR
PROFITABILITY AND LIMIT OUR GROWTH.
INSURANCE REGULATION: We are subject to a wide variety of insurance and other
laws and regulations. See "Description of Business -- Regulation." State
insurance laws regulate most aspects of our insurance business. We are
domiciled in Arizona and are primarily regulated by the Director of Insurance
of the Arizona Department of Insurance and by the states in which we are
licensed.
State laws in the United States grant insurance regulatory authorities broad
administrative powers with respect to, among other things:
. licensing companies and agents to transact business;
. calculating the value of assets to determine compliance with statutory
requirements;
. regulating unfair trade and claims practices, including through the
imposition of restrictions on marketing and sales practices, distribution
arrangements and payment of inducements;
. establishing statutory capital and reserve requirements and solvency
standards;
. fixing maximum interest rates on insurance policy loans and minimum rates
for guaranteed crediting rates on life insurance policies and annuity
contracts;
. restricting the payment of dividends and other transactions between our
insurance subsidiaries and affiliates; and
. regulating the types, amounts, concentrations and valuation of
investments.
From time to time, regulators raise issues during examinations or audits that
could, if determined adversely, have a material impact on us. We cannot predict
whether or when regulatory actions may be taken that could adversely affect our
operations. In addition, the interpretations of regulations by regulators may
change and statutes may be enacted with retroactive impact, particularly in
areas such as accounting or statutory reserve requirements.
State insurance guaranty associations have the right to assess insurance
companies doing business in their state for funds to help pay the obligations
of insolvent insurance companies to policyholders and claimants. Because the
amount and timing of an assessment is beyond our control, the liabilities that
we have currently established for these potential liabilities may not be
adequate. See "Description of Business - Insurance Regulation."
State insurance regulators and the National Association of Insurance
Commissioners ("NAIC") regularly reexamine existing laws and regulations
applicable to insurance companies and their products. Changes in these laws and
regulations, or in interpretations thereof, are often made for the benefit of
the consumer at the expense of the insurer and, thus, could have a material
adverse effect on our financial condition and results of operations. For
example, in October 2011, the NAIC established a subgroup to study insurers'
use of captives and special purpose vehicles to transfer insurance risk in
relation to existing state laws and regulations, and to establish appropriate
regulatory requirements to address concerns identified in the study. We cannot
predict what actions and regulatory change will result from this study and what
impacts such changes will have on our financial conditions and consolidated
results of operations.
In addition, state insurance regulators are becoming more active in adopting
and enforcing suitability standards with respect to sales of certain insurance
products such as fixed, indexed and variable annuities. In particular, the NAIC
has adopted a revised Suitability in Annuity Transactions Model Regulation
("SAT"), which will, if enacted by the states, place new responsibilities upon
issuing insurance companies with respect to the suitability of annuity sales,
including responsibilities for training agents. Several states, including
Arizona, have already enacted laws based on the SAT.
U.S. FEDERAL REGULATION AFFECTING INSURANCE: Currently, the U.S. federal
government does not directly regulate the business of insurance. While the
Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank
Act") does not remove primary responsibility for the supervision and regulation
of insurance from the states, Title V of the Act establishes a Federal
Insurance Office ("FIO") within the U.S. Treasury Department and reforms the
regulation of the non-admitted property and casualty insurance market and the
reinsurance market. The FIO has authority that extends to all lines of
insurance except health insurance, crop insurance and (unless included with
life or annuity components) long-term care insurance. Under the Dodd-Frank Act,
the FIO is charged with monitoring all aspects of the insurance industry
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
(including identifying gaps in regulation that could contribute to a systemic
crisis), recommending to the newly established Financial Stability Oversight
Council the designation of any insurer and its affiliates (potentially
including AXA and its affiliates) as a non-bank financial company subject to
oversight by the Board of Governors of the Federal Reserve System (including
the administration of stress testing on capital), assisting the Treasury
Secretary in negotiating "covered agreements" with non-US governments or
regulatory authorities, and, with respect to state insurance laws and
regulation, determining whether such state insurance measures are pre-empted by
such covered agreements. In addition, the FIO will be empowered to request and
collect data (including financial data) on and from the insurance industry and
insurers (including reinsurers) and their affiliates. In such capacity, the FIO
may require an insurer or an affiliate of an insurer to submit such data or
information as the FIO may reasonably require. In addition, the FIO's approval
will be required to subject an insurer or a company whose largest U.S.
subsidiary is an insurer to the special orderly liquidation process
administered by the FDIC pursuant to the Dodd-Frank Act. The Dodd-Frank Act
also reforms the regulation of the non-admitted property/casualty insurance
market (commonly referred to as excess and surplus lines) and the reinsurance
markets, including the ability of non-domiciliary state insurance regulators to
deny credit for reinsurance when recognized by the ceding insurer's domiciliary
state regulator.
Although the full impact of the Dodd-Frank Act cannot be determined until the
various mandated studies are conducted and implementing regulations are
enacted, many of the legislation's requirements could have profound and/or
adverse consequences for the financial services industry, including the
Company. The Dodd-Frank Act could make it more expensive for us to conduct our
business; require us to make changes to our business model or satisfy increased
capital requirements; subject us to greater regulatory scrutiny; and have a
material effect on our results of operations or financial condition.
The sales of insurance products could also be adversely affected to the extent
that some or all of the third-party firms that distribute our products or
unaffiliated insurance companies face heightened regulatory scrutiny and/or
increased regulation that causes them to de-emphasize sales of the types of
products we issue.
INTERNATIONAL REGULATION: In addition, regulators and lawmakers in non-U.S.
jurisdictions are engaged in addressing the causes of the financial crisis and
means of avoiding such crises in the future. For example, in May 2012, the
International Association of Insurance Supervisors ("IAIS") published a
proposed assessment methodology for designating global systemically important
insurers ("G-SIIs"), as part of the global initiative to identify global
systemically important financial institutions ("G-SIFIs"). The proposed
methodology is intended to identify those insurers whose distress or disorderly
failure, because of their size, complexity and interconnectedness, would cause
significant disruption to the global financial system and economic activity.
Management of AXA believes that the AXA Group is likely to be among the
insurance groups so designated and expects final designations to be made and
publicized during the second quarter of 2013. The precise implications of being
designated a G-SII are not yet clear, however, management of AXA believes that
the draft policy measures for G-SIIs published by the IAIS in October 2012
provides insights into the likely consequences which include (i) additional
capital buffers for business deemed non-traditional / non-insurance,
(ii) greater regulatory authority over holding companies, (iii) various
measures to promote "structural self-sufficiency" of group companies and reduce
group interdependencies, and (iv) in general, a greater level of regulatory
scrutiny for G-SIIs (including a requirement to prepare recovery and
resolutions plans which will entail significant new reporting and compliance
burdens and costs). These measures, if implemented, could have far reaching
regulatory and competitive implications for the AXA Group and adversely impact
AXA's capital requirements, profitability, the fungibility of AXA's capital and
ability to provide capital / financial support for AXA Group companies,
including potentially MLOA, AXA's ability to grow through future acquisitions
and AXA's overall competitive position in relation to insurance groups that are
not designated G-SIIs. Based on the information obtained from the IAIS, the
Financial Stability Board ("FSB") will make final recommendations in
consultation with national supervisory authorities. An initial list of G-SIIs
is expected to be published by the FSB in the second quarter of 2013, with
annual updates thereafter. While the precise implications of being designated a
G-SII on the AXA Group are not yet clear, the negative impacts could be
potentially significant. All of these possibilities, if they occurred, could
affect the way we conduct our business and manage capital, and may require us
to satisfy increased capital requirements, any of which in turn could
materially affect our consolidated results of operations, financial condition
and liquidity.
THE AMOUNT OF STATUTORY CAPITAL THAT WE HAVE AND THE AMOUNT OF STATUTORY
CAPITAL WE MUST HOLD TO MEET OUR STATUTORY CAPITAL REQUIREMENTS AND OUR
FINANCIAL STRENGTH AND CREDIT RATINGS CAN VARY SIGNIFICANTLY FROM TIME TO TIME.
Statutory accounting standards and capital and reserve requirements for MLOA
are prescribed by the 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. This RBC
formula establishes capital requirements relating to insurance, business, asset
and interest rate risks, including equity, interest rate and expense recovery
risks associated with variable annuities and group annuities that contain death
benefits or certain living benefits. In any particular year, statutory surplus
amounts and RBC ratios may increase or decrease depending on a variety of
factors, including but not limited to the amount of statutory income or losses
we generate (which itself is sensitive to equity market and credit market
conditions), changes in reserves, the amount of additional capital we
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
must hold to support business growth, changes in equity market levels, the
value of certain fixed-income and equity securities in our investment portfolio
(including the value of AllianceBernstein units), changes in interest rates, as
well as changes to existing RBC formulas. Additionally, state insurance
regulators have significant leeway in how to interpret existing regulations,
which could further impact the amount of statutory capital or reserves that we
must maintain. Our financial strength and credit ratings are significantly
influenced by our statutory surplus amount and our RBC ratio. Moreover, rating
agencies may implement changes to their internal models that have the effect of
increasing or decreasing the amount of capital we must hold in order to
maintain our current ratings. To the extent that our statutory capital
resources are deemed to be insufficient to maintain a particular rating by one
or more rating agencies, our financial strength and credit ratings might be
downgraded by one or more rating agencies. There can be no assurance 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, results of operations or financial condition.
OUR RESERVES COULD BE INADEQUATE DUE TO DIFFERENCES BETWEEN OUR ACTUAL
EXPERIENCE AND MANAGEMENT'S ESTIMATES AND ASSUMPTIONS.
We establish and carry reserves to pay future policyholder benefits and claims.
Our reserve requirements for our direct and reinsurance assumed business are
calculated based on a number of estimates and assumptions, including estimates
and assumptions related to future mortality, morbidity, interest rates, future
equity performance, reinvestment rates, persistency, claims experience, and
policyholder elections (i.e., the exercise or non-exercise of rights by
policyholders under the contracts). Examples of policyholder elections include,
but are not limited to, lapses and surrenders, withdrawals and amounts of
withdrawals, and contributions and the allocation thereof. The assumptions and
estimates used in connection with the reserve estimation process are inherently
uncertain and involve the exercise of significant judgment. We periodically
review the adequacy of reserves and the underlying assumptions and make
adjustments when appropriate. We cannot, however, determine with precision the
amounts that we will pay for, or the timing of payment of, actual benefits and
claims or whether the assets supporting the policy liabilities will grow to the
level assumed prior to payment of benefits or claims. Our claim costs could
increase significantly and our reserves could be inadequate if actual results
differ significantly from our estimates and assumptions. If so, we will be
required to increase reserves or reduce DAC, which could adversely impact our
earnings and/or capital. See "Management's Discussion and Analysis of Financial
Conditions and Results of Operations - Critical Accounting Estimates."
OUR PROFITABILITY MAY DECLINE IF MORTALITY RATES OR PERSISTENCY RATES DIFFER
SIGNIFICANTLY FROM OUR PRICING EXPECTATIONS.
We set prices for many of our insurance and annuity products based upon
expected claims and payment patterns, using assumptions for mortality rates of
our policyholders. In addition to the potential effect of natural or man-made
disasters, significant changes in mortality could emerge gradually over time,
due to changes in the natural environment, the health habits of the insured
population, the economic environment, or other factors. Pricing of our
insurance and annuity products are also based in part upon expected persistency
of these products, which is the probability that a policy or contract will
remain in force from one period to the next. Persistency within our annuities
products may be significantly impacted by the value of guaranteed minimum
benefits contained in many of our variable annuity products being higher than
current account values in light of poor equity market performance or extended
periods of low interest rates as well as other factors. Results may also vary
based on differences between actual and expected premium deposits and
withdrawals for these products. Persistency within our life products may be
significantly impacted by, among other things, conditions in the capital
markets, the changing needs of our policyholders, the manner in which a product
is marketed or illustrated, and competition, including the availability of new
products. The development of a secondary market for life insurance, including
life settlements or "viaticals" and investor owned life insurance, and to a
lesser extent third party investor strategies in the annuities market, could
adversely affect the profitability of existing business and our pricing
assumptions for new business. Significant deviations in actual experience from
our pricing assumptions could have an adverse effect on the profitability of
our products. Although some of our products permit us to increase premiums or
adjust other charges and credits during the life of the policy or contract, the
adjustments permitted under the terms of the policies or contracts may not be
sufficient to maintain profitability. Many of our products do not permit us to
increase premiums or adjust other charges and credits or limit those
adjustments during the life of the policy or contract.
OUR EARNINGS ARE IMPACTED BY DAC AND VOBA ESTIMATES THAT ARE SUBJECT TO CHANGE.
Our earnings for any period depend in part on the amount of our life insurance
and annuity product acquisition costs (including commissions, underwriting,
agency and policy issue expenses) that can be deferred and amortized rather
than expensed immediately. They also depend in part on the pattern of DAC and
VOBA amortization and the recoverability of DAC and VOBA which are both based
on models involving numerous estimates and subjective judgments, including
those regarding investment results including, Separate Account performance,
Separate Account fees, mortality and expense margins, expected market rates of
return, lapse rates and anticipated surrender charges. These estimates and
judgments are required to be revised periodically and adjusted as appropriate.
Revisions to our estimates may result in a change in DAC and VOBA amortization,
which could negatively impact our earnings.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
WE USE FINANCIAL MODELS THAT RELY ON A NUMBER OF ESTIMATES, ASSUMPTIONS AND
PROJECTIONS THAT ARE INHERENTLY UNCERTAIN.
We use models in many aspects of our operations, including but not limited to
product developments and pricing, capital management, the estimation of
actuarial reserves, the amortization of deferred acquisition costs and the
value of business acquired and the valuation of certain other assets and
liabilities. These models rely on estimates, assumptions and projections that
are inherently uncertain and involve the exercise of significant judgment. Due
to the complexity of such models, it is possible that errors in the models
could exist and our controls could fail to detect such errors. Failure to
detect such errors could result in a negative impact to our results of
operations and financial position.
THE DETERMINATION OF THE AMOUNT OF ALLOWANCES AND IMPAIRMENTS TAKEN ON OUR
INVESTMENTS IS SUBJECTIVE AND COULD MATERIALLY IMPACT OUR RESULTS OF OPERATIONS
AND FINANCIAL CONDITION.
The determination of the amount of allowances and impairments vary by
investment type and is based upon our evaluation and assessment of known and
inherent risks associated with the respective asset class. Such evaluations and
assessments are revised as conditions change and new information becomes
available. Management updates its evaluations regularly and reflects changes in
allowances and impairments in operations as such evaluations are revised. There
can be no assurance that management's judgments, as reflected in our financial
statements, will ultimately prove to be an accurate estimate of the actual and
eventual diminution in realized value. Furthermore, additional impairments may
need to be taken or allowances provided for in the future.
SOME OF OUR INVESTMENTS ARE RELATIVELY ILLIQUID.
We hold certain investments that may lack liquidity, such as privately placed
fixed maturity securities, mortgage loans, commercial mortgage backed
securities, equity real estate and limited partnership interests. These asset
classes represented approximately 21% of the carrying value of our total cash
and invested assets as of December 31, 2012. Although we seek to adjust our
cash and short-term investment positions to minimize the likelihood that we
would need to sell illiquid investments, if we were required to liquidate these
investments on short notice, we may have difficulty doing so and be forced to
sell them for less than we otherwise would have been able to realize.
GROSS UNREALIZED LOSSES ON FIXED MATURITY AND EQUITY SECURITIES MAY BE REALIZED
OR RESULT IN FUTURE IMPAIRMENTS, RESULTING IN A REDUCTION IN OUR NET INCOME.
Fixed maturity and equity securities classified as available-for-sale are
reported at fair value. Unrealized gains or losses on available-for-sale
securities are recognized as a component of other comprehensive income (loss)
and are, therefore, excluded from net income. Our gross unrealized losses on
fixed maturity and equity securities at December 31, 2012 were approximately
$29 million. The accumulated change in estimated fair value of these
available-for-sale securities is recognized in net income when the gain or loss
is realized upon the sale of the security or in the event that the decline in
estimated fair value is determined to be other-than-temporary and an impairment
charge to earnings is taken. Realized losses or impairments may have a material
adverse effect on our net income in a particular quarterly or annual period.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations - General Accounts Investment Portfolio."
A DOWNGRADE IN OUR FINANCIAL STRENGTH AND CLAIMS-PAYING RATINGS COULD ADVERSELY
AFFECT OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
Claims paying and financial strength ratings are important factors in
establishing the competitive position of insurance companies. A downgrade of
our ratings or those of AXA and/or AXA Financial could adversely affect our
business and results of operations by, among other things, reducing new sales
of our products, increasing surrenders and withdrawals from our existing
contracts, possibly requiring us to reduce prices or take other actions for
many of our products and services to remain competitive, or adversely affecting
our ability to obtain reinsurance or obtain reasonable pricing on reinsurance.
A downgrade in our ratings may also adversely affect our cost of raising
capital or limit our access to sources of capital.
As a result of the difficulties recently experienced by many insurance
companies, we believe that it is possible that the ratings agencies will
continue to heighten the level of scrutiny they apply to insurance companies,
will continue to increase the frequency and scope of their credit reviews, will
continue to request additional information from the companies that they rate,
and may adjust upward the capital and other requirements employed in their
ratings models for maintenance of certain ratings levels.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
LEGAL AND REGULATORY ACTIONS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
A number of lawsuits have been filed against life and health insurers and
affiliated distribution companies involving insurers' sales practices, alleged
agent misconduct, failure to properly supervise agents and other matters. Some
of these lawsuits have resulted in the award of substantial judgments against
other insurers, including material amounts of punitive damages, or in
substantial settlements. In some states, juries have substantial discretion in
awarding punitive damages.
We, like other life insurers, are involved in such litigation and our results
of operations and financial position could be affected by defense and
settlement costs and any unexpected material adverse outcomes in such
litigations as well as in other material litigations pending against us. The
frequency of large damage awards, including large punitive damage awards that
bear little or no relation to actual economic damages incurred by plaintiffs in
some jurisdictions, continues to create the potential for an unpredictable
judgment in any given matter.
In addition, examinations by Federal and state regulators and other
governmental and self-regulatory agencies including, among others, the SEC,
state attorneys general, insurance and securities regulators and FINRA could
result in adverse publicity, sanctions, fines and other costs. For example, we,
along with other life insurance industry companies, have been the subject of
various inquiries regarding our death claim, escheatment and unclaimed property
procedures and are cooperating with these inquiries. We are under audit by a
third party auditor acting on behalf of a number of U.S. state jurisdictions
reviewing compliance with unclaimed property laws of those jurisdictions. A
number of life insurance industry companies have received a multistate targeted
market conduct examination notice issued on behalf of various U.S. state
insurance departments reviewing use of the DMF, claims processing and payments
to beneficiaries. In December 2012, AXA Equitable received an examination
notice on behalf of at least six insurance departments. At this time,
management cannot predict what actions regulators may take or what the impact
of such actions might be. See "Description of Business - Regulation."
CHANGES IN U.S. TAX LAWS AND REGULATIONS MAY ADVERSELY AFFECT SALES OF OUR
PRODUCTS AND OUR PROFITABILITY.
Currently, U.S. tax law provisions afford certain benefits to life insurance
and annuity products. The nature and extent of competition and the markets for
our life insurance and annuity products and our profitability may be materially
affected by changes in tax laws and regulations, including changes relating to
savings and retirement funding. Adverse changes could include, among many other
things, the introduction of current taxation of increases in the account value
of life insurance and annuity products, improved tax treatment of mutual funds
or other investments as compared to insurance products or repeal of the Federal
estate tax. Management cannot predict what proposals may be made, what
legislation, if any, may be introduced or enacted or what the effect of any
such legislation might be. See "Description of Business - Regulation - Federal
Tax Legislation."
WE FACE COMPETITION FROM OTHER INSURANCE COMPANIES, BANKS AND OTHER FINANCIAL
INSTITUTIONS, WHICH MAY ADVERSELY IMPACT OUR MARKET SHARE AND PROFITABILITY.
There is strong competition among insurers, banks, brokerage firms and other
financial institutions and providers seeking clients for the types of products
and services we provide, including insurance, annuity and other investment
products and services. Competition is intense among a broad range of financial
institutions and other financial service providers for retirement and other
savings dollars. This competition makes it especially difficult to provide
unique insurance products since, once such products are made available to the
public, they often are reproduced and offered by our competitors. Also, this
competition may adversely impact our market share and profitability.
Our ability to compete is dependent on numerous factors including, among
others, the successful implementation of our strategy; our financial strength
as evidenced, in part, by our financial and claims-paying ratings; our access
to diversified sources of distribution; our size and scale; our product
quality, range, features/functionality and price; our ability to bring
customized products to the market quickly; our ability to explain complicated
products and features to our distribution channels and customers; crediting
rates on our fixed products; the visibility, recognition and understanding of
our brands in the marketplace; our reputation and quality of service; and (with
respect to variable insurance and annuity products and other investment
products) investment options, flexibility and investment management
performance. See "Description of Business - Competition."
CONSOLIDATION OF DISTRIBUTORS OF INSURANCE PRODUCTS MAY ADVERSELY AFFECT THE
INSURANCE INDUSTRY AND THE PROFITABILITY OF OUR BUSINESS.
The insurance industry distributes many of its products through other financial
institutions such as banks and broker-dealers. The trend toward consolidation
in the financial services industry has been significantly accelerating as a
result of the recent financial crisis with substantial
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
consolidation particularly between and among banks and other financial services
companies. An increase in bank and other financial services companies
consolidation activity may create firms with even stronger competitive
positions, negatively impact the industry's sales, and such consolidation could
increase competition for access to distributors, result in greater distribution
expenses and impair our ability to market insurance products to our current
customer base or expand our customer base. Consolidation of distributors and/or
other industry changes may also increase the likelihood that distributors will
try to renegotiate the terms of any existing selling agreements to terms less
favorable to us.
CHANGES IN ACCOUNTING STANDARDS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
RESULTS OF OPERATIONS AND/OR FINANCIAL CONDITION.
Our financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America that are revised from time
to time. Accordingly, from time to time we are required to adopt new or revised
accounting standards issued by recognized authoritative bodies, including the
Financial Accounting Standards Board ("FASB"). For example, the adoption of the
provisions of Accounting Standards Update ("ASU") 2010-26, Financial Services:
Insurance (Accounting Standards Codification /(TM) /("ASC") Topic 944):
"Accounting for Costs Associated with Acquiring or Renewing Insurance
Contracts" decreased our December 31, 2011 Total equity by $34 million. In the
future, new accounting pronouncements, as well as new interpretations of
existing accounting pronouncements, may have material adverse effects on our
results of operations and/or financial condition. See Note 2 of Notes to
Financial Statements.
WE MAY NOT BE ABLE TO PROTECT OUR INTELLECTUAL PROPERTY AND MAY BE SUBJECT TO
INFRINGEMENT CLAIMS BY A THIRD PARTY.
We rely on a combination of contractual rights, copyright, trademark, and trade
secret laws to establish and protect our intellectual property. Although we use
a broad range of measures to protect our intellectual property rights, third
parties may infringe or misappropriate our intellectual property. The loss of
intellectual property protection or the inability to secure or enforce the
protection of our intellectual property assets could have a material adverse
effect on our business and our ability to compete.
Third parties may have, or may eventually be issued, patents or other
protections that could be infringed by our products, methods, processes or
services or could limit our ability to offer certain product features. In
recent years, there has been increasing intellectual property litigation in the
financial services industry challenging, among other things, product designs
and business processes. If a third party were to successfully assert an
intellectual property infringement claim against us, or if we were otherwise
precluded from offering certain features or designs, or utilizing certain
processes, it could have a material adverse effect on our business, results of
operations and financial condition.
LOSSES DUE TO DEFAULTS, ERRORS OR OMISSIONS BY THIRD PARTIES, INCLUDING
OUTSOURCING RELATIONSHIPS, COULD MATERIALLY ADVERSELY IMPACT OUR BUSINESS,
RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
We depend on third parties that owe us money, securities or other assets to pay
or perform under their obligations. These parties include the issuers whose
securities we hold in our investment portfolios, borrowers under the mortgage
loans we make, customers, trading counterparties, counterparties under swap and
other derivative contracts, clearing agents, exchanges, clearing houses and
other financial intermediaries. These parties may default on their obligations
to us due to bankruptcy, lack of liquidity, downturns in the economy or real
estate values, operational failure or other reasons.
We also depend on third parties in other contexts. For example, in establishing
the amount of the liabilities and reserves associated with the risks assumed in
connection with reinsurance pools and arrangements, we rely on the accuracy and
timely delivery of data and other information from ceding companies.
We also rely on third parties to whom we outsource certain technology
platforms, information systems and administrative functions, including records
retention. If we do not effectively implement and manage our outsourcing
strategy, third party vendor providers do not perform as anticipated, such
vendors' internal controls fail or are inadequate, or we experience
technological or other problems associated with outsourcing transitions, we may
not realize anticipated productivity improvements or cost efficiencies and may
experience operational difficulties, increased costs and reputational damage.
Losses associated with defaults or other failures by these third parties and
outsourcing partners upon whom we rely could materially adversely impact our
business, results of operations and financial condition.
WE COULD EXPERIENCE SIGNIFICANT DIFFICULTIES WITH RESPECT TO OUR PROPRIETARY
TECHNOLOGY AND INFORMATION SYSTEMS AS WELL AS THOSE PROVIDED BY VENDORS.
We utilize numerous technology and information systems in our businesses, some
of which are proprietary and some of which are provided by outside vendors
pursuant to outsourcing arrangements. These systems are central to, among other
things, designing and pricing products,
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
underwriting and reserving decisions, our reinsurance and hedging programs,
marketing and selling products and services, processing policyholder and
investor transactions, client recordkeeping, communicating with retail sales
associates, employees and clients, and recording information for accounting and
management purposes in a secure and timely manner. The systems are maintained
to provide customer privacy and, although they are periodically tested to
ensure the viability of business resumption plans, these systems are subject to
attack by viruses, spam, spyware, worms and other malicious software programs,
which could jeopardize the security of information stored in a user's computer
or in our computer systems and networks.
We commit significant resources to maintain and enhance our existing
information systems that, in some cases, are advanced in age, and to develop
and introduce new systems and software applications. Any significant difficulty
associated with the operation of our systems, or any material delay, disruption
or inability to develop needed system capabilities could have a material
adverse effect on our consolidated results of operations and, ultimately, our
ability to achieve our strategic goals. We are unable to predict with certainty
all of the material adverse effects that could result from our failure, or the
failure of an outside vendor, to address these problems. The material adverse
effects could include the inability to perform or prolonged delays in
performing critical business operational functions or failure to comply with
regulatory requirements, which could lead to loss of client confidence, harm to
reputation or exposure to disciplinary action.
OUR BUSINESS COULD BE ADVERSELY AFFECTED BY THE OCCURRENCE OF A CATASTROPHE,
INCLUDING NATURAL OR MAN-MADE DISASTERS.
Any catastrophic event, such as pandemic diseases, terrorist attacks, floods,
severe storms or hurricanes or computer cyber-terrorism, could have an adverse
effect on our business in several respects:
. we could experience long-term interruptions in our service due to the
vulnerability of our information and operation systems and those of our
significant vendors to the effects of catastrophic events. We depend
heavily on computer systems to provide reliable service. Despite our
implementation of a variety of security measures, our computer systems
could be subject to physical and electronic break-ins, cyber-attacks and
similar disruptions from unauthorized tampering, including threats that
may come from external factors, such as governments, organized crime,
hackers and third parties to whom we outsource certain functions, or may
originate internally from within the Company. Some of our operational
systems are not fully redundant, and our disaster recovery and business
continuity planning cannot account for all eventualities. Additionally,
unanticipated problems with our disaster recovery systems could further
impede our ability to conduct business, particularly if those problems
affect our computer-based data processing, transmission, storage and
retrieval systems and destroy valuable data.
. the occurrence of a pandemic disease could have a material adverse effect
on our liquidity and operating results due to increased mortality and, in
certain cases, morbidity rates.
. the occurrence of any pandemic disease, natural disaster, terrorist
attacks or any other catastrophic event that results in our workforce
being unable to be physically located at one of our facilities could
result in lengthy interruptions in our service.
. another terrorist attack in the United States could have long-term
economic impacts that may have severe negative effects on our investment
portfolio and disrupt our business operations. Any continuous and
heightened threat of terrorist attacks could also result in increased
costs of reinsurance.
OUR RISK MANAGEMENT POLICIES AND PROCEDURES MAY NOT BE ADEQUATE, WHICH MAY
LEAVE US EXPOSED TO UNIDENTIFIED OR UNANTICIPATED RISK, WHICH COULD NEGATIVELY
AFFECT OUR BUSINESSES OR RESULT IN LOSSES.
Our policies and procedures to identify, monitor and manage risks may not be
adequate or fully effective. Many of our methods of managing risk and exposures
are based upon our use of historical market behavior or statistics based on
historical models. As a result, these methods may not predict future exposures,
which could be significantly greater than the historical measures indicate,
such as the risk of pandemics causing a large number of deaths or terrorism.
Other risk management methods depend upon the evaluation of information
regarding markets, clients, catastrophe occurrence or other matters that is
publicly available or otherwise accessible to us, which may not always be
accurate, complete, up-to-date or properly evaluated.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
DESCRIPTION OF BUSINESS1
OVERVIEW
MLOA, established in the state of Arizona in 1969, is a wholly owned subsidiary
of AXA Financial, Inc. Our primary business is to provide life insurance and
annuity products to both individuals and businesses. We are licensed to sell
our products in 49 states (not including New York), the District of Columbia
and Puerto Rico. As of December 31, 2012, we had approximately 179,243
insurance policies and annuity contracts in force.
AXA Financial is an indirect wholly owned subsidiary of AXA S.A. ("AXA"), a
French holding company for an international group of insurance and related
financial services companies. For additional information regarding AXA, see
"Description of Business -- Parent Company."
PRODUCTS
Prior to the MONY Acquisition, we offered a broad portfolio of life insurance
products consisting primarily of variable life and interest-sensitive life
insurance products (including group interest-sensitive life insurance
products). In addition, we previously offered whole life and a variety of term
life insurance products, as well as a variety of annuity products, such as
variable annuities, fixed deferred annuities and payout annuities. For
additional information regarding certain features of our variable annuity
products, see Note 6 of Notes to Financial Statements.
In connection with the integration of the MONY Companies with AXA Financial,
management evaluated the products sold by MLOA as part of an overall review of
insurance products offered by AXA Equitable and AXA Financial's other insurance
subsidiaries with a view towards reducing duplication of products, improving
the quality of the product line-up and enhancing the overall profitability of
AXA Financial Group. This evaluation resulted in our discontinuation, in 2005,
of new sales of life insurance and annuity products, except for certain
variable and fixed annuities in limited markets, variable universal life
insurance and interest-sensitive whole life insurance. Since future decisions
regarding product development depend on factors and considerations not yet
known, management is unable to predict the extent to which we will offer other
products in the future.
SEPARATE ACCOUNT ASSETS
Variable life and variable annuity policyholders have a broad selection of
investment accounts representing a range of investment objectives in which to
invest the assets held under their contracts. The investment options available
to MLOA's variable life and variable annuity policyholders are comprised of the
proprietary fund families of EQ Advisors Trust, AXA Premier VIP Trust and
various non-proprietary fund families. Our variable life insurance contracts
had 92 investment options and MLOA's variable annuity contracts had 31
investment options as of December 31, 2012. Depending on the investment options
available under the specific contract, variable policyholders may allocate
their funds among a wide variety of these investment options.
DISTRIBUTION
We distribute our products through Retail and Wholesale distribution channels.
RETAIL DISTRIBUTION. Our annuity and life insurance products are offered on a
retail basis in 49 states (not including New York), the District of Columbia
and Puerto Rico through financial professionals associated with AXA Advisors,
LLC ("AXA Advisors"), an affiliated broker-dealer, and AXA Network, LLC ("AXA
Network"), an affiliated insurance agency. These financial professionals also
have access to and can offer a broad array of annuity, life insurance and
investment products and services from unaffiliated insurers and other financial
service providers. As of December 31, 2012, AXA Advisors and AXA Network had
approximately 5,242 financial professionals.
-----------
1 As used herein, the terms "MLOA", "we", "our" and/or "us" refers to MONY
Life Insurance Company of America, an Arizona stock life insurance company,
"AXA Financial" refers to AXA Financial, Inc., a Delaware corporation
incorporated in 1991, "AXA Financial Group" refers to AXA Financial and its
consolidated subsidiaries, including AXA Equitable Life Insurance Company
("AXA Equitable"). The term "MONY" refers to The MONY Group Inc., a Delaware
corporation acquired by AXA Financial on July 8, 2004 that merged with and
into AXA Financial on July 22, 2004 (the "MONY Acquisition"), and the term
"MONY Companies" means MONY Life Insurance Company, MLOA, U.S. Financial
Life Insurance Company and the other subsidiaries of MONY acquired by AXA
Financial in the MONY Acquisition. The term "Separate Accounts" refers to
the Separate Account investment assets of MLOA excluding the assets held in
those Separate Accounts on which MLOA bears the investment risk. The term
"General Account Investment Assets" refers to assets held in the General
Account associated with MLOA's continuing operations.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
WHOLESALE DISTRIBUTION. We also distribute our products on a wholesale basis
through AXA Distributors, LLC ("AXA Distributors"), an affiliated wholesale
distribution company, to third-party broker-dealers and insurance brokerage
general agencies.
REINSURANCE
We reinsure most of our variable life, interest-sensitive life and term life
insurance policies on an excess of retention basis. In 2012, we generally
retained up to a maximum of $4 million of mortality risk on single-life
policies and up to a maximum of $6 million of mortality risk on second-to-die
policies. For amounts applied for in excess of those limits, reinsurance is
ceded to AXA Equitable up to a combined maximum of $20 million of risk on
single-life policies and up to a maximum of $25 million on second-to-die
policies. For amounts issued in excess of those limits we typically obtained
reinsurance from unaffiliated third parties. The reinsurance arrangements
obligate the reinsurer to pay a portion of any death claim in excess of the
amount we retain in exchange for an agreed-upon premium. We are not a party to
any risk reinsurance arrangement with any reinsurer pursuant to which the
amount of reserves on reinsurance ceded to such reinsurer equals more than
1.48% of the total policy life reserves of MLOA.
We also continue to reinsure a portion of our exposure on variable annuity
products that provide guaranteed minimum income benefit ("GMIB") features
and/or guaranteed minimum death benefit ("GMDB") features. At December 31,
2012, we have fully reinsured, subject to certain maximum amounts or caps in
any one period, the GMIB benefit and reinsured approximately 31.8% of our net
amount at risk to the GMDB obligation on annuity contracts in force as of
December 31, 2012. A contingent liability exists with respect to reinsurance
should the reinsurers be unable to meet their obligations. We evaluate the
financial condition of our reinsurers in an effort to minimize our exposure to
significant losses from reinsurer insolvencies.
We do not assume reinsurance from any non-affiliated insurance company. For
additional information about reinsurance strategies implemented and affiliate
reinsurance assumed, see Notes 7 and 8 of Notes to Financial Statements.
POLICYHOLDER LIABILITIES AND RESERVES
We establish, and carry as liabilities, actuarially determined amounts that are
calculated to meet our policy obligations when a policy matures or is
surrendered, an insured dies or becomes disabled or upon the occurrence of
other covered events, or to provide for future annuity payments. Our reserve
requirements are calculated based on a number of estimates and assumptions,
including estimates and assumptions related to future mortality, morbidity,
interest rates, future equity performance, reinvestment rates, persistency,
claims experience and policyholder elections (i.e., lapses and surrenders,
withdrawals and amounts of withdrawals, contributions and the allocation
thereof etc.) which we modify to reflect our actual experience and/or refined
assumptions when appropriate.
Pursuant to state insurance laws, we establish statutory reserves, reported as
liabilities, to meet our obligations on our policies. These statutory reserves
are established in amounts sufficient to meet policy and contract obligations,
when taken together with expected future premiums and interest at assumed
rates. Statutory reserves generally differ from actuarial liabilities for
future policy benefits determined using U.S. GAAP.
State insurance laws and regulations require that we submit to state insurance
departments, with each annual report, an opinion and memorandum of a "qualified
actuary" that the statutory reserves and related actuarial amounts recorded in
support of specified policies and contracts, and the assets supporting such
statutory reserves and related actuarial amounts, make adequate provision for
its statutory liabilities with respect to these obligations.
For additional information on Policyholder Liabilities, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Critical Accounting Policies and Estimates", "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Results of
Continuing Operations by Segment - Insurance" and "Risk Factors."
UNDERWRITING AND PRICING
UNDERWRITING. We employ detailed underwriting policies, guidelines and
procedures designed to align mortality results with the assumptions used in
product pricing while providing for competitive risk selection. The risk
selection process is carried out by underwriters who evaluate policy
applications based on information provided by the applicant and other sources.
Specific tests, such as blood analysis, are used to evaluate policy
applications based on the size of the policy, the age of the applicant and
other factors. The purpose of this process is to determine the type and amount
of risk that we are willing to accept. In addition, we are piloting alternative
underwriting methods that rely on predictive modeling.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
We have senior level oversight of the underwriting process in order to
facilitate quality sales and serve the needs of our customers, while supporting
our financial strength and business objectives. The application of our
underwriting guidelines is periodically reviewed through internal underwriting
audits in order to maintain high standards of underwriting and consistency.
PRICING. Pricing for our products is designed to allow us to make an
appropriate profit after paying benefits to customers, and taking account of
all the risks we assume. Product pricing is calculated through the use of
estimates and assumptions for mortality, morbidity, withdrawal rates and
amounts, expenses, persistency, policyholder elections and investment returns,
as well as certain macroeconomic factors. Assumptions used are determined in
light of our underwriting standards and practices. Investment-oriented products
are priced based on various factors, which may include investment return,
expenses, persistency and optionality.
Our life insurance products are highly regulated by the individual state
regulators where such products are sold. Variable and fixed annuity products
are also highly regulated and approved by the individual state regulators where
the product is sold. Such products generally include penalties for early
withdrawals and policyholder benefit elections to tailor the form of the
product's benefits to the needs of the opting policyholder. From time to time,
we reevaluate the type and level of guarantee and other features currently
being offered and may change the nature and/or pricing of such features for new
sales.
We continually review our underwriting and pricing guidelines with a view to
maintaining competitive offerings that are consistent with maintaining our
financial strength and meeting profitability goals.
GENERAL ACCOUNT INVESTMENT PORTFOLIO
The General Account consists of a diversified portfolio of principally
fixed-income investments.
The following table summarizes our General Account Investment Assets by asset
category at December 31, 2012:
MONY LIFE INSURANCE COMPANY OF AMERICA
GENERAL ACCOUNT INVESTMENT ASSETS
AMOUNT % OF TOTAL
-------- ----------
(IN MILLIONS)
Fixed maturities................ $ 1,890 85.3%
Mortgages....................... 45 2.0
Other equity investments........ 2 0.1
Policy loans.................... 139 6.3
Cash and short-term investments. 140 6.3
-------- -------
Total........................... $ 2,216 100.0%
======== =======
/(1)/See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - General Account Investment Portfolio - Investment
Results of General Account Investment Assets" for further information on
these investment assets and their results.
We have an asset/liability management approach with separate investment
objectives for specific classes of product liabilities, such as life insurance
and annuity. We have investment strategies to manage each product line's
investment return and liquidity requirements, consistent with management's
overall investment objectives for the General Account investment portfolio.
Investments frequently meet the investment objectives of more than one class of
product liabilities.
INVESTMENT SURVEILLANCE. As part of our investment management process,
management, with the assistance of its investment advisors, continuously
monitors General Account investment performance. This internal review process
culminates with a quarterly review of assets by our Investment Under
Surveillance ("IUS") Committee. The IUS Committee, among other things,
evaluates whether any investments are other than temporarily impaired and,
therefore, must be written down to their fair value and whether specific
investments should be put on an interest non-accrual basis.
For additional information on the General Account Investment Portfolio, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - General Account Investment Portfolio."
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
COMPETITION
There is strong competition among insurers, banks, brokerage firms and other
financial institutions and providers seeking clients for the types of products
we provide. Competition is intense among a broad range of financial
institutions and other financial service providers for retirement and other
savings dollars. For additional information regarding competition, see "Risk
Factors."
The principal competitive factors affecting our business are our financial
strength as evidenced, in part, by our financial and claims-paying ratings;
size; product quality, range, features/functionality and price; crediting rates
on fixed products; visibility, recognition and understanding of our brand in
the marketplace; reputation and quality of service; and (with respect to
variable insurance and annuity products) investment management performance.
We and our affiliated distributors must attract and retain productive sales
representatives to sell our products. Strong competition continues among
financial institutions for sales representatives with demonstrated ability. We
compete with other financial institutions for sales representatives primarily
on the basis of financial position, product breadth and features, support
services and compensation policies. For additional information, see "Risk
Factors."
Legislative and other changes affecting the regulatory environment can affect
our competitive position within the life insurance industry and within the
broader financial services industry. For additional information, see
"Description of Business -- Regulation" and "Risk Factors."
REGULATION
INSURANCE REGULATION
We are licensed to transact insurance business in all states other than New
York and are subject to extensive regulation and supervision by insurance
regulators in these states and the District of Columbia and Puerto Rico. We are
domiciled in Arizona and are primarily regulated by the Director of Insurance
of the Arizona Department of Insurance. The extent of regulation by
jurisdiction varies, but most jurisdictions have laws and regulations governing
sales practices, standards of solvency, levels of reserves, risk-based capital,
permitted types and concentrations of investments, and business conduct to be
maintained by insurance companies as well as agent licensing, approval of
policy forms and, for certain lines of insurance, approval or filing of rates.
Insurance regulators have the discretionary authority to limit or prohibit new
issuances of business to policyholders within their jurisdictions when, in
their judgment, such regulators determine that the issuing company is not
maintaining adequate statutory surplus or capital. For additional information
on Insurance Supervision, see "Risk Factors."
We are required to file detailed annual financial statements, prepared on a
statutory accounting basis, with supervisory agencies in each of the
jurisdictions in which we do business. Such agencies may conduct regular or
targeted examinations of our operations and accounts and may make occasional
requests for particular information from us. In addition to oversight by state
insurance regulators, in recent years, the insurance industry has seen an
increase in inquiries from state attorneys general and other state officials
regarding compliance with certain state insurance, securities and other
applicable laws. We have received and responded to such inquiries from time to
time. For example, MLOA, along with other life insurance industry companies,
has been the subject of various inquiries regarding its death claim,
escheatment and unclaimed property procedures and is cooperating with these
inquiries. MLOA is under audit by a third party auditor acting on behalf of a
number of U.S. state jurisdictions reviewing compliance with unclaimed property
laws of those jurisdictions. In addition, a number of life insurance industry
companies have received a multistate targeted market conduct examination notice
issued on behalf of various U.S. state insurance departments reviewing use of
the U.S. Social Security Administration's Death Master File or similar
database, claims processing and payments to beneficiaries. In December 2012,
MLOA received an examination notice on behalf of at least six insurance
departments. These audits and related inquiries have resulted in the payment of
death benefits and changes to MLOA's relevant procedures. MLOA expects it will
also result in the reporting and escheatment of unclaimed death benefits,
including potential interest on such payments, and the payment of examination
costs. In addition, MLOA, along with other life insurance companies, are
subject to lawsuits that may be filed by regulatory agencies and other
litigants.
HOLDING COMPANY AND SHAREHOLDER DIVIDEND REGULATION. Most states, including
Arizona, regulate transactions between an insurer and its affiliates under
insurance holding company acts. The insurance holding company laws and
regulations vary from jurisdiction to jurisdiction, but generally require a
controlled insurance company (insurers that are subsidiaries of insurance
holding companies) to register with state regulatory authorities and to file
with those authorities certain reports, including information concerning its
capital structure, ownership, financial condition, certain intercompany
transactions and general business operations.
State insurance statutes also typically place restrictions and limitations on
the amount of dividends or other distributions payable by insurance company
subsidiaries to their parent companies, as well as on transactions between an
insurer and its affiliates.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
In 2012, we did not make any shareholder dividend payments. For additional
information, see "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources."
GUARANTY ASSOCIATIONS AND SIMILAR ARRANGEMENTS. Each of the states in which we
are admitted to transact business require life insurers doing business within
the jurisdiction to participate in guaranty associations, which are organized
to pay certain contractual insurance benefits owed pursuant to insurance
policies issued by impaired, insolvent or failed insurers. These associations
levy assessments, up to prescribed limits, on all member insurers in a
particular state on the basis of the proportionate share of the premiums
written by member insurers in the lines of business in which the impaired,
insolvent or failed insurer is engaged. Some states permit member insurers to
recover assessments paid through full or partial premium tax offsets.
During each of the past five years, the assessments levied against us have not
been material.
RISK BASED CAPITAL ("RBC"). We are subject to RBC requirements and report our
RBC based on a formula calculated by applying factors to various asset, premium
and statutory reserve items, as well as taking into account the risk
characteristics of the insurer. The major categories of risk involved are asset
risk, insurance risk, interest rate risk, market risk and business risk. The
formula is used as a regulatory tool to identify possible inadequately
capitalized insurers for purposes of initiating regulatory action, and not as a
means to rank insurers generally. State insurance laws provide insurance
regulators the authority to require various actions by, or take various actions
against, insurers whose RBC ratio does not meet or exceed certain RBC levels.
As of the date of the most recent annual statutory financial statements filed
with insurance regulators, our RBC was in excess of each of those RBC levels.
For additional information on RBC, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources."
SECURITIES LAWS
We and certain policies and contracts offered by us are subject to regulation
under the Federal securities laws administered by the Securities and Exchange
Commission (the "SEC") and under certain state securities laws. The SEC
conducts regular examinations of our operations, and from time to time makes
requests for particular information from us. The SEC and other governmental
regulatory authorities, including state securities administrators, may
institute administrative or judicial proceedings that may result in censure,
fines, issuance of cease-and-desist orders or other sanctions. Sales of
variable insurance and annuity products are regulated by the SEC and the
Financial Industry Regulatory Authority, Inc. ("FINRA"), the successor to the
National Association of Securities Dealers, Inc. The SEC, FINRA and other
regulators have from time to time investigated certain sales practices
involving certain sales of variable annuities and transactions in which an
existing variable annuity is replaced by, or exchanged for, a new variable
annuity. Certain of our Separate Accounts are registered as investment
companies under the Investment Company Act of 1940, as amended. Separate
Account interests under certain annuity contracts and insurance policies issued
by us are also registered under the Securities Act of 1933, as amended.
DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT
Currently, the U.S. federal government does not directly regulate the business
of insurance. While the Dodd-Frank Wall Street Reform and Consumer Protection
Act (the "Dodd-Frank Act") does not remove primary responsibility for the
supervision and regulation of insurance from the states, Title V of the Act
establishes a Federal Insurance Office ("FIO") within the U.S. Treasury
Department and reforms the regulation of the non-admitted property and casualty
insurance market and the reinsurance market. The FIO has authority that extends
to all lines of insurance except health insurance, crop insurance and (unless
included with life or annuity components) long-term care insurance. Under the
Dodd-Frank Act, the FIO is charged with monitoring all aspects of the insurance
industry (including identifying gaps in regulation that could contribute to a
systemic crisis), recommending to the newly established Financial Stability
Oversight Council the designation of any insurer and its affiliates
(potentially including AXA and its affiliates) as a non-bank financial company
subject to oversight by the Board of Governors of the Federal Reserve System
(including the administration of stress testing on capital), assisting the
Treasury Secretary in negotiating "covered agreements" with non-US governments
or regulatory authorities, and, with respect to state insurance laws and
regulation, determining whether such state insurance measures are pre-empted by
such covered agreements. In addition, the FIO will be empowered to request and
collect data (including financial data) on and from the insurance industry and
insurers (including reinsurers) and their affiliates. In such capacity, the FIO
may require an insurer or an affiliate of an insurer to submit such data or
information as the FIO may reasonably require. In addition, the FIO's approval
will be required to subject an insurer or a company whose largest U.S.
subsidiary is an insurer to the special orderly liquidation process outside the
federal bankruptcy code, administered by the Federal Deposit Insurance
Corporation pursuant to the Dodd-Frank Act. The Dodd-Frank Act also reforms the
regulation of the non-admitted property/casualty insurance market (commonly
referred to as excess and surplus lines) and the reinsurance markets, including
the ability of non-domiciliary state insurance regulators to deny credit for
reinsurance when recognized by the ceding insurer's domiciliary state regulator.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
FEDERAL TAX LEGISLATION
There are a number of existing, expiring, newly enacted and previously or
currently proposed Federal tax initiatives that may also significantly affect
us including, among others, the following.
Estate and Related Taxes. Under Federal tax legislation enacted on January 2,
2013, exemption amounts for estate, gift and generation skipping transfer
("GST") taxes in the United States on estates, gifts or GST transfers exceeding
$5 million per individual (to be indexed for inflation) will be subject to tax
at a top rate of 40%. The permanence of the estate tax as enacted in 2013 with
an inflation indexed exemption amount of $5 million, a top tax rate of 40% and
"portability" which allows a surviving spouse to use a deceased spouse's unused
$5 million exemption could be expected to have an adverse impact on life
insurance sales as a significant portion of our life insurance sales are made
in conjunction with estate planning. At the same time, the higher gift tax
exemption may encourage certain gifting techniques involving life insurance in
larger estates.
Income, Capital Gains and Dividend Tax Rates. Federal tax legislation enacted
on January 2, 2013 made permanent reduced income tax rates for individuals
except those with taxable income of over $400,000 per year ($450,000 for a
married couple on a joint tax return) who will now be subject to a top income
tax rate of 39.6% (an increase from 35%); a top long-term capital gains and
dividend tax rate of 20% (an increase from 15%). Such changes may increase the
tax appeal of cash value life insurance and annuity products for individuals in
the higher tax bracket. The tax advantages of cash value life insurance and
annuity products should increase favourably in the event of higher income and
capital gains tax rates and the application of a newly enacted 3.8% net
investment income tax on investment type income for higher earning taxpayers
beginning in 2013.
Other Proposals. The U.S. Congress may also consider proposals for, among other
things, the comprehensive overhaul of the Federal tax law and/or tax incentives
targeted particularly to lower and middle-income taxpayers. For example, as
part of deficit reduction ideas being discussed, there may be renewed interest
in tax reform options, which could present sweeping changes to many
longstanding tax rules. One possible change includes the creation of new
tax-favoured savings accounts that would replace many existing qualified plan
arrangements or new limits on the tax benefits available under existing
qualified plan arrangements. Others would eliminate or limit certain tax
benefits currently available to cash value life insurance and deferred annuity
products. Enactment of these changes or similar alternatives would likely
adversely affect new sales, and possibly funding and persistency of existing
cash value life insurance and deferred annuity products. Finally, current
legislative proposals may introduce significant increases on the taxation of
financial institutions, including, taxes on certain financial institutions to
compensate for the funds dispersed during the financial crisis, taxes on
financial transactions, and taxes on executive compensation, including bonuses.
Recent tax rulings indicate lifetime annuity guarantees can be placed upon
mutual fund type investment portfolios outside the annuity contract. Such
portfolios would not be tax-deferred but would be eligible to pass capital gain
or loss and dividend treatment to the policyholders. Development of such new
annuity designs could impact the attractiveness or pricing of current annuity
guarantee designs but expand the market for such guarantees.
The current, rapidly changing economic environment and projections relating to
government budget deficits may increase the likelihood of substantial changes
to Federal tax law. Management cannot predict what, if any, legislation will
actually be proposed or enacted based on these proposals or what other
proposals or legislation, if any, may be introduced or enacted relating to our
business or what the effect of any such legislation might be.
PRIVACY OF CUSTOMER INFORMATION
We have adopted a privacy policy outlining procedures and practices to be
followed by members of the AXA Financial Group relating to the collection,
disclosure and protection of customer information. Customer information may
only be used to conduct company business. We may not disclose customer
information to third parties except as required or permitted by law. Customer
information may not be sold or rented to third parties. A copy of the privacy
policy is mailed to customers on an annual basis. Federal and state laws and
regulations require financial institutions to protect the security and
confidentiality of customer information and report breaches in which customer
information is intentionally or accidentally disclosed to third parties.
Violation of these laws and regulations may result in significant fines and
remediation costs. Legislation currently under consideration in the U.S.
Congress and state legislatures could create additional obligations relating to
the use and protection of customer information.
EMPLOYEES
We have no employees. We have service agreements with affiliates pursuant to
which we are provided services necessary to operate our business. For
additional information, see Note 8 of Notes to Financial Statements.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
PARENT COMPANY
AXA, our ultimate parent company, is the holding company for an international
group of insurance and related financial services companies engaged in the
financial protection and wealth management business. AXA is one of the world's
largest insurance groups, operating primarily in Europe, North America, the
Asia/Pacific region and, to a lesser extent, in other regions including the
Middle East, Africa and Latin America. AXA has five operating business
segments: life and savings, property and casualty, international insurance,
asset management and banking.
Neither AXA nor any affiliate of AXA has any obligation to provide us with
additional capital or credit support.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
DESCRIPTION OF PROPERTY
MLOA does not lease or own space for its operations. Facilities are provided to
MLOA for the conduct of its business pursuant to service agreements with
affiliated companies. For additional information, see Note 8 of Notes to
Financial Statements included elsewhere herein.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
LEGAL PROCEEDINGS
The matters set forth in Note 12 of Notes to Financial Statements for the year
ended December 31, 2012 are incorporated herein by reference.
18
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
MONY LIFE INSURANCE COMPANY OF AMERICA
Report of Independent Registered Public Accounting Firm............... 20
Financial Statements:
Balance Sheets, December 31, 2012 and December 31, 2011............. 21
Statements of Earnings (Loss), Years Ended December 31, 2012, 2011
and 2010........................................................... 22
Statements of Comprehensive Income (Loss), Years Ended December 31,
2012, 2011 and 2010................................................ 23
Statements of Shareholder's Equity, Years Ended December 31, 2012,
2011 and 2010...................................................... 24
Statements of Cash Flows, Years Ended December 31, 2012, 2011 and
2010............................................................... 25
Notes to Financial Statements....................................... 26
19
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholder of
MONY Life Insurance Company of America
In our opinion, the accompanying balance sheets and the related statements of
earnings (loss), of comprehensive income (loss), of shareholder's equity and of
cash flows present fairly, in all material respects, the financial position of
MONY Life Insurance Company of America ("the Company") at December 31, 2012 and
2011 and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2012 in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with the
standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
As discussed in Note 2 of the Notes to Financial Statements, as of January 1,
2012, the Company retrospectively adopted a new accounting standard that amends
the accounting for costs associated with acquiring or renewing insurance
contracts.
/s/ PricewaterhouseCoopers LLP
New York, New York
March 8, 2013, except for the effects of the revision discussed in Note 2
related to the overstatement of initial fee liability and understatement of
deferred policy acquisition cost amortization to the financial statements, as
which the date is April 23, 2013.
20
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
MONY LIFE INSURANCE COMPANY OF AMERICA
BALANCE SHEETS
DECEMBER 31, 2012 AND 2011
2012 2011
-------- --------
(IN MILLIONS)
ASSETS:
Investments:
Fixed maturities available for sale, at fair value................................................ $ 2,026 $ 1,967
Mortgage loans on real estate..................................................................... 45 124
Policy loans...................................................................................... 137 134
Other invested assets............................................................................. 71 74
-------- --------
Total investments................................................................................ 2,279 2,299
Cash and cash equivalents........................................................................... 151 61
Amounts due from reinsurers......................................................................... 158 136
Deferred policy acquisition costs................................................................... 218 172
Value of business acquired.......................................................................... 103 97
Other assets........................................................................................ 39 39
Separate Accounts' assets........................................................................... 1,640 1,604
-------- --------
TOTAL ASSETS........................................................................................ $ 4,588 $ 4,408
======== ========
LIABILITIES
Policyholders' account balances..................................................................... $ 1,615 $ 1,608
Future policy benefits and other policyholders liabilities.......................................... 397 380
Other liabilities................................................................................... 52 12
Current and deferred income taxes................................................................... 143 129
Separate Accounts' liabilities...................................................................... 1,640 1,604
-------- --------
Total liabilities................................................................................ 3,847 3,733
-------- --------
Commitments and contingent liabilities (Notes 2, 5, 8, 9, and 12)
SHAREHOLDER'S EQUITY
Common Stock, $1.00 par value; 5.0 million shares authorized, 2.5 million issued and outstanding.. 2 2
Capital in excess of par value.................................................................... 516 515
Retained earnings................................................................................. 141 103
Accumulated other comprehensive income (loss)..................................................... 82 55
-------- --------
Total shareholder's equity....................................................................... 741 675
-------- --------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY.......................................................... $ 4,588 $ 4,408
======== ========
21
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
See Notes to Financial Statements.
MONY LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF EARNINGS (LOSS)
YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010
2012 2011 2010
------ ------ ------
(IN MILLIONS)
REVENUES
Universal life and investment-type product policy fee income......................... $ 117 $ 123 $ 122
Premiums............................................................................. 32 42 39
Net investment income (loss)......................................................... 110 116 119
Investment gains (losses), net:
Total other-than-temporary impairment losses....................................... (7) (2) (56)
Portion of loss recognized in other comprehensive income (loss).................... -- -- 2
------ ------ ------
Net impairment losses recognized.................................................. (7) (2) (54)
Other investment gains (losses), net............................................... 2 1 6
------ ------ ------
Total investment gains (losses), net.............................................. (5) (1) (48)
------ ------ ------
Other income (loss).................................................................. 7 4 8
Increase (decrease) in the fair value of the reinsurance contract asset.............. (2) 7 1
------ ------ ------
Total revenues.................................................................... 259 291 241
------ ------ ------
BENEFITS AND OTHER DEDUCTIONS
Policyholders' benefits.............................................................. 103 96 93
Interest credited to policyholders' account balances................................. 61 61 68
Compensation and benefits............................................................ 25 30 32
Commissions.......................................................................... 38 33 27
Interest expense..................................................................... -- -- 1
Amortization of deferred policy acquisition costs and value of business acquired..... (27) (12) 41
Capitalization of deferred policy acquisition costs.................................. (31) (25) (21)
Rent expense......................................................................... 2 3 3
Other operating costs and expenses................................................... 44 29 27
------ ------ ------
Total benefits and other deductions............................................... 215 215 271
------ ------ ------
Earnings (loss), before income taxes................................................. 44 76 (30)
Income tax (expense) benefit......................................................... (6) 1 11
------ ------ ------
Net Earnings (Loss).................................................................. $ 38 $ 77 $ (19)
====== ====== ======
22
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
See Notes to Financial Statements.
MONY LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010
2012 2011 2010
----- ----- ------
(IN MILLIONS)
COMPREHENSIVE INCOME (LOSS)
Net earnings (loss)........................................................... $ 38 $ 77 $ (19)
----- ----- ------
Other comprehensive income (loss), net of income taxes:
Change in unrealized gains (losses), net of reclassification adjustment... 27 10 56
----- ----- ------
Total other comprehensive income (loss), net of income taxes.............. 27 10 56
----- ----- ------
Comprehensive Income (Loss).................................................... $ 65 $ 87 $ 37
===== ===== ======
23
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
See Notes to Financial Statements.
MONY LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF SHAREHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010
2012 2011 2010
------ ------ ------
(IN MILLIONS)
SHAREHOLDER'S EQUITY
Common stock, at par value, beginning and end of year............... $ 2 $ 2 $ 2
------ ------ ------
Capital in excess of par value, beginning of year................... 515 514 512
Changes in capital in excess of par value........................... 1 1 2
------ ------ ------
Capital in excess of par value, end of year......................... 516 515 514
------ ------ ------
Retained earnings, beginning of year................................ 103 26 68
Impact of implementing new accounting guidance, net of taxes........ -- -- (23)
------ ------ ------
Retained earnings, beginning of year, as adjusted................... 103 26 45
Net earnings (loss)................................................. 38 77 (19)
------ ------ ------
Retained earnings, end of year...................................... 141 103 26
------ ------ ------
Accumulated other comprehensive income (loss), beginning of year.... 55 45 (11)
Other comprehensive income (loss)................................... 27 10 56
------ ------ ------
Accumulated other comprehensive income (loss), end of year.......... 82 55 45
------ ------ ------
TOTAL SHAREHOLDER'S EQUITY, END OF YEAR............................... $ 741 $ 675 $ 587
====== ====== ======
See Notes to Financial Statements.
24
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
MONY LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010
2012 2011 2010
------ ----- ------
(IN MILLIONS)
Net earnings (loss).................................................................................. $ 38 $ 77 $ (19)
Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities:
Interest credited to policyholders' account balances................................................ 61 61 68
Universal life and investment-type product policy fee income........................................ (117) (123) (122)
Change in accrued investment income................................................................. 2 1 --
Investment (gains) losses, net...................................................................... 5 1 48
Change in deferred policy acquisition costs and value of business acquired.......................... (58) (37) 20
Change in the fair value of the reinsurance contract asset.......................................... 2 (7) (1)
Change in future policy benefits.................................................................... (5) 3 (4)
Change in other policyholders liabilities........................................................... 5 (3) 1
Change in current and deferred income taxes......................................................... (1) 15 (10)
Provision for depreciation and amortization......................................................... 5 3 5
Dividend from AllianceBernstein..................................................................... 3 4 5
Other, net.......................................................................................... 11 (18) (1)
------ ----- ------
Net cash provided by (used in) operating activities.................................................. (49) (23) (10)
------ ----- ------
Cash flows from investing activities:
Maturities and repayments of fixed maturities and mortgage loans.................................... 139 156 101
Sales of investments................................................................................ 60 16 122
Purchases of investments............................................................................ (134) (190) (103)
Other, net.......................................................................................... (8) (5) (9)
------ ----- ------
Net cash provided by (used in) investing activities.................................................. 57 (23) 111
------ ----- ------
Cash flows from financing activities:
Policyholders' account balances:
Deposits.......................................................................................... 148 156 163
Withdrawals and transfers to Separate Accounts.................................................... (66) (141) (209)
Repayments of note to affiliate..................................................................... -- -- (20)
------ ----- ------
Net cash provided by (used in) financing activities.................................................. 82 15 (66)
------ ----- ------
Change in cash and cash equivalents.................................................................. 90 (31) 35
Cash and cash equivalents, beginning of year......................................................... 61 92 57
------ ----- ------
Cash and Cash Equivalents, End of Year............................................................... $ 151 $ 61 $ 92
====== ===== ======
Supplemental cash flow information:
Interest paid....................................................................................... $ -- $ -- $ 1
====== ===== ======
Schedule of non-cash financing activities:
Shared-based Programs............................................................................... $ 1 $ 1 $ 2
====== ===== ======
See Notes to Financial Statements.
25
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS
1) ORGANIZATION
MONY Life Insurance Company of America ("MLOA") is an Arizona stock life
insurance company. MLOA's primary business is providing life insurance and
annuity products to both individuals and businesses. MLOA is a wholly-owned
subsidiary of MONY Life Insurance Company ("MONY Life"). MONY Life is a
wholly owned subsidiary of AXA Equitable Financial Services, LLC, which is a
downstream holding company of AXA Financial, Inc. ("AXA Financial" and
together with its consolidated subsidiaries "AXA Financial Group"). AXA
Financial is an indirect wholly owned subsidiary of AXA, a French holding
company for an international group of insurance and related financial
services companies.
2) SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The preparation of the accompanying financial statements in conformity with
accounting principles generally accepted in the United States of America
("U.S. GAAP") requires management to make estimates and assumptions
(including normal, recurring accruals) that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting periods. Actual results could
differ from these estimates. The accompanying financial statements reflect
all adjustments necessary in the opinion of management for a fair
presentation of the financial position of MLOA and its results of operations
and cash flows for the periods presented.
The years "2012", "2011" and "2010" refer to the years ended December 31,
2012, 2011 and 2010, respectively. Certain reclassifications have been made
in the amounts presented for prior periods to conform those periods to the
current presentation.
Revision of Prior Period Financial Statements
During the year ended 2012, MLOA's management identified a pre-tax $31
million ($20 million post-tax) overpayment related to its intercompany
commission expenses with AXA Network resulting in an overstatement of
commissions and other operating costs and expenses and a net $6 million
pre-tax ($4 million post-tax) of overstatement of initial fee liability and
understatement of deferred policy acquisition costs ("DAC") amortization for
the years 2011 and 2010. MLOA's management does not believe these
overpayments and the impact of revisions to initial fee liability and
amortization of DAC to be material to MLOA's results of operations,
financial position, or cash flows for any of MLOA's previously filed annual
financial statements. As the correction due to the overpayment would be
material to the results of operations and cash flows for 2012, MLOA's
Statements of Earnings and Statements of Cash Flows for the years ended 2011
and 2010 and Balance sheet as of December 31, 2011, included herein have
been revised.
The following table presents the effects of the revision to MLOA's
previously reported balance sheets:
AS PREVIOUSLY
REPORTED ADJUSTMENT AS ADJUSTED
------------- ----------- -----------
(IN MILLIONS)
DECEMBER 31, 2011:
ASSETS:
Deferred policy acquisition costs.... $ 228 $ (4) $ 224
LIABILITIES:
Future policy benefits and other
policyholders liabilities.......... 390 (10) 380
Other liabilities.................... 43 (31) 12
Current and deferred income taxes.... 134 13 147
EQUITY:
Retained earnings.................... 113 24 137
Total shareholder's equity........... 685 24 709
26
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
The following table presents the effects of the revision to MLOA's
previously reported statements of earnings (loss):
AS PREVIOUSLY
REPORTED ADJUSTMENT AS ADJUSTED
------------- ---------- -----------
(IN MILLIONS)
YEAR ENDED DECEMBER 31, 2011:
REVENUES:
Universal life and investment-type product policy fee income.... $ 117 $ 6 $ 123
Benefits and Other Deductions:
Commissions..................................................... 45 (12) 33
Amortization of deferred policy acquisition costs and value of
business acquired............................................. (14) 2 (12)
Other operating costs and expenses.............................. 35 (6) 29
Earnings (loss), before income taxes.............................. 64 22 86
Income tax (expense) benefit...................................... 5 (7) (2)
Net earnings (loss)............................................... 69 15 84
YEAR ENDED DECEMBER 31, 2010:
Revenues:
Universal life and investment-type product policy fee income.... $ 118 $ 4 $ 122
Benefits and Other Deductions:
Commissions..................................................... 35 (8) 27
Amortization of deferred policy acquisition costs and value of
business acquired............................................. 41 2 43
Other operating costs and expenses.............................. 30 (3) 27
Earnings (loss), before income taxes.............................. (37) 13 (24)
Income tax (expense) benefit...................................... 14 (5) 9
Net earnings (loss)............................................... (23) 8 (15)
The following table presents the effects of the revision to MLOA's
previously reported statements of cash flows:
AS PREVIOUSLY
REPORTED ADJUSTMENT AS ADJUSTED
------------- ------------- ------------
(IN MILLIONS)
YEAR ENDED DECEMBER 31, 2011:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings................................... $ 69 $ 15 $ 84
Universal life and investment-type product
policy fee income............................ (117) (6) (123)
Change in deferred policy acquisition costs
and value of business acquired............... (49) 2 (47)
Change in current and deferred income taxes.... 11 7 18
Other, net..................................... -- (18) (18)
YEAR ENDED DECEMBER 31, 2010:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings................................... $ (23) $ 8 $ (15)
Universal life and investment-type product
policy fee income............................ (118) (4) (122)
Change in deferred policy acquisition costs
and value of business acquired............... 12 2 14
Change in current and deferred income taxes.... (13) 5 (8)
Other, net..................................... 10 (11) (1)
Retrospective Adoption of Accounting Pronouncements
In October 2010, the Financial Accounting Standards Board ("FASB") issued
authoritative guidance to address diversity in practice regarding the
interpretation of which costs relating to the acquisition of new or renewal
insurance contracts qualify for deferral. Under the amended guidance, an
entity may defer incremental direct costs of contract acquisition with
independent third parties or employees that are essential
27
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
to the contract transaction, as well as the portion of employee
compensation, including payroll fringe benefits and other costs directly
related to underwriting, policy issuance and processing, medical inspection,
and contract selling for successfully negotiated contracts. This amended
guidance was effective for fiscal years, and interim periods within those
years, beginning after December 15, 2011 and permits, but does not require,
retrospective application. MLOA adopted this guidance effective January 1,
2012, and applied the retrospective method of adoption.
The following table presents the effects of the retrospective application of
the adoption of such new accounting guidance to MLOA's previously reported
balance sheets:
AS PREVIOUSLY REPORTED
AND ADJUSTED HEREIN ADJUSTMENT AS ADJUSTED
---------------------- ---------- -----------
(IN MILLIONS)
DECEMBER 31, 2011:
ASSETS:
Deferred policy acquisition costs.... $ 224 $ (52) $ 172
LIABILITIES:
Current and deferred income taxes.... 147 (18) 129
EQUITY:
Retained earnings.................... 137 (34) 103
Total shareholder's equity........... 709 (34) 675
The following table presents the effects of the retrospective application of
the adoption of such new accounting guidance to MLOA's previously reported
statements of earnings (loss):
AS PREVIOUSLY REPORTED
AND ADJUSTED HEREIN ADJUSTMENT AS ADJUSTED
---------------------- ---------- -----------
(IN MILLIONS)
YEAR ENDED DECEMBER 31, 2011:
Benefits and Other Deductions:
Amortization of deferred policy acquisition costs and value of
business acquired............................................. $ (12) $ -- $ (12)
Capitalization of deferred policy acquisition costs............. (35) 10 (25)
Earnings (loss), before income taxes.............................. 86 (10) 76
Income tax (expense) benefit...................................... (2) 3 1
Net earnings (loss)............................................... 84 (7) 77
YEAR ENDED DECEMBER 31, 2010:
Benefits and Other Deductions:
Amortization of deferred policy acquisition costs and value of
business acquired............................................. $ 43 $ (2) $ 41
Capitalization of deferred policy acquisition costs............. (29) 8 (21)
Earnings (loss), before income taxes.............................. (24) (6) (30)
Income tax (expense) benefit...................................... 9 2 11
Net earnings (loss)............................................... (15) (4) (19)
The following table presents the effects of the retrospective application of
the adoption of such new accounting guidance to MLOA's previously reported
statements of cash flows:
AS PREVIOUSLY REPORTED
AND ADJUSTED HEREIN ADJUSTMENT AS ADJUSTED
---------------------- ---------- -----------
(IN MILLIONS)
YEAR ENDED DECEMBER 31, 2011:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings.............................................. $ 84 $ (7) $ 77
Change in deferred policy acquisition costs and value of
business acquired....................................... (47) 10 (37)
Change in current and deferred income taxes............... 18 (3) 15
28
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
AS PREVIOUSLY REPORTED
AND ADJUSTED HEREIN ADJUSTMENT AS ADJUSTED
---------------------- ---------- -----------
(IN MILLIONS)
YEAR ENDED DECEMBER 31, 2010:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings.............................................. $ (15) $ (4) $ (19)
Change in deferred policy acquisition costs and value of
business acquired....................................... 14 6 20
Change in current and deferred income taxes............... (8) (2) (10)
Adoption of New Accounting Pronouncements
In September 2011, the FASB issued new guidance on testing goodwill for
impairment. The guidance is intended to reduce the cost and complexity of
the annual goodwill impairment test by providing entities with the option of
performing a "qualitative" assessment to determine whether further
impairment testing is necessary. The guidance was effective for annual and
interim goodwill impairment tests performed for fiscal years beginning after
December 15, 2011, with early adoption permitted for certain companies.
Implementation of this guidance did not have a material impact on MLOA's
financial statements.
In June 2011, the FASB issued new guidance to amend the existing
alternatives for presenting Other comprehensive income (loss) ("OCI") and
its components in financial statements. The amendments eliminate the current
option to report OCI and its components in the statement of changes in
equity. An entity can elect to present items of net earnings (loss) and OCI
in one continuous statement or in two separate, but consecutive statements.
This guidance will not change the items that constitute net earnings (loss)
and OCI, when an item of OCI must be reclassified to net earnings (loss).
The new guidance also called for reclassification adjustments from OCI to be
measured and presented by income statement line item in net earnings (loss)
and in OCI. This guidance was effective for interim and annual periods
beginning after December 15, 2011. Consistent with this guidance, MLOA
currently presents items of net earnings (loss) and OCI in two consecutive
statements. In December 2011, the FASB issued new guidance to defer the
portion of the guidance to present components of OCI on the face of the
statement of earnings (loss).
In May 2011, the FASB amended its guidance on fair value measurements and
disclosure requirements to enhance comparability between U.S. GAAP and
International Financial Reporting Standards ("IFRS"). The changes to the
existing guidance include how and when the valuation premise of highest and
best use applies, the application of premiums and discounts, as well as new
required disclosures. This guidance was effective for reporting periods
beginning after December 15, 2011, with early adoption prohibited.
Implementation of this guidance did not have a material impact on MLOA's
financial statements.
In April 2011, the FASB issued new guidance for a creditor's determination
of whether a restructuring is a troubled debt restructuring ("TDR"). The new
guidance provided additional guidance to creditors for evaluating whether a
modification or restructuring of a receivable is a TDR. The new guidance
required creditors to evaluate modifications and restructurings of
receivables using a more principles-based approach, which may result in more
modifications and restructurings being considered TDR. The financial
reporting implications of being classified as a TDR are that the creditor is
required to:
. Consider the receivable impaired when calculating the allowance for
credit losses; and
. Provide additional disclosures about its troubled debt restructuring
activities in accordance with the requirements of recently issued
guidance on disclosures about the credit quality of financing
receivables and the allowance for credit losses.
The new guidance was effective for the first interim or annual period
beginning on or after June 15, 2011. Implementation of this guidance did not
have a material impact on MLOA's financial statements.
In July 2010, the FASB issued new and enhanced disclosure requirements about
the credit quality of financing receivables and the allowance for credit
losses with the objective of providing greater transparency of credit risk
exposures from lending arrangements in the form of loans and receivables and
of accounting policies and methodology used to estimate the allowance for
credit losses. These disclosure requirements include both qualitative
information about credit risk assessment and monitoring and quantitative
information about credit quality during and at the end of the reporting
period, including current credit indicators, agings of past-due amounts, and
carrying amounts of modified, impaired, and non-accrual loans. Several new
terms critical to the application of these disclosures, such as "portfolio
segments" and "classes", were defined by the FASB to provide guidance with
respect to the appropriate level of disaggregation for the purpose of
reporting this information. Except for disclosures of reporting period
activity, or, more specifically, the credit loss allowance rollforward
and the disclosures about troubled debt restructurings, all other
disclosures required by this standard are to be presented for the annual
period
29
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
ending after December 15, 2010. Disclosures of reporting period activity or,
more specifically, the credit loss allowance rollforward, which are
effective in the first interim reporting period beginning after December 15,
2010, have been adopted. Comparative disclosures are not required for
earlier periods presented for comparative purposes at initial
adoption. Implementation of the effective guidance did not have a material
impact on MLOA's financial statements.
In January 2010, the FASB issued new guidance for improving disclosures
about fair value measurements. This guidance requires a reporting entity to
disclose separately the amounts of significant transfers in and out of Level
1 and Level 2 fair value measurements and to describe the reasons for the
transfers. In addition, for Level 3 fair value measurements, a reporting
entity should present separately information about purchases, sales,
issuances and settlements. This guidance was effective for interim and
annual reporting periods ending on or after December 15, 2009 except for
disclosures for Level 3 fair value measurements which was effective for the
first quarter of 2011. These new disclosures have been included in the Notes
to MLOA's financial statements, as appropriate.
Future Adoption of New Accounting Pronouncements
In February 2013, the FASB issued new guidance to improve the reporting of
reclassifications out of accumulated other comprehensive income (loss)
("AOCI"). The amendments in this guidance require an entity to report the
effect of significant reclassifications out of AOCI on the respective line
items in the statement of earnings (loss) if the amount being reclassified
is required to be reclassified in its entirety to net earnings (loss). For
other amounts that are not required to be reclassified in their entirety to
net earnings in the same reporting period, an entity is required to
cross-reference other disclosures that provide additional detail about those
amounts. The guidance requires disclosure of reclassification information
either in the notes or the face of the financial statements provided the
information is presented in one location. This guidance is effective for
interim and annual periods beginning after December 31, 2012. Management
does not expect that implementation of this guidance will have a material
impact on MLOA's financial statements.
In December 2011, the FASB issued new and enhanced disclosures about
offsetting (netting) of financial instruments and derivatives, including
repurchase/reverse repurchase agreements and securities lending/borrowing
arrangements, to converge with those required by IFRS. The disclosures
require presentation in tabular format of gross and net information about
assets and liabilities that either are offset (presented net) on the balance
sheet or are subject to master netting agreements or similar arrangements
providing rights of setoff, such as global master repurchase, securities
lending, and derivative clearing agreements, irrespective of whether the
assets and liabilities are offset. Financial instruments subject only to
collateral agreements are excluded from the scope of these requirements,
however, the tabular disclosures are required to include the fair values of
financial collateral, including cash, related to master netting agreements
or similar arrangements. In January 2013, the FASB issued new guidance
limiting the scope of the new balance sheet offsetting disclosures to
derivatives, repurchase agreements, and securities lending transactions to
the extent that they are (1) offset in the financial statements or
(2) subject to an enforceable master netting arrangement or similar
agreement. This guidance is effective for interim and annual periods
beginning after January 1, 2013 and is to be applied retrospectively to all
comparative prior periods presented. Management does not expect that
implementation of this guidance will have a material impact on MLOA's
financial statements.
Investments
The carrying values of fixed maturities classified as available-for-sale
("AFS") are reported at fair value. Changes in fair value are reported in
comprehensive income. The amortized cost of fixed maturities is adjusted for
impairments in value deemed to be other than temporary which are recognized
in Investment gains (losses), net. The redeemable preferred stock
investments that are reported in fixed maturities include real estate
investment trusts ("REIT"), perpetual preferred stock and redeemable
preferred stock. These securities may not have a stated maturity, may not be
cumulative and do not provide for mandatory redemption by the issuer.
MLOA determines the fair values of fixed maturities and equity securities
based upon quoted prices in active markets, when available, or through the
use of alternative approaches when market quotes are not readily accessible
or available. These alternative approaches include matrix or model pricing
and use of independent pricing services, each supported by reference to
principal market trades or other observable market assumptions for similar
securities. More specifically, the matrix pricing approach to fair value is
a discounted cash flow methodology that incorporates market interest rates
commensurate with the credit quality and duration of the investment.
MLOA's management, with the assistance of its investment advisors, monitors
the investment performance of its portfolio and reviews AFS securities with
unrealized losses for other-than-temporary impairments ("OTTI"). Integral to
this review is an assessment made each quarter, on a security-by-security
basis, by the Investments Under Surveillance ("IUS") Committee, of various
indicators of credit deterioration to determine whether the investment
security is expected to recover. This assessment includes, but is not
limited to, consideration of the duration and severity of the unrealized
loss, failure, if any, of the issuer of the security to make scheduled
payments, actions taken by rating agencies, adverse conditions specifically
related to the security or sector, the financial strength, liquidity, and
continued viability of the issuer and, for equity securities only, the
intent and ability to hold the investment until recovery, and results in
identification of specific securities for which OTTI is recognized.
If there is no intent to sell or likely requirement to dispose of the fixed
maturity security before its recovery, only the credit loss component of any
resulting OTTI is recognized in earnings (loss) and the remainder of the
fair value loss is recognized in OCI. The amount of credit loss is
30
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
the shortfall of the present value of the cash flows expected to be
collected as compared to the amortized cost basis of the security. The
present value is calculated by discounting management's best estimate of
projected future cash flows at the effective interest rate implicit in the
debt security prior to impairment. Projections of future cash flows are
based on assumptions regarding probability of default and estimates
regarding the amount and timing of recoveries. These assumptions and
estimates require use of management judgment and consider internal credit
analyses as well as market observable data relevant to the collectability of
the security. For mortgage- and asset-backed securities, projected future
cash flows also include assumptions regarding prepayments and underlying
collateral value.
Real estate held for the production of income, including real estate
acquired in satisfaction of debt, is stated at depreciated cost less
valuation allowances. At the date of foreclosure (including in-substance
foreclosure), real estate acquired in satisfaction of debt is valued at
estimated fair value. Impaired real estate is written down to fair value
with the impairment loss being included in Investment gains (losses), net.
Depreciation of real estate held for production of income is computed using
the straight-line method over the estimated useful lives of the properties,
which generally range from 40 to 50 years.
Policy loans are stated at unpaid principal balances.
Partnerships and joint venture interests that MLOA has control of and has a
majority economic interest in (that is, greater than 50% of the economic
return generated by the entity) or those that meet the requirements for
consolidation under accounting guidance for consolidation of variable
interest entities ("VIE") are consolidated. Those that MLOA does not have
control of and does not have a majority economic interest in and those that
do not meet the VIE requirements for consolidation are reported on the
equity basis of accounting and are reported in Other assets. MLOA records
its interest in certain of these partnerships on a one quarter lag basis.
Equity securities, which include common stock and non-redeemable preferred
stock classified as AFS securities, are carried at fair value and are
included in Other invested assets with changes in fair value reported in OCI.
Units in AllianceBernstein L.P. ("AllianceBernstein"), a subsidiary of AXA
Financial, are carried on the equity method and reported in Other invested
assets.
Short-term investments are reported at amortized cost that approximates fair
value and are included in Other invested assets.
Cash and cash equivalents includes cash on hand, amounts due from banks and
highly liquid debt instruments purchased with an original maturity of three
months or less. Due to the short-term nature of these investments, the
recorded value is deemed to approximate fair value.
All securities owned, including United States government and agency
securities and mortgage-backed securities, are reported in the financial
statements on a trade date basis.
Valuation Allowances for Mortgage Loans:
For commercial and agricultural loans, an allowance for credit loss is
typically recommended when management believes it is probable that principal
and interest will not be collected according to the contractual terms.
Factors that influence management's judgment in determining allowance for
credit losses include the following:
. Loan-to-value ratio -- Derived from current loan balance divided by
the fair market value of the property. An allowance for credit loss is
typically recommended when the loan-to-value ratio is in excess of
100%. In the case where the loan-to-value is in excess of 100%, the
allowance for credit loss is derived by taking the difference between
the fair market value (less cost of sale) and the current loan balance.
. Debt service coverage ratio -- Derived from actual net operating
income divided by annual debt service. If the ratio is below 1.0x,
then the income from the property does not support the debt.
. Occupancy -- Criteria varies by property type but low or below market
occupancy is an indicator of sub-par property performance.
. Lease expirations -- The percentage of leases expiring in the upcoming
12 to 36 months are monitored as a decline in rent and/or occupancy
may negatively impact the debt service coverage ratio. In the case of
single-tenant properties or properties with large tenant exposure, the
lease expiration is a material risk factor.
. Maturity -- Loans that are not fully amortizing and have upcoming
maturities within the next 12 to 24 months are monitored in
conjunction with the capital markets to determine the borrower's
ability to refinance the debt and/or pay off the balloon balance.
. Borrower/tenant related issues -- Financial concerns, potential
bankruptcy, or words or actions that indicate imminent default or
abandonment of property.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
. Payment status -- current vs. delinquent -- A history of delinquent
payments may be a cause for concern.
. Property condition -- Significant deferred maintenance observed during
Lender's annual site inspections.
. Other - Any other factors such as current economic conditions may call
into question the performance of the loan.
Mortgage loans on real estate are stated at unpaid principal balances, net
of unamortized discounts and valuation allowances. Valuation allowances are
based on the present value of expected future cash flows discounted at the
loan's original effective interest rate or on its collateral value if the
loan is collateral dependent. However, if foreclosure is or becomes
probable, the collateral value measurement method is used.
Mortgage loans also are individually evaluated quarterly by the IUS
Committee for impairment, including an assessment of related collateral
value. Commercial mortgages 60 days or more past due and agricultural
mortgages 90 days or more past due, as well as all mortgages in the process
of foreclosure, are identified as problem mortgages. Based on its monthly
monitoring of mortgages, a class of potential problem mortgages are also
identified, consisting of mortgage loans not currently classified as
problems but for which management has doubts as to the ability of the
borrower to comply with the present loan payment terms and which may result
in the loan becoming a problem or being restructured. The decision whether
to classify a performing mortgage loan as a potential problem involves
significant subjective judgments by management as to likely future industry
conditions and developments with respect to the borrower or the individual
mortgaged property.
For problem mortgage loans a valuation allowance is established to provide
for the risk of credit losses inherent in the lending process. The allowance
includes loan specific reserves for loans determined to be non-performing as
a result of the loan review process. A non-performing loan is defined as a
loan for which it is probable that amounts due according to the contractual
terms of the loan agreement will not be collected. The loan specific portion
of the loss allowance is based on AXA Financial Group's assessment as to
ultimate collectability of loan principal and interest. Valuation allowances
for a non-performing loan are recorded based on the present value of
expected future cash flows discounted at the loan's effective interest rate
or based on the fair value of the collateral if the loan is collateral
dependent. The valuation allowance for mortgage loans can increase or
decrease from period to period based on such factors.
Impaired mortgage loans without provision for losses are loans where the
fair value of the collateral or the net present value of the expected future
cash flows related to the loan equals or exceeds the recorded investment.
Interest income earned on loans where the collateral value is used to
measure impairment is recorded on a cash basis. Interest income on loans
where the present value method is used to measure impairment is accrued on
the net carrying value amount of the loan at the interest rate used to
discount the cash flows. Changes in the present value attributable to
changes in the amount or timing of expected cash flows are reported as
investment gains or losses.
Mortgage loans on real estate are placed on nonaccrual status once
management believes the collection of accrued interest is doubtful. Once
mortgage loans on real estate are classified as nonaccrual loans, interest
income is recognized under the cash basis of accounting and the resumption
of the interest accrual would commence only after all past due interest has
been collected or the mortgage loan on real estate has been restructured to
where the collection of interest is considered likely. At December 31, 2012
and 2011, the carrying values of commercial and agricultural mortgage loans
on real estate that had been classified as nonaccrual loans were $6 million
and $7 million for commercial and $0 million and $0 million for
agricultural, respectively.
Troubled Debt Restructuring
When a loan modification is determined to be a troubled debt restructuring,
the impairment of the loan is re-measured by discounting the expected cash
flows to be received based on the modified terms using the loan's original
effective yield, and the allowance for loss is adjusted accordingly.
Subsequent to the modification, income is recognized prospectively based on
the modified terms of the loans. Additionally, the loan continues to be
subject to the credit review process noted above.
Derivatives
MLOA uses equity options to hedge its exposure to equity linked and
commodity indexed crediting rates on certain universal variable life
products.
Net Investment Income (Loss), Investment Gains (Losses), Net and Unrealized
Investment Gains (Losses)
Realized investment gains (losses) are determined by identification with the
specific asset and are presented as a component of revenue. Changes in the
valuation allowances are included in Investment gains (losses), net.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
Unrealized investment gains (losses) on fixed maturities and equity
securities designated as AFS held by MLOA are accounted for as a separate
component of AOCI, net of related deferred income taxes and amounts
attributable to DAC and value of business acquired ("VOBA") related to
variable life and investment-type products.
Changes in unrealized gains (losses) reflect changes in fair value of only
those fixed maturities classified as AFS and do not reflect any changes in
fair value of policyholders' account balances and future policy benefits.
Fair Value of Financial Instruments
Fair value is defined as the exchange price that would be received for an
asset or paid to transfer a liability (an exit price) in the principal or
most advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date. The
accounting guidance established a fair value hierarchy that requires an
entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value, and identifies three levels
of inputs that may be used to measure fair value:
Level 1 Unadjusted quoted prices for identical instruments in active markets. Level 1 fair values generally are
supported by market transactions that occur with sufficient frequency and volume to provide pricing
information on an ongoing basis.
Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar instruments, quoted prices in
markets that are not active, and inputs to model-derived valuations that are directly observable or can be
corroborated by observable market data.
Level 3 Unobservable inputs supported by little or no market activity and often requiring significant management
judgment or estimation, such as an entity's own assumptions about the cash flows or other significant
components of value that market participants would use in pricing the asset or liability.
MLOA defines fair value as the unadjusted quoted market prices for those
instruments that are actively traded in financial markets. In cases where
quoted market prices are not available, fair values are measured using
present value or other valuation techniques. The fair value determinations
are made at a specific point in time, based on available market information
and judgments about the financial instrument, including estimates of the
timing and amount of expected future cash flows and the credit standing of
counterparties. Such adjustments do not reflect any premium or discount that
could result from offering for sale at one time MLOA's entire holdings of a
particular financial instrument, nor do they consider the tax impact of the
realization of unrealized gains or losses. In many cases, the fair value
cannot be substantiated by direct comparison to independent markets, nor can
the disclosed value be realized in immediate settlement of the instrument.
Management is responsible for the determination of the value of investments
carried at fair value and the supporting methodologies and assumptions.
Under the terms of various service agreements, MLOA often utilizes
independent valuation service providers to gather, analyze, and interpret
market information and derive fair values based upon relevant methodologies
and assumptions for individual securities. These independent valuation
service providers typically obtain data about market transactions and other
key valuation model inputs from multiple sources and, through the use of
widely accepted valuation models, provide a single fair value measurement
for individual securities for which a fair value has been requested. As
further described below with respect to specific asset classes, these inputs
include, but are not limited to, market prices for recent trades and
transactions in comparable securities, benchmark yields, interest rate yield
curves, credit spreads, quoted prices for similar securities, and other
market-observable information, as applicable. Specific attributes of the
security being valued also are considered, including its term, interest
rate, credit rating, industry sector, and when applicable, collateral
quality and other security- or issuer-specific information. When
insufficient market observable information is available upon which to
measure fair value, MLOA either will request brokers knowledgeable about
these securities to provide a non-binding quote or will employ widely
accepted internal valuation models. Fair values received from independent
valuation service providers and brokers and those internally modeled or
otherwise estimated are assessed for reasonableness.
At December 31, 2012 and 2011, respectively, the fair value of public fixed
maturities is approximately $1,557 million and $1,528 million or
approximately 40.9% and 42.1% of MLOA's total assets measured at fair value
on a recurring basis (excluding guaranteed minimum income benefits ("GMIB")
reinsurance contracts measured at fair value on a recurring basis). The fair
values of MLOA's public fixed maturity securities are generally based on
prices obtained from independent valuation service providers and for which
MLOA maintains a vendor hierarchy by asset type based on historical pricing
experience and vendor expertise. Although each security generally is priced
by multiple independent valuation service providers, MLOA ultimately uses
the price received from the independent valuation service provider highest
in the vendor hierarchy based on the respective asset type, with limited
exception. To validate reasonableness, prices also are internally reviewed
by those with relevant expertise through comparison with directly observed
recent market trades. Consistent with the fair value hierarchy, public fixed
maturity securities validated in this manner generally are reflected within
Level 2, as they are primarily based on observable pricing for similar
assets and/or other market observable inputs. If the pricing information
received from independent valuation
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
service providers is not reflective of market activity or other inputs
observable in the market, MLOA may challenge the price through a formal
process in accordance with the terms of the respective independent valuation
service provider agreement. If as a result it is determined that the
independent valuation service provider is able to reprice the security in a
manner agreed as more consistent with current market observations, the
security remains within Level 2. Alternatively, a Level 3 classification may
result if the pricing information then is sourced from another vendor,
non-binding broker quotes, or internally-developed valuations for which
MLOA's own assumptions about market-participant inputs would be used in
pricing the security.
At December 31, 2012 and 2011, respectively, the fair value of private fixed
maturities is approximately $469 million and $439 million or approximately
12.3% and 12.1% of MLOA's total assets measured at fair value on a recurring
basis. The fair values of MLOA's private fixed maturities, which primarily
are comprised of investments in private placement securities generally are
determined using a discounted cash flow model. In certain cases, these
models use observable inputs with a discount rate based upon the average of
spread surveys collected from private market intermediaries who are active
in both primary and secondary transactions, taking into account, among other
factors, the credit quality and industry sector of the issuer and the
reduced liquidity associated with private placements. Generally, these
securities have been reflected within Level 2. For certain private fixed
maturities, the discounted cash flow model may also incorporate unobservable
inputs, which reflect MLOA's own assumptions about the inputs market
participants would use in pricing the asset. To the extent management
determines that such unobservable inputs are significant to the fair value
measurement of a security, a Level 3 classification generally is made.
At December 31, 2012 and 2011, respectively, investments classified as Level
1 comprise approximately 47.4% and 45.9% of assets measured at fair value on
a recurring basis and primarily include redeemable preferred stock, cash
equivalents and Separate Accounts assets. Fair value measurements classified
as Level 1 include exchange-traded prices of fixed maturities, equity
securities and net asset values for transacting subscriptions and
redemptions of mutual fund shares held by Separate Accounts. Cash
equivalents classified as Level 1 include money market accounts, overnight
commercial paper and highly liquid debt instruments purchased with an
original maturity of three months or less, and are carried at cost as a
proxy for fair value measurement due to their short-term nature.
At December 31, 2012 and 2011, respectively, investments classified as Level
2 comprise approximately 50.6% and 52.2% of assets measured at fair value on
a recurring basis and primarily include U.S. government and agency
securities and certain corporate debt securities, such as public and private
fixed maturities. As market quotes generally are not readily available or
accessible for these securities, their fair value measures are determined
utilizing relevant information generated by market transactions involving
comparable securities and often are based on model pricing techniques that
effectively discount prospective cash flows to present value using
appropriate sector-adjusted credit spreads commensurate with the security's
duration, also taking into consideration issuer-specific credit quality and
liquidity.
Observable inputs generally used to measure the fair value of securities
classified as Level 2 include benchmark yields, reported secondary trades,
issuer spreads, benchmark securities and other reference data. Additional
observable inputs are used when available, and as may be appropriate, for
certain security types, such as prepayment, default, and collateral
information for the purpose of measuring the fair value of mortgage- and
asset-backed securities. At December 31, 2012 and 2011, respectively,
approximately $20 million and $28 million of AAA-rated mortgage- and
asset-backed securities are classified as Level 2 for which the
observability of market inputs to their pricing models is supported by
sufficient, albeit more recently contracted, market activity in these
sectors.
At December 31, 2012 and 2011, respectively, investments classified as Level
3 comprise approximately 2.0% and 1.9% of assets measured at fair value on a
recurring basis and primarily include corporate debt securities.
Determinations to classify fair value measures within Level 3 of the
valuation hierarchy generally are based upon the significance of the
unobservable factors to the overall fair value measurement. Included in the
Level 3 classification at December 31, 2012 and 2011, respectively, were
approximately $0 million and $0 million of fixed maturities with indicative
pricing obtained from brokers that otherwise could not be corroborated to
market observable data. MLOA applies various due-diligence procedures, as
considered appropriate, to validate these non-binding broker quotes for
reasonableness, based on its understanding of the markets, including use of
internally-developed assumptions about inputs a market participant would use
to price the security. In addition, approximately $41 million and $35
million of mortgage- and asset-backed securities, including commercial
mortgage-backed securities ("CMBS"), are classified as Level 3 at
December 31, 2012 and 2011, respectively. At December 31, 2012, MLOA
continued to apply a risk-adjusted present value technique to estimate the
fair value of CMBS securities below the senior AAA tranche due to ongoing
insufficient frequency and volume of observable trading activity in these
securities. In applying this valuation methodology, MLOA adjusted
the projected cash flows of these securities for origination year, default
metrics, and level of subordination, with the objective of maximizing
observable inputs, and weighted the result with a 10% attribution to
pricing sourced from a third party service whose process placed significant
reliance on market trading activity.
Level 3 also includes the GMIB reinsurance contract asset which is accounted
for as derivative contracts. The GMIB reinsurance contract asset's fair
value reflects the present value of reinsurance premiums and recoveries and
risk margins over a range of market consistent economic scenarios. The
valuation of the GMIB reinsurance contract asset incorporates significant
non-observable assumptions related to
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
policyholder behavior, risk margins and projections of equity Separate
Account funds consistent with the S&P 500 Index. The credit risks of the
counterparty and of MLOA are considered in determining the fair values of
its GMIB reinsurance contract asset, after taking into account the effects
of collateral arrangements. Incremental adjustment to the swap curve,
adjusted for non-performance risk, is made to the resulting fair values of
the GMIB reinsurance contract asset to reflect change in the claims-paying
ratings of counterparties to the reinsurance treaties. After giving
consideration to collateral arrangements, MLOA made no adjustment to reduce
the fair value of its GMIB asset at December 31, 2012 and 2011 to recognize
incremental counterparty non-performance risk.
Fair values for commercial mortgage loans on real estate are measured by
discounting future contractual cash flows to be received on the mortgage
loan using interest rates at which loans with similar characteristics and
credit quality would be made. The discount rate is derived from taking the
appropriate U.S. Treasury rate with a like term to the remaining term of the
loan and adding a spread reflective of the risk premium associated with the
specific loan. Fair values for mortgage loans anticipated to be foreclosed
and problem mortgage loans are limited to the fair value of the underlying
collateral, if lower.
The fair values for MLOA's supplementary contracts not involving life
contingencies ("SCNILC"), single premium deferred annuities and certain
annuities, which are included in Policyholder's account balances, are
estimated using projected cash flows discounted at rates reflecting current
market rates. Significant unobservable inputs reflected in the cash flows
include lapse rates and withdrawal rates.
Recognition of Insurance Income and Related Expenses
Premiums from variable life and investment-type contracts are reported as
deposits to policyholders' account balances. Revenues from these contracts
consist of fees assessed during the period against policyholders' account
balances for mortality charges, policy administration charges and surrender
charges. Policy benefits and claims that are charged to expense include
benefit claims incurred in the period in excess of related policyholders'
account balances.
Premiums from non-participating traditional life and annuity policies with
life contingencies generally are recognized in income when due. Benefits and
expenses are matched with such income so as to result in the recognition of
profits over the life of the contracts. This match is accomplished by means
of the provision for liabilities for future policy benefits and the deferral
and subsequent amortization of policy acquisition costs.
For contracts with a single premium or a limited number of premium payments
due over a significantly shorter period than the total period over which
benefits are provided, premiums are recorded as revenue when due with any
excess profit deferred and recognized in income in a constant relationship
to insurance in-force or, for annuities, the amount of expected future
benefit payments.
DAC and VOBA
DAC. Acquisition costs that vary with and are primarily related to the
acquisition of new and renewal insurance business, reflecting incremental
direct costs of contract acquisition with independent third parties or
employees that are essential to the contract transaction, as well as the
portion of employee compensation, including payroll fringe benefits and
other costs directly related to underwriting, policy issuance and
processing, medical inspection, and contract selling for successfully
negotiated contracts including commissions, underwriting, agency and policy
issue expenses, are deferred. DAC is subject to recoverability testing at
the time of policy issue and loss recognition testing at the end of each
accounting period.
After the initial establishment of reserves, premium deficiency and loss
recognition tests are performed each period end using best estimate
assumptions as of the testing date without provisions for adverse deviation.
When the liabilities for future policy benefits plus the present value of
expected future gross premiums for the aggregate product group are
insufficient to provide for expected future policy benefits and expenses for
that line of business (i.e., reserves net of any DAC asset), DAC would first
be written off and thereafter, if required, a premium deficiency reserve
would be established by a charge to earnings.
VOBA. VOBA, which arose from MLOA's 2004 acquisition by AXA Financial, was
established in accordance with purchase accounting guidance for business
combinations. VOBA is the actuarially determined present value of estimated
future gross profits from insurance contracts in force at the date of the
acquisition. VOBA is amortized over the expected life of the contracts (up
to 50 years from the date of issue) according to the type of contract using
the methods described below as applicable. VOBA is subject to loss
recognition testing at the end of each accounting period.
AMORTIZATION POLICY. For universal life ("UL") products and investment-type
products, DAC and VOBA are amortized over the expected total life of the
contract group as a constant percentage of estimated gross profits arising
principally from investment results, Separate Account
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
fees, mortality and expense margins and surrender charges based on
historical and anticipated future experience, updated at the end of each
accounting period. When estimated gross profits are expected to be negative
for multiple years of a contract life, DAC and VOBA are amortized using the
present value of estimated assessments. The effect on the amortization of
DAC and VOBA of revisions to estimated gross profits or assessments is
reflected in earnings in the period such estimated gross profits or
assessments are revised. A decrease in expected gross profits or assessments
would accelerate DAC and VOBA amortization. Conversely, an increase in
expected gross profits or assessments would slow DAC and VOBA amortization.
The effect on the DAC and VOBA assets that would result from realization of
unrealized gains (losses) is recognized with an offset to AOCI in
shareholders' equity as of the balance sheet date.
A significant assumption in the amortization of DAC and VOBA on variable
annuities and, to a lesser extent, on variable and interest-sensitive life
insurance relates to projected future Separate Account performance.
Management sets estimated future gross profit or assessment assumptions
related to Separate Account performance using a long-term view of expected
average market returns by applying a reversion to the mean approach, a
commonly used industry practice. This future return approach influences the
projection of fees earned, as well as other sources of estimated gross
profits. Returns that are higher than expectations for a given period
produce higher than expected account balances, increase the fees earned
resulting in higher expected future gross profits and lower DAC and VOBA
amortization for the period. The opposite occurs when returns are lower than
expected.
In applying this approach to develop estimates of future returns, it is
assumed that the market will return to an average gross long-term return
estimate, developed with reference to historical long-term equity market
performance. Currently, the average gross long-term return estimate is
measured from December 31, 2008. Management has set limitations as to
maximum and minimum future rate of return assumptions, as well as a
limitation on the duration of use of these maximum or minimum rates of
return. At December 31, 2012, the average gross short-term and long-term
annual return estimate on variable and interest-sensitive life insurance and
variable annuities was 9.0% (7.37% net of product weighted average Separate
Account fees), and the gross maximum and minimum short-term annual rate of
return limitations were 15.0% (13.37% net of product weighted average
Separate Account fees) and 0.0% (-1.63% net of product weighted average
Separate Account fees), respectively. The maximum duration over which these
rate limitations may be applied is 5 years. This approach will continue to
be applied in future periods. These assumptions of long-term growth are
subject to assessment of the reasonableness of resulting estimates of future
return assumptions.
If actual market returns continue at levels that would result in assuming
future market returns of 15.0% for more than 5 years in order to reach the
average gross long-term return estimate, the application of the 5 year
maximum duration limitation would result in an acceleration of DAC and VOBA
amortization. Conversely, actual market returns resulting in assumed future
market returns of 0.0% for more than 5 years would result in a required
deceleration of DAC and VOBA amortization. At December 31, 2012, current
projections of future average gross market returns assume a 0.0% annualized
return for the next two quarters, which is within the maximum and minimum
limitations, grading to a reversion to the mean of 9.0% in seven quarters.
In addition, projections of future mortality assumptions related to variable
and interest-sensitive life products are based on a long-term average of
actual experience. This assumption is updated quarterly to reflect recent
experience as it emerges. Improvement of life mortality in future periods
from that currently projected would result in future deceleration of DAC and
VOBA amortization. Conversely, deterioration of life mortality in future
periods from that currently projected would result in future acceleration of
DAC and VOBA amortization. Generally, life mortality experience has been
improving in recent years.
Other significant assumptions underlying gross profit estimates for UL and
investment-type products relate to contract persistency and General Account
investment spread.
DAC and VOBA associated with non-participating traditional life policies,
are amortized in proportion to anticipated premiums. Assumptions as to
anticipated premiums are estimated at the date of policy issue and are
consistently applied during the life of the contracts. Deviations from
estimated experience are reflected in earnings (loss) in the period such
deviations occur. For these contracts, the amortization periods generally
are for the total life of the policy. DAC and VOBA related to these policies
are subject to recoverability testing as part of AXA Financial Group's
premium deficiency testing. If a premium deficiency exists, DAC and VOBA are
reduced by the amount of the deficiency or to zero through a charge to
current period earnings (loss). If the deficiency exceeds the DAC balance,
the reserve for future policy benefits is increased by the excess, reflected
in earnings (loss) in the period such deficiency occurs.
Policyholders' Account Balances and Future Policy Benefits
Policyholders' account balances for variable life and investment-type
contracts are equal to the policy account values. The policy account values
represent an accumulation of gross premium payments plus credited interest
less expense and mortality charges and withdrawals.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
MLOA issues or has issued certain variable annuity products with a
guaranteed minimum death benefit ("GMDB") feature. MLOA also issues certain
variable annuity products that contain a GMIB feature which, if elected by
the policyholder after a stipulated waiting period from contract issuance,
guarantees a minimum lifetime annuity based on predetermined annuity
purchase rates that may be in excess of what the contract account value can
purchase at then-current annuity purchase rates. This minimum lifetime
annuity is based on predetermined annuity purchase rates applied to a GMIB
base. Reserves for GMDB and GMIB obligations are calculated on the basis of
actuarial assumptions related to projected benefits and related contract
charges generally over the lives of the contracts using assumptions
consistent with those used in estimating gross profits for purposes of
amortizing DAC and VOBA. The determination of this estimated liability is
based on models that involve numerous estimates and subjective judgments,
including those regarding expected market rates of return and volatility,
contract surrender and withdrawal rates, mortality experience, and, for
contracts with the GMIB feature, GMIB election rates. Assumptions regarding
Separate Account performance used for purposes of this calculation are set
using a long-term view of expected average market returns by applying a
reversion to the mean approach, consistent with that used for DAC and VOBA
amortization. There can be no assurance that actual experience will be
consistent with management's estimates.
For reinsurance contracts other than those covering GMIB exposure,
reinsurance recoverable balances are calculated using methodologies and
assumptions that are consistent with those used to calculate the direct
liabilities.
For non-participating traditional life insurance policies, future policy
benefit liabilities are estimated using a net level premium method on the
basis of actuarial assumptions as to mortality, persistency and interest
established at policy issue. Assumptions established at policy issue as to
mortality and persistency are based on MLOA's experience that, together with
interest and expense assumptions, includes a margin for adverse deviation.
Benefit liabilities for traditional annuities during the accumulation period
are equal to accumulated contractholders' fund balances and, after
annuitization, are equal to the present value of expected future payments.
Interest rates used in establishing such liabilities range from 3.0% to 6.0%
for life insurance liabilities and from 3.0% to 6.0% for annuity liabilities.
When the liabilities for future policy benefits plus the present value of
expected future gross premiums for a product are insufficient to provide for
expected future policy benefits and expenses for that product, DAC and VOBA
are written off and thereafter, if required, a premium deficiency reserve is
established by a charge to earnings.
Separate Accounts
Generally, Separate Accounts established under Arizona State Insurance Law
are not chargeable with liabilities that arise from any other business of
MLOA. Separate Accounts assets are subject to General Account claims only to
the extent Separate Accounts assets exceed Separate Accounts liabilities.
Assets and liabilities of the Separate Accounts represent the net deposits
and accumulated net investment earnings (loss) less fees, held primarily for
the benefit of contractholders, and for which MLOA does not bear the
investment risk. Separate Accounts' assets and liabilities are shown on
separate lines in the balance sheets. Assets held in Separate Accounts are
reported at quoted market values or, where quoted values are not readily
available or accessible for these securities, their fair value measures most
often are determined through the use of model pricing that effectively
discounts prospective cash flows to present value using appropriate
sector-adjusted credit spreads commensurate with the security's duration,
also taking into consideration issuer-specific credit quality and liquidity.
The investment results of Separate Accounts, including unrealized gains
(losses), on which MLOA does not bear the investment risk are reflected
directly in Separate Accounts liabilities and are not reported in revenues
in the statements of earnings (loss). For 2012, 2011 and 2010, investment
results of such Separate Accounts were gains (losses) of $196 million, $(49)
million and $247 million, respectively.
Deposits to Separate Accounts are reported as increases in Separate Accounts
liabilities and are not reported in revenues. Mortality, policy
administration and surrender charges on all policies including those funded
by Separate Accounts are included in revenues.
MLOA reports the General Account's interests in Separate Accounts as other
invested assets in the balance sheets.
Other Accounting Policies
AXA Financial and certain of its consolidated subsidiaries, including MLOA,
file a consolidated Federal income tax return. Current Federal income taxes
are charged or credited to operations based upon amounts estimated to be
payable or recoverable as a result of taxable operations for the current
year. Deferred income tax assets and liabilities are recognized based on the
difference between financial statement carrying amounts and income tax bases
of assets and liabilities using enacted income tax rates and laws.
37
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
3) INVESTMENTS
Fixed Maturities and Equity Securities
The following table provides information relating to fixed maturities
classified as AFS; no equity securities were classified as AFS.
AVAILABLE-FOR-SALE SECURITIES BY CLASSIFICATION
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR OTTI
COST GAINS LOSSES VALUE IN AOCI/(3)/
--------- ---------- ---------- -------- -----------
(IN MILLIONS)
DECEMBER 31, 2012:
Fixed Maturities:
Corporate............................ $ 1,553 $ 167 $ 1 $ 1,719 $ --
U.S. Treasury, government and agency. 106 7 -- 113 --
States and political subdivisions.... 25 3 -- 28 --
Foreign governments.................. 2 -- -- 2 --
Commercial mortgage-backed........... 57 5 27 35 2
Residential mortgage-backed/(1)/..... 19 1 -- 20 --
Asset-backed/(2)/.................... 9 2 -- 11 --
Redeemable preferred stock........... 97 2 1 98 --
-------- -------- ------- -------- --------
Total at December 31, 2012............ $ 1,868 $ 187 $ 29 $ 2,026 $ 2
======== ======== ======= ======== ========
December 31, 2011:
Fixed Maturities:
Corporate............................ $ 1,554 $ 147 $ 8 $ 1,693 $ --
U.S. Treasury, government and agency. 99 6 -- 105 --
States and political subdivisions.... 21 1 -- 22 --
Foreign governments.................. 4 -- -- 4 --
Commercial mortgage-backed........... 63 -- 34 29 2
Residential mortgage-backed/(1)/..... 26 2 -- 28 --
Asset-backed/(2)/.................... 9 1 -- 10 --
Redeemable preferred stock........... 81 -- 5 76 --
-------- -------- ------- -------- --------
Total at December 31, 2011............ $ 1,857 $ 157 $ 47 $ 1,967 $ 2
======== ======== ======= ======== ========
/(1)/Includes publicly traded agency pass-through securities and
collateralized mortgage obligations.
/(2)/Includes credit-tranched securities collateralized by sub-prime
mortgages and other asset types and credit tenant loans.
/(3)/Amounts represent OTTI losses in AOCI, which were not included in
earnings (loss) in accordance with current accounting guidance.
38
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
The contractual maturities of AFS fixed maturities (excluding redeemable
preferred stock) at December 31, 2012 are shown in the table below. Bonds
not due at a single maturity date have been included in the table in the
final year of maturity. Actual maturities may differ from contractual
maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
AVAILABLE-FOR-SALE FIXED MATURITIES
CONTRACTUAL MATURITIES AT DECEMBER 31, 2012
AMORTIZED
COST FAIR VALUE
--------- ----------
(IN MILLIONS)
Due in one year or less................. $ 346 $ 356
Due in years two through five........... 516 568
Due in years six through ten............ 660 761
Due after ten years..................... 164 177
-------- --------
Subtotal............................. 1,686 1,862
Commercial mortgage-backed securities... 57 35
Residential mortgage-backed securities.. 19 20
Asset-backed securities................. 9 11
-------- --------
Total................................... $ 1,771 $ 1,928
======== ========
The following table shows proceeds from sales, gross gains (losses) from
sales and OTTI for AFS fixed maturities during 2012, 2011 and 2010:
December 31,
-------------------
2012 2011 2010
----- ----- -----
(IN MILLIONS)
Proceeds from sales.......................... $ 13 $ 20 $ 88
===== ===== =====
Gross gains on sales......................... $ 2 $ 1 $ 4
===== ===== =====
Gross losses on sales........................ $ -- $ 1 $ 2
===== ===== =====
Total OTTI................................... $ (7) $ (2) $ (56)
Non-credit losses recognized in OCI.......... -- -- 2
----- ----- -----
Credit losses recognized in earnings (loss).. $ (7) $ (2) $ (54)
===== ===== =====
The following table sets forth the amount of credit loss impairments on
fixed maturity securities held by MLOA at the dates indicated and the
corresponding changes in such amounts.
FIXED MATURITIES -- CREDIT LOSS IMPAIRMENTS
2012 2011
------ ------
(IN MILLIONS)
Balances at January 1,.................................................................... $ (74) $ (83)
Previously recognized impairments on securities that matured, paid, prepaid or sold....... 9 11
Recognized impairments on securities impaired to fair value this period/(1)/.............. -- --
Impairments recognized this period on securities not previously impaired.................. (6) (2)
Additional impairments this period on securities previously impaired...................... (1) --
Increases due to passage of time on previously recorded credit losses..................... -- --
Accretion of previously recognized impairments due to increases in expected cash flows.... -- --
------ ------
Balances at December 31,.................................................................. $ (72) $ (74)
====== ======
/(1)/Represents circumstances where MLOA determined in the current period
that it intends to sell the security or it is more likely than not that
it will be required to sell the security before recovery of the
security's amortized cost.
39
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
Net unrealized investment gains (losses) on fixed maturities and equity
securities classified as AFS are included in the balance sheets as a
component of AOCI. The table below presents these amounts as of the dates
indicated:
DECEMBER 31,
-------------
2012 2011
------ ------
(IN MILLIONS)
AFS Securities:
Fixed maturities:
With OTTI loss.................. $ 2 $ (5)
All other....................... 156 115
------ ------
Net Unrealized (Gains) Losses...... $ 158 $ 110
====== ======
Changes in net unrealized investment gains (losses) recognized in AOCI
include reclassification adjustments to reflect amounts realized in Net
earnings (loss) for the current period that had been part of OCI in earlier
periods. The tables that follow below present a rollforward of net
unrealized investment gains (losses) recognized in AOCI, split between
amounts related to fixed maturity securities on which an OTTI loss has been
recognized, and all other:
NET UNREALIZED GAINS (LOSSES) ON FIXED MATURITIES WITH OTTI LOSSES
AOCI GAIN
NET (LOSS)
UNREALIZED DEFERRED RELATED TO
GAINS INCOME NET UNREALIZED
(LOSSES) ON DAC AND TAX ASSET INVESTMENT
INVESTMENTS VOBA (LIABILITY) GAINS (LOSSES)
----------- ------- ----------- --------------
(IN MILLIONS)
BALANCE, JANUARY 1, 2012................................ $ (5) $ 1 $ 2 $ (2)
Net investment gains (losses) arising during the period. 6 -- -- 6
Reclassification adjustment for OTTI losses:
Included in Net earnings (loss)...................... 1 -- -- 1
Excluded from Net earnings (loss)/(1)/............... -- -- -- --
Impact of net unrealized investment gains (losses) on:
DAC and VOBA......................................... -- (2) -- (2)
Deferred income taxes................................ -- -- (2) (2)
--------- ------- -------- ---------
BALANCE, DECEMBER 31, 2012.............................. $ 2 $ (1) $ -- $ 1
========= ======= ======== =========
BALANCE, JANUARY 1, 2011................................ $ (3) $ -- $ 1 $ (2)
Net investment gains (losses) arising during the period. (2) -- -- (2)
Reclassification adjustment for OTTI losses:
Included in Net earnings (loss)...................... -- -- -- --
Excluded from Net earnings (loss)/(1)/............... -- -- -- --
Impact of net unrealized investment gains (losses) on:
DAC and VOBA......................................... -- 1 -- 1
Deferred income taxes................................ -- -- 1 1
--------- ------- -------- ---------
BALANCE, DECEMBER 31, 2011.............................. $ (5) $ 1 $ 2 $ (2)
========= ======= ======== =========
/(1)/Represents "transfers in" related to the portion of OTTI losses
recognized during the period that were not recognized in earnings (loss)
for securities with no prior OTTI loss.
40
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
ALL OTHER NET UNREALIZED INVESTMENT GAINS (LOSSES) IN AOCI
AOCI GAIN
NET (LOSS)
UNREALIZED DEFERRED RELATED TO
GAINS INCOME NET UNREALIZED
(LOSSES) ON DAC AND TAX ASSET INVESTMENT
INVESTMENTS VOBA (LIABILITY) GAINS (LOSSES)
----------- ------- ----------- --------------
(IN MILLIONS)
BALANCE, JANUARY 1, 2012.................................... $ 115 $ (27) $ (31) $ 57
Net investment gains (losses) arising during the period..... 37 -- -- 37
Reclassification adjustment for OTTI losses:
Included in Net earnings (loss).......................... 4 -- -- 4
Excluded from Net earnings (loss)/(1)/................... -- -- -- --
Impact of net unrealized investment gains (losses) on:
DAC and VOBA............................................. -- (4) -- (4)
Deferred income taxes.................................... -- -- (13) (13)
--------- ------- --------- ------------
BALANCE, DECEMBER 31, 2012.................................. $ 156 $ (31) $ (44) $ 81
========= ======= ========= ============
BALANCE, JANUARY 1, 2011.................................... $ 77 $ (6) $ (24) $ 47
Net investment gains (losses) arising during the period..... 36 -- -- 36
Reclassification adjustment for OTTI losses:
Included in Net earnings (loss).......................... 2 -- -- 2
Impact of net unrealized investment gains (losses) on:
DAC and VOBA............................................. -- (21) -- (21)
Deferred income taxes.................................... -- -- (7) (7)
--------- ------- --------- ------------
BALANCE, DECEMBER 31, 2011.................................. $ 115 $ (27) $ (31) $ 57
========= ======= ========= ============
/(1)/Represents "transfers out" related to the portion of OTTI losses during
the period that were not recognized in earnings (loss) for securities
with no prior OTTI loss.
The following tables disclose the fair values and gross unrealized losses of
the 76 issues at December 31, 2012 and the 93 issues at December 31, 2011 of
fixed maturities that are not deemed to be other-than-temporarily impaired,
aggregated by investment category and length of time that individual
securities have been in a continuous unrealized loss position for the
specified periods at the dates indicated:
LESS THAN 12 MONTHS 12 MONTHS OR LONGER TOTAL
-------------------- -------------------- --------------------
GROSS GROSS GROSS
UNREALIZED UNREALIZED UNREALIZED
FAIR VALUE LOSSES FAIR VALUE LOSSES FAIR VALUE LOSSES
---------- ---------- ---------- ---------- ---------- ----------
(IN MILLIONS)
DECEMBER 31, 2012
Fixed Maturities:
Corporate............................. $ 44 $ -- $ 14 $ (1) $ 58 $ (1)
U.S. Treasury, government and agency.. 1 -- -- -- 1 --
States and political subdivisions..... -- -- -- -- -- --
Foreign governments................... -- -- 2 -- 2 --
Commercial mortgage-backed............ -- (1) 26 (26) 26 (27)
Residential mortgage-backed........... -- -- -- -- -- --
Asset-backed.......................... -- -- -- -- -- --
Redeemable preferred stock............ 14 -- 30 (1) 44 (1)
------- -------- -------- -------- -------- --------
Total................................... $ 59 $ (1) $ 72 $ (28) $ 131 $ (29)
======= ======== ======== ======== ======== ========
41
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
Less Than 12 Months 12 Months or Longer Total
-------------------- -------------------- --------------------
Gross Gross Gross
Unrealized Unrealized Unrealized
Fair Value Losses Fair Value Losses Fair Value Losses
---------- ---------- ---------- ---------- ---------- ----------
December 31, 2011
Fixed Maturities:
Corporate........................ $ 105 $ (6) $ 13 $ (2) $ 118 $ (8)
Foreign governments.............. -- -- 2 -- 2 --
Commercial mortgage-backed....... 1 (2) 27 (32) 28 (34)
Residential mortgage-backed...... -- -- -- -- -- --
Redeemable preferred stock....... 29 (2) 30 (3) 59 (5)
--------- ------- -------- ------- --------- --------
Total.............................. $ 135 $ (10) $ 72 $ (37) $ 207 $ (47)
========= ======= ======== ======= ========= ========
MLOA's investments in fixed maturity securities do not include
concentrations of credit risk of any single issuer greater than 10% of the
shareholder's equity of MLOA, other than securities of the U.S. government,
U.S. government agencies and certain securities guaranteed by the U.S.
government. MLOA maintains a diversified portfolio of corporate securities
across industries and issuers and does not have exposure to any single
issuer in excess of 1.2% of total investments. The largest exposures to a
single issuer of corporate securities held at December 31, 2012 and 2011
were $27 million and $27 million, respectively. Corporate high yield
securities, consisting primarily of public high yield bonds, are classified
as other than investment grade by the various rating agencies, i.e., a
rating below Baa3/BBB- or the National Association of Insurance
Commissioners ("NAIC") designation of 3 (medium grade), 4 or 5 (below
investment grade) or 6 (in or near default). At December 31, 2012 and 2011,
respectively, approximately $125 million and $150 million, or 6.7% and 8.1%,
of the $1,868 million and $1,857 million aggregate amortized cost of fixed
maturities held by MLOA were considered to be other than investment grade.
These securities had net unrealized losses of $17 million and $35 million at
December 31, 2012 and 2011, respectively.
MLOA does not originate, purchase or warehouse residential mortgages and is
not in the mortgage servicing business. MLOA's fixed maturity investment
portfolio includes residential mortgage backed securities ("RMBS") backed by
subprime and Alt-A residential mortgages, comprised of loans made by banks
or mortgage lenders to residential borrowers with lower credit ratings. The
criteria used to categorize such subprime borrowers include Fair Isaac
Credit Organization ("FICO") scores, interest rates charged, debt-to-income
ratios and loan-to-value ratios. Alt-A residential mortgages are mortgage
loans where the risk profile falls between prime and subprime; borrowers
typically have clean credit histories but the mortgage loan has an increased
risk profile due to higher loan-to-value and debt-to-income ratios and/or
inadequate documentation of the borrowers' income. At December 31, 2012 and
2011, respectively, MLOA owned $4 million and $4 million in RMBS backed by
subprime residential mortgage loans, and $0 million and $0 million in RMBS
backed by Alt-A residential mortgage loans. RMBS backed by subprime and
Alt-A residential mortgages are fixed income investments supporting General
Account liabilities.
At December 31, 2012, the carrying value of fixed maturities that were
non-income producing for the twelve months preceding that date was $6
million.
Valuation Allowances for Mortgage Loans:
Allowances for credit losses for mortgage loans in 2012, 2011 and 2010 are
as follows:
COMMERCIAL MORTGAGE LOANS
-------------------------
2012 2011 2010
----- ----- -----
(IN MILLIONS)
ALLOWANCE FOR CREDIT LOSSES:
Beginning Balance, January 1,...................... $ 3 $ 2 $ 2
Charge-offs..................................... -- -- --
Recoveries...................................... -- -- --
Provision....................................... 1 1 --
----- ----- -----
Ending Balance, December 31,....................... $ 4 $ 3 $ 2
===== ===== =====
Ending Balance, December 31,:
Individually Evaluated for Impairment........... $ 4 $ 3 $ 2
===== ===== =====
Collectively Evaluated for Impairment........... $ -- $ -- $ --
===== ===== =====
Loans Acquired with Deteriorated Credit Quality. $ -- $ -- $ --
===== ===== =====
42
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
There were no allowances for credit losses for agricultural mortgage loans
in 2012, 2011 and 2010.
The values used in these ratio calculations were developed as part of the
periodic review of the commercial and agricultural mortgage loan portfolio,
which includes an evaluation of the underlying collateral value. The
following tables provide information relating to the debt service coverage
ratio for commercial mortgage loans at December 31, 2012 and 2011,
respectively, and for agricultural mortgage loans at December 31, 2011.
MORTGAGE LOANS BY LOAN-TO-VALUE AND DEBT SERVICE COVERAGE RATIOS
DECEMBER 31, 2012
DEBT SERVICE COVERAGE RATIO
------------------------------------------------
LESS TOTAL
GREATER 1.8X TO 1.5X TO 1.2X TO 1.0X TO THAN MORTGAGE
THAN 2.0X 2.0X 1.8X 1.5X 1.2X 1.0X LOANS
LOAN-TO-VALUE RATIO:/(2)/ --------- ------- ------- ------- ------- ------ --------
COMMERCIAL MORTGAGE LOANS/(1)/ (IN MILLIONS)
0% - 50%......................... $ 4 $ -- $ 17 $ -- $ 12 $ -- $ 33
50% - 70%........................ -- -- -- 6 -- -- 6
70% - 90%........................ -- -- -- -- -- -- --
90% plus......................... 10 -- -- -- -- -- 10
-------- ------- ------- ------- ------- ------ -------
Total Commercial Mortgage Loans.... $ 14 $ -- $ 17 $ 6 $ 12 $ -- $ 49
======== ======= ======= ======= ======= ====== =======
/(1)/The debt service coverage ratio is calculated using the most recently
reported net operating income results from property operations divided
by annual debt service.
/(2)/The loan-to-value ratio is derived from current loan balance divided by
the fair market value of the property. The fair market value of the
underlying commercial properties is updated annually.
Mortgage Loans by Loan-to-Value and Debt Service Coverage Ratios
December 31, 2011
Debt Service Coverage Ratio
------------------------------------------------
Less Total
Greater 1.8x to 1.5x to 1.2x to 1.0x to than Mortgage
than 2.0x 2.0x 1.8x 1.5x 1.2x 1.0x Loans
Loan-to-Value Ratio:/(2)/ --------- ------- ------- ------- ------- ------ --------
Commercial Mortgage Loans/(1)/ (In Millions)
0% - 50%......................... $ 5 $ -- $ 17 $ -- $ 1 $ -- $ 23
50% - 70%........................ -- -- -- 41 -- -- 41
70% - 90%........................ -- -- -- 6 -- -- 6
90% plus......................... 10 -- -- -- -- -- 10
------- ------- ------ ------ ------ ------ ------
Total Commercial Mortgage Loans... $ 15 $ -- $ 17 $ 47 $ 1 $ -- $ 80
======= ======= ====== ====== ====== ====== ======
Agricultural Mortgage Loans/(1)/
0% - 50%......................... $ 1 $ -- $ 5 $ 9 $ 1 $ 21 $ 37
50% - 70%........................ 1 -- 2 2 3 2 10
70% - 90%........................ -- -- -- -- -- -- --
90% plus......................... -- -- -- -- -- -- --
------- ------- ------ ------ ------ ------ ------
Total Agricultural Mortgage Loans $ 2 $ -- $ 7 $ 11 $ 4 $ 23 $ 47
======= ======= ====== ====== ====== ====== ======
Total Mortgage Loans/(1)/
0% - 50%......................... $ 6 $ -- $ 22 $ 9 $ 2 $ 21 $ 60
50% - 70%........................ 1 -- 2 43 3 2 51
70% - 90%........................ -- -- -- 6 -- -- 6
90% plus......................... 10 -- -- -- -- -- 10
------- ------- ------ ------ ------ ------ ------
Total Mortgage Loans.............. $ 17 $ -- $ 24 $ 58 $ 5 $ 23 $ 127
======= ======= ====== ====== ====== ====== ======
/(1)/The debt service coverage ratio is calculated using the most recently
reported net operating income results from property operations divided
by annual debt service.
/(2)/The loan-to-value ratio is derived from current loan balance divided by
the fair market value of the property. The fair market value of the
underlying commercial properties is updated annually.
43
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
The following table provides information relating to the aging analysis of
past due mortgage loans at December 31, 2012 and 2011, respectively.
AGE ANALYSIS OF PAST DUE MORTGAGE LOANS
RECORDED
INVESTMENT
TOTAL (GREATER THAN) 90 DAYS
30-59 60-89 90 DAYS FINANCING AND
DAYS DAYS OR (GREATER THAN) TOTAL CURRENT RECEIVABLES ACCRUING
----- ----- ----------------- ----- ------- ----------- ----------------------
(IN MILLIONS)
DECEMBER 31, 2012
Commercial............. $ -- $ -- $ -- $ -- $ 49 $ 49 $ --
Agricultural........... -- -- -- -- -- -- --
----- ----- -------------- ----- ------ ------ ---------------------
TOTAL MORTGAGE LOANS..... $ -- $ -- $ -- $ -- $ 49 $ 49 $ --
===== ===== ============== ===== ====== ====== =====================
December 31, 2011
Commercial............. $ -- $ -- $ -- $ -- $ 80 $ 80 $ --
Agricultural........... -- -- -- -- 47 47 --
----- ----- -------------- ----- ------ ------ ---------------------
Total Mortgage Loans..... $ -- $ -- $ -- $ -- $ 127 $ 127 $ --
===== ===== ============== ===== ====== ====== =====================
The following table provides information relating to impaired loans at
December 31, 2012 and 2011, respectively.
IMPAIRED MORTGAGE LOANS
UNPAID AVERAGE INTEREST
RECORDED PRINCIPAL RELATED RECORDED INCOME
INVESTMENT BALANCE ALLOWANCE INVESTMENT/(1)/ RECOGNIZED
---------- --------- --------- -------------- ----------
(IN MILLIONS)
DECEMBER 31, 2012
With no related allowance recorded:
Commercial mortgage loans -- other.... $ -- $ -- $ -- $ -- $ --
Agricultural mortgage loans........... -- -- -- -- --
------- ------ -------- ------- --------
TOTAL................................... $ -- $ -- $ -- $ -- $ --
======= ====== ======== ======= ========
With related allowance recorded:
Commercial mortgage loans -- other.... $ 10 $ 10 $ (4) $ 10 $ --
Agricultural mortgage loans........... -- -- -- -- --
------- ------ -------- ------- --------
TOTAL................................... $ 10 $ 10 $ (4) $ 10 $ --
======= ====== ======== ======= ========
December 31, 2011
With no related allowance recorded:
Commercial mortgage loans -- other.... $ -- $ -- $ -- $ -- $ --
Agricultural mortgage loans........... -- -- -- -- --
------- ------ -------- ------- --------
Total................................... $ -- $ -- $ -- $ -- $ --
======= ====== ======== ======= ========
With related allowance recorded:
Commercial mortgage loans -- other.... $ 10 $ 10 $ (3) $ 10 $ --
Agricultural mortgage loans........... -- -- -- -- --
------- ------ -------- ------- --------
Total................................... $ 10 $ 10 $ (3) $ 10 $ --
======= ====== ======== ======= ========
/(1)/Represents a five-quarter average of recorded amortized cost.
Equity Investments
MLOA holds equity in limited partnership interests and other equity method
investments that primarily invest in securities considered to be other than
investment grade. The carrying values at December 31, 2012 and 2011 were $2
million and $2 million, respectively.
44
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
The following table presents MLOA's investment in 2.6 million units in
AllianceBernstein, an affiliate, which is included in Other invested assets:
2012 2011
----- -----
(IN MILLIONS)
Balance at January 1,....................................... $ 72 $ 76
Equity in net earnings (loss)............................... 2 (2)
Impact of repurchase/issuance of AllianceBernstein Units.... (2) 2
Dividends received.......................................... (3) (4)
----- -----
Balance at December 31,..................................... $ 69 $ 72
===== =====
Derivatives
The tables below present quantitative disclosures about MLOA's derivative
instruments, including those embedded in other contracts though required to
be accounted for as derivative instruments.
DERIVATIVE INSTRUMENTS BY CATEGORY
FAIR VALUE
-----------------------
GAINS (LOSSES)
NOTIONAL ASSET LIABILITY REPORTED IN
AMOUNT DERIVATIVES DERIVATIVES EARNINGS (LOSS)
-------- ----------- ----------- ---------------
AT OR FOR THE YEAR ENDED DECEMBER 31, 2012: (IN MILLIONS)
FREESTANDING DERIVATIVES:
Equity contracts:/(1)/
Options............................... $ 29 $ 2 $ 1 $ --
----------
NET INVESTMENT INCOME (LOSS)........... --
----------
EMBEDDED DERIVATIVES:
GMIB reinsurance contracts/(2)/........ -- 7 -- (2)
-------- ------- -------- ----------
Balances, December 31, 2012............ $ 29 $ 9 $ 1 $ (2)
======== ======= ======== ==========
At or For the Year Ended December 31, 2011:
Freestanding derivatives:
Equity contracts:/(1)/
Options............................... $ 3 $ -- $ -- $ --
----------
Net investment income (loss)........... --
----------
Embedded derivatives:
GMIB reinsurance contracts/(2)/........ -- 9 -- 7
-------- ------- -------- ----------
Balances, December 31, 2011............ $ 3 $ 9 $ -- $ 7
======== ======= ======== ==========
/(1)/Reported in Other invested assets in MLOA's balance sheets.
/(2)/Reported in Other assets in MLOA's balance sheets.
45
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
Net Investment Income (Loss)
The following table breaks out Net investment income (loss) by asset
category:
2012 2011 2010
------ ------ ------
(IN MILLIONS)
Fixed maturities............................. $ 97 $ 102 $ 106
Mortgage loans on real estate................ 9 10 10
Policy loans................................. 8 8 8
Other equity investments..................... -- -- (1)
------ ------ ------
Gross investment income (loss)............... 114 120 123
Investment expenses.......................... (4) (4) (4)
------ ------ ------
Net Investment Income (Loss)................. $ 110 $ 116 $ 119
====== ====== ======
Investment Gains (Losses), Net
Investment gains (losses), net including changes in the valuation allowances
and OTTI are as follows:
2012 2011 2010
------ ------ -------
(IN MILLIONS)
Fixed maturities........................................... $ (5) $ (2) $ (47)
Impact of (repurchase) issuance of AllianceBernstein Units. (2) 2 (2)
Mortgage loans on real estate.............................. 2 (1) 1
------ ------ -------
Investment Gains (Losses), Net............................. $ (5) $ (1) $ (48)
====== ====== =======
4) VALUE OF BUSINESS ACQUIRED
The following table presents MLOA's VOBA asset at December 31, 2012 and 2011:
GROSS ACCUMULATED
CARRYING AMORTIZATION
AMOUNT AND OTHER/(1)/ NET
-------- ------------- ------
(IN MILLIONS)
VOBA
DECEMBER 31, 2012........ $ 416 $ (313) $ 103
======== ========== ======
December 31, 2011........ $ 416 $ (319) $ 97
======== ========== ======
/(1)/Includes reactivity to unrealized investment gains (losses) and impact
of the December 31, 2005 modified coinsurance ("MODCO") recapture.
For 2012 and 2011, negative amortization expense related to VOBA was $(13)
million and $(10) million. For 2010, amortization expense related to VOBA
was $27 million. VOBA amortization is estimated to range between $19 million
and $13 million annually through 2017.
46
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
5) FAIR VALUE DISCLOSURES
Assets measured at fair value on a recurring basis are summarized below.
Fair value measurements also are required on a non-recurring basis for
certain assets, including goodwill, mortgage loans on real estate, equity
real estate held for production of income, and equity real estate held for
sale, only when an OTTI or other event occurs. When such fair value
measurements are recorded, they must be classified and disclosed within the
fair value hierarchy. At December 31, 2012 and 2011, no assets were required
to be measured at fair value on a non-recurring basis.
FAIR VALUE MEASUREMENTS
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
-------- -------- ------- --------
DECEMBER 31, 2012
----------------- (IN MILLIONS)
ASSETS:
Investments:
Fixed maturities, available-for-sale:
Corporate................................. $ -- $ 1,684 $ 35 $ 1,719
U.S. Treasury, government and agency...... -- 113 -- 113
States and political subdivisions......... -- 28 -- 28
Foreign governments....................... -- 2 -- 2
Commercial mortgage-backed................ -- -- 35 35
Residential mortgage-backed/(1)/.......... -- 20 -- 20
Asset-backed/(2)/......................... -- 5 6 11
Redeemable preferred stock................ 37 61 -- 98
-------- -------- ------- --------
Subtotal................................ 37 1,913 76 2,026
-------- -------- ------- --------
Other equity investments................... 1 -- -- 1
Cash equivalents............................. 145 -- -- 145
GMIB reinsurance contracts................... -- -- 7 7
Separate Accounts' assets.................... 1,623 15 -- 1,638
-------- -------- ------- --------
Total Assets.............................. $ 1,806 $ 1,928 $ 83 $ 3,817
======== ======== ======= ========
December 31, 2011
-----------------
Assets:
Investments:
Fixed maturities, available-for-sale:
Corporate................................. $ -- $ 1,659 $ 34 $ 1,693
U.S. Treasury, government and agency...... -- 105 -- 105
States and political subdivisions......... -- 22 -- 22
Foreign governments....................... -- 4 -- 4
Commercial mortgage-backed................ -- -- 29 29
Residential mortgage-backed/(1)/.......... -- 28 -- 28
Asset-backed/(2)/......................... -- 5 5 10
Redeemable preferred stock................ 19 57 -- 76
-------- -------- ------- --------
Subtotal................................ 19 1,880 68 1,967
-------- -------- ------- --------
Other equity investments................... 1 -- -- 1
Cash equivalents............................. 57 -- -- 57
GMIB reinsurance contracts................... -- -- 9 9
Separate Accounts' assets.................... 1,589 15 -- 1,604
-------- -------- ------- --------
Total Assets.............................. $ 1,666 $ 1,895 $ 77 $ 3,638
======== ======== ======= ========
/(1)/Includes publicly traded agency pass-through securities and
collateralized obligations.
/(2)/Includes credit-tranched securities collateralized by sub-prime
mortgages and other asset types and credit tenant loans.
In 2012, AFS fixed maturities with fair values of $3 million were
transferred from Level 2 into the Level 3 classification. These transfers in
the aggregate represent approximately 0.4% of total equity at December 31,
2012.
In 2011, AFS fixed maturities with fair values of $5 million were
transferred out of Level 3 and into Level 2 principally due to the
availability of trading activity and/or market observable inputs to measure
and validate their fair values. In addition, AFS fixed maturities with fair
value of $22 million were transferred from Level 2 into the Level 3
classification. These transfers in the aggregate represent approximately
4.0% of total equity at December 31, 2011.
47
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
The table below presents a reconciliation for all Level 3 assets at
December 31, 2012 and 2011, respectively.
LEVEL 3 INSTRUMENTS
FAIR VALUE MEASUREMENTS
COMMERCIAL REDEEMABLE GMIB
MORTGAGE- ASSET- PREFERRED REINSURANCE
CORPORATE BACKED BACKED STOCK CONTRACTS
--------- ---------- ------ ---------- -----------
(IN MILLIONS)
BALANCE, JANUARY 1, 2012......................... $ 34 $ 29 $ 5 $ -- $ 9
Total gains (losses), realized and unrealized,
included in:
Earnings (loss) as:
Net investment income (loss)................ -- -- -- -- --
Investment gains (losses), net.............. 1 (7) -- -- --
Increase (decrease) in the fair value of
reinsurance contracts..................... -- -- -- -- (2)
-------- --------- ------ ------- --------
Subtotal.................................. 1 (7) -- -- (2)
-------- --------- ------ ------- --------
Other comprehensive income (loss)............. -- 13 1 -- --
Purchases........................................ -- -- -- -- --
Sales............................................ (3) -- -- -- --
Transfers into Level 3/(2)/...................... 3 -- -- -- --
-------- --------- ------ ------- --------
BALANCE, DECEMBER 31, 2012/(1)/.................. $ 35 $ 35 $ 6 $ -- $ 7
======== ========= ====== ======= ========
BALANCE, JANUARY 1, 2011......................... $ 19 $ 36 $ 5 $ -- $ 2
Total gains (losses), realized and unrealized
included in:
Earnings (loss) as:
Net investment income (loss)................ -- -- -- -- --
Investment gains (losses), net.............. -- (1) -- -- --
Increase (decrease) in the fair value of
reinsurance contracts..................... -- -- -- -- 7
-------- --------- ------ ------- --------
Subtotal.................................. $ -- $ (1) $ -- $ -- $ 7
-------- --------- ------ ------- --------
Other comprehensive income (loss)............. (2) (3) -- -- --
Sales............................................ (1) (3) -- -- --
Transfers into Level 3/(2)/...................... 22 -- -- -- --
Transfers out of Level 3/(2)/.................... (4) -- -- -- --
-------- --------- ------ ------- --------
BALANCE, DECEMBER 31, 2011/(1)/.................. $ 34 $ 29 $ 5 $ -- $ 9
======== ========= ====== ======= ========
/(1)/There were no U.S. Treasury, government and agency; State and political
subdivisions; Foreign governments; Residential mortgage-backed
securities; Other equity investments; or Separate Accounts' assets
classified as Level 3 at December 31, 2012 and 2011.
/(2)/Transfers into/out of Level 3 classification are reflected at
beginning-of-period fair values.
48
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
The table below details changes in unrealized gains (losses) for 2012 and
2011 by category for Level 3 assets still held at December 31, 2012 and
2011, respectively.
EARNINGS (LOSS)
---------------------------------------------
INCREASE
NET INVESTMENT (DECREASE) IN THE
INVESTMENT GAINS FAIR VALUE OF
INCOME (LOSSES), REINSURANCE
(LOSS) NET CONTRACTS OCI
---------- ---------- ----------------- -----
(IN MILLIONS)
LEVEL 3 INSTRUMENTS
FULL YEAR 2012
STILL HELD AT DECEMBER 31, 2012:/(1)/
Change in unrealized gains (losses):
Fixed maturities, available-for-sale:
Commercial mortgage-backed................... -- -- -- 13
Other fixed maturities, available-for-sale... -- -- -- 1
-------- -------- ------------- -----
Subtotal................................... $ -- $ -- $ -- $ 14
-------- -------- ------------- -----
GMIB reinsurance contracts..................... -- -- (2) --
-------- -------- ------------- -----
Total...................................... $ -- $ -- $ (2) $ 14
======== ======== ============= =====
Level 3 Instruments
Full Year 2011
Still Held at December 31, 2011:/(1)/
Change in unrealized gains (losses):
Fixed maturities, available-for-sale:
Commercial mortgage-backed................... -- -- -- (4)
Other fixed maturities, availablfor-sale..... -- -- -- (2)
-------- -------- ------------- -----
Subtotal................................... $ -- $ -- $ -- $ (6)
-------- -------- ------------- -----
GMIB reinsurance contracts................... -- -- 7 --
-------- -------- ------------- -----
Total...................................... $ -- $ -- $ 7 $ (6)
======== ======== ============= =====
/(1)/There were no Equity securities classified as AFS, Other equity
investments, Cash equivalents and Separate Accounts' assets at
December 31, 2012 and 2011.
49
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
The following table discloses quantitative information about Level 3 fair
value measurements by category for assets and liabilities as of December 31,
2012.
QUANTITATIVE INFORMATION ABOUT LEVEL 3 FAIR VALUE MEASUREMENTS
DECEMBER 31, 2012
FAIR
VALUE VALUATION TECHNIQUE SIGNIFICANT UNOBSERVABLE INPUT RANGE
----- --------------------- ---------------------------------- -----------------
(IN MILLIONS)
ASSETS:
Investments:
Fixed maturities, available-for-sale:
Corporate........................... $ 11 Matrix pricing model Spread over the industry-specific
benchmark yield curve 600 BPS - 650 BPS
------------------------------------------------------------------------------------------------------------------------
Commercial mortgage-backed.......... 35 Discounted Cash flow Constant default rate 3.0% - 25.0%
Probability of default 55.0%
Loss severity 49.0%
Discount rate 3.72% - 13.42%
------------------------------------------------------------------------------------------------------------------------
GMIB reinsurance contracts............. 7 Discounted Cash flow Lapse Rates 2.5% - 27.5%
Withdrawal Rates 3.5%
GMIB Utilization Rates 0.0% - 15.0%
Non-performance risk 13.5 BPS
Volatility rates -- Equity 24.0%- 36.0%
------------------------------------------------------------------------------------------------------------------------
Excluded from the table above are approximately $30 million Level 3 fair
value measurements of investments for which the underlying quantitative
inputs are not developed by MLOA and are not reasonably available. The fair
value measurements of these Level 3 investments comprise approximately 39.5%
of total assets classified as Level 3 and represent only 0.8% of total
assets measured at fair value on a recurring basis. These investments
primarily consist of certain privately placed debt securities with limited
trading activity, including asset-backed instruments, and their fair values
generally reflect unadjusted prices obtained from independent valuation
service providers and indicative, non-binding quotes obtained from
third-party broker-dealers recognized as market participants. Significant
increases or decreases in the fair value amounts received from these pricing
sources may result in MLOA's reporting significantly higher or lower fair
value measurements for these Level 3 investments.
Included in the table above are approximately $11 million fair value of
privately placed, available-for-sale corporate debt securities classified as
Level 3 at December 31, 2012 that is determined by application of a matrix
pricing model, representing approximately 31.4% of the total fair value of
Level 3 securities in the corporate fixed maturities asset class. The
significant unobservable input to the matrix pricing model is the spread
over the industry-specific benchmark yield curve. Generally, an increase or
decrease in spreads would lead to directionally inverse movement in the fair
value measurements of these securities.
Commercial mortgage-backed securities classified as Level 3 consist of
holdings subordinate to the AAA-tranche position and for which MLOA applies
a discounted cash flow methodology to measure fair value. The process for
determining fair value first adjusts the contractual principal and interest
payments to reflect performance expectations and then discounts the
securities' cash flows to reflect an appropriate risk-adjusted return. The
significant unobservable inputs used in these fair value measurements are
default rate and probability, loss severity, and the discount rate. An
increase either in the cumulative default rate, probability of default, or
loss severity would result in a decrease in the fair value of these
securities; generally, those assumptions would change in a directionally
similar manner. A decrease in the discount rate would result in
directionally inverse movement in the fair value measurement of these
securities.
Significant unobservable inputs with respect to the fair value measurement
of the Level 3 GMIB reinsurance contract asset and the Level 3 liabilities
identified in the table above are developed using Company data. Validations
of unobservable inputs are performed to the extent MLOA has experience. When
an input is changed the model is updated and the results of each step of the
model are analyzed for reasonableness.
The significant unobservable inputs used in the fair value measurement of
MLOA's GMIB reinsurance contract asset are lapse rates, withdrawal rates and
GMIB utilization rates. Significant increases in GMIB utilization rates or
decreases in lapse or withdrawal rates in isolation would tend to increase
the GMIB reinsurance contract asset.
50
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
Fair value measurement of the GMIB reinsurance contract asset includes
dynamic lapse and GMIB utilization assumptions whereby projected contractual
lapses and GMIB utilization reflect the projected net amount of risks of the
contract. As the net amount of risk of a contract increases, the assumed
lapse rate decreases and the GMIB utilization increases. Increases in
volatility would increase the asset.
The carrying values and fair values at December 31, 2012 and December 31,
2011 for financial instruments not otherwise disclosed in Note 3 are
presented in the table below. Certain financial instruments are exempt from
the requirements for fair value disclosure, such as insurance liabilities
other than financial guarantees and investment contracts and pension and
other postretirement obligations.
DECEMBER 31, 2012
---------------------------------------
FAIR VALUE
CARRYING ------------------------------
VALUE LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
-------- ------- ------- ------- ------
(IN MILLIONS)
Mortgage loans on real estate.......................... $ 45 $ -- $ -- $ 46 $ 46
Policyholders liabilities: Investment contracts........ 200 -- -- 223 223
December 31, 2011
----------------
Carrying Fair
Value Value
-------- -------
(In Millions)
Mortgage loans on real estate....................... $ 124 $ 130
Policyholders liabilities -- Investment contracts... 229 242
6) GMDB, GMIB AND NO LAPSE GUARANTEE FEATURES
A) Variable Annuity Contracts -- GMDB and GMIB
MLOA has certain variable annuity contracts with GMDB and GMIB
features-in-force that guarantee one of the following:
. Return of Premium: the benefit is the greater of current account value
or premiums paid (adjusted for withdrawals);
. Ratchet: the benefit is the greatest of current account value,
premiums paid (adjusted for withdrawals), or the highest account value
on any anniversary up to contractually specified ages (adjusted for
withdrawals);
. Roll-Up: the benefit is the greater of current account value or
premiums paid (adjusted for withdrawals) accumulated at contractually
specified interest rates up to specified ages; or
. Combo: the benefit is the greater of the ratchet benefit or the
roll-up benefit which may include a five year or an annual reset.
The following table summarizes the GMDB and GMIB liabilities, before
reinsurance ceded, reflected in the General Account in future policy
benefits and other policyholders' liabilities:
GMDB GMIB TOTAL
---- ---- -----
(IN MILLIONS)
Balance at January 1, 2010......... $ 5 $ 3 $ 8
Paid guarantee benefits.......... (2) -- (2)
Other changes in reserve......... 3 (1) 2
---- ---- -----
Balance at December 31, 2010....... 6 2 8
Paid guarantee benefits.......... (2) -- (2)
Other changes in reserve......... 3 -- 3
---- ---- -----
Balance at December 31, 2011....... 7 2 9
Paid guarantee benefits.......... (2) -- (2)
Other changes in reserve......... 3 -- 3
---- ---- -----
Balance at December 31, 2012....... $ 8 $ 2 $ 10
==== ==== =====
51
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
Related GMDB reinsurance ceded amounts were:
GMDB
-------------
(IN MILLIONS)
Balance at January 1, 2010......... $ 3
Paid guarantee benefits.......... (1)
Other changes in reserve......... 1
-----------
Balance at December 31, 2010....... 3
Other changes in reserve......... 1
-----------
Balance at December 31, 2011....... 4
Paid guarantee benefits.......... --
Other changes in reserve......... 1
-----------
Balance at December 31, 2012....... $ 5
===========
The GMIB reinsurance contracts are considered derivatives and are reported
at fair value.
The December 31, 2012 values for variable annuity contracts in-force on such
date with GMDB and GMIB features are presented in the following table. For
contracts with the GMDB feature, the net amount at risk in the event of
death is the amount by which the GMDB benefits exceed related account
values. For contracts with the GMIB feature, the net amount at risk in the
event of annuitization is the amount by which the present value of the GMIB
benefits exceeds related account values, taking into account the
relationship between current annuity purchase rates and the GMIB guaranteed
annuity purchase rates. Since variable annuity contracts with GMDB
guarantees may also offer GMIB guarantees in the same contract, the GMDB and
GMIB amounts listed are not mutually exclusive:
RETURN OF
PREMIUM RATCHET ROLL-UP COMBO TOTAL
--------- ------- ------- ------- ------
(DOLLARS IN MILLIONS)
GMDB:
Account values invested in:
General Account....................................... $ 121 $ 186 $ N/A $ 30 $ 337
Separate Accounts..................................... $ 309 $ 391 $ N/A $ 59 $ 759
Net amount at risk, gross.............................. $ 5 $ 48 $ N/A $ 17 $ 70
Net amount at risk, net of amounts reinsured........... $ 5 $ 43 $ N/A $ -- $ 48
Average attained age of contractholders................ 66.1 66.4 N/A 66.1 66.3
Percentage of contractholders over age 70.............. 25.6% 25.7% N/A 25.0% 25.6%
Contractually specified interest rates................. N/A N/A N/A 5.0% 5.0%
GMIB:
Account values invested in:
General Account....................................... N/A N/A $ 30 $ N/A $ 30
Separate Accounts..................................... N/A N/A $ 59 $ N/A $ 59
Net amount at risk, gross.............................. N/A N/A $ 3 $ N/A $ 3
Net amount at risk, net of amounts reinsured........... N/A N/A $ -- $ N/A $ --
Weighted average years remaining until annuitization... N/A N/A 1.7 N/A 1.7
Contractually specified interest rates................. N/A N/A 5.0% N/A 5.0%
52
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
B) Separate Account Investments by Investment Category Underlying GMDB and
GMIB Features
The total account values of variable annuity contracts with GMDB and GMIB
features include amounts allocated to the guaranteed interest option, which
is part of the General Account and variable investment options that invest
through Separate Accounts in variable insurance trusts. The following table
presents the aggregate fair value of assets, by major investment category,
held by Separate Accounts that support variable annuity contracts with GMDB
and GMIB benefits and guarantees. The investment performance of the assets
impacts the related account values and, consequently, the net amount of risk
associated with the GMDB and GMIB benefits and guarantees. Since variable
annuity contracts with GMDB benefits and guarantees may also offer GMIB
benefits and guarantees in each contract, the GMDB and GMIB amounts listed
are not mutually exclusive:
INVESTMENT IN VARIABLE INSURANCE TRUST MUTUAL FUNDS
DECEMBER 31,
-------------
2012 2011
------ ------
(IN MILLIONS)
GMDB:
Equity.................................. $ 643 $ 685
Fixed income............................ 73 89
Balanced................................ 15 16
Other................................... 28 34
------ ------
Total................................... $ 759 $ 824
====== ======
GMIB:
Equity.................................. $ 47 $ 54
Fixed income............................ 9 12
Other................................... 3 4
------ ------
Total................................... $ 59 $ 70
====== ======
C) Variable and Interest-Sensitive Life Insurance Policies - No Lapse
Guarantee
The no lapse guarantee feature contained in variable and interest-sensitive
life insurance policies keeps them in force in situations where the policy
value is not sufficient to cover monthly charges then due. The no lapse
guarantee remains in effect so long as the policy meets a contractually
specified premium funding test and certain other requirements. At
December 31, 2012 and 2011, MLOA had liabilities of $1 million and $1
million, respectively, for no lapse guarantees reflected in the General
Account in future policy benefits and other policyholders' liabilities.
7) REINSURANCE
MLOA reinsures most of its new variable life policies on an excess of
retention basis. MLOA maintains a maximum of $4 million on single-life
policies and $6 million on second-to-die policies. For amounts applied for
in excess of those limits, reinsurance is ceded to AXA Equitable Life
Insurance Company ("AXA Equitable"), an affiliate and wholly-owned
subsidiary of AXA Financial, up to a combined maximum of $20 million on
single-life policies and $25 million on second-to-die policies. For amounts
applied in excess of those limits, MLOA seeks reinsurance from unaffiliated
third parties. A contingent liability exists with respect to reinsurance
ceded should the reinsurers be unable to meet their obligations. For its
variable annuity products, MLOA retained 100% of the risk in connection with
the return of premium death benefit. The benefits in connection with GMDB in
excess of the return of premium benefit, which are offered under certain of
MLOA's annuity contracts, were 100% reinsured up to specified limits.
Benefits in connection with the earnings increase benefit rider were
similarly reinsured. The GMIB was 100% reinsured up to individual and
aggregate limits as well as limits that are based on benefit utilization.
Based on management's estimates of future contract cash flows and
experience, the estimated fair values of the GMIB reinsurance contracts,
considered derivatives at December 31, 2012 and 2011 were $7 million and $9
million, respectively. The increases (decreases) in estimated fair value
were $(2) million, $7 million and $1 million for 2012, 2011 and 2010,
respectively.
At December 31, 2012 and 2011, respectively, reinsurance recoverables
related to insurance contracts amounted to $158 million and $136 million, of
which $53 million in 2012 and $56 million in 2011 related to one specific
reinsurer, which is rated AA- with the remainder of the
53
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
reinsurers rated BBB and above or not rated. A contingent liability exists
with respect to reinsurance should the reinsurers be unable to meet their
obligations. MLOA evaluates the financial condition of its reinsurers in an
effort to minimize its exposure to significant losses from reinsurer
insolvencies.
The following table summarizes the effect of reinsurance:
2012 2011 2010
----- ----- -----
(IN MILLIONS)
Direct premiums....................................................... $ 56 $ 68 $ 66
Assumed............................................................... 2 2 2
Reinsurance ceded..................................................... (26) (28) (29)
----- ----- -----
Premiums.............................................................. $ 32 $ 42 $ 39
===== ===== =====
Variable Life and Investment-type Product Policy Fee Income Ceded..... $ 29 $ 31 $ 31
===== ===== =====
Policyholders' Benefits Ceded......................................... $ 84 $ 39 $ 43
===== ===== =====
8) RELATED PARTY TRANSACTIONS
In August 2012, MLOA sold its entire portfolio of agricultural mortgage
loans on real estate to AXA Equitable, an affiliate, in exchange for $42
million dollars in cash. MLOA recorded a pre-tax net realized gain of $3
million related to the sale.
Under its service agreement with AXA Equitable, personnel services, employee
benefits, facilities, supplies and equipment are provided to MLOA to conduct
its business. The associated costs related to the service agreement are
allocated to MLOA based on methods that management believes are reasonable,
including a review of the nature of such costs and activities performed to
support MLOA. As a result of such allocations, MLOA incurred expenses of $57
million, $54 million and $53 million for 2012, 2011 and 2010, respectively.
At December 31, 2012 and 2011, respectively, MLOA reported a $23 million and
$11 million payable to AXA Equitable in connection with its service
agreement.
Various AXA affiliates cede a portion of their life, health and catastrophe
insurance business through reinsurance agreements to AXA Global Life in 2010
(and AXA Cessions in 2009 and prior), AXA affiliated reinsurers. Beginning
in 2008 AXA Global Life, in turn, retrocedes a quota share portion of these
risks to MLOA on a one-year term basis. Premiums and experience refunds
earned in 2012, 2011 and 2010 under this arrangement totaled approximately
$1 million, $2 million and $2 million, respectively. Claims and expenses
paid in 2012, 2011 and 2010 were $1 million, $1 million and $2 million,
respectively.
MLOA cedes a portion of its life business through excess of retention
treaties to AXA Equitable on a yearly renewal term basis. Premiums paid in
2012, 2011 and 2010 to AXA Equitable totaled approximately $570,437,
$426,414 and $395,877, respectively. Claims and expenses in 2012, 2011 and
2010 were $0, $0 and $894,972, respectively.
As more fully described in Note 7, MLOA ceded new variable life policies on
an excess of retention basis with AXA Equitable and reinsured the no lapse
guarantee riders through AXA RE Arizona Company (formerly AXA Bermuda, which
during second quarter 2012, redomesticated from Bermuda to Arizona and
changed its name to AXA RE Arizona Company) ("AXA Arizona"). MLOA reported
$317,488, $334,772 and $361,422 of ceded premiums for 2012, 2011 and 2010,
respectively.
In 2012, 2011 and 2010, respectively, MLOA paid AXA Distribution and its
subsidiaries $11 million, $36 million and $31 million of commissions and
fees for sales of insurance products. MLOA charged AXA Distribution's
subsidiaries $25 million, $3 million and $3 million, respectively, for their
applicable share of operating expenses in 2012, 2011 and 2010, pursuant to
the Agreements for Services.
In addition to the AXA Equitable service agreement, MLOA has various other
service and investment advisory agreements with affiliates. The amount of
expenses incurred by MLOA related to these agreements were $2 million, $2
million and $2 million for 2012, 2011 and 2010, respectively.
9) SHARE-BASED COMPENSATION
For 2012, 2011 and 2010, respectively, MLOA recognized compensation costs of
$3 million, $1 million and $3 million, for share-based payment arrangements
and approximately $177,000, $280,000 and $431,000 related to employee stock
options.
54
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
At December 31, 2012, approximately $117,000 of unrecognized compensation
cost related to unvested employee stock option awards, net of estimated
pre-vesting forfeitures, is expected to be recognized by MLOA over a
weighted average period of 0.8 years.
AXA MILES PROGRAM. On March 16, 2012, under the terms of the AXA Miles
Program 2012, AXA granted 50 AXA ordinary shares ("AXA Miles") to every
employee and eligible financial professional of AXA Group for the purpose of
enhancing long-term employee-shareholder engagement. Each AXA Mile
represents a phantom share of AXA stock that will convert to an actual AXA
ordinary share at the end of a four-year vesting period provided the
employee or financial professional remains in the employ of the company or
has retired. Half of each AXA Miles grant, or 25 AXA Miles, are further
subject to vesting conditions based on achievement of improvements in
specific AXA performance metrics. The total fair value of these AXA Miles
awards of approximately $6 million, net of expected forfeitures, is charged
to expense over the shorter of the vesting term or the period up to the date
at which the participant becomes retirement eligible and is updated to
reflect change in respect of the expectation for meeting the predefined
performance conditions. In 2012, the expense associated with the March 16,
2012 grant of AXA Miles was approximately $94,300.
On July 1, 2007, under the terms of the AXA Miles Program 2007, AXA granted
50 AXA Miles to every employee and financial professional of AXA for the
purpose of enhancing long-term employee-shareholder engagement. Each AXA
Mile represents the right to receive one unrestricted AXA ordinary share on
July 1, 2011, conditional only upon continued employment with AXA at the
close of the four-year cliff vesting period with exceptions for retirement,
death, and disability. The grant date fair value of approximately 449,400
AXA Miles awarded to employees and financial professionals of AXA
Financial's subsidiaries was approximately $700,000, measured as the market
equivalent of a vested AXA ordinary share. Beginning on July 1, 2007, the
total fair value of this award, net of expected forfeitures, has been
expensed over the shorter of the vesting term or to the date at which the
participant becomes retirement eligible. For 2011 and 2010, respectively,
MLOA recognized compensation expense of approximately $53,000 and $113,000
in respect of this grant of AXA Miles.
10)INCOME TAXES
A summary of the income tax (expense) benefit in the statements of earnings
(loss) follows:
2012 2011 2010
------ ----- -----
(IN MILLIONS)
Income tax (expense) benefit:
Current (expense) benefit... $ (4) $ 39 $ (24)
Deferred (expense) benefit.. (2) (38) 35
------ ----- -----
Total......................... $ (6) $ 1 $ 11
====== ===== =====
The Federal income taxes attributable to operations are different from the
amounts determined by multiplying the earnings (loss), before income taxes
by the expected Federal income tax rate of 35%. The sources of the
difference and their tax effects are as follows:
2012 2011 2010
------ ------ -----
(IN MILLIONS)
Tax at statutory rate......... $ (15) $ (26) $ 10
Dividends received deduction.. 2 2 1
Tax settlement................ 9 7 --
Valuation allowance........... -- 19 --
Other......................... (2) (1) --
------ ------ -----
Income Tax (Expense) Benefit.. $ (6) $ 1 $ 11
====== ====== =====
MLOA recognized a tax benefit in 2012 of $9 million related to the
settlement with the IRS of the audit for tax years 2004 - 2007. The tax
benefit for 2011 reflected a benefit in the amount of $19 million related to
the determination that the valuation allowance previously established on
deferred tax assets related to net operating loss carry forwards was no
longer necessary and a $7 million benefit in settlement of refund claims for
tax years 1994 - 1997.
55
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
The components of the net deferred income taxes are as follows:
DECEMBER 31, 2012 December 31, 2011
------------------- ------------------
ASSETS LIABILITIES Assets Liabilities
------- ----------- ------ -----------
(IN MILLIONS)
Reserves and reinsurance............. $ -- $ 21 $ -- $ 37
DAC.................................. -- 46 -- 26
VOBA................................. -- 34 -- 34
Investments.......................... -- 25 -- 6
Goodwill and other intangible assets. -- 9 -- 7
NOL and Credits...................... -- -- 6 --
Other................................ 8 -- -- 6
------- --------- ------ ---------
Total................................ $ 8 $ 135 $ 6 $ 116
======= ========= ====== =========
MLOA does not provide income taxes on the undistributed earnings related to
its investment in AllianceBernstein units except to the extent that such
earnings are not permanently invested outside the United States. As of
December 31, 2012, $6 million of accumulated undistributed earnings related
to its investment in AllianceBernstein units were permanently invested. At
existing applicable income tax rates, additional taxes of approximately $2
million would need to be provided if such earnings were remitted.
At December 31, 2012 and 2011, respectively, the total amount of
unrecognized tax benefits were $5 million and $20 million, all of which
would affect the effective tax rate.
MLOA recognizes accrued interest and penalties related to unrecognized tax
benefits in tax (expense) benefit. Interest and penalties included in the
amounts of unrecognized tax benefits at December 31, 2012 and 2011 were $1
million and $3 million, respectively. Tax (expense) benefit for 2012
reflected a benefit of $2 million in interest expense related to
unrecognized tax benefits.
A reconciliation of unrecognized tax benefits (excluding interest and
penalties) follows:
2012 2011 2010
------ ----- -----
(IN MILLIONS)
Balance, beginning of year.................. $ 17 $ 16 $ 15
Additions for tax positions of prior years.. 1 1 1
Reductions for tax positions of prior years. (2) -- --
Settlements with tax authorities............ (12) -- --
------ ----- -----
Balance, End of Year........................ $ 4 $ 17 $ 16
====== ===== =====
In 2012, the IRS concluded its examination of the tax returns of MONY Life
and its subsidiaries from the date of its acquisition by AXA Financial in
2004 through 2007. The completion of this examination resulted in the
release of $12 million of unrecognized tax benefits for MLOA. It is
reasonably possible that the total amounts of unrecognized tax benefits will
change within the next 12 months. The possible change in the amount of
unrecognized tax benefits cannot be estimated at this time.
11)ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
AOCI represents cumulative gains (losses) on investments that are not
reflected in earnings (loss). The balances for the past three years follow:
DECEMBER 31,
-----------------
2012 2011 2010
----- ----- -----
(IN MILLIONS)
Unrealized gains (losses) on investments, net of adjustments. $ 82 $ 55 $ 45
----- ----- -----
Total Accumulated Other Comprehensive Income (Loss).......... $ 82 $ 55 $ 45
===== ===== =====
56
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
The components of OCI for the past three years follow:
DECEMBER 31,
-------------------
2012 2011 2010
----- ----- -----
(IN MILLIONS)
Net unrealized gains (losses) on investments:
Net unrealized gains (losses) arising during the year................. $ 43 $ 34 $ 51
(Gains) losses reclassified into net earnings (loss) during the year.. 5 2 47
----- ----- -----
Net unrealized gains (losses) on investments........................... 48 36 98
Adjustments for DAC and VOBA and deferred income tax (expense) benefit. (21) (26) (42)
----- ----- -----
Other Comprehensive Income (Loss)...................................... $ 27 $ 10 $ 56
===== ===== =====
12)LITIGATION
INSURANCE LITIGATION
MLOA is involved in various legal actions and proceedings in connection with
its business. Some of the actions and proceedings have been brought on
behalf of various alleged classes of claimants and certain of these
claimants seek damages of unspecified amounts. While the ultimate outcome of
such matters cannot be predicted with certainty, in the opinion of
management no such matter is likely to have a material adverse effect on
MLOA's financial position or results of operations. However, it should be
noted that the frequency of large damage awards, including large punitive
damage awards that bear little or no relation to actual economic damages
incurred by plaintiffs in some jurisdictions, continues to create the
potential for an unpredictable judgment in any given matter.
INSURANCE REGULATORY MATTERS
MLOA is subject to various statutory and regulatory requirements concerning
the payment of death benefits and the reporting and escheatment of unclaimed
property, and is subject to audit and examination for compliance with these
requirements. MLOA, along with other life insurance industry companies, has
been the subject of various inquiries regarding its death claim,
escheatment, and unclaimed property procedures and is cooperating with these
inquiries. For example, MLOA is under audit by a third party auditor acting
on behalf of a number of U.S. state jurisdictions reviewing compliance with
unclaimed property laws of those jurisdictions. In addition, a number of
life insurance industry companies have received a multistate targeted market
conduct examination notice issued on behalf of various U.S. state insurance
departments reviewing use of the U.S. Social Security Administration's Death
Master File or similar database, claims processing and payments to
beneficiaries. In December 2012, MLOA received an examination notice on
behalf of at least six insurance departments. The audits and related
inquiries have resulted in the payment of death benefits and changes to
MLOA's relevant procedures. MLOA expects it will also result in the
reporting and escheatment of unclaimed death benefits, including potential
interest on such payments, and the payment of examination costs. In
addition, MLOA, along with other life insurance industry companies, is
subject to lawsuits that may be filed by state regulatory agencies or other
litigants.
--------------------------------------------
In addition to the matters descried above, a number of lawsuits, claims and
assessments have been filed against life and health insurers in the
jurisdictions in which MLOA does business involving insurers' sales
practices, alleged agent misconduct, alleged failure to properly supervise
agents, contract administration and other matters. Some of the matters have
resulted in the award of substantial judgments against other insurers,
including material amounts of punitive damages, or in substantial
settlements. In some states, juries have substantial discretion in awarding
punitive damages. MLOA, like other life and health insurers, from time to
time is involved in such matters. Some of these matters filed against MLOA
have been brought on behalf of various alleged classes of claimants and
certain of these claimants seek damages of unspecified amounts. While the
ultimate outcome of such matters cannot be predicted with certainty, in the
opinion of management no such matter is likely to have a material adverse
effect on MLOA's financial position or results of operations. However, it
should be noted that the frequency of large damage awards, including large
punitive damage awards that bear little or no relation to actual economic
damages incurred by plaintiffs in some jurisdictions, continues to create
the potential for an unpredictable judgment in any given matter.
Although the outcome of litigation and regulatory matters cannot be
predicted with certainty, MLOA's management believes that the ultimate
resolution of the matters described above should not have a material adverse
effect on the financial position of MLOA. MLOA's management cannot make an
estimate of loss, if any, or predict whether or not such litigations and
regulatory matters will have a material adverse effect on MLOA's results of
operations in any particular period.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
13)STATUTORY FINANCIAL INFORMATION
MLOA is restricted as to the amounts it may pay as dividends to MONY Life.
Under Arizona Insurance Law, a domestic life insurer may, without prior
approval of the Superintendent, pay a dividend to its shareholder not
exceeding an amount calculated based on a statutory formula. For 2012, 2011
and 2010, MLOA's statutory net income (loss) was $33 million, $35 million
and $(19) million, respectively. Statutory surplus, capital stock and Asset
Valuation Reserve ("AVR") totaled $295 million and $225 million at
December 31, 2012 and 2011, respectively. There were no shareholder
dividends paid to MONY Life by MLOA in 2012, 2011 and 2010.
At December 31, 2012, MLOA, in accordance with various government and state
regulations, had $5 million of securities on deposit with such government or
state agencies.
At December 31, 2012 and for the year then ended, there were no differences
in net income (loss) and capital and surplus resulting from practices
prescribed and permitted by the State of Arizona Insurance Department (the
"AID") and those prescribed by NAIC Accounting Practices and Procedures
effective at December 31, 2012.
Accounting practices used to prepare statutory financial statements for
regulatory filings of stock life insurance companies differ in certain
instances from U.S. GAAP. The differences between statutory surplus and
capital stock determined in accordance with Statutory Accounting Principles
("SAP") and total shareholder's equity under U.S. GAAP are primarily:
(a) the inclusion in SAP of an AVR intended to stabilize surplus from
fluctuations in the value of the investment portfolio; (b) future policy
benefits and policyholders' account balances under SAP differ from U.S. GAAP
due to differences between actuarial assumptions and reserving
methodologies; (c) certain policy acquisition costs are expensed under SAP
but deferred under U.S. GAAP and amortized over future periods to achieve a
matching of revenues and expenses; (d) under SAP, Federal income taxes are
provided on the basis of amounts currently payable with limited recognition
of deferred tax assets while under U.S. GAAP, deferred taxes are recorded
for temporary differences between the financial statements and tax basis of
assets and liabilities where the probability of realization is reasonably
assured; (e) the valuation of assets under SAP and U.S. GAAP differ due to
different investment valuation and depreciation methodologies, as well as
the deferral of interest-related realized capital gains and losses on fixed
income investments; (f) the valuation of the investment in Alliance Units
under SAP reflects a portion of the market value appreciation rather than
the equity in the underlying net assets as required under U.S. GAAP;
(g) computer software development costs are capitalized under U.S. GAAP but
expensed under SAP; (h) certain assets, primarily pre-paid assets, are not
admissible under SAP but are admissible under U.S. GAAP and (i) the fair
valuing of all acquired assets and liabilities including VOBA assets
required for U.S. GAAP purchase accounting.
14)SUBSEQUENT EVENT (UNAUDITED)
On April 10, 2013, MLOA entered into an agreement with Protective Life
Insurance Company ("Protective Life") to reinsure an in-force book of life
insurance and annuity policies, written primarily prior to 2004. Upon the
closing of the agreement, MLOA will receive consideration totaling $373
million. The transaction, which is subject to regulatory approvals and the
satisfaction of other customary conditions, is expected to close in 2013.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
SELECTED FINANCIAL DATA
The Selected Financial Data reflects changes described in Note 2 of the
Notes to Financial Statements and should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations and the Financial Statements and accompanying notes included
elsewhere herein.
YEARS ENDED DECEMBER 31,
--------------------------------------
2012 2011 2010 2009 2008
------ ------ ------ ------ ------
(IN MILLIONS)
STATEMENTS OF EARNINGS (LOSS) DATA:
REVENUES:
Universal life and investment-type product policy fee income............ $ 117 $ 123 $ 122 $ 129 $ 147
Premiums................................................................ 32 42 39 40 45
Net investment income (loss)............................................ 110 116 119 122 126
Investment gains (losses), net:
Total other-than-temporary impairment losses........................... (7) (2) (56) (53) (38)
Portion of loss recognized in other comprehensive income (loss)........ -- -- 2 -- --
------ ------ ------ ------ ------
Net impairment losses recognized..................................... (7) (2) (54) (53) (38)
Other investment gains (losses), net................................... 2 1 6 (3) --
------ ------ ------ ------ ------
Total investment gains (losses), net............................... (5) (1) (48) (56) (38)
------ ------ ------ ------ ------
Other income (loss)..................................................... 7 4 8 11 10
Increase (decrease) in the fair value of there insurance contract asset. (2) 7 1 (7) 8
------ ------ ------ ------ ------
Total revenues..................................................... 259 291 241 239 298
------ ------ ------ ------ ------
BENEFITS AND OTHER DEDUCTIONS:
Policyholders' benefits................................................. 103 96 93 84 120
Interest credited to policyholders' account balances.................... 61 61 68 71 73
Compensation and benefits............................................... 25 30 32 26 29
Commissions............................................................. 38 33 27 30 43
Interest expense........................................................ -- -- 1 1 2
Amortization of deferred policy acquisition costs and value of
business acquired..................................................... (27) (12) 41 22 83
Capitalization of deferred policy acquisition costs..................... (31) (25) (21) (23) (32)
Rent expense............................................................ 2 3 3 4 5
Other operating costs and expenses...................................... 44 29 27 25 35
------ ------ ------ ------ ------
Total benefits and other deductions................................ 215 215 271 240 358
------ ------ ------ ------ ------
Earnings (loss), before income taxes.................................... 44 76 (30) (1) (60)
Income tax benefit (expense)............................................ (6) 1 11 4 (6)
------ ------ ------ ------ ------
Net Earnings (Loss)..................................................... $ 38 $ 77 $ (19) $ 3 $ (66)
====== ====== ====== ====== ======
DECEMBER 31,
--------------------------------------------
2012 2011 2010 2009 2008
-------- -------- -------- -------- --------
(IN MILLIONS)
BALANCE SHEET DATA:
Total Investments.......................................... $ 2,279 $ 2,299 $ 2,251 $ 2,317 $ 2,074
Separate Accounts assets................................... 1,640 1,604 1,840 1,832 1,727
Total Assets............................................... 4,588 4,408 4,603 4,657 4,477
Policyholders' account balances............................ 1,615 1,608 1,664 1,774 1,822
Future policy benefits and other policyholders liabilities. 397 380 374 360 397
Separate Accounts liabilities.............................. 1,640 1,604 1,840 1,832 1,727
Total liabilities.......................................... 3,847 3,733 4,016 4,109 4,047
Total shareholder's equity................................. 741 675 587 548 430
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
The following table presents the effects of the revision and the
retrospective application of the adoption of new accounting guidance related
to DAC to MLOA's previously reported balance sheets:
AS PREVIOUSLY REPORTED ADJUSTMENT AS ADJUSTED
---------------------- ------------- -----------------
DECEMBER 31, DECEMBER 31, DECEMBER 31,
---------------------- ------------- -----------------
2010 2009 2008 2010 2009 2008 2010 2009 2008
----- ----- ----- ---- ---- ---- ----- ----- -----
(IN MILLIONS)
Total assets............... 4,647 4,693 4,509 (44) (36) (32) 4,603 4,657 4,477
Total liabilities.......... 4,042 4,123 4,058 (26) (14) (11) 4,016 4,109 4,047
Total shareholder's equity. 605 570 450 (18) (22) (20) 587 548 430
The following table presents the effects of the revision and the
retrospective application of the adoption of new accounting guidance related
to DAC to MLOA's previously reported statements of earnings (loss):
AS PREVIOUSLY
REPORTED ADJUSTMENT AS ADJUSTED
------------- ---------- -----------
(IN MILLIONS)
YEAR ENDED DECEMBER 31, 2010:
Revenues:
Universal life and investment-type product policy fee income. $ 118 $ 4 $ 122
Benefits and Other Deductions:
Commissions.................................................. 35 (8) 27
Amortization of deferred policy acquisition costs and value
of business acquired....................................... 41 -- 41
Capitalization of deferred policy acquisition costs.......... (29) 8 (21)
Other operating costs and expenses........................... 30 (3) 27
Total benefits and other deductions............................ 274 (3) 271
Earnings (loss), before income taxes........................... (37) 7 (30)
Income tax (expense) benefit................................... 14 (3) 11
Net earnings (loss)............................................ (23) 4 (19)
YEAR ENDED DECEMBER 31, 2009:
Benefits and Other Deductions:
Commissions.................................................. $ 31 $ (1) $ 30
Amortization of deferred policy acquisition costs and value
of business acquired....................................... 23 (1) 22
Capitalization of deferred policy acquisition costs.......... (29) 6 (23)
Other operating costs and expenses........................... 26 (1) 25
Total benefits and other deductions............................ 237 3 240
Earnings (loss), before income taxes........................... 2 (3) (1)
Income tax (expense) benefit................................... 3 1 4
Net earnings (loss)............................................ 5 (2) 3
YEAR ENDED DECEMBER 31, 2008:
Benefits and Other Deductions:
Amortization of deferred policy acquisition costs and value
of business acquired....................................... $ 88 $ (5) $ 83
Capitalization of deferred policy acquisition costs.......... (37) 5 (32)
Total benefits and other deductions............................ 358 -- 358
Earnings (loss), before income taxes........................... (60) -- (60)
Income tax (expense) benefit................................... (6) -- (6)
Net earnings (loss)............................................ (66) -- (66)
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS ("MD&A") FOR MONY LIFE INSURANCE COMPANY OF AMERICA
("MLOA") SHOULD BE READ IN CONJUNCTION WITH "RISK FACTORS," "SELECTED FINANCIAL
DATA" AND THE FINANCIAL STATEMENTS AND RELATED NOTES TO FINANCIAL STATEMENTS
INCLUDED ELSEWHERE HEREIN. IN FIRST QUARTER 2012, MLOA ADOPTED NEW ACCOUNTING
GUIDANCE FOR DEFERRED ACQUISITION COSTS ("DAC"). IN FOURTH QUARTER 2012, MLOA
REVISED ITS 2011 AND 2010 FINANCIAL INFORMATION RELATED TO MLOA'S OVERPAYMENT
OF INTERCOMPANY COMMISSION EXPENSES, AN OVERSTATEMENT OF THE DEFERRAL OF
INITIAL FEE LIABILITY AND AN UNDERSTATEMENT OF AMORTIZATION OF DAC. AS A
RESULT, PRIOR PERIOD RESULTS HAVE BEEN RETROSPECTIVELY RECAST FOR THE
RETROSPECTIVE APPLICATION OF THE FIRST QUARTER 2012 ADOPTION OF NEW ACCOUNTING
GUIDANCE FOR DAC AND THE REVISIONS FOR THE OVERPAYMENT OF INTERCOMPANY
COMMISSION EXPENSES, THE OVERSTATEMENT OF THE DEFERRAL OF INITIAL FEE LIABILITY
AND THE UNDERSTATEMENT OF DAC AMORTIZATION. SEE NOTE 2 OF NOTES TO THE
FINANCIAL STATEMENTS.
FORWARD LOOKING INFORMATION
This document contains "forward-looking statements" that anticipate results
based on our estimates, assumptions and plans that are subject to uncertainty.
These statements are made subject to the safe-harbor provisions of the Private
Securities Litigation Reform Act of 1995. We assume no obligation to update any
forward-looking statements as a result of new information or future events or
developments.
These forward-looking statements do not relate strictly to historical or
current facts and may be identified by their use of words like "plans,"
"seeks," "expects," "will," "should," "anticipates," "estimates," "intends,"
"believes," "likely," "targets" and other words with similar meanings. These
statements may address, among other things, our strategy for growth, product
development, investment results, regulatory approvals, market position,
expenses, financial results, litigation and reserves. We believe that these
statements are based on reasonable estimates, assumptions and plans. However,
if the estimates, assumptions or plans underlying the forward-looking
statements prove inaccurate or if other risks or uncertainties arise, actual
results could differ materially from those communicated in these
forward-looking statements.
In addition to the normal risks of business, we are subject to significant
risks and uncertainties, including those listed in the "Risk Factors" section
of this report, which apply to us. These risks constitute our cautionary
statements under the Private Securities Litigation Reform Act of 1995 and
readers should carefully review such cautionary statements as they identify
certain important factors that could cause actual results to differ materially
from those in the forward-looking statements and historical trends. These
cautionary statements are not exclusive and are in addition to other factors
discussed elsewhere in this document, in our filings with the Securities and
Exchange Commission ("SEC") or in materials incorporated therein by reference.
BACKGROUND
MLOA, established in the state of Arizona in 1969, is a wholly owned subsidiary
of MONY Life. MLOA's primary business is to provide life insurance and annuity
products to both individuals and businesses. MLOA is licensed to sell its
products in 49 states (not including New York), the District of Columbia and
Puerto Rico. As of December 31, 2012, MLOA had approximately 179,243 insurance
policies and annuity contracts in force.
MONY Life is an indirect wholly owned subsidiary of AXA Financial and AXA
Financial is an indirect wholly owned subsidiary of AXA, a French holding
company for an international group of insurance and related financial services
companies. For additional information regarding AXA, see "Description of
Business - Parent Company".
RECENT DEVELOPMENTS
On April 10, 2013, MLOA entered into an agreement with Protective Life
Insurance Company ("Protective Life") to reinsure an in-force book of life
insurance and annuity policies, written primarily prior to 2004. Upon the
closing of the agreement, MLOA will receive consideration totaling $373
million. The transaction, which is subject to regulatory approvals and the
satisfaction of other customary conditions, is expected to close in 2013.
CURRENT MARKET CONDITIONS AND OVERVIEW
MLOA's business results of operations are materially affected by conditions in
the global capital markets and the economy, generally. In recent years,
stressed conditions in the economy, volatility and disruptions in the capital
markets and/or particular asset classes and continued low interest rates have
had an adverse effect on MLOA's business, results of operations and financial
condition. While an economic recovery in the U.S. is underway, concerns over
the pace of the recovery continue due to, among other things, the level of U.S.
national debt, the European sovereign debt crisis, unemployment, the
availability and cost of credit and geopolitical issues have contributed to
increased volatility and diminished confidence for the
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
economy and capital markets going forward. Moreover, recent actions by the
United States Federal Reserve to provide further support to the U.S. economy
including, but not limited to, keeping long-term interest rates low until the
unemployment rate falls below 6.5%, contributed to a continuation of low
interest rates during the year-ended 2012. As a result, the ten year U.S.
Treasury yield ranged from a low of 1.5% (the lowest in five decades) to a high
of 2.2% during 2012, ultimately ending the year at 1.8% on December 31, 2012.
Consequently, many of the risks MLOA faces, including those arising from weak
economic conditions, equity market declines and/or volatility, prolonged
periods of low interest rates and/or interest rate fluctuations could affect
(and, in some cases in 2012, did affect) MLOA's business, results of operations
and financial condition.
Despite the challenging economic environment, MLOA's overall life insurance and
annuity sales improved in 2012 as compared to 2011. MLOA's first year life
insurance premiums and deposits in 2012 increased by $6 million or 7.6% from
2011, primarily due to increased sales of universal life insurance products. In
2012, life insurance first year premiums and deposits by MLOA increased by $14
million or 21.2% from 2011, primarily due to increased premiums and deposits of
recently introduced indexed universal life ("UL") products.
CRITICAL ACCOUNTING ESTIMATES
MLOA's MD&A is based upon its financial statements that have been prepared in
accordance with accounting principles generally accepted in the United States
of America ("U.S. GAAP"). The preparation of these financial statements
requires the application of accounting policies that often involve a
significant degree of judgment, requiring management to make estimates and
assumptions (including normal, recurring accruals) that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Management, on an ongoing basis, reviews and evaluates the estimates and
assumptions used in the preparation of the financial statements, including
those related to investments, recognition of insurance income and related
expenses, DAC and value of business acquired ("VOBA") and future policy
benefits. MLOA bases its estimates on historical experience and on various
other assumptions that are believed to be reasonable under the circumstances.
The results of such factors form the basis for making judgments about the
carrying values of assets and liabilities that are not readily apparent from
other sources. If management determines that modifications in assumptions and
estimates are appropriate given current facts and circumstances, the results of
operations and financial position as reported in the Financial Statements could
change significantly.
Management believes the critical accounting policies relating to the following
areas are most dependent on the application of estimates, assumptions and
judgments:
. Revenue Recognition
. Insurance Reserves and Policyholder Benefits
. DAC and VOBA
. Benefit plan costs
. Share-based and Other Compensation Programs
. Investments - Impairments and Fair Value Measurements
. Income Taxes
REVENUE RECOGNITION
Profits on non-participating traditional life policies and annuity contracts
with life contingencies emerge from the matching of benefits and other expenses
against the related premiums. Profits on universal life-type and
investment-type contracts emerge from the matching of benefits and other
expenses against the related contract margins. This matching is accomplished by
means of the provision for liabilities for future policy benefits and the
deferral, and subsequent amortization, of policy acquisition costs. Trends in
the general population and MLOA's own mortality, morbidity, persistency and
claims experience have a direct impact on the benefits and expenses reported in
any given period.
INSURANCE RESERVES AND POLICYHOLDER BENEFITS
NON-PARTICIPATING TRADITIONAL LIFE POLICIES
The future policy benefit reserves for non-participating traditional life
insurance policies relate primarily to non-participating term life products and
are calculated using a net level premium method equal to the present value of
expected future benefits plus the present value of future maintenance expenses
less the present value of future net premiums. The expected future benefits and
expenses are determined using
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
actuarial assumptions as to mortality, persistency and interest established at
policy issue. Reserve assumptions established at policy issue reflect best
estimate assumptions based on MLOA's experience that, together with interest
and expense assumptions, includes a margin for adverse deviation. Mortality
assumptions are reviewed annually and are generally based on MLOA's historical
experience or standard industry tables, as applicable; expense assumptions are
based on current levels of maintenance costs, adjusted for the effects of
inflation; and interest rate assumptions are based on current and expected net
investment returns.
UNIVERSAL LIFE AND INVESTMENT-TYPE CONTRACTS
Policyholders' account balances for UL and investment-type contracts represent
an accumulation of gross premium payments plus credited interest less expense
and mortality charges and withdrawals.
MLOA issues or has issued certain variable annuity products with guaranteed
minimum death benefit ("GMDB") and guaranteed minimum income benefit ("GMIB")
features. The GMDB feature provides that in the event of an insured's death,
the beneficiary will receive the higher of the current contract account balance
or another amount defined in the contract. The GMIB feature which, if elected
by the policyholder after a stipulated waiting period from contract issuance,
guarantees a minimum lifetime annuity based on predetermined annuity purchase
rates that may be in excess of what the contract account value can purchase at
then-current annuity purchase rates applied to a guaranteed minimum income
benefit base.
Reserves for GMDB and GMIB obligations are calculated on the basis of actuarial
assumptions related to projected benefits and related contract charges
generally over the lives of the contracts using assumptions consistent with
those used in estimating gross profits for purposes of amortizing DAC and VOBA.
The determination of this estimated liability is based on models that involve
numerous estimates and subjective judgments, including those regarding expected
market rates of return and volatility, contract surrender and withdrawal rates,
mortality experience, and, for contracts with the GMIB feature, GMIB election
rates. Assumptions related to contractholder behavior and mortality are updated
when a material change in behavior or mortality experience is observed in an
interim period.
SENSITIVITY OF FUTURE RATE OF RETURN ASSUMPTIONS ON GMDB/GMIB RESERVES
The future rate of return assumptions used in establishing reserves for GMDB
and GMIB features regarding Separate Account performance used for purposes of
this calculation are set using a long-term view of expected average market
returns by applying a reversion to the mean approach, consistent with that used
for DAC and VOBA amortization. For additional information regarding the future
expected rate of return assumptions and the reversion to the mean approach,
see, "--DAC and VOBA".
The GMDB/GMIB reserve balance before reinsurance ceded was $10 million at
December 31, 2012. The sensitivity of the reserves for GMDB and GMIB features
related to variable annuity policies relative to the future rate of return
assumptions by quantifying the adjustments to these reserves that would be
required assuming both a 100 basis point ("BP") increase and decrease in the
future rate of return would be less than $100,000. This sensitivity considers
only the direct effect of changes in the future rate of return on operating
results due to the change in the reserve balance and not changes in any other
assumptions such as persistency, mortality, or expenses included in the
evaluation of the reserves, or any changes on DAC and the GMIB reinsurance
asset.
TRADITIONAL ANNUITIES
The reserves for future policy benefits for annuities include payout annuities
and during the accumulation period, are equal to accumulated contractholders'
fund balances and, after annuitization, are equal to the present value of
expected future payments based on assumptions as to mortality, retirement,
maintenance expense, and interest rates. Interest rates used in establishing
such liabilities range from 3.0% to 6.0%. If reserves determined based on these
assumptions are greater than the existing reserves, the existing reserves are
adjusted to the greater amount.
REINSURANCE
For reinsurance contracts other than those covering GMIB exposure, reinsurance
recoverable balances are calculated using methodologies and assumptions that
are consistent with those used to calculate the direct liabilities. GMIB
reinsurance contracts are used to cede non-affiliated reinsurers a portion of
the exposure on variable annuity products that offer the GMIB feature. Under
U.S. GAAP, the GMIB reinsurance contracts are accounted for as derivatives and
are reported at fair value. Gross reserves for GMIB, on the other hand, are
calculated under U.S. GAAP on the basis of assumptions related to projected
benefits and related contract charges over the lives of the contracts,
therefore, will not immediately reflect the offsetting impact on future claims
exposure resulting from the same capital market and/or interest rate
fluctuations that cause gains or losses on the fair value of the GMIB
reinsurance contracts.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
DAC AND VOBA
Acquisition costs that vary with and are primarily related to the acquisition
of new and renewal insurance business, reflecting incremental direct costs of
contract acquisition with independent third parties or employees that are
essential to the contract transaction, as well as the portion of employee
compensation, including payroll fringe benefits and other costs directly
related to underwriting, policy issuance and processing, medical inspection,
and contract selling for successfully negotiated contracts including
commissions, underwriting, agency and policy issue expenses, are deferred.
Depending on the type of contract, DAC is amortized over the expected total
life of the contract group, based on MLOA's estimates of the level and timing
of gross margins, gross profits or assessments, or anticipated premiums. In
calculating DAC amortization, management is required to make assumptions about
investment results including hedging costs, Separate Account performance,
Separate Account fees, mortality and expense margins, lapse rates and
anticipated surrender charges that impact the estimates of the level and timing
of estimated gross profits or assessments, margins and anticipated future
experience. VOBA, which arose from MLOA's acquisition by AXA Financial, was
established in accordance with purchase accounting guidance for business
combinations. VOBA is the actuarially determined present value of estimated
future gross profits from insurance contracts in force at the date of the
acquisition. DAC and VOBA are amortized over the expected life of the contracts
(up to 50 years from date of issue) according to the type of contract using the
methods described below as applicable. DAC and VOBA are subject to loss
recognition testing at the end of each accounting period.
NON-PARTICIPATING TRADITIONAL LIFE INSURANCE POLICIES
DAC and VOBA associated with non-participating traditional life policies are
amortized in proportion to anticipated premiums. Assumptions as to anticipated
premiums are estimated at the date of policy issue and are consistently applied
during the life of the contracts. Deviations from estimated experience are
reflected in earnings (loss) in the period such deviations occur. For these
contracts, the amortization periods generally are for the total life of the
policy.
UNIVERSAL LIFE AND INVESTMENT-TYPE CONTRACTS
DAC and VOBA associated with UL and investment-type products, are amortized
over the expected total life of the contract group as a constant percentage of
estimated gross profits arising principally from investment results, Separate
Account fees, mortality and expense margins and surrender charges based on
historical and anticipated future experience, updated at the end of each
accounting period. When estimated gross profits are expected to be negative for
multiple years of a contract life, DAC and VOBA are amortized using the present
value of estimated assessments. The effect on the amortization of DAC of
revisions to estimated gross profits or assessments is reflected in earnings
(loss) in the period such estimated gross profits or assessments are revised. A
decrease in expected gross profits or assessments would accelerate DAC and VOBA
amortization. Conversely, an increase in expected gross profits or assessments
would slow DAC and VOBA amortization. The effect on the DAC and VOBA assets
that would result from realization of unrealized gains (losses) is recognized
with an offset to accumulated other comprehensive income (loss) ("AOCI") in
shareholder's equity as of the balance sheet date.
Quarterly adjustments to the DAC and VOBA balances are made for current period
experience and market performance related adjustments, and the impact of
reviews of estimated total gross profits. The quarterly adjustments for current
period experience reflect the impact of differences between actual and
previously estimated expected gross profits for a given period. Total estimated
gross profits include both actual experience and estimates of gross profits for
future periods. To the extent each period's actual experience differs from the
previous estimate for that period, the assumed level of total gross profits may
change. In these cases, cumulative adjustment to all previous periods' costs is
recognized.
During each accounting period, the DAC and VOBA balances are evaluated and
adjusted with a corresponding charge or credit to current period earnings for
the effects of MLOA's actual gross profits and changes in the assumptions
regarding estimated future gross profits. A decrease in expected gross profits
or assessments would accelerate DAC and VOBA amortization. Conversely, an
increase in expected gross profits or assessments would slow DAC and VOBA
amortization. The effect on the DAC and VOBA assets that would result from
realization of unrealized gains (losses) is recognized with an offset to AOCI
in shareholder's equity as of the balance sheet date.
For the variable and UL policies a significant portion of the gross profits is
derived from mortality margins and therefore, are significantly influenced by
the mortality assumptions used. Mortality assumptions represent the Company's
expected claims experience over the life of these policies and are based on a
long-term average of actual company experience. This assumption is updated
quarterly to reflect recent experience as it emerges. Improvement of life
mortality in future periods from that currently projected would result in
future deceleration of DAC and VOBA amortization. Conversely, deterioration of
life mortality in future periods from that currently projected would result in
future acceleration of DAC and VOBA amortization. Generally, life mortality
experience has been improving in recent years. However, changes to the
mortality assumptions in future periods could have a significant adverse or
favorable effect on the results of operations.
PREMIUM DEFICIENCY RESERVES AND LOSS RECOGNITION TESTS
After the initial establishment of reserves, premium deficiency and loss
recognition tests are performed using best estimate assumptions as of the
testing date without provisions for adverse deviation. When the liabilities for
future policy benefits plus the present value of expected
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
future gross premiums for the aggregate product group are insufficient to
provide for expected future policy benefits and expenses for that line of
business (i.e., reserves net of any DAC asset), DAC and VOBA would first be
written off and thereafter, if required, a premium deficiency reserve would be
established by a charge to earnings (loss).
SENSITIVITY OF DAC TO CHANGES IN FUTURE MORTALITY ASSUMPTIONS
The variable and UL policies DAC balance was $175 million at December 31, 2012.
The following table demonstrates the sensitivity of the DAC balance relative to
future mortality assumptions by quantifying the adjustments that would be
required, assuming an increase and decrease in the future mortality rate by 1%.
This information considers only the direct effect of changes in the mortality
assumptions on the DAC balance and not changes in any other assumptions used in
the measurement of the DAC balance and does not assume changes in reserves.
DAC SENSITIVITY - MORTALITY
DECEMBER 31, 2012
INCREASE/(REDUCTION)
IN DAC
--------------------
(IN MILLIONS)
Decrease in future mortality by 1%........... $ 3
Increase in future mortality by 1%........... (3)
SENSITIVITY OF DAC TO CHANGES IN FUTURE RATE OF RETURN ASSUMPTIONS
A significant assumption in the amortization of DAC and VOBA on variable
annuities and, to a lesser extent, on variable and interest-sensitive life
insurance relates to projected future Separate Account performance. Management
sets estimated future gross profit or assessment assumptions related to
Separate Account performance using a long-term view of expected average market
returns by applying a reversion to the mean approach, a commonly used industry
practice. This future return approach influences the projection of fees earned,
as well as other sources of estimated gross profits. Returns that are higher
than expectations for a given period produce higher than expected account
balances, increase the fees earned resulting in higher expected future gross
profits and lower DAC amortization for the period. The opposite occurs when
returns are lower than expected.
In applying this approach to develop estimates of future returns, it is assumed
that the market will return to an average gross long-term return estimate,
developed with reference to historical long-term equity market performance.
Currently, the average gross long-term return estimate is measured from
December 31, 2008. Management has set limitations as to maximum and minimum
future rate of return assumptions, as well as a limitation on the duration of
use of these maximum or minimum rates of return. At December 31, 2012, the
average gross short-term and long-term annual return estimate on variable and
interest-sensitive life insurance and variable annuities was 9.0% (7.37% net of
product weighted average Separate Account fees), and the gross maximum and
minimum short-term annual rate of return limitations were 15.0% (13.37% net of
product weighted average Separate Account fees) and 0.0% (-1.63% net of product
weighted average Separate Account fees), respectively. The maximum duration
over which these rate limitations may be applied is 5 years. This approach will
continue to be applied in future periods. These assumptions of long-term growth
are subject to assessment of the reasonableness of resulting estimates of
future return assumptions.
If actual market returns continue at levels that would result in assuming
future market returns of 15.0% for more than 5 years in order to reach the
average gross long-term return estimate, the application of the 5 year maximum
duration limitation would result in an acceleration of DAC and VOBA
amortization. Conversely, actual market returns resulting in assumed future
market returns of 0.0% for more than 5 years would result in a required
deceleration of DAC and VOBA amortization. At December 31, 2012, current
projections of future average gross market returns assume a 0.0% annualized
return for the next two quarters, which is within the maximum and minimum
limitations, grading to a reversion to the mean of 9.0% in seven quarters.
Other significant assumptions underlying gross profit estimates for UL and
investment-type products relate to contract persistency and General Account
investment spread.
The variable annuity contracts DAC balance was $20 million at December 31,
2012. The following table provides an example of the sensitivity of that DAC
balance relative to future return assumptions by quantifying the adjustments to
the DAC balance that would be required assuming both an increase and decrease
in the future rate of return by 1%. This information considers only the effect
of changes in the future Separate Account rate of return and not changes in any
other assumptions used in the measurement of the DAC balance.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
DAC SENSITIVITY - RATE OF RETURN
DECEMBER 31, 2012
INCREASE/(REDUCTION)
IN DAC
--------------------
(IN MILLIONS)
Decrease in future rate of return by 1%...... $ (3)
Increase in future rate of return by 1%...... 3
BENEFIT PLAN COSTS
Although MLOA has no employees, under service agreements with affiliates, MLOA
is charged for services, including personnel services that include a component
related to employee benefits (see Note 8 of Notes to Financial Statements). Net
periodic pension cost is the aggregation of the compensation cost of benefits
promised, interest cost resulting from deferred payment of those benefits, and
investment results of assets dedicated to fund those benefits. Each component
of net periodic pension benefits cost is based on the affiliated company's best
estimate of long-term actuarial and investment return assumptions and consider,
as appropriate, an assumed discount rate, an expected rate of return on plan
assets, inflation costs, expected increases in compensation levels and trends
in health care costs. Of these assumptions, the discount rate and expected rate
of return assumptions generally have the most significant impact on the
resulting net periodic cost associated with these plans. Actual experience
different from that assumed generally is recognized prospectively over future
periods; however, significant variances could result in immediate recognition
of net periodic cost or benefit if they exceed certain prescribed thresholds or
in conjunction with a reconsideration of the related assumptions.
SHARE-BASED AND OTHER COMPENSATION PROGRAMS
Although MLOA has no employees, under service agreements with affiliates, MLOA
is charged for services, including personnel services that include a component
related to employee benefits (see Note 9 of Notes to Financial Statements). AXA
and AXA Financial Group sponsors various share-based compensation plans for
eligible employees and associates. Compensation expense related to these awards
is measured based on the estimated fair value of the equity instruments issued
or the liabilities incurred. AXA Financial Group uses the Black-Scholes option
valuation model to determine the grant-date fair values of equity share/unit
option awards and similar instruments, requiring assumptions with respect to
the expected term of the award, expected price volatility of the underlying
share/unit, and expected dividends. These assumptions are significant factors
in the resulting measure of fair value recognized over the vesting period and
require use of management judgment as to likely future conditions, including
employee exercise behavior, as well as consideration of historical and market
observable data.
INVESTMENTS - IMPAIRMENTS AND VALUATION ALLOWANCES AND FAIR VALUE MEASUREMENTS
MLOA's investment portfolio principally consists of public and private fixed
maturities, mortgage loans and Units in AllianceBernstein. In applying the
Company's accounting policies with respect to these investments, estimates,
assumptions, and judgments are required about matters that are inherently
uncertain, particularly in the identification and recognition of
other-than-temporary impairments ("OTTI"), determination of the valuation
allowance for losses on mortgage loans and measurements of fair value.
IMPAIRMENTS AND VALUATION ALLOWANCES
The assessment of whether OTTIs have occurred is performed quarterly by MLOA's
Investment Under Surveillance ("IUS") Committee, with the assistance of its
investment advisors, on a security-by-security basis for each
available-for-sale fixed maturity and equity security that has experienced a
decline in fair value for purpose of evaluating the underlying reasons. The
analysis begins with a review of gross unrealized losses by the following
categories of securities: (i) all investment grade and below investment grade
fixed maturities for which fair value has declined and remained below amortized
cost by 20% or more; and (ii) below-investment-grade fixed maturities for which
fair value has declined and remained below amortized cost for a period greater
than 12 months. Integral to the analysis is an assessment of various indicators
of credit deterioration to determine whether the investment security is
expected to recover, including, but not limited to, consideration of the
duration and severity of the unrealized loss, failure, if any, of the issuer of
the security to make scheduled payments, actions taken by rating agencies,
adverse conditions specifically related to the security or sector, the
financial strength, liquidity, and continued viability of the issuer and, for
equity securities only, the intent and ability to hold the investment until
recovery, resulting in identification of specific securities for which OTTI is
recognized.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
If there is no intent to sell or likely requirement to dispose of the fixed
maturity security before its recovery, only the credit loss component of any
resulting OTTI is recognized in earnings and the remainder of the fair value
loss is recognized in other comprehensive income (loss) ("OCI"). The amount of
credit loss is the shortfall of the present value of the cash flows expected to
be collected as compared to the amortized cost basis of the security. The
present value is calculated by discounting management's best estimate of
projected future cash flows at the effective interest rate implicit in the debt
security prior to impairment. Projections of future cash flows are based on
assumptions regarding probability of default and estimates regarding the amount
and timing of recoveries. These assumptions and estimates require use of
management judgment and consider internal credit analyses as well as market
observable data relevant to the collectability of the security. For mortgage-
and asset-backed securities, projected future cash flows also include
assumptions regarding prepayments and underlying collateral value.
Mortgage loans also are reviewed quarterly by the IUS Committee for impairment
on a loan-by-loan basis, including an assessment of related collateral value.
Commercial mortgages 60 days or more past due and agricultural mortgages 90
days or more past due, as well as all mortgages in the process of foreclosure,
are identified as problem mortgages. Based on its monthly monitoring of
mortgages, a class of potential problem mortgages also is identified,
consisting of mortgage loans not currently classified as problems but for which
management has doubts as to the ability of the borrower to comply with the
present loan payment terms and which may result in the loan becoming a problem
or being restructured. The decision whether to classify a performing mortgage
loan as a potential problem involves significant subjective judgments by
management as to likely future industry conditions and developments with
respect to the borrower or the individual mortgaged property.
For problem mortgage loans a valuation allowance is established to provide for
the risk of credit losses inherent in the lending process. The allowance
includes loan specific reserves for loans determined to be non-performing as a
result of the loan review process. A non-performing loan is defined as a loan
for which it is probable that amounts due according to the contractual terms of
the loan agreement will not be collected. The loan specific portion of the loss
allowance is based on the Company's assessment as to ultimate collectability of
loan principal and interest. Valuation allowances for a non-performing loan are
recorded based on the present value of expected future cash flows discounted at
the loan's effective interest rate or based on the fair value of the collateral
if the loan is collateral dependent. The valuation allowance for mortgage loans
can increase or decrease from period to period based on such factors.
FAIR VALUE MEASUREMENTS
Investments reported at fair value in the balance sheets of MLOA include fixed
maturity securities classified as available-for-sale ("AFS"). In addition,
reinsurance contracts covering GMIB exposure in certain variable annuity
products issued by MLOA are considered embedded derivatives and reported at
fair value.
When available, the estimated fair value of securities is based on quoted
prices in active markets that are readily and regularly obtainable; these
generally are the most liquid holdings and their valuation does not involve
management judgment. When quoted prices in active markets are not available,
MLOA estimates fair value based on market standard valuation methodologies,
including discounted cash flow methodologies, matrix pricing, or other similar
techniques. For securities with reasonable price transparency, the significant
inputs to these valuation methodologies either are observable in the market or
can be derived principally from or corroborated by observable market data. When
the volume or level of activity results in little or no price transparency,
significant inputs no longer can be supported by reference to market observable
data but instead must be based on management's estimation and judgment.
As required by the accounting guidance, MLOA categorizes its assets and
liabilities measured at fair value into a three-level hierarchy, based on the
priority of the inputs to the respective valuation technique, giving the
highest priority to quoted prices in active markets for identical assets and
liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
For additional information regarding the key estimates and assumptions
surrounding the determinations of fair value measurements, see Note 5 to the
Financial Statements - Fair Value Disclosures.
INCOME TAXES
Income taxes represent the net amount of income taxes that MLOA expects to pay
to or receive from various taxing jurisdictions in connection with its
operations. MLOA provides for Federal and state income taxes currently payable,
as well as those deferred due to temporary differences between the financial
reporting and tax bases of assets and liabilities. Deferred tax assets and
liabilities are measured at the balance sheet date using enacted tax rates
expected to apply to taxable income in the years the temporary differences are
expected to reverse. The realization of deferred tax assets depends upon the
existence of sufficient taxable income within the carry forward periods under
the tax law in the applicable jurisdiction. Valuation allowances are
established when management determines, based on available information, that it
is more likely than not that deferred tax assets will not be realized.
Management considers all available evidence including past operating results,
the existence of cumulative losses in the most recent years, forecasted
earnings, future taxable income and prudent and feasible tax planning
strategies. MLOA's accounting for income taxes represents management's best
estimate of the tax consequences of various events and transactions.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
Significant management judgment is required in determining the provision for
income taxes and deferred tax assets and liabilities and in evaluating MLOA's
tax positions including evaluating uncertainties under the guidance for
Accounting for Uncertainty in Income taxes. Under the guidance, MLOA determines
whether it is more-likely-than-not that a tax position will be sustained upon
examination by the appropriate taxing authorities before any part of the
benefit can be recorded in the financial statements. Tax positions are then
measured at the largest amount of benefit that is greater than 50 percent
likely of being realized upon settlement.
MLOA's tax positions are reviewed quarterly and the balances are adjusted as
new information becomes available.
RESULTS OF OPERATIONS
The earnings narratives that follow discuss the results for 2012 compared to
2011's results, followed by the results for 2011 compared to 2010's results.
MONY LIFE INSURANCE COMPANY OF AMERICA
RESULTS OF OPERATIONS
2012 2011 2010
------ ------ ------
(IN MILLIONS)
REVENUES
Universal life and investment-type product policy fee income..................... $ 117 $ 123 $ 122
Premiums......................................................................... 32 42 39
Net investment income (loss)..................................................... 110 116 119
Investment gains (losses), net:
Total other-than-temporary impairment losses.................................... (7) (2) (56)
Portion of loss recognized in other comprehensive income (loss)................. -- -- 2
------ ------ ------
Net impairment losses recognized.............................................. (7) (2) (54)
Other investment gains (losses), net............................................ 2 1 6
------ ------ ------
Total investment gains (losses), net.......................................... (5) (1) (48)
------ ------ ------
Other income (loss).............................................................. 7 4 8
Increase (decrease) in the fair value of the reinsurance contract asset.......... (2) 7 1
------ ------ ------
Total revenues................................................................ 259 291 241
------ ------ ------
BENEFITS AND OTHER DEDUCTIONS
Policyholders' benefits.......................................................... 103 96 93
Interest credited to policyholders' account balances............................. 61 61 68
Compensation and benefits........................................................ 25 30 32
Commissions...................................................................... 38 33 27
Interest expense................................................................. -- -- 1
Amortization of deferred policy acquisition costs and value of business acquired. (27) (12) 41
Capitalization of deferred policy acquisition costs.............................. (31) (25) (21)
Rent expense..................................................................... 2 3 3
Other operating costs and expenses............................................... 44 29 27
------ ------ ------
Total benefits and other deductions........................................... 215 215 271
------ ------ ------
Earnings (loss), before income taxes............................................. 44 76 (30)
Income tax (expense) benefit..................................................... (6) 1 11
------ ------ ------
Net Earnings (Loss).............................................................. $ 38 $ 77 $ (19)
====== ====== ======
YEAR ENDED DECEMBER 31, 2012 COMPARED TO YEAR ENDED DECEMBER 31, 2011
Net earnings (loss) were $38 million in 2012, a decrease of $39 million from
net earnings (loss) of $77 million in 2011, primarily related to a decrease in
the fair value of the reinsurance contract asset in 2012 as compared to an
increase in 2011, lower investment income on fixed maturities reflecting lower
yields, higher writedowns on fixed maturities, higher policyholders' benefits
and higher other operating costs and expenses partially offset by higher
negative DAC and VOBA amortization.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
Income tax expense was $6 million in 2012 as compared to an income tax benefit
of $1 million in 2011. The $7 million higher income tax expense was primarily
related to the absence of the valuation allowance reversal in 2011 partially
offset by lower pre-tax earnings in 2012 compared to 2011. The 2012 income tax
expense was reduced by a $9 million income tax benefit from the conclusion of
the 2004-2007 IRS audit. In 2011, the income tax benefit for MLOA reflected a
release of $19 million of valuation allowance related to prior periods and a $7
million income tax benefit from the settlement of refund claims for tax years
1994-1997.
Earnings (loss) before income taxes were $44 million in 2012, a decrease of $32
million from earnings (loss) before income taxes of $76 million in 2011.
REVENUES. Total revenues in 2012 decreased $32 million to $259 million from
$291 million in 2011, primarily due to lower premiums, lower universal life and
investment-type product policy fee income, a decrease in the fair value of the
reinsurance contract asset as compared to an increase in 2011 and lower
investment income on fixed maturities.
UL and investment-type product policy fee income decreased $6 million in 2012
to $117 million from $123 million in 2011 period primarily due to lower initial
fee liability amortization resulting from updated expectations of lower future
mortality in 2012.
Premiums totaled $32 million in 2012, a decrease of $10 million from $42
million in 2011 primarily related to lower premiums on supplementary contracts
with life contingencies and lower renewals partially offset by higher first
year life premiums.
Net investment income decreased $6 million in 2012 to $110 million from $116
million in 2011 principally due to lower investment income on fixed maturities
reflecting lower yields and lower investment income from mortgage loans on real
estate reflecting the impact of MLOA's sale of its entire portfolio of
agricultural mortgage loans to AXA Equitable in August of 2012.
Investment losses, net increased $4 million in 2012 to $5 million from $1
million in 2011 due to writedowns of $7 million on fixed maturities during 2012
as compared to $1 million of writedowns in 2011, all of which related to
commercial mortgage-backed securities ("CMBS") for both periods, partially
offset by $2 million higher gains on sales of fixed maturities and the $3
million gain recorded on MLOA's sale of its agricultural mortgage loan
portfolio.
Increase (decrease) in the fair value of the reinsurance contract asset
decreased $9 million in 2012 to a decrease of $2 million from an increase of $7
million in 2011; both periods changes reflected existing market conditions and
assumption changes.
BENEFITS AND OTHER DEDUCTIONS. Total benefits and other deductions totaled $215
million in 2012 and 2011, respectively as the impact of negative DAC and VOBA
amortization and higher DAC capitalization were offset by higher operating
costs and expense and increases in policyholder benefits in 2012.
Policyholders' benefits increased $7 million in 2012 to $103 million from $96
million in 2011 primarily due to a $6 million increase in death and annuity
benefit expenses and a $1 million higher increase in GMIB and GMDB reserves in
2012 as compared to 2011.
Compensation and benefits expense decreased $5 million to $25 million in 2012
from $30 million in 2011 due to lower allocated salary expenses reflecting AXA
Financial Group's expense reduction initiatives partially offset by higher
allocated shared based compensation expenses.
Commissions increased $5 million in 2012 to $38 million from $33 million in
2011 due to higher first year commissions on increased sales of life insurance
and annuity products.
Amortization of DAC and VOBA decreased $15 million in 2012 (negative
amortization of $27 million in 2012 as compared to negative amortization of $12
million in 2011) as a result of updated expectations of lower future mortality
assumptions and better lapse experience in annuities and interest
sensitive-life products. The negative amortization in 2011 resulted from
unlocking of assumptions due to better lapse experience in annuities and
interest sensitive-life products.
DAC capitalization totaled $31 million in 2012, an increase of $6 million from
the $25 million reported in 2011. The increase was primarily due to $9 million
capitalization of higher first year commissions partially offset by $3 million
lower capitalization of other expenses.
Other operating costs and expenses, substantially all of which are allocated,
totaled $44 million in 2012, an increase of $15 million from the $29 million
reported in 2011. The increase was primarily due to $6 million higher other
operating costs and expenses (reflecting $3 million higher expenses related to
AXA Technology Services and $1 million higher outsourcing costs), $3 million
higher restructuring costs, $2 million higher depreciation and $2 million
higher consulting and auditing fees.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
YEAR ENDED DECEMBER 31, 2011 COMPARED TO YEAR ENDED DECEMBER 31, 2010
Net earnings (loss) were $77 million in 2011, an increase of $96 million from
net earnings (loss) of $(19) million in 2010, primarily due to negative DAC and
VOBA amortization in 2011 as compared to amortization in 2010 and lower
impairment of fixed maturities in 2011.
Income tax benefit decreased $10 million in 2011 to $1 million as compared to
$11 million in 2010. In first quarter of 2011, management reviewed the
intercompany tax sharing agreement between MLOA and MONY Life and determined
that the valuation allowance previously established on deferred tax assets
related to net operating loss carryforwards was no longer necessary.
Consequently, the tax benefit for MLOA for 2011 reflected a release of $19
million of valuation allowances related to prior periods. MLOA also recognized
a $7 million tax benefit in settlement of refund claims for tax years
1994-1997. These benefits more than offset the tax expense on $76 million of
pre-tax earnings. The tax benefit in 2010 was due to pre-tax losses of $30
million.
Earnings (loss) before income taxes were $76 million in 2011, an increase of
$106 million from the earnings (loss) before income taxes of $(30) million in
2010.
REVENUES. Total revenues in 2011 increased $50 million to $291 million from
$241 million in 2010, primarily due to lower impairments and a higher increase
in the fair value of the reinsurance contract asset in 2011 as compared to 2010.
UL and investment-type product policy fee income increased $1 million in 2011
to $123 million from $122 million in 2010 primarily due to higher initial fee
liability capitalization resulting from the unlocking of assumptions due to
better lapse experience in interest sensitive life products.
Net investment income decreased $3 million in 2011 to $116 million from $119
million in 2010 principally due to lower investment income on fixed maturities.
Investment losses, net decreased $47 million in 2011 to $1 million from $48
million in 2010 due to writedowns of $2 million on fixed maturities during 2011
as compared to $54 million in writedowns in 2010, all of which related to CMBS
for both periods, partially offset by lower gains on sales of fixed maturities.
Increase (decrease) in the fair value of the reinsurance contract asset
increased $6 million in 2011 to $7 million from $1 million in 2010; both
periods changes reflected existing market conditions.
BENEFITS AND OTHER DEDUCTIONS. Total benefits and other deductions in 2011
decreased $56 million to $215 million from $271 million in 2010, primarily due
to negative DAC and VOBA amortization and lower interest credited partially
offset by higher commission expenses.
Policyholders' benefits increased $3 million in 2011 to $96 million from $93
million in 2010 primarily due to a $1 million higher increase in reserves for
supplementary contracts in 2011 as compared to 2010 and a $1 million charge for
unreported death claims in 2011.
Interest credited to policyholders' account balances decreased $7 million in
2011 to $61 million from $68 million in 2010 primarily related to lower fund
values.
Compensation and benefits expense decreased $2 million to $30 million in 2011
from $32 million in 2010 due to lower allocated salary and other benefit
expenses.
Commissions increased $6 million in 2011 to $33 million from $27 million in
2010 due to higher first year commissions on increased sales of life insurance
and annuity products.
Amortization of DAC and VOBA decreased $53 million in 2011 (negative
amortization of $12 million in 2011 as compared to amortization of $41 million
in 2010). The negative amortization in 2011 resulted from unlocking of
assumptions due to better lapse experience in annuities and interest
sensitive-life products. In 2010, revised estimates of future reinsurance costs
and other updates resulted in amortization expense.
PREMIUMS AND DEPOSITS
The market for annuity and life insurance products of the types issued by the
MLOA continues to be dynamic as the global economy and capital markets slowly
recover from significant stress experienced in recent years. As a result,
features and pricing of various products, including but not limited to variable
annuity products, continue to change rapidly, in response to changing customer
preferences, company risk appetites, capital utilization and other factors.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
Management continues to evaluate the products sold by MLOA as part of an
ongoing review of products offered by AXA Equitable and AXA Financial's other
insurance subsidiaries with a view towards reducing duplication of products,
improving the quality of the product line-up and enhancing the overall
profitability of AXA Financial Group. Given the impact or effects of the recent
economic disruption, MLOA may offer new and/or different products, and it may
also further revise, suspend or discontinue one or more of its product
offerings as conditions in the marketplace and capital markets develop.
The following table lists the sales for major insurance product lines for 2012,
2011 and 2010. Premiums and deposits are presented net of internal conversions
and are presented gross of reinsurance ceded.
PREMIUMS AND DEPOSITS
2012 2011 2010
------ ------ ------
(IN MILLIONS)
RETAIL:
Annuities
First year................. $ 5 $ 11 $ 5
Renewal.................... 37 35 30
------ ------ ------
42 46 35
Life/ (1) /
First year................. 69 35 31
Renewal.................... 151 151 151
------ ------ ------
220 186 182
Other/ (2) /
First year................. -- 1 1
Renewal.................... 6 6 7
------ ------ ------
6 7 8
------ ------ ------
Total retail............. 268 239 225
------ ------ ------
WHOLESALE:
Annuities
First year................. -- 1 1
Renewal.................... 2 2 1
------ ------ ------
2 3 2
Life/ (1) /
First year................. 11 31 3
Renewal.................... 47 50 50
------ ------ ------
58 81 53
Other....................... 1 1 1
------ ------ ------
Total wholesale.......... 61 85 56
------ ------ ------
Total Premiums and Deposits. $ 329 $ 324 $ 281
====== ====== ======
/(1)/Includes variable, interest-sensitive and traditional life products.
/(2)/Includes reinsurance assumed.
2012 COMPARED TO 2011. Total premiums and deposits for insurance and annuity
products for 2012 were $329 million, a $5 million increase from $324 million in
2011 while total first year premiums and deposits increased $6 million to $85
million in 2012 from $79 million in 2011. First year premiums and deposits for
the life insurance products increased $14 million, primarily due to the $34
million increase in sales of universal life insurance products in the wholesale
channel offset by the $20 million decrease in sales of universal life insurance
products in the retail channel. The annuity line's first year premiums and
deposits decreased $6 million to $5 million principally due to the decrease in
supplementary contract sales, substantially all in the retail channel.
2011 COMPARED TO 2010. Total premiums and deposits for insurance and annuity
products for 2011 were $324 million, a $43 million increase from $281 million
in 2010 while total first year premiums and deposits increased $38 million to
$79 million in 2011 from $41 million in 2010.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
First year premiums and deposits for the life insurance products increased $32
million, primarily due to the $28 million and $4 million respective increase in
sales of universal life insurance products in the wholesale and retail
channels. The annuity line's first year premiums and deposits increased $6
million to $11 million principally due to the $6 million increase in
supplementary contract sales, substantially all in the retail channel.
SURRENDERS AND WITHDRAWALS.
The following table presents surrender and withdrawal amounts and rates for
major insurance product lines. Annuity surrenders and withdrawals are presented
net of internal replacements.
SURRENDERS AND WITHDRAWALS
RATES/(1)/
----------------
2012 2011 2010 2012 2011 2010
------ ------ ------ ---- ---- ----
(DOLLARS IN MILLIONS)
Annuities............................... $ 207 $ 266 $ 296 15.9% 17.9% 17.5%
Variable and interest-sensitive life.... 71 92 121 4.8% 6.0% 7.7%
------ ------ ------
Total................................... $ 278 $ 358 $ 417
====== ====== ======
/(1)/Surrender rates are based on the average surrenderable future policy
benefits and/or policyholders' account balances for the related policies
and contracts in force during each year.
2012 COMPARED TO 2011. Surrenders and withdrawals decreased $80 million, from
$358 million in 2011 to $278 million for 2012. There was a decrease of $59
million and $21 million, respectively, for individual annuities and variable
and interest sensitive life insurance surrenders withdrawals. The annualized
annuities surrender rate decreased to 15.9% in 2012 from 17.9% in 2011. The
variable and interest sensitive life products' annualized surrender rate for
2012 and 2011 was 4.8% and 6.0%, respectively.
2011 COMPARED TO 2010. Surrenders and withdrawals decreased $59 million, from
$417 million in 2010 to $358 million for 2011. There was a decrease of $30
million and $29 million, respectively, for individual annuities and variable
and interest sensitive life insurance surrenders withdrawals. The annualized
annuities surrender rate increased to 17.9% in 2011 from 17.5% in 2010. The
variable and interest sensitive life products' annualized surrender rate for
2011 and 2010 was 6.0% and 7.7%, respectively.
GENERAL ACCOUNT INVESTMENT PORTFOLIO
The General Account Investment Assets ("GAIA") portfolio consists of a
well-diversified portfolio of public and private fixed maturities, commercial
and agricultural mortgages and other loans and other invested assets.
The General Accounts' portfolios and investment results support the insurance
and annuity liabilities of MLOA's business operations. The following table
reconciles the balance sheet asset amounts to GAIA.
GENERAL ACCOUNT INVESTMENT ASSETS
DECEMBER 31, 2012
BALANCE
SHEET TOTAL OTHER/(1)/ GAIA
BALANCE SHEET CAPTIONS: ----------- --------- --------
(IN MILLIONS)
Fixed maturities, available for sale, at fair value. $ 2,026 $ 136 $ 1,890
Mortgage loans on real estate....................... 45 -- 45
Policy Loans........................................ 137 (2) 139
Other invested assets............................... 71 69 2
---------- -------- --------
Total investments.................................. 2,279 203 2,076
Cash and cash equivalents........................... 151 11 140
---------- -------- --------
Total............................................... $ 2,430 $ 214 $ 2,216
========== ======== ========
/(1)/Assets listed in the "Other" category principally consist of MLOA's loans
to affiliates and other miscellaneous assets and loans from affiliates and
other miscellaneous liabilities related to GAIA that are reclassified from
various balance sheet lines held in portfolios other than the General
Account which are not managed as part of GAIA, including related accrued
income or expense and certain reclassifications and, for fixed maturities,
the reversal of net unrealized gains (losses). The "Other" category is
deducted in arriving at GAIA.
72
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
INVESTMENT RESULTS OF GENERAL ACCOUNT INVESTMENT ASSETS
The following table summarizes investment results by asset category for the
periods indicated.
2012 2011 2010
---------------- ---------------- ----------------
YIELD AMOUNT Yield Amount Yield Amount
----- -------- ----- -------- ----- --------
(DOLLARS IN MILLIONS)
FIXED MATURITIES:
Investment grade................
Income (loss)................. 4.95% $ 87 5.36% $ 90 5.36% $ 91
Ending assets................. 1,763 1,728 1,667
Below investment grade..........
Income........................ 6.83% 9 7.59% 12 6.88% 15
Ending assets................. 127 152 182
MORTGAGES:
Income (loss)................. 10.30% 10 7.97% 10 7.15% 10
Ending assets................. 45 125 142
POLICY LOANS:
Income........................ 5.84% 8 6.12% 8 6.31% 8
Ending assets................. 139 136 134
CASH AND SHORT-TERM INVESTMENTS:
Income........................ 0.14% -- 0.11% -- 0.22% --
Ending assets................. 140 50 77
OTHER INVESTED ASSETS:
Income........................ -- -- --
Ending assets................. 2 2 2
TOTAL INVESTED ASSETS:
-------- -------- --------
Income........................ 4.91% 114 5.57% 120 5.45% 124
Ending Assets................. 2,216 2,193 2,204
DEBT AND OTHER:
Interest expense and other.... -- -- 7.49% (1)
Ending assets (liabilities)... -- -- --
TOTAL:
-------- -------- --------
Investment income............. 5.24% 114 5.60% 120 5.54% 123
Less: investment fees......... (0.11)% (2) (0.11)% (2) (0.12)% (3)
----- ======== ----- ======== ----- ========
Investment Income, Net........ 5.13% $ 112 5.49% $ 118 5.42% $ 120
======== ======== ========
ENDING NET ASSETS $ 2,216 $ 2,193 $ 2,204
======== ======== ========
FIXED MATURITIES
The fixed maturity portfolio consists largely of investment grade corporate
debt securities and includes significant amounts of U.S. government and agency
obligations. At December 31, 2012, 75.8% of the fixed maturity portfolio was
publicly traded. At December 31, 2012, GAIA held CMBS with an amortized cost of
$57 million. The General Account had no direct exposure to the sovereign debt
of Italy, Greece, Portugal, Spain and the Republic of Ireland.
FIXED MATURITIES BY INDUSTRY
The General Accounts' fixed maturities portfolios include publicly-traded and
privately-placed corporate debt securities across an array of industry
categories.
73
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
The following table sets forth these fixed maturities by industry category as
of the dates indicated along with their associated gross unrealized gains and
losses.
FIXED MATURITIES BY INDUSTRY/(1)/
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
--------- ---------- ---------- ----------
(IN MILLIONS)
AT DECEMBER 31, 2012:
Corporate Securities:
Finance.......................... $ 343 $ 36 $ -- $ 379
Manufacturing.................... 506 57 -- 563
Utilities........................ 255 25 1 279
Services......................... 201 24 -- 225
Energy........................... 98 12 -- 110
Retail and wholesale............. 90 9 -- 99
Transportation................... 60 4 -- 64
Other............................ -- -- -- --
-------- ------- ------- ---------
Total corporate securities...... 1,553 167 1 1,719
-------- ------- ------- ---------
U.S. government.................... 106 7 -- 113
Commercial mortgage-backed......... 57 5 27 35
Residential mortgage-backed/(2)/... 19 1 -- 20
Preferred stock.................... 97 2 1 98
State & municipal.................. 25 3 -- 28
Foreign governments................ 2 -- -- 2
Asset-backed securities............ 9 2 -- 11
-------- ------- ------- ---------
Total.............................. $ 1,868 $ 187 $ 29 $ 2,026
======== ======= ======= =========
At December 31, 2011:
Corporate Securities:
Finance.......................... $ 346 $ 22 $ 5 $ 363
Manufacturing.................... 470 54 -- 524
Utilities........................ 275 24 2 297
Services......................... 223 22 1 244
Energy........................... 95 10 -- 105
Retail and wholesale............. 85 9 -- 94
Transportation................... 60 6 -- 66
-------- ------- ------- ---------
Total corporate securities...... 1,554 147 8 1,693
-------- ------- ------- ---------
U.S. government.................... 99 6 -- 105
Commercial mortgage-backed......... 63 -- 34 29
Residential mortgage-backed/(2)/... 26 2 -- 28
Preferred stock.................... 81 -- 5 76
State & municipal.................. 21 1 -- 22
Foreign governments................ 4 -- -- 4
Asset-backed securities............ 9 1 -- 10
-------- ------- ------- ---------
Total.............................. $ 1,857 $ 157 $ 47 $ 1,967
======== ======= ======= =========
/(1)/Investment data has been classified based on standard industry
categorizations for domestic public holdings and similar classifications
by industry for all other holdings.
/(2)/Includes publicly traded agency pass-through securities and collateralized
mortgage obligations.
74
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
FIXED MATURITIES CREDIT QUALITY
The Securities Valuation Office ("SVO") of the National Association of
Insurance Commissioners ("NAIC"), evaluates the investments of insurers for
regulatory reporting purposes and assigns fixed maturity securities to one of
six categories ("NAIC Designations"). NAIC designations of "1" or "2" include
fixed maturities considered investment grade, which include securities rated
Baa3 or higher by Moody's or BBB- or higher by Standard & Poor's. NAIC
Designations of "3" through "6" are referred to as below investment grade,
which include securities rated Ba1 or lower by Moody's and BB+ or lower by
Standard & Poor's. As a result of time lags between the funding of investments,
the finalization of legal documents and the completion of the SVO filing
process, the fixed maturity portfolio generally includes securities that have
not yet been rated by the SVO as of each balance sheet date. Pending receipt of
SVO ratings, the categorization of these securities by NAIC designation is
based on the expected ratings indicated by internal analysis.
The amortized cost of the General Accounts' public and private below investment
grade fixed maturities totaled $113 million, or 6.0%, of the total fixed
maturities at December 31, 2012 and $140 million, or 7.5%, of the total fixed
maturities at December 31, 2011. Gross unrealized losses on public and private
fixed maturities decreased from $47 million in 2011 to $29 million in 2012.
Below investment grade fixed maturities represented 44.8% and 48.9% of the
gross unrealized losses at December 31, 2012 and 2011, respectively. For
public, private and corporate fixed maturity categories, gross unrealized gains
were higher and gross unrealized losses were lower in 2012 than in the prior
year.
PUBLIC FIXED MATURITIES CREDIT QUALITY. The following table sets forth the
General Accounts' public fixed maturities portfolios by NAIC rating at the
dates indicated.
PUBLIC FIXED MATURITIES
GROSS GROSS
NAIC AMORTIZED UNREALIZED UNREALIZED
DESIGNATION/(1)/ RATING AGENCY EQUIVALENT COST GAINS LOSSES FAIR VALUE
---------------------- ------------------------ ---------- ----------- ----------- -----------
(IN MILLIONS)
AT DECEMBER 31, 2012:
1 Aaa, Aa, A............... $ 838 $ 95 $ -- $ 933
2 Baa...................... 522 46 1 567
---------- ----------- ----------- -----------
Investment grade......... 1,360 141 1 1,500
---------- ----------- ----------- -----------
3 Ba....................... 37 2 -- 39
4 B........................ 10 -- 1 9
5 C and lower.............. 8 -- 1 7
6 In or near default....... 1 1 -- 2
---------- ----------- ----------- -----------
Below investment grade... 56 3 2 57
---------- ----------- ----------- -----------
Total........................................... $ 1,416 $ 144 $ 3 $ 1,557
========== =========== =========== ===========
At December 31, 2011:
1 Aaa, Aa, A............... $ 848 $ 84 $ 3 $ 929
2 Baa...................... 492 37 2 527
---------- ----------- ----------- -----------
Investment grade......... 1,340 121 5 1,456
---------- ----------- ----------- -----------
3 Ba....................... 50 1 1 50
4 B........................ 13 -- 1 12
5 C and lower.............. 7 -- 2 5
6 In or near default....... 6 1 2 5
---------- ----------- ----------- -----------
Below investment grade... 76 2 6 72
---------- ----------- ----------- -----------
Total........................................... $ 1,416 $ 123 $ 11 $ 1,528
========== =========== =========== ===========
/(1)/At December 31, 2012 and 2011, no securities had been categorized based on
expected NAIC designation pending receipt of SVO ratings.
75
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
PRIVATE FIXED MATURITIES CREDIT QUALITY. The following table sets forth the
General Accounts' private fixed maturities portfolios by NAIC rating at the
dates indicated.
PRIVATE FIXED MATURITIES
GROSS GROSS
NAIC AMORTIZED UNREALIZED UNREALIZED
DESIGNATION/(1)/ RATING AGENCY EQUIVALENT COST GAINS LOSSES FAIR VALUE
---------------------- ------------------------ --------- ---------- ----------- ------------
(IN MILLIONS)
AT DECEMBER 31, 2012:
1 Aaa, Aa, A............... $ 177 $ 21 $ 14 $ 184
2 Baa...................... 218 20 1 237
-------- ---------- ----------- ------------
Investment grade......... 395 41 15 421
-------- ---------- ----------- ------------
3 Ba....................... 20 -- 1 19
4 B........................ 14 -- 2 12
5 C and lower.............. 4 -- 2 2
6 In or near default....... 19 2 6 15
-------- ---------- ----------- ------------
Below investment grade... 57 2 11 48
-------- ---------- ----------- ------------
Total........................................... $ 452 $ 43 $ 26 $ 469
======== ========== =========== ============
At December 31, 2011:
1 Aaa, Aa, A............... $ 168 $ 17 $ 15 $ 170
2 Baa...................... 209 15 4 220
-------- ---------- ----------- ------------
Investment grade......... 377 32 19 390
-------- ---------- ----------- ------------
3 Ba....................... 36 1 4 33
4 B........................ 6 -- 2 4
5 C and lower.............. 4 -- 2 2
6 In or near default....... 18 1 9 10
-------- ---------- ----------- ------------
Below investment grade... 64 2 17 49
-------- ---------- ----------- ------------
Total........................................... $ 441 $ 34 $ 36 $ 439
======== ========== =========== ============
/(1)/Includes no securities, as of December 31, 2012 and 2011, that have been
categorized based on expected NAIC designation pending receipt of SVO
ratings.
CORPORATE FIXED MATURITIES CREDIT QUALITY. The following table sets forth the
General Accounts' public and private holdings of corporate fixed maturities by
NAIC rating at the dates indicated.
CORPORATE FIXED MATURITIES
GROSS GROSS
NAIC AMORTIZED UNREALIZED UNREALIZED
DESIGNATION RATING AGENCY EQUIVALENT COST GAINS LOSSES FAIR VALUE
---------------------- ------------------------ ---------- ---------- ---------- -----------
(IN MILLIONS)
AT DECEMBER 31, 2012:
1 Aaa, Aa, A............... $ 833 $ 99 $ -- $ 932
2 Baa...................... 662 64 -- 726
---------- --------- ---------- -----------
Investment grade......... 1,495 163 -- 1,658
---------- --------- ---------- -----------
3 Ba....................... 44 2 -- 46
4 B........................ 11 -- 1 10
5 C and lower.............. 2 -- -- 2
6 In or near default....... 1 2 -- 3
---------- --------- ---------- -----------
Below investment grade... 58 4 1 61
---------- --------- ---------- -----------
Total........................................... $ 1,553 $ 167 $ 1 $ 1,719
========== ========= ========== ===========
76
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
Gross Gross
NAIC Amortized Unrealized Unrealized
Designation Rating Agency Equivalent Cost Gains Losses Fair Value
---------------------- ------------------------ --------- ---------- ---------- ----------
(In Millions)
At December 31, 2011:
1 Aaa, Aa, A............... $ 820 $ 93 $ 2 $ 911
2 Baa...................... 665 52 4 713
-------- -------- --------- --------
Investment grade......... 1,485 145 6 1,624
-------- -------- --------- --------
3 Ba....................... 58 1 1 58
4 B........................ 8 -- 1 7
5 C and lower.............. 2 -- -- 2
6 In or near default....... 1 1 -- 2
-------- -------- --------- --------
Below investment grade... 69 2 2 69
-------- -------- --------- --------
Total........................................... $ 1,554 $ 147 $ 8 $ 1,693
======== ======== ========= ========
ASSET-BACKED SECURITIES
At December 31, 2012, the amortized cost and fair value of asset backed
securities held were $9 million and $11 million, respectively; at December 31,
2011, those amounts were $9 million and $10 million, respectively. At
December 31, 2012, the amortized cost and fair value of asset backed securities
collateralized by sub-prime mortgages were $4 million and $6 million,
respectively. At the same date, the amortized cost and fair value of asset
backed securities collateralized by non-subprime mortgages were $0 million and
$0 million, respectively.
COMMERCIAL MORTGAGE-BACKED SECURITIES
In recent years, weakness in commercial real estate fundamentals, along with an
overall decrease in liquidity and availability of capital, led to a very
difficult refinancing environment and an increase in overall delinquency rates
on commercial mortgages on properties, except for highly desirable properties
in select markets.
The following table sets forth the amortized cost and fair value of the
Company's commercial mortgage-backed securities at the dates indicated by
credit quality and by year of issuance (vintage).
COMMERCIAL MORTGAGE-BACKED SECURITIES
DECEMBER 31, 2012
------------------------------
MOODY'S AGENCY RATING
------------------------------ TOTAL TOTAL
BA AND DECEMBER 31, DECEMBER 31,
AAA AA A BAA BELOW 2012 2011
VINTAGE ----- ----- ----- ----- ------ ------------ ------------
(IN MILLIONS)
At amortized cost:
2004.............. $ -- $ -- $ -- $ -- $ -- $ -- $ --
2005.............. -- -- -- 2 21 23 24
2006.............. -- -- -- -- 14 14 14
2007.............. -- -- -- -- 20 20 25
----- ----- ----- ----- ----- ----------- -----------
Total CMBS......... $ -- $ -- $ -- $ 2 $ 55 $ 57 $ 63
===== ===== ===== ===== ===== =========== ===========
At fair value:
2004.............. $ -- $ -- $ -- $ -- $ -- $ -- $ --
2005.............. -- -- -- 2 16 18 17
2006.............. -- -- -- -- 5 5 4
2007.............. -- -- -- -- 12 12 8
----- ----- ----- ----- ----- ----------- -----------
Total CMBS......... $ -- $ -- $ -- $ 2 $ 33 $ 35 $ 29
===== ===== ===== ===== ===== =========== ===========
77
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
MORTGAGES
INVESTMENT MIX
At December 31, 2012 approximately 2.2% of GAIA were in commercial mortgage
loans and at December 31, 2011 approximately 5.8% of GAIA were in commercial
and agricultural mortgage loans. The table below shows the composition of the
commercial and agricultural mortgage loan portfolio, before the loss allowance,
as of the dates indicated.
DECEMBER 31, 2012 December 31, 2011
----------------- -----------------
(IN MILLIONS)
Commercial mortgage loans... $ 49 $ 80
Agricultural mortgage loans. -- $ 47
--------------- --------------
Total Mortgage Loans........ $ 49 $ 127
=============== ==============
In August 2012, MLOA sold its entire portfolio of agricultural mortgage loans
on real estate to AXA Equitable Life Insurance Company ("AXA Equitable"), an
affiliate.
The investment strategy for the mortgage loan portfolio emphasizes
diversification by property type and geographic location with a primary focus
on asset quality. The tables below show the breakdown of the amortized cost of
the General Accounts investments in mortgage loans by geographic region and
property type as of the dates indicated.
MORTGAGE LOANS BY REGION AND PROPERTY TYPE
DECEMBER 31, 2012 December 31, 2011
------------------------ ------------------------
AMORTIZED COST % OF TOTAL Amortized Cost % of Total
-------------- ---------- -------------- ----------
(DOLLARS IN MILLIONS)
BY REGION:
U.S. Regions:
Pacific.............. $ 28 57.2% $ 76 59.5%
West South Central... 10 20.4 12 9.3
South Atlantic....... 7 14.3 9 7.4
East South Central... 3 6.1 3 2.4
East North Central... 1 2.0 14 10.6
Mountain............. -- -- 11 8.7
West North Central... -- -- 3 2.1
------------ --------- ----------- ---------
Total Mortgage Loans.... $ 49 100.0% $ 128 100.0%
============ ========= =========== =========
BY PROPERTY TYPE:
Industrial buildings.... $ 39 79.6% $ 31 24.3%
Retail stores........... 6 12.2 13 10.2
Hospitality............. 4 8.2 5 3.9
Office buildings........ -- -- 10 7.8
Apartment complexes..... -- -- 21 16.5
Agricultural properties. -- -- 48 37.3
------------ --------- ----------- ---------
Total Mortgage Loans.... $ 49 100.0% $ 128 100.0%
============ ========= =========== =========
At December 31, 2012, the General Account investments in commercial mortgage
loans had a weighted average loan-to-value ratio of 75.0% while the
agricultural mortgage loans weighted average loan-to-value ratio was 0.0%.
The values used in these ratio calculations were developed as part of the
periodic review of the commercial and agricultural mortgage loan portfolio,
which includes an evaluation of the underlying collateral value.
78
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
MORTGAGE LOANS BY LOAN-TO-VALUE AND DEBT SERVICE COVERAGE RATIOS
DECEMBER 31, 2012
DEBT SERVICE COVERAGE RATIO/(1)/
-----------------------------------------------
LESS TOTAL
GREATER 1.8X TO 1.5X TO 1.2X TO 1.0X TO THAN MORTGAGE
THAN 2.0X 2.0X 1.8X 1.5X 1.2X 1.0X LOANS
LOAN-TO-VALUE RATIO --------- ------- ------- ------- ------- ----- --------
(IN MILLIONS)
0% - 50%.......................... $ 4 $ -- $ 17 $ -- $ 12 $ -- $33
50% - 70%......................... -- -- -- 6 -- -- 6
70% - 90%......................... -- -- -- -- -- -- --
90% plus.......................... 10 -- -- -- -- -- 10
------- ----- ----- ----- ----- ----- -----
Total Commercial and Agricultural
Mortgage Loans $ 14 $ -- $ 17 $ 6 $ 12 $ -- $ 49
======= ===== ===== ===== ===== ===== =====
/(1)/The debt service coverage ratio is calculated using actual results from
property operations.
The tables below show the breakdown of the commercial mortgage loans by year of
origination at December 31, 2012.
MORTGAGE LOANS BY YEAR OF ORIGINATION
DECEMBER 31, 2012
-------------------------
AMORTIZED COST % OF TOTAL
YEAR OF ORIGINATION -------------- -----------
(DOLLARS IN MILLIONS)
2007 and prior....... $ 49 100.0%
------------- ---------
Total Mortgage Loans. $ 49 100.0%
============= =========
At December 31, 2012 and 2011, respectively, $0 million and $0 million of
mortgage loans were classified as problem loans while $10 million and $10
million were classified as potential problem loans. There were no loans in the
restructured category at either date.
Valuation allowances for the commercial mortgage loan portfolio were related to
loan specific reserves. The following table sets forth the change in valuation
allowances for the commercial mortgage loan portfolio as of the dates
indicated. There were no valuation allowances for agricultural mortgages at
December 31, 2012 and 2011.
2012 2011
------ ------
(IN MILLIONS)
Balances, beginning of year. $ 3 $ 2
Provision.................. 1 1
------ ------
Balances, End of Year....... $ 4 $ 3
====== ======
OTHER EQUITY INVESTMENTS
At December 31, 2012, private equity partnerships, hedge funds and real-estate
related partnerships were 50.0% of total other equity investments. These
interests, which represent 0.1% of GAIA, consist of a diversified portfolio of
Leveraged Buyout ("LBO"), mezzanine, venture capital and other alternative
limited partnerships, diversified by sponsor, fund and vintage year. The
portfolio is actively managed to control risk and generate investment returns
over the long term. Portfolio returns are sensitive to overall market
developments.
OTHER EQUITY INVESTMENTS - CLASSIFICATIONS
DECEMBER 31, 2012 December 31, 2011
----------------- -----------------
(IN MILLIONS)
Common stock............................. $ 1 $ 1
Joint ventures and limited partnerships:
Private equity.......................... 1 1
------------ ------------
Total Other Equity Investments........... $ 2 $ 2
============ ============
79
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
REALIZED INVESTMENT GAINS (LOSSES)
Realized investment gains (losses) are generated from numerous sources,
including the sale of fixed maturity securities, equity securities, investments
in limited partnerships and other types of investments, as well as adjustments
to the cost basis of investments for OTTI. Realized investment gains (losses)
are also generated from prepayment premiums received on private fixed maturity
securities, recoveries of principal on previously impaired securities,
provisions for losses on commercial mortgage and other loans and fair value
changes on commercial mortgage loans carried at fair value.
The following table sets forth "Realized investment gains (losses), net," for
the years indicated:
REALIZED INVESTMENT GAINS (LOSSES), NET
2012 2011 2010
----- ----- ------
(IN MILLIONS)
Fixed maturities. $ (5) $ (2) $ (47)
Other............ 2 (1) 1
----- ----- ------
Total............ $ (3) $ (3) $ (46)
===== ===== ======
The following table further describes realized gains (losses), net for Fixed
maturities:
FIXED MATURITIES
REALIZED INVESTMENT GAINS (LOSSES), NET
2012 2011 2010
----- ----- ------
(IN MILLIONS)
Gross realized investment gains:
Gross gains on sales and maturities............................ $ 3 $ 2 $ 10
----- ----- ------
Total gross realized investment gains........................ 3 2 10
----- ----- ------
Gross realized investment losses:
Other-than-temporary impairments recognized in earnings (loss). (7) (2) (54)
Gross losses on sales and maturities........................... (1) (2) (3)
----- ----- ------
Total gross realized investment losses....................... (8) (4) (57)
----- ----- ------
Total........................................................... $ (5) $ (2) $ (47)
===== ===== ======
The following table sets forth, for the periods indicated, the composition of
other-than-temporary impairments recorded in Earnings (loss) by asset type.
OTHER-THAN-TEMPORARY IMPAIRMENTS RECORDED IN EARNINGS (LOSS)/(1)/
2012 2011 2010
----- ----- ------
(IN MILLIONS)
Fixed Maturities:
Public fixed maturities............. $ (1) $ (1) $ (6)
Private fixed maturities............ (6) (1) (48)
----- ----- ------
Total fixed maturities securities. $ (7) $ (2) $ (54)
===== ===== ======
/(1)/For 2012, 2011 and 2010, respectively, excludes $0 million, $0 million and
$2 million of OTTI recorded in OCI, representing any difference between
the fair value of the impaired debt security and the net present value of
its projected future cash flows at the time of impairment.
80
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
At December 31, 2012 and 2011, respectively, the $7 million and $2 million in
OTTI on fixed maturities recorded in income were due to credit events or
adverse conditions of the respective issuer. In these situations, management
believes such circumstances have caused, or will lead to, a deficiency in the
contractual cash flows related to the investment. The amount of the impairment
recorded in earnings (loss) is the difference between the amortized cost of the
debt security and the net present value of its projected future cash flows
discounted at the effective interest rate implicit in the debt security prior
to impairment.
LIQUIDITY AND CAPITAL RESOURCES
OVERVIEW
MLOA's principal sources of cash flows are premiums and charges on policies and
contracts, investment income, repayments of principal and proceeds from sales
of fixed maturities and other General Account Investment Assets and capital
contributions from MONY Life. Liquidity management is focused around a
centralized funds management process. This centralized process includes the
monitoring and control of cash flow associated with policyholder receipts and
disbursements and General Account portfolio principal, interest and investment
activity. Funds are managed through a banking system designed to reduce float
and maximize funds availability.
In addition to gathering and analyzing information on funding needs, the
Company has a centralized process for both investing short-term cash and
borrowing funds to meet cash needs. In general, the short-term investment
positions have a maturity profile of 1-7 days with considerable flexibility as
to availability.
MLOA's liquidity requirements principally relate to the payment of benefits
under its various life insurance and annuity products, cash payments in
connection with policy surrenders, withdrawals and loans and payment of its
operating expenses, including payments to affiliates in connection with service
agreements.
In managing the liquidity of MLOA's business, management also considers the
risk of policyholder and contractholder withdrawals of funds earlier than
assumed when selecting assets to support these contractual obligations.
Surrender charges and other contract provisions are used to mitigate the
extent, timing and profitability impact of withdrawals of funds by customers
from annuity contracts and deposit liabilities. The following table sets forth
withdrawal characteristics of MLOA's General Account annuity reserves and
deposit liabilities (based on statutory liability values) as of the dates
indicated.
GENERAL ACCOUNTS ANNUITY RESERVES AND DEPOSIT LIABILITIES
DECEMBER 31, 2012 December 31, 2011
------------------- --------------------
AMOUNT % OF TOTAL Amount % of Total
-------- ---------- -------- -----------
(DOLLARS IN MILLIONS)
Not subject to discretionary withdrawal provisions...................... $ 99 7.0% $ 103 6.9%
Subject to discretionary withdrawal, with adjustment:
With market value adjustment........................................... 998 70.9 1,082 72.2
Subject to discretionary withdrawal at contract value with no surrender
charge or surrender charge of less than 5%............................ 310 22.1 313 20.9
-------- -------- -------- --------
Total Annuity Reserves And Deposit Liabilities.......................... $ 1,407 100.0% $ 1,498 100.0%
======== ======== ======== ========
ANALYSIS OF STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2012 AND 2011
Cash and cash equivalents were $151 million at December 31, 2012 an increase of
$90 million from $61 million at December 31, 2011.
Net cash used in operating activities was $49 million in 2012 as compared to
$23 million in 2011. Cash flows from operating activities include such sources
as premiums and investment income offset by such uses as life insurance benefit
payments, compensation reimbursements to affiliates and other cash expenditures.
Net cash provided by investing activities was $57 million in 2012 as compared
to net cash used in investing activities of $23 million in 2011. The change was
principally due to net sales of $65 million in 2012 as compared to net
purchases of $17 million in 2011.
81
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
Net cash provided by financing activities was $82 million in 2012 as compared
to $15 million in 2011. The impact of the net deposits to policyholders'
account balances was $82 million in 2012 as compared to net withdrawals to
policyholders' account balances of $15 million in 2011.
YEARS ENDED DECEMBER 31, 2011 AND 2010
Cash and cash equivalents of $61 million at December 31, 2011 decreased $31
million from $92 million at December 31, 2010.
Net cash used by operating activities was $23 million in 2011 as compared to
$10 million in 2010. Cash flows from operating activities include such sources
as premiums and investment income offset by such uses as life insurance benefit
payments, compensation reimbursements to affiliates and other cash expenditures.
Net cash used in investing activities was $23 million in 2011 as compared to
net cash provided by investing activities of $111 million in 2010. The change
was principally due net purchases of $17 million in 2011 as compared to net
sales of $19 million in 2010.
Net cash provided by financing activities was $15 million in 2011 as compared
to net cash used in financing activities of $66 million in 2010. The impact of
the net deposits to policyholders' account balances was $15 million in 2011 as
compared to net withdrawals to policyholders' account balances of $46 million
in 2010.
SOURCES OF LIQUIDITY
MLOA's primary source of short-term liquidity to support its insurance
operations is a pool of highly liquid, high quality short-term instruments
structured to provide liquidity in excess of the expected cash requirements. At
December 31, 2012, this asset pool included an aggregate of $139 million in
highly liquid short-term investments, as compared to $50 million at
December 31, 2011. In addition, a substantial portfolio of public bonds
including U.S. Treasury and agency securities and other investment grade fixed
maturities is available to meet MLOA's liquidity needs.
OFF BALANCE SHEET TRANSACTIONS
At December 31, 2012 and 2011, MLOA was not a party to any off balance sheet
transactions.
STATUTORY REGULATION, CAPITAL AND DIVIDENDS
MLOA is subject to the regulatory capital requirements of Arizona, which are
designed to monitor capital adequacy. The level of an insurer's required
capital is impacted by many factors including, but not limited to, business
mix, product design, sales volume, invested assets, liabilities, reserves and
movements in the capital markets, including interest rates and equity markets.
As of December 31, 2012, the total adjusted capital of MLOA was in excess of
Arizona's regulatory capital requirements.
Management monitors its regulatory capital requirements on an ongoing basis
taking into account the prevailing conditions in the capital markets. Lower
interest rates and/or poor equity market performance, both of which have been
experienced recently, increase the reserve requirements and capital needed to
support the variable annuity guarantee business. While future capital
requirements will depend on future market conditions, management believes that
MLOA will continue to have the ability to meet the capital requirements
necessary to support its business. For additional information, see "Risk
Factors".
For 2012, 2011 and 2010, respectively, MLOA's statutory net income (loss)
totaled $33 million, $35 million and $(19) million. Statutory surplus, capital
stock and Asset Valuation Reserve totaled $295 million and $225 million at
December 31, 2012 and 2011, respectively.
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SUPPLEMENTARY INFORMATION
A schedule of future payments under certain of MLOA's contractual obligations
follows:
CONTRACTUAL OBLIGATIONS - DECEMBER 31, 2012
PAYMENTS DUE BY PERIOD
-----------------------------------------
LESS THAN OVER
TOTAL 1 YEAR 1 -3 YEARS 4 -5 YEARS 5 YEARS
-------- --------- ---------- ---------- ---------
(IN THOUSANDS)
Contractual obligations:
Policyholders liabilities - policyholders' account balances,
future policy benefits and other policyholder
liabilities/(1)/........................................... $ 3,564 $ 213 $ 350 $ 290 $ 2,711
-------- ------- --------- --------- ---------
Total Contractual Obligations................................ $ 3,564 $ 213 $ 350 $ 290 $ 2,711
======== ======= ========= ========= =========
/(1)/Policyholders liabilities represent estimated cash flows out of the
General Account related to the payment of death and disability claims,
policy surrenders and withdrawals, annuity payments, minimum guarantees on
Separate Account funded contracts, matured endowments, policyholder
dividends and future renewal premium-based and fund-based commissions
offset by contractual future premiums and deposits on in-force contracts.
These estimated cash flows are based on mortality, morbidity and lapse
assumptions comparable with the MLOA experience and assume market growth
and interest crediting consistent with assumptions used in amortizing DAC
and VOBA. These amounts are undiscounted and, therefore, exceed the
Policyholders' account balances and Future policy benefits and other
policyholder liabilities included in the balance sheet included elsewhere
herein. They do not reflect projected recoveries from reinsurance
agreements. Due to the use of assumptions, actual cash flows will differ
from these estimates (see "Critical Accounting Estimates - Future Policy
Benefits"). Separate Accounts liabilities have been excluded as they are
legally insulated from General Account obligations and will be funded by
cash flows from Separate Accounts assets.
Unrecognized tax benefits of $5 million were not included in the above table
because it is not possible to make reasonably reliable estimates of the
occurrence or timing of cash settlements with the respective taxing
authorities.
In addition, MLOA has financial obligations under contingent commitments at
December 31, 2012 including guarantees or commitments to fund private fixed
maturities and floating rate commercial mortgages. Information on these
contingent commitments can be found in Notes 5, 8 and 12 of Notes to
Financial Statements.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
MLOA's operations are subject to financial, market, political and economic
risks, as well as to risks inherent in its business operations. The
discussion that follows provides additional information on market risks
arising from its insurance asset/liability management activities. Primary
market risk exposure results from interest rate fluctuations and changes in
credit quality.
MLOA's results of operations significantly depend on profit margins between
investment results from General Account Investment Assets and interest
credited on individual insurance and annuity products. Management believes
its fixed rate liabilities should be supported by a portfolio principally
composed of fixed rate investments that generate predictable, steady rates
of return. Although these assets are purchased for long-term investment, the
portfolio management strategy considers them available for sale in response
to changes in market interest rates, changes in prepayment risk, changes in
relative values of asset sectors and individual securities and loans,
changes in credit quality outlook and other relevant factors. See the
"Investments" section of Note 2 of Notes to Financial Statements for the
accounting policies for the investment portfolios. The objective of
portfolio management is to maximize returns, taking into account interest
rate and credit risks. Insurance asset/liability management includes
strategies to minimize exposure to loss as interest rates and economic and
market conditions change. As a result, the fixed maturity portfolio has
modest exposure to call and prepayment risk and the vast majority of
mortgage holdings are fixed rate mortgages that carry yield maintenance and
prepayment provisions.
INVESTMENTS WITH INTEREST RATE RISK - FAIR VALUE. MLOA's assets with
interest rate risk include fixed maturities and mortgage loans that make up
87.3% of the carrying value of General Account Investment Assets at
December 31, 2012. As part of its asset/liability management, quantitative
analyses are used to model the impact various changes in interest rates have
on assets with interest rate risk. The table that follows shows the impact
an immediate 100 BP increase in interest rates at December 31, 2012 and 2011
would have on the fair value of fixed maturities and mortgage loans:
DECEMBER 31, 2012 December 31, 2011
---------------------- ----------------------
BALANCE AFTER Balance After
FAIR +100 BP Fair +100 BP
VALUE CHANGE Value Change
-------- ------------- -------- -------------
(IN MILLIONS)
Fixed maturities.............. $ 2,026 $ 1,946 $ 1,967 $ 1,885
Mortgage loans on real estate. 46 46 130 128
-------- -------- -------- --------
Total......................... $ 2,072 $ 1,992 $ 2,097 $ 2,013
======== ======== ======== ========
A 100 BP increase in interest rates is a hypothetical rate scenario used to
demonstrate potential risk; it does not represent management's view of
future market changes. While these fair value measurements provide a
representation of interest rate sensitivity of fixed maturities and mortgage
loans, they are based on various portfolio exposures at a particular point
in time and may not be representative of future market results. These
exposures will change as a result of ongoing portfolio activities in
response to management's assessment of changing market conditions and
available investment opportunities.
LIABILITIES WITH INTEREST RATE RISK - FAIR VALUE. At December 31, 2012 and
2011, respectively, the aggregate carrying value of policyholders'
liabilities were $2,012 million and $1,988 million, approximately $1,825
million and $1,795 million of which liabilities are reactive to interest
rate fluctuations. The aggregate fair values of such contracts at
December 31, 2012 and 2011 were $2,067 million and $2,021 million,
respectively. The impact of a relative 1.0% decrease in interest rates would
be an increase in the fair value of those contracts to $2,145 million and
$2,089 million, respectively. While these fair value measurements provide a
representation of the interest rate sensitivity of policyholders'
liabilities, they are based on the composition of such liabilities at a
particular point in time and may not be representative of future results.
Asset/liability management is integrated into many aspects of MLOA's
operations, including investment decisions, product development and
determination of crediting rates. As part of the risk management process,
numerous economic scenarios are modeled, including cash flow testing
required for insurance regulatory purposes, to determine if existing assets
would be sufficient to meet projected liability cash flows. Key variables
include policyholder behavior, such as persistency, under differing
crediting rate strategies.
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DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
BOARD OF DIRECTORS
The Board currently consists of twelve members, including our Chief Executive
Officer, President, two senior executives of AXA, one senior executive of
AllianceBernstein and seven independent members.
The Board holds regular quarterly meetings, generally in February, May,
September, and November of each year, and holds special meetings or takes
action by unanimous written consent as circumstances warrant. The Board has
standing Executive, Audit, Organization and Compensation, and Investment
Committees, each of which is described in further detail below. Each of the
Directors attended at least 75% of the Board and committee meetings to which he
or she was assigned during 2012.
The current members of our Board are as follows:
MARK PEARSON
Mr. Pearson, age 54, has been a Director of MLOA since January 2011 and has
served as Chairman of the Board and Chief Executive Officer since February
2011. Mr. Pearson also serves as President and Chief Executive Officer of AXA
Financial since February 2011 and as Chairman of the Board and Chief Executive
Officer of AXA Equitable since February 2011. Mr. Pearson is also a member of
the Management and Executive Committees at AXA. Mr. Pearson joined AXA in 1995
with the acquisition of National Mutual Holdings (now AXA Asia Pacific
Holdings) and was appointed Regional Chief Executive of AXA Asia Life in 2001.
In 2008, he became President and Chief Executive Officer of AXA Japan Holding
Co. Ltd. ("AXA Japan") and was appointed a member of the Executive Committee of
AXA. Before joining AXA, Mr. Pearson spent approximately 20 years in the
insurance sector, assuming several senior manager positions at National Mutual
Holdings and Friends Provident. Mr. Pearson is a Fellow of the Chartered
Association of Certified Accountants. Mr. Pearson is also a director of AXA
Financial (since January 2011), MONY Life (since January 2011), AXA Equitable
(since January 2011) and AllianceBernstein Corporation (since February 2011).
Mr. Pearson brings to the Board diverse financial services experience developed
though his service as an executive, including as a Chief Executive Officer, to
AXA Financial, AXA Japan and other AXA affiliates.
ANDREW J. MCMAHON
Mr. McMahon, age 45, has been a Director of MLOA since May 2011 and has served
as President since January 2011. Prior thereto, Mr. McMahon served as Senior
Executive Vice President and President, Financial Protection and Wealth
Management of MLOA. Mr. McMahon also serves as Senior Executive Vice President
and President, Financial Protection and Wealth Management of AXA Financial and
as President of AXA Equitable. Mr. McMahon also served as President of AXA
Financial on an interim basis for the period January 2011 through February
2011. Mr. McMahon has overall responsibility for life insurance manufacturing,
marketing, distribution, business management operations, and in-force
management. He also served as Chairman of AXA Advisors, LLC, the company's
broker/dealer and retail distribution channel from July 2007 through May 2012,
where he has served as a Director since July 2007 and as Chief Financial
Protection and Wealth Management Officer since 2010. Before joining AXA
Equitable in 2005, Mr. McMahon was a principal at McKinsey & Co. and served as
a life insurance practice leader in North America. Prior to McKinsey & Co.,
Mr. McMahon spent several years in management positions with various business
divisions of General Electric Company. Mr. McMahon is a member of the Board of
Directors of The American Council of Life Insurers. Mr. McMahon is also a
director of AXA Financial (since May 2011), MONY Life (since May 2011), AXA
Equitable (since May 2011) and AllianceBernstein Corporation (since April 2012).
Mr. McMahon brings to the Board extensive financial services and insurance
industry experience and key strategic planning, leadership and sales skills
developed as an executive at AXA Equitable, McKinsey & Co. and General Electric
Company.
HENRI DE CASTRIES
Mr. de Castries, age 58, has been a Director of MLOA since July 2004. Mr. de
Castries has also served as Chairman of the Board of AXA Financial since April
1998. Since April 2010, Mr. de Castries has been Chairman of the Board and
Chief Executive Officer of AXA. Mr. de Castries served as the Chairman of the
Management Board of AXA from May 2000 through April 2010. Prior thereto, he
served AXA in various capacities, including Vice Chairman of the AXA Management
Board; Senior Executive Vice President-Financial Services and Life Insurance
Activities in the United States, Germany, the United Kingdom and Benelux from
1996 to 2000; Executive Vice President-Financial Services and Life Insurance
Activities from 1993 to 1996; Corporate Secretary from 1991 to 1993; and
Central Director of Finances from 1989
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to 1991. Mr. de Castries is a member of the Board of Directors of Nestle S.A.,
where he serves on the Audit Committee. Mr. de Castries is also a director of
AXA Financial (since September 1993), MONY Life (since July 2004), AXA
Equitable (since September 1993), AllianceBernstein Corporation (since October
1993) and various other subsidiaries and affiliates of the AXA Group.
Mr. de Castries brings to the Board his extensive experience as an AXA
executive and, prior thereto, his financial and public sector experience gained
from working in French government. The Board also benefits from his invaluable
perspective as the Chairman and Chief Executive Officer of AXA.
RAMON DE OLIVEIRA
Mr. de Oliveira, age 58, has been a Director of MLOA since May 2011. Since
April 2010, Mr. de Oliveira has been a member of AXA's Board of Directors,
where he serves on the Finance Committee (Chair) and Audit Committee, and from
April 2009 to May 2010, he was a member of AXA's Supervisory Board. He is
currently the Managing Director of the consulting firm Investment Audit
Practice, LLC, based in New York, NY. From 2002 and 2006, Mr. de Oliveira was
an adjunct professor of Finance at Columbia University. Prior thereto, starting
in 1977, he spent 24 years at JP Morgan & Co. where he was Chairman and Chief
Executive Officer of JP Morgan Investment Management and was also a member of
the firm's Management Committee since its inception in 1995. Upon the merger
with Chase Manhattan Bank in 2001, Mr. de Oliveira was the only executive from
JP Morgan & Co. asked to join the Executive Committee of the new firm with
operating responsibilities. Mr. de Oliveira is currently a member of the Board
of Directors of Investment Audit Practice, LLC, the Kauffman Foundation, Fonds
de Dotation du Louvre, Tattinger-Kobrand, Quilvest SA and The Red Cross.
Previously he was a Director of JP Morgan Suisse, American Century Company,
Inc., SunGard Data Systems and The Hartford Insurance Company. Mr. de Oliveira
is also a director of AXA Financial, MONY Life and AXA Equitable since May 2011.
Mr. de Oliveira brings to the Board extensive financial services experience,
and key leadership and analytical skills developed through his roles within the
financial services industry and academia. The Board also benefits from his
perspective as a director of AXA and as a former director of other companies.
DENIS DUVERNE
Mr. Duverne, age 59, has been a Director of MLOA since July 2004. Since April
2010, Mr. Duverne has been the Deputy Chief Executive Officer of AXA, in charge
of Finance, Strategy and Operations and a member of AXA's Board of Directors.
From January 2010 until April 2010, Mr. Duverne was AXA's Management Board
member in charge of Finance, Strategy and Operations. Mr. Duverne was a member
of the AXA Management Board from February 2003 through April 2010. He was Chief
Financial Officer of AXA from May 2003 through December 2009. From January 2000
to May 2003, Mr. Duverne served as Group Executive Vice President-Finance,
Control and Strategy. Mr. Duverne joined AXA as Senior Vice President in 1995.
Mr. Duverne is also a director of AXA Financial (since November 2003), MONY
Life (since July 2004), AXA Equitable (since February 1998), AllianceBernstein
Corporation (since February 1996) and various other subsidiaries and affiliates
of the AXA Group.
Mr. Duverne brings to the Board the highly diverse experience he has garnered
throughout the years from the many key roles he has served for AXA. The Board
also benefits from his invaluable perspective as director and Deputy Chief
Executive Officer of AXA.
BARBARA FALLON-WALSH
Ms. Fallon-Walsh, age 60, has been a Director of MLOA since May 2012. From 2006
to December 2011, Ms. Fallon-Walsh served as Head of Institutional Retirement
Plan Services at The Vanguard Group, Inc. ("Vanguard"). Ms. Fallon-Walsh joined
Vanguard in 1995 and prior to becoming the Head of Institutional Retirement
Plan Services, Ms. Fallon-Walsh served in several executive positions. Prior to
joining Vanguard, Ms. Fallon-Walsh served as Executive Vice President, Bay Area
Region and LA Gold Coast Region at Bank of America Corporation from 1992 to
1995. From 1981 to 1992, Ms. Fallon-Walsh held several management positions at
Security Pacific Corporation, which was acquired by Bank of America in 1992.
Ms. Fallon-Walsh is also a director of AXA Financial, MONY Life and AXA
Equitable since May 2012.
Ms. Fallon-Walsh brings to the Board extensive financial services and general
management expertise through her executive positions at Vanguard and Bank of
America. The Board also benefits from her extensive knowledge of the retirement
business.
DANNY L. HALE
Mr. Hale, age 68, has been a Director of MLOA since May 2010. From January 2003
to March 2008, Mr. Hale served as Senior Vice President and Chief Financial
Officer of The Allstate Corporation. Prior to joining The Allstate Corporation
in January 2003, he was Executive Vice
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
President and Chief Financial Officer of the Promus Hotel Corporation until its
acquisition by the Hilton Hotels Group in 1999. Prior to joining Promus Hotel
Corporation, Mr. Hale was Executive Vice President and Chief Financial Officer
of USF&G Corporation from 1993 to 1998. Mr. Hale joined insurer USF&G
Corporation in 1991 as Executive Vice President of Diversified Insurance &
Investment Operations. Prior thereto, Mr. Hale held various positions with each
of Chase Manhattan Leasing and General Electric Company. Mr. Hale is also a
director of AXA Financial, MONY Life and AXA Equitable since May 2010.
Mr. Hale brings to the Board invaluable expertise as an audit committee
financial expert, and extensive financial services and insurance industry
experience and his general knowledge and experience in financial matters,
including as a Chief Financial Officer.
ANTHONY J. HAMILTON
Mr. Hamilton, age 71, has been a Director of MLOA since May 2006. Since April
2010, Mr. Hamilton has been a member of AXA's Board of Directors, where he
serves on the Audit Committee (Chair) and Compensation and Human Resources
Committee. Prior thereto, he was a member of AXA's Supervisory Board from
January 1996 to April 2010. Mr. Hamilton is also a director of AXA Equity and
Law plc since 1993 and its Non-executive Chairman since 1995 and a director of
AXA UK plc since 1995 and its Non-executive Chairman since September 2000.
Mr. Hamilton joined the investment bank Fox-Pitt, Kelton Limited ("FPK") in
1978. He was a principal shareholder and served as executive chairman of FPK
from 1994 until FPK was acquired by Swiss RE in March 1999. Mr. Hamilton
retired from his executive responsibilities at FPK in 2004. Mr. Hamilton is
currently a director of Tawa plc and is a former director of FPK; Pinault
Printemps Redoute SA; Swiss Re Capital Markets Limited; CX Reinsurance; and
Binley Limited. Mr. Hamilton is also a director of AXA Financial (since
December 1995), MONY Life (since May 2006) and AXA Equitable (since May 2006).
Mr. Hamilton brings to the Board extensive financial services and insurance
industry experience acquired through his years as a senior leader at FPK. The
Board also benefits from his perspective as a director of Tawa plc and AXA and
certain of its other subsidiaries.
PETER S. KRAUS
Mr. Kraus, age 60, has been a Director of MLOA since February 2009. Since
December 2008, Mr. Kraus has served as Chairman of the Board of
AllianceBernstein Corporation and Chief Executive Officer of AllianceBernstein
Corporation, AllianceBernstein and AllianceBernstein Holding. From September
2008 through December 2008, Mr. Kraus served as an executive vice president,
the head of global strategy and a member of the Management Committee of Merrill
Lynch & Co. Inc. ("Merrill Lynch"). Prior to joining Merrill Lynch, Mr. Kraus
spent 22 years with Goldman Sachs Group Inc. ("Goldman"), where he most
recently served as co-head of the Investment Management Division and a member
of the Management Committee, as well as head of firm-wide strategy and chairman
of the Strategy Committee. Mr. Kraus also served as co-head of the Financial
Institutions Group. Mr. Kraus is a member of the Management and Executive
Committees of AXA. Mr. Kraus is also a director of AXA Financial, MONY and AXA
Equitable since February 2009.
Mr. Kraus brings to the Board extensive knowledge of the financial services
industry and in-depth experience in the financial markets, including experience
as co-head of the Investment Management Division and head of firm-wide strategy
at Goldman.
BERTRAM L. SCOTT
Mr. Scott, age 61, has been a Director of MLOA since May 2012. Since November
2012, Mr. Scott has served as President and Chief Executive Officer of Affinity
Health Plans, an independent, not-for-profit organization offering quality
health care coverage to low income New Yorkers. From June 2010 to December
2011, Mr. Scott served as President, U.S. Commercial of CIGNA Corporation.
Prior thereto, he served as Executive Vice President of TIAA-CREF from 2000 to
June 2010 and as President and Chief Executive Officer of TIAA-CREF Life
Insurance Company from 2000 to 2007. Mr. Scott is currently a member of the
Board of Directors of Becton, Dickinson and Company, where he serves on the
Audit Committee and Compensation and Benefits Committee. Mr. Scott is also a
director of AXA Financial, MONY Life and AXA Equitable since May 2012.
Mr. Scott brings to the Board invaluable expertise as an audit committee
financial expert, and strong strategic and operational expertise acquired
through the variety of executive roles in which he has served during his
career. The Board also benefits from his perspective as a director of Becton,
Dickinson and Company.
LORIE A. SLUTSKY
Ms. Slutsky, age 60, has been a Director of MLOA since September 2006. Since
January 1990, Ms. Slutsky has been President and Chief Executive Officer of The
New York Community Trust, a community foundation that manages a $2 billion
endowment and annually grants more
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than $150 million to non-profit organizations. Ms. Slutsky is Secretary and a
board member of the Independent Sector and co-chaired its National Panel on the
Non-Profit Sector, which focused on reducing abuse and improving governance
practices at non-profits. She served on the Board of Directors of BoardSource
from 1999 to 2008 and served as its Chair from 2005 to 2007. She also served on
the Board of Directors of the Council on Foundations from 1989 to 1995 and as
its Chair from 1992 to 1994. Ms. Slutsky served as Trustee and Chair of the
Budget Committee of Colgate University from 1989 to 1997. Ms. Slutsky is also a
director of AXA Financial, MONY Life and AXA Equitable (since September 2006)
and AllianceBernstein Corporation (since July 2002).
Ms. Slutsky brings to the Board extensive corporate governance experience
through her executive and managerial roles at The New York Community Trust,
BoardSource and various other non-profit organizations.
RICHARD C. VAUGHAN
Mr. Vaughan, age 63, has been a Director of MLOA since May 2010. From 1995 to
May 2005, Mr. Vaughan served as Executive Vice President and Chief Financial
Officer of Lincoln Financial Group ("Lincoln"). Mr. Vaughan joined Lincoln in
July 1990 as Senior Vice President and Chief Financial Officer of Lincoln's
Employee Benefits Division. In June 1992, Mr. Vaughan was appointed Chief
Financial Officer of Lincoln and was promoted to Executive Vice President of
Lincoln in January 1995. Mr. Vaughan is a member of the Board of Directors of
MBIA Inc., where he serves on the Audit Committee (Chair), Compensation and
Governance Committee and Executive Committee. Previously, Mr. Vaughan was also
a Director of The Bank of New York and Davita, Inc. Mr. Vaughan is also a
director of AXA Financial, MONY and AXA Equitable since May 2010.
Mr. Vaughan brings to the Board invaluable expertise as an audit committee
financial expert, and extensive financial services and insurance industry
experience and his general knowledge and experience in financial matters,
including as a Chief Financial Officer. The Board also benefits from his
perspective as a director of MBIA, Inc. and as a former director to other
public companies.
EXECUTIVE OFFICERS
The current executive officers (other than Messrs. Pearson and McMahon, whose
biographies are included above in the Board of Directors information) are as
follows:
DAVE S. HATTEM, SENIOR EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
Mr. Hattem, age 56, joined AXA Financial Group in 1994 and currently serves as
Senior Executive Vice President and General Counsel of AXA Financial and MLOA
and as Senior Executive Director and General Counsel of AXA Equitable. Prior to
his election as general counsel in 2010, Mr. Hattem served as senior vice
president and deputy general counsel, taking on this role in 2004. Mr. Hattem
is responsible for oversight of the Law Department, including the National
Compliance Office, setting the strategic direction of the Department and
ensuring the business areas are advised as to choices and opportunities
available under existing law to enable company goals. Prior to joining AXA
Financial Group, Mr. Hattem served in several senior management positions in
the Office of the United States Attorney for the Eastern District of New York.
Mr. Hattem began his professional legal career as an Associate in the
Litigation Department of Barrett Smith Schapiro Simon & Armstrong. Since
September 2012, Mr. Hattem has been a member of the Board of Directors of The
Life Insurance Council of New York.
NICHOLAS B. LANE, SENIOR EXECUTIVE VICE PRESIDENT AND PRESIDENT, RETIREMENT
SAVINGS
Mr. Lane, age 39, rejoined AXA Financial Group in February 2011 and currently
serves as Senior Executive Vice President and President, Retirement Savings of
AXA Financial and MLOA and as Senior Executive Director and President,
Retirement Savings of AXA Equitable. Mr. Lane has overall responsibility for
annuity product manufacturing, service delivery, marketing, in-force management
and wholesale distribution. Mr. Lane rejoined AXA Financial Group from AXA,
where he served as head of AXA Group Strategy since 2008. Prior to joining AXA
Group in 2008, he was a director of AXA Advisors LLC and a director and Vice
Chairman of AXA Network LLC, AXA Financial Group's retail broker dealer and
insurance general agency, respectively. Prior to joining AXA Financial Group,
he was a leader in the sales and marketing practice of the strategic consulting
firm McKinsey & Co. Prior thereto, Mr. Lane served as a captain in the U.S.
Marine Corps.
ANDERS MALMSTROM, SENIOR EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
Mr. Malmstrom, age 45, joined AXA Financial Group in June 2012 and currently
serves as Senior Executive Vice President and Chief Financial Officer of AXA
Financial and MLOA and as Senior Executive Director and Chief Financial Officer
of AXA Equitable. Mr. Malmstrom is responsible for all actuarial, investment,
and risk management functions, with oversight of the controller, tax, expense
management and
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corporate real estate, corporate sourcing and procurement, and distribution
finance areas. Prior to joining AXA Financial Group, Mr. Malmstrom was a member
of the Executive Board and served as the Head of the Life Business at AXA
Winterthur. Prior to joining AXA Winterthur in January 2009, Mr. Malmstrom was
a Senior Vice President at Swiss Life, where he was also a member of the
Management Committee. Mr. Malmstrom joined Swiss Life in 1997, and held several
positions of increasing responsibility during his tenure.
SALVATORE PIAZZOLLA, SENIOR EXECUTIVE VICE PRESIDENT AND HEAD OF HUMAN RESOURCES
Mr. Piazzolla, age 60, joined AXA Financial Group in March 2011 and currently
serves as Senior Executive Vice President and Head of Human Resources of AXA
Financial and MLOA and as Senior Executive Director and Chief Human Resources
Officer of AXA Equitable. Mr. Piazzolla is responsible for developing and
executing a business-aligned human capital management strategy focused on
leadership development, talent management and total rewards. Prior to joining
AXA Financial Group, Mr. Piazzolla was Senior Executive Vice President, Head of
Human Resources at UniCredit Group, where he was responsible for all aspects of
human resources management, including leadership development, learning and
industrial relations. Before joining UniCredit Group in 2005, he held various
human resources senior management positions in the United States and abroad at
General Electric Company, Pepsi Cola International and S.C. Johnson Wax.
AMY J. RADIN, SENIOR EXECUTIVE VICE PRESIDENT AND CHIEF MARKETING OFFICER
Ms. Radin, age 54, joined AXA Financial Group in February 2012 and currently
serves as Senior Executive Vice President and Chief Marketing Officer of AXA
Financial and MLOA and as Senior Executive Director and Chief Marketing Officer
of AXA Equitable. Ms. Radin has overall responsibility for the Company's
customer strategy and building the Company's brand. Ms. Radin leads the
marketing and communications team which includes brand management and
advertising, digital and multichannel programs, marketing for the Company's
core life insurance and retirement savings areas, insights and analytics and
communications. In addition, she works closely with AXA on global marketing
strategies. Prior to joining AXA Financial Group, Ms. Radin was Executive Vice
President and Chief Innovation Officer at E*TRADE, where she was responsible
for identifying trends and opportunities in the financial services industry and
for developing new sources of growth through broader and deeper relationships.
Before joining E*TRADE in 2010, Ms. Radin served in several senior management
positions at Reader's Digest Association, Citigroup, Dime Bancorp and American
Express.
CORPORATE GOVERNANCE
COMMITTEES OF THE BOARD
The Executive Committee of the Board ("Executive Committee") is currently
comprised of Mr. Pearson (Chair), Mr. de Castries, Mr. Duverne, Mr. Hamilton
and Mr. Vaughan. The function of the Executive Committee is to exercise the
authority of the Board in the management of the Company between meetings of the
Board with the exceptions set forth in the Company's By-Laws. The Executive
Committee held no meetings in 2012.
The Audit Committee of the Board ("Audit Committee") is currently comprised of
Mr. Vaughan (Chair), Mr. Hale and Mr. Scott. The primary purposes of the Audit
Committee are to: (i) assist the Board of Directors in its oversight of the
(1) adequacy and effectiveness of the internal control and risk management
frameworks, (2) financial reporting process and the integrity of the publicly
reported results and disclosures made in the financial statements and
(3) effectiveness and performance of the internal and external auditors and the
independence of the external auditor; (ii) approve (1) the appointment,
compensation and retention of the external auditor in connection with the
annual audit and (2) the audit and non-audit services to be performed by the
external auditor and (iii) resolve any disagreements between management and the
external auditor regarding financial reporting. The Board has determined that
each of Messrs. Vaughan, Hale and Scott is an "audit committee financial
expert" within the meaning of Item 407(d) of Regulation S-K. The Board has also
determined that each member of the Audit Committee is financially literate. The
Audit Committee met eight times in 2012.
The Investment Committee of the Board ("Investment Committee") is currently
comprised of Mr. Hamilton (Chair), Mr. de Castries, Mr. Hale, Mr. McMahon and
Mr. Vaughan. The primary purpose of the Investment Committee is to oversee the
investments of the Company by (i) taking actions with respect to the
acquisition, management and disposition of investments and (ii) reviewing
investment risk, exposure and performance, as well as the investment
performance of products and accounts managed on behalf of third parties. The
Investment Committee met five times in 2012.
INDEPENDENCE OF CERTAIN DIRECTORS
Although not subject to the independence standards of the New York Stock
Exchange, as a best practice we have applied the independence standards
required for listed companies of the New York Stock Exchange to the current
members of the Board of Directors. Applying these standards, the Board of
Directors has determined that Mr. de Oliveira, Ms. Fallon-Walsh, Mr. Hale,
Mr. Hamilton, Mr. Scott, Ms. Slutsky and Mr. Vaughan are independent.
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CODE OF ETHICS
All of our officers and employees, including our Chief Executive Officer, Chief
Financial Officer and Chief Accounting Officer, are subject to the Policy
Statement on Ethics (the "Code"), a code of ethics as defined under Regulation
S-K.
The Code is available on our website at www.axa-equitable.com.
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EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
In this section, we provide an overview of the goals and principal components
of our executive compensation program and describe how we determine the
compensation of our "Named Executive Officers." For 2012, our Named Executive
Officers were:
. MARK PEARSON, Chairman and Chief Executive Officer
. ANDERS MALMSTROM, Senior Executive Director and Chief Financial Officer
since June 1, 2012
. BERTRAND POUPART-LAFARGE, Interim Chief Financial Officer from April 13,
2012 through May 31, 2012/(1)/
. RICHARD S. DZIADZIO, Senior Executive Vice President and Chief Financial
Officer through April 13, 2012
. ANDREW MCMAHON, President
. NICK LANE, Senior Executive Director and President, Retirement Savings
. SALVATORE F. PIAZZOLLA, Senior Executive Director and Chief Human
Resources Officer
. RICHARD V. SILVER, Senior Executive Vice President, Chief Administrative
Officer and Chief Legal Officer (retired effective May 1, 2012)
(1)Mr. Poupart-Lafarge's compensation is not discussed below since his
compensation was not adjusted during the limited period he served as
Interim Chief Financial Officer. Rather, the compensation paid to him in
2012 was based on his positions as Chief Investment Officer and
Treasurer, each a non-executive officer position.
The details of each Named Executive Officer's compensation may be found in the
Summary Compensation Table and other compensation tables included in this
section.
Note: Executive officers of MLOA are employees of AXA Equitable Life
Insurance Company ("AXA Equitable") and receive no compensation directly
from MLOA. Rather, a portion of their compensation from AXA Equitable is
allocated to MLOA under the Amended Services Agreement between AXA Equitable
and MLOA, effective as of February 1, 2005 (the "Services Agreement"). As a
result, the compensation discussion set forth below represents the
compensation decisions of AXA Equitable.
COMPENSATION PHILOSOPHY AND STRATEGY
OVERVIEW
The overriding goal of AXA Equitable's executive compensation program is to
attract, retain and motivate top-performing executive officers who will
dedicate themselves to the long-term financial and operational success of AXA
Equitable and its parent, AXA Financial, Inc. To this end, AXA Equitable has
structured the program to foster a pay-for-performance management culture by:
. providing total compensation opportunities that are competitive with the
levels of total compensation available at the large diversified financial
services companies with which AXA Equitable most directly competes in the
marketplace;
. making performance-based variable compensation the principal component of
executive pay to drive superior performance by basing executive officers'
financial success on the financial and operational success of AXA
Financial Group's insurance-related businesses ("AXA Financial Life and
Savings Operations");
. setting performance metrics and objectives for variable compensation
arrangements that reward executives for attaining both annual targets and
medium-range and long-term business objectives, thereby providing
individual executives with the opportunity to earn above-average
compensation by achieving above-average results;
. establishing equity-based arrangements that align executives' financial
interests with those of our ultimate parent and shareholder, AXA, by
ensuring executives have a material financial stake in the rising equity
value of AXA and the business success of its affiliates; and
. structuring compensation packages and outcomes to foster internal equity.
COMPENSATION COMPONENTS
To support this pay-for-performance strategy, AXA Equitable's total
compensation program provides a mix of fixed and variable compensation
components that bases the majority of each executive's compensation on AXA
Equitable's success and on an assessment of each executive's overall
contribution to that success.
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Fixed Component
The fixed compensation component of AXA Equitable's total compensation program,
base salary, falls within the market median of the large financial services
companies that are major competitors and is meant to fairly and competitively
compensate executives for their positions and the scope of their
responsibilities.
Variable Components
The variable compensation components of AXA Equitable's total compensation
program, short-term incentive compensation program and equity-based awards,
give executives the opportunity to receive compensation at the median of the
market if they meet various corporate and individual financial and operational
goals and at above the market average offered by our competitors if they exceed
their goals. The variable compensation components measure and reward
performance with short-term, medium-term and long-term focuses.
The short-term incentive compensation program focuses executives on annual
corporate and business unit goals that, when attained, drive global success. It
also serves as the primary means for differentiating, recognizing and most
directly rewarding individual executives for their personal achievements and
leadership based on both qualitative and quantitative results.
Equity-based awards are structured to reward both medium-term and long-term
value creation. Performance unit awards serve as a medium range incentive, with
three-year vesting schedules and payouts in cash. Stock options, on the other
hand, are intended to focus executives on a longer time horizon. Stock options
are typically granted with vesting schedules of four years and terms of 10
years so that they effectively merge a substantial portion of each executive's
compensation with the long-term financial success of AXA. AXA Equitable is
confident that such a direct alignment of the long-term interests of executives
with those of AXA, combined with the multi-year time-vesting and performance
periods of such awards, promotes executive retention, focuses executives on
gearing their performances to long-term value-creation strategies and
discourages excessive risk-taking.
HOW COMPENSATION DECISIONS ARE MADE
ROLE OF THE AXA BOARD OF DIRECTORS
The global framework governing the executive compensation policies for AXA
Group and its U.S. subsidiaries, including AXA Equitable, is set and
administered at the AXA level through the operations of AXA's Board of
Directors. The AXA Board of Directors (i) oversees the activities of AXA,
(ii) reviews the compensation policies that apply to executives of AXA Group
worldwide, which are then adapted to local law, conditions and practices by the
boards of directors and compensation committees of AXA's subsidiaries, and
(iii) sets annual caps on equity-based awards and reviews and approves all AXA
equity-based compensation programs prior to their implementation, which it does
in accordance with French laws that govern equity-based compensation.
The Compensation and Human Resources Committee of the AXA Board of Directors is
responsible for reviewing the compensation of key executives of the AXA Group,
including Mr. Pearson. The Compensation and Human Resources Committee also
recommends to the AXA Board of Directors the amount of equity-based awards to
be granted to the members of the Management Committee, an internal committee
established to assist the Chief Executive Officer of AXA with the operational
management of the AXA Group. Mr. Pearson is a member of the Management
Committee. On February 20, 2013, the Compensation and Human Resources Committee
was composed entirely of directors who were determined to be independent as of
December 31, 2012 by the AXA Board of Directors in accordance with the criteria
set forth in the AFEP/MEDEF Code (a code of corporate governance principles
issued by the French Association of Private Companies (Association Francaise
des Entreprises Privees - AFEP) and the French Confederation of Business
Enterprises (Mouvement des Entreprises de France - MEDEF).
ROLE OF THE ORGANIZATION AND COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
OF AXA EQUITABLE
Within the global framework of executive compensation policies that AXA has
established, direct responsibility for overseeing the development and
administration of the executive compensation program for AXA Equitable falls to
the Organization and Compensation Committee (the "OCC") of the Board of
Directors of AXA Equitable (the "Board of Directors"). The OCC consists of
three members, all of whom were determined to be independent directors by the
Board of Directors under New York Stock Exchange standards as of February 14,
2013. In implementing AXA's global compensation program at the entity level,
the OCC is aided by the Chairman and Chief Executive Officer of AXA who, while
not a formal member of the OCC, is a member of the Board of Directors and
participates in the OCC's deliberations related to compensation issues and
assists in ensuring coordination with AXA's global compensation policies.
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The OCC is primarily responsible for general oversight of compensation and
compensation related matters, including reviewing new benefit plans,
equity-based plans and the compensation practices of AXA Equitable to ensure
they support AXA Equitable's business strategy and meet the objectives set by
AXA for its global compensation policy. In particular, the OCC of AXA Equitable
is responsible for:
. evaluating the performance of the Named Executive Officers and
recommending to the Board of Directors their compensation, including
their salaries and variable compensation;
. supervising the policies relating to compensation of officers and
employees; and
. reviewing corporate goals and objectives included in variable
compensation arrangements and evaluating executive management performance
in light of those goals and objectives.
Following its review and discussion, the OCC submits its compensation
recommendations to the Board of Directors for its discussion and approval.
Pursuant to the provisions of the New York Insurance Law, the Board of
Directors must approve the compensation of all principal officers of AXA
Equitable and comparably paid employees. As of February 14, 2013, all of the
Named Executive Officers were principal officers or comparably paid employees
with the exception of Messrs. Dziadzio, Poupart-Lafarge and Silver.
ROLE OF THE CHIEF EXECUTIVE OFFICER
AXA Equitable's Chief Executive Officer, Mr. Pearson, assists the OCC in its
review of the total compensation of all the Named Executive Officers except
himself. Mr. Pearson provides the OCC with his assessment of their performances
relative to the corporate and individual goals and other expectations set for
them for the preceding year. Based on these assessments, he then provides his
recommendations for each Named Executive Officer's total compensation and the
appropriate goals for each in the year to come. However, the OCC is not bound
by his recommendations.
Other than the Chief Executive Officer, no Named Executive Officer plays a
decision-making role in determining the compensation of any other Named
Executive Officer. As Chief Human Resources Officer, Mr. Piazzolla plays an
administrative role as described below in "Role of AXA Equitable Human
Resources."
ROLE OF AXA EQUITABLE HUMAN RESOURCES
AXA Equitable Human Resources supports the OCC's work on executive compensation
matters, being responsible for many of the organizational and administrative
tasks that underlie the compensation review and determination process and
making presentations on various topics. Human Resources' efforts include, among
other things:
. suggesting appropriate peer groups for the approval of the OCC, and
updating existing selections;
. evaluating the compensation data from peer groups, national executive pay
surveys and other sources for the Named Executive Officers and other
officers as appropriate;
. gathering and correlating performance ratings and reviews for individual
executive officers, including the Named Executive Officers;
. reviewing executive compensation recommendations against appropriate
market data and for internal consistency and equity; and
. reporting to, and answering requests for information from, the OCC.
Human Resources officers also coordinate and share information with their
counterparts at our ultimate parent company, AXA, and take part in its annual
comprehensive review of the total compensation of executive officers, as
described below in the section entitled "Executive Compensation Review."
ROLE OF COMPENSATION CONSULTANT
Towers Watson has been retained by AXA Equitable to serve as an executive
compensation consultant. Towers Watson provides various services including
advising senior management on various issues relating to executive compensation
practices and providing market information and analysis regarding the
competitiveness of the total compensation program.
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During 2012, Towers Watson performed the following specific services for AXA
Equitable:
. prepared a comparative review of the total compensation of Mr. Pearson
against that received by chief executive officers at peer companies;
. provided periodic updates on legal, accounting and other developments and
trends affecting compensation and benefits generally and executive
compensation specifically;
. offered competitive review of total compensation (including base, salary,
targeted and actual annual incentives, annualized value of long-term
incentives, welfare or retirement benefits) against selected peer
companies, covering specific groups of executive positions; and
. assisted in analyzing general reports published by third party national
compensation consultants on corporate compensation and benefits.
The senior management of Human Resources of AXA Equitable has full authority to
approve all fees paid to Towers Watson, determine the nature and scope of its
services, evaluate its performance and terminate its engagement upon 30 days'
written notice to Towers Watson. The total amount of fees paid to Tower Watson
by AXA Equitable in 2012 was approximately $118,000 (representing $76,000 fees
for executive compensation support and $42,000 fees for broad-based employee
compensation support) for both executive compensation consulting and support
for a performance review system. AXA Equitable also paid fees to Towers Watson
for actuarial services unrelated to its compensation programs.
USE OF COMPETITIVE COMPENSATION DATA
Because AXA Equitable competes most directly for executive talent with other
large diversified financial services companies, AXA Equitable regards it as
essential to regularly review the competitiveness of its total compensation
program for executives to ensure that it is providing compensation
opportunities that compare favorably with the levels of total compensation
offered to similarly situated executives by peer companies. AXA Equitable uses
a variety of sources of compensation information to benchmark the competitive
market for executives, including the Named Executive Officers.
For certain Named Executive Officers, AXA Equitable's primary sources are
compensation data compiled from peer groups of business competitors, with
different sources used for different officers depending on the availability of
relevant data.
MR. PEARSON
Mr. Pearson's peer group currently includes the following companies:
AFLAC MetLife
Ameriprise Principal Financial
Genworth Financial Prudential Financial
Hartford Financial Sun Life Financial
Lincoln Financial
Mr. Pearson's compensation is compared to two groups of executives within the
peer group as follows:
. CEO PEER GROUP: This group includes the chief executive officers of the
companies in the peer group. A discount is applied to the data to reflect
the subsidiary status of AXA Equitable. Specifically, a 15% discount is
applied to cash compensation, a 30% discount is applied to long-term
incentive compensation and a 20% discount is applied to total
compensation; and
. PRESIDENT/DIVISION CEOS: This group includes the "seconds" of the
companies in the peer group or presidents and chief executive officers of
their subsidiaries. There is no discount applied to this group.
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OTHER NAMED EXECUTIVE OFFICERS
For all other Named Executive Officers, AXA Equitable currently relies
primarily on the Tower Watson U.S. Diversified Insurance Study of Executive
Compensation ("Towers Watson DIS") for information to compare their total
compensation to the total compensation reported for equivalent executive
officer positions, paid by peer groups of companies that included:
Aegon ING Phoenix Companies
AFLAC John Hancock Principal Financial
AIG Lincoln Financial Prudential Financial
Allstate Massachusetts Mutual Securian Financial
American United Life MetLife Sun Life Financial
CIGNA Nationwide Thrivent Financial
CNO Financial New York Life TIAA-CREF
Genworth Financial Northwestern Mutual Unum Group
Guardian Life Pacific Life USAA
Hartford Financial
OTHER COMPENSATION DATA SOURCES
AXA Equitable supplements the above U.S. compensation data sources with
additional information from general surveys of corporate compensation and
benefits published by various national compensation consulting firms. AXA
Equitable also participates in surveys conducted by Mercer, McLagan Partners,
Towers Watson and LOMA Executive Survey to benchmark both executive and
non-executive compensation programs.
All these information sources are employed to measure and compare actual pay
levels not only on a total compensation basis but also by breaking down the
total compensation program component by component to review and compare
specific compensation elements as well as the particular mixes of fixed versus
variable, short-term versus long-term and cash versus equity-based compensation
at peer companies. This information, as collected and reviewed by AXA
Equitable's Human Resources, is submitted to the OCC for review and discussion.
PRICING PHILOSOPHY
AXA Equitable designs its compensation practices with the aid of the market
data to target the compensation of each Named Executive Officer at the median
for total compensation with respect to the pay for comparable positions at the
appropriate peer group. The analysis takes into account certain individual
factors such as the specific characteristics and responsibilities of a
particular Named Executive Officer's position as compared to similarly situated
executives at peer companies. Differences in the amounts of total compensation
for Named Executive Officers in 2012 resulted chiefly from differences in each
executive's level of responsibilities, tenure, performance and appropriate
benchmark data as well as general considerations of internal consistency and
equity.
EXECUTIVE COMPENSATION REVIEW
In addition to the foregoing processes, each year AXA Human Resources conducts
a comprehensive review of the total compensation paid to the top approximately
300 executives of AXA Group worldwide, including all the Named Executive
Officers except Mr. Pearson since members of AXA's Management Committee are
reviewed separately by the Compensation and Human Resources Committee of the
AXA Board of Directors. The Chairman and Chief Executive Officer of AXA and the
Deputy Chief Executive Officer of AXA participate in this review which focuses
on the executives' performance over the last year and the decisions made about
their compensation in light of those performances. The Chief Executive Officer
of AXA Equitable and AXA Equitable Human Resources participate in the portion
of the review relating to AXA Equitable executives.
COMPONENTS OF THE TOTAL REWARDS FOR EXECUTIVE OFFICERS
The Total Rewards Program for Named Executive Officers consists of six
components. These components include the three components of the total
compensation program (i.e., base salary, short-term incentive compensation and
equity-based awards) as well as: (i) retirement, health and other benefit
programs, (ii) severance and change-in-control benefits and (iii) perquisites.
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BASE SALARY
The primary purpose of base salary is to compensate each Named Executive
Officer fairly based on the position held, the Named Executive Officer's career
experience, the scope of the position's responsibilities and the Named
Executive Officer's own performance, all of which are reviewed with the aid of
market survey data. Using this data, AXA Equitable maintains a 50/th/
percentile pricing philosophy, comparing base salaries against the median for
comparable salaries at peer companies, unless exceptional conditions require
otherwise (for example, Mr. Piazzolla's initial base salary was set at a higher
level to match his compensation at his prior employer and to include an
additional amount in lieu of providing Mr. Piazzolla with a housing allowance;
Mr. Malmstrom's base salary also includes an additional amount in lieu of
providing Mr. Malmstrom with a housing or education allowance) or a Named
Executive Officer's experience and tenure warrant a lower initial salary with
an adjustment to market over time. Base salaries for the Named Executive
Officers usually do not increase, except to reflect a change in job
responsibility, a sustained change in the market compensation for the position
or a market adjustment for a Named Executive Officer whose initial salary was
set below the 50/th/ percentile.
Mr. Pearson is the only Named Executive Officer with an employment agreement.
Under this agreement, Mr. Pearson's employment will continue until he is age 65
unless the employment agreement is terminated earlier by either party on 30
days' prior written notice. Mr. Pearson is entitled to a minimum rate of base
salary of $1,150,000 per year, except that his rate of base salary may be
decreased in the case of across-the-board salary reductions similarly affecting
all officers with the title of Executive Director or higher. In setting
Mr. Pearson's base salary, AXA Equitable included an additional amount in lieu
of providing Mr. Pearson with a housing allowance.
In 2012, none of the Named Executive Officers, except Mr. Lane, received an
increase in their annual rate of base salary. Mr. Lane received an increase of
$50,000 to bring his salary closer to the 50/th/ percentile based on his growth
in the role.
The base salaries earned by the Named Executive Officers in 2012 (and in the
prior two fiscal years) are reported in the Summary Compensation Table included
in this section.
SHORT-TERM INCENTIVE COMPENSATION PROGRAM
Annual variable cash awards for the Named Executive Officers are available
under The AXA Equitable Short-Term Incentive Compensation Program for Senior
Officers (the "STIC Program").
The purpose of the STIC Program is to:
. align incentive awards with the company's strategic objectives and reward
employees based on both company and individual performance;
. enhance the performance assessment process with a focus on accountability;
. establish greater compensation differentiation based on performance;
. provide competitive total compensation opportunities; and
. attract, motivate and retain top performers.
The STIC Program awards are typically made in February each year, following
review of each participant's performance and achievements over the course of
the preceding fiscal year. Awards can vary from year to year, and differ by
participant, depending primarily on the business and operational results of AXA
Financial Life and Savings Operations, as measured by the performance
objectives under the STIC Program and certain qualitative measures as well as
the participant's individual contributions to those results. No individual is
guaranteed any award under the STIC Program, except for certain limited
guarantees for new hires.
Individual Targets
Initially, individual target awards are assigned to each STIC Program
participant based on evaluations of competitive market data for his or her
position. These individual award targets are reviewed each year and may be
increased or decreased, but generally remain constant from year to year unless
there has been a significant change in the level of the participant's
responsibilities or a proven and sustained change in the market compensation
for the position.
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STIC Program Pool
All the money available to pay STIC Program awards to participants other than
Mr. Pearson comes from, and is limited by, a cash pool (the "STIC Pool") from
which the awards of all the participants under the STIC Program are paid. The
size of this pool is determined each year by a formula under which the sum of
all the individual award targets established for all STIC Program participants
for the year is multiplied by a funding percentage (the "Funding Percentage").
The Funding Percentage is initially based on a performance percentage that
measures the performance of AXA Financial Life and Savings Operations (weighted
90%) and AXA Group (weighted 10%) against certain financial and other targets
(the "Performance Percentage"). The performance of the Investment Management
segment of AXA Equitable is not considered for this purpose since it reports
the business of AllianceBernstein, the officers of which do not participate in
the STIC Program. AllianceBernstein maintains separate compensation plans and
programs.
After the Performance Percentage is determined, it may be adjusted positively
or negatively by the Chairman and Chief Executive Officer of AXA, as described
below, to arrive at the Funding Percentage.
Mr. Pearson's STIC Program award is determined independently of the STIC
Program Pool and is based 30% on AXA Group's performance (which reflects his
broader range of performance responsibilities within AXA Group worldwide as a
member of the Management Committee), 40% on the performance of AXA Financial
Life and Savings Operations and 30% on his individual performance.
Performance Percentage
Various performance objectives are established for each of AXA Group and AXA
Financial Life and Savings Operations, and a target is set for each one. Each
performance objective is separately subject to a 150% cap and 50% cliff with
the exception of the Customer Scope component of AXA Financial Life and Savings
Operations' Customer Centricity performance objective for which the cliff was
removed in 2012 due to the volatility of the measure. For example, if a
particular performance objective is weighted 15% for AXA Financial Life and
Savings Operations, 15% will be added to the overall performance percentage for
AXA Financial Life and Savings Operations if that target is met, regardless of
AXA Financial Life and Savings Operations' performance on its other objectives.
If the target for that performance objective is exceeded, the amount added to
the overall performance percentage for AXA Financial Life and Savings
Operations will be increased up to a maximum of 22.5% (150% x 15%). If the
target for the performance objective is not met, the amount added to the
performance percentage will be decreased down to a threshold of 7.5% (50% x
15%). If performance is below the threshold, 0% will be added to AXA Financial
Life and Savings Operations' overall performance percentage.
AXA FINANCIAL LIFE AND SAVINGS OPERATIONS - The following grid presents the
targets for each of the performance objectives used to measure the performance
of AXA Financial Life and Savings Operations in 2012, along with their relative
weightings. The performance objectives for AXA Financial Life and Savings
Operations and their relative weightings are standardized for AXA Group life
and savings companies in mature markets worldwide and, accordingly, are not
measures calculated and presented in accordance with generally accepted
accounting principles in the United States.
AXA FINANCIAL LIFE AND SAVINGS OPERATIONS PERFORMANCE OBJECTIVES WEIGHTING TARGET/(1)/
---------------------------------------------------------------- --------- ----------
Underlying earnings/(2)/.................................... 40.0% 662
Economic expenses/(3)/...................................... 10.0% 1,280
Operating return on short-term economic capital/(4)/........ 20.0% 16.7%
Operating free cash flow/(5)/............................... 15.0% 754
Customer Centricity/(6)/....................................
Customer Scope............................................. 10.0% 81.5%
Brand Preference........................................... 5.0% 37.5%
/(1)/The numbers for underlying earnings and economic expenses are in millions
of U.S. dollars.
/(2)/"Underlying earnings" means net income excluding net realized capital
gains (losses), goodwill and related intangibles, profit and loss on
financial assets under the fair value option, derivatives and exceptional
operations. Underlying earnings is measured using International Financial
Reporting Standards ("IFRS") since AXA uses IFRS as its principal method
of accounting.
/(3)/"Economic expenses" means various controllable expenses as determined by
AXA.
/(4)/"Operating return on short-term economic capital" means the value
generated by the business as compared to its capital consumption.
/(5)/"Operating Free Cash Flow" means the ability to generate dividends
(distributable earnings for shareholders).
/(6)/"Customer Centricity" is comprised of two components - Customer Scope and
Brand Preference. Generally, Customer Scope measures customers' overall
satisfaction with AXA Equitable and Brand Preference measures customers'
intention to buy additional products from AXA Equitable based on a
weighted average of the percentage of favorable responses received for
certain customer survey questions.
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Since the performance objectives are meant to cover only the key performance
indicators for a year, there are generally no more than five objectives. The
performance objectives are determined based on AXA's strategy and focus and may
change from year to year as different metrics may become more relevant. For
example, the weighting of customer centricity has increased over the last few
years as AXA Group has developed a global strategy of becoming more
customer-focused. Underlying earnings is generally the most highly weighted
performance objective since AXA Equitable believes that underlying earnings is
the strongest indicator of performance for a year and should be the dominant
metric to determine an executive's annual incentive income.
AXA GROUP - AXA Group's performance is primarily based on underlying earnings
per share. Return on equity and customer scope are also considered. For this
purpose, "return on equity" means the ratio of the change in available
financial resources for a year to the average short-term economic capital.
Short-term economic capital measures the portion of the available financial
resources that could be lost in a year if a 1 in 200 year "shock" were to occur.
Adjustment by AXA Group Chairman and Chief Executive Officer
As stated above, the Performance Percentage may be adjusted by AXA's Chairman
and Chief Executive Officer to arrive at the Funding Percentage. This
adjustment reflects AXA Equitable's performance against other qualitative goals
set by AXA at the beginning of the year and may increase or decrease the
Performance Percentage by 15%, subject to an overall cap of 150% for the
Funding Percentage. For 2012, these other qualitative goals included a wide
range of customer centricity, trust and achievement, efficiency and other major
strategic initiatives set at the beginning of the year. With respect to 2012,
AXA's Chairman and Chief Executive Officer made a positive adjustment based on
his subjective evaluation of AXA Equitable's performance for 2012, taking into
account various accomplishments such as increasing the frequency and depth of
organization talent discussions, delivering micro-inequities training to a
substantial portion of the employee population and increasing AXA Equitable's
score on AXA's corporate responsibility index.
Individual Determinations
Once the STIC Pool is determined, it is allocated to participants in the STIC
Program based on their individual performance and demonstrated leadership
behaviors. As stated above, no participant is guaranteed his or her target
award or any award under the STIC Program except for certain limited guarantees
for new hires. This section describes how the amounts of the STIC Program
awards for the Named Executive Officers were determined.
The OCC reviewed the performance of each Named Executive Officer during 2012.
Based on its subjective determination of each Named Executive Officer's
performance, the OCC made its recommendations as to the STIC Program award for
each Named Executive Officer to the AXA Equitable Board of Directors who
approved the final award amounts. In making its recommendations, the OCC took
into account the factors that it deemed relevant, including the following
accomplishments achieved in 2012 and the Funding Percentage. The
accomplishments included:
. AXA Equitable made solid progress in executing its strategy to offer a
more balanced and diversified product portfolio. As an example, the
Structured Capital Strategies product surpassed the $1.5 billion new
premium sales level in 2012;
. AXA Equitable continued to take steps to reduce the risk associated with
the in-force business including suspending the acceptance of
contributions into certain Accumulator(R) contracts issued prior to June
2009 and taking steps to limit and/or suspend the acceptance of
contributions to other annuity products as well as initiating a limited
program to offer to purchase from certain policyholders the GMDB rider
contained in their annuity contracts;
. AXA Equitable's productivity initiatives and disciplined expense
management resulted in a reduction to expenses and increased operational
efficiency;
. AXA Equitable achieved excellent customer satisfaction ratings and was
once again a DALBAR Annuity Service Award winner; and
. AXA Equitable continued to implement successful diversity initiatives
resulting in significant recognition such as being named one of the Top
25 Best Companies for Multicultural Women in WORKING MOTHER magazine,
placing in the highest category of companies in the Human Rights
Campaign's Corporate Equality Index (95 out of 100), being recognized as
having one of the Top 25 U.S. Diversity Councils by the Association of
Diversity Councils and receiving the Corporate Leadership Award from the
Women Presidents' Educational Organization.
No specific weight was assigned to any particular factor and all were evaluated
in the aggregate to arrive at the recommended STIC Program award for each of
the Named Executive Officers.
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In addition to his STIC Program award for 2012, Mr. Malmstrom received a
sign-on bonus of $150,000 in June 2012. The bonus is subject to recoupment in
the event Mr. Malmstrom's employment with AXA Equitable is terminated for any
reason (other than death or job elimination) prior to one full year of
employment.
The STIC Program awards earned by the Named Executive Officers in 2012 (and in
the prior two fiscal years) are reported in the Summary Compensation Table
included in this section.
EQUITY-BASED AWARDS
Annual equity-based awards for AXA Equitable officers, including the Named
Executive Officers, are available under the umbrella of AXA's global equity
program. The value of the equity-based awards is linked to the performance of
AXA's stock.
The purpose of the equity-based awards is to:
. align strategic interests of participants with those of our ultimate
parent and shareholder, AXA;
. provide competitive total compensation opportunities;
. focus on achievement of medium-range and long-term strategic business
objectives; and
. attract, motivate and retain top performers.
Each year, AXA Equitable's OCC submits to the AXA Board of Directors
recommendations with respect to equity-based awards for officers, including the
Named Executive Officers. The AXA Board of Directors approves individual grants
as it deems appropriate.
Proposed grants under AXA's global equity program involve a mix of two
equity-based components: (1) AXA ordinary share options and (2) AXA performance
units. U.S. employees are granted AXA ordinary share options under the AXA
Stock Option Plan for AXA Financial Employees and Associates (the "Stock Option
Plan") and are granted AXA performance units under the AXA Performance Unit
Plan (the "Performance Unit Plan").
Both the Stock Option Plan and the Performance Unit Plan are subject to the
oversight of the AXA Board of Directors, which is authorized to approve all
stock option and performance unit programs within AXA Group prior to their
implementation within the global cap for grants authorized by AXA's
shareholders. The AXA Board of Directors is also responsible for setting the
size of the equity pool each year, after considering the amounts authorized by
shareholders for stock options (AXA's shareholders authorize a global cap for
option awards every three to four years) and the recommendations of chief
executive officers or boards of directors of affiliates worldwide on the number
of option and performance unit grants for the year. The pools are allocated
annually among AXA Group affiliates based on each affiliate's contribution to
AXA Group's financial results during the preceding year.
The AXA Board of Directors sets the mix of performance units and stock options
for individual grants, which is standardized through AXA Group worldwide. Since
2004 there has been an increasing reliance on performance units over stock
options in equity-based awards since performance units avoid the dilutive
effects that accompany grants of stock options. The mix between performance
units and stock options is generally more heavily weighted toward performance
units at the junior officer levels. For senior and executive officer grants,
the proportion of stock options rises since stock options are a long-term award
and AXA believes that senior officers should have more of a long-term focus.
Equity-based awards are granted using dollar values. These dollar values are
converted into euros using the U.S. dollar to euro exchange rate at the time of
grant. The resulting euro grant value is then allocated between stock options
and performance units in accordance with the mix determined by the AXA Board of
Directors. The number of stock options is then determined by dividing the
portion of the euro grant value allocated to the options by the value of one
stock option at the grant date as determined using a Black-Scholes pricing
methodology. The number of performance units is then determined by dividing the
portion of the euro grant value allocated to the performance units by the value
of one performance unit. For this purpose, the value of a performance unit is
deemed to be equal to 2.5 times the value of a stock option at the grant date.
Note that the stock option and performance unit values used in determining the
amount of a grant are based on assumptions which differ from the assumptions
used in determining an option's or performance unit's grant date fair value
reflected in the Summary Compensation Table which is based on FASB ASC Topic
718.
2012 GRANTS OF EQUITY-BASED AWARDS
On March 16, 2012, stock option and performance unit grants were made to the
Named Executive Officers by the AXA Board of Directors based on a review of
each officer's potential future contributions, consideration of the importance
of retaining the officer in his current
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position, a review of competitive market data relating to equity-based awards
for similar positions at peer companies, as described above in the section
entitled, "Use of Competitive Compensation Data," and the recommendations of
the AXA Equitable OCC.
Mr. Pearson was granted an equity-based award comprised of 40% stock options
and 60% performance units. The number of stock options awarded was 116,000 and
the number of performance units awarded was 69,600.
For the other Named Executive Officers, the equity-based award was comprised of
30% stock options and 70% performance units. The amounts were as follows:
Mr. Dziadzio received 36,223 stock options and 33,808 performance units.
Mr. Piazzolla received 20,856 stock options and 19,465 performance units.
Mr. McMahon received 61,745 stock options and 57,628 performance units.
Mr. Silver received 34,028 stock options and 31,759 performance units. Mr. Lane
received 38,419 stock options and 35,857 performance units.
Stock Options
The stock options granted to the Named Executive Officers on March 16, 2012
have a 10-year term and a vesting schedule of four years, with one-third of the
grant vesting on each of the second, third and fourth anniversaries of the
grant, provided that the last third will be exercisable from March 16, 2016
only if the AXA ordinary share performs at least as well as the DowJones Europe
Stoxx Insurance Index over a specified period (this performance condition
applies to all of Mr. Pearson's options). The exercise price for the options is
12.22 euro, which was the average of the closing prices for the AXA ordinary
share on NYSE Euronext Paris SA over the 20 trading days immediately preceding
March 16, 2012.
In the event of a Named Executive Officer's retirement, the stock options
continue to vest and may be exercised until the end of the term, except in the
case of misconduct. Accordingly, since Mr. Silver retired, these stock options
will not be forfeited due to any service condition.
Performance Units
The performance units granted to the Named Executive Officers on March 16, 2012
have a cliff vesting schedule of three years and will be settled in cash.
A performance unit is a "phantom" share of AXA stock that, once earned and
vested, provides the right to a payment equal to the value of an AXA share at
the time of payment. Performance units are granted unearned. Under the 2012
Performance Unit Plan, the number of units that is earned is determined at the
end of a two-year performance period starting on January 1, 2012 and ending on
December 31, 2013 by multiplying the number of units granted by a percentage
that is determined based on the performance of AXA Group and AXA Financial Life
and Savings Operations over the performance period. If no dividend is paid by
AXA for fiscal year 2012 or fiscal year 2013, the percentage will be divided in
half.
PERFORMANCE OBJECTIVES - AXA and AXA Financial Life and Savings Operations each
have their own performance objectives under the 2012 Performance Unit Plan,
with AXA Group's performance over the two-year performance period counting for
one-third and AXA Financial Life and Savings Operations' performance over the
same period counting for two-thirds toward the final determination of how many
performance units a participant has earned. If performance targets are met,
100% of the performance units initially granted is earned. Performance that
exceeds the targets results in increases in the number of units earned, subject
to a cap of 130% of the initial number of units. Performance that falls short
of targets results in a decrease in the number of units earned with a possible
forfeiture of all units. Since AXA uses IFRS as its principal method of
accounting, the performance objectives are measured using IFRS. Accordingly,
the performance objectives are not measures calculated and presented in
accordance with generally accepted accounting principles in the United States.
For performance units granted under the 2012 Performance Unit Plan, the
performance objectives are:
AXA FINANCIAL LIFE AND SAVINGS
AXA GROUP (1/3 WEIGHT) OPERATIONS (2/3 WEIGHT)
---------------------- --------------------------------------
.. Net Income Per Share . Net Income/(1)/ (weighted 50%)
. Underlying Earnings (weighted 50%)
/(1)/Net income means net income as determined under IFRS.
For AXA Group, net income per share is the key performance objective since it
is aligned with shareholder dividends and provides differentiation from the
STIC Program performance objectives. For AXA Financial Life and Savings
Operations, underlying earnings is included as a performance objective since it
measures operating performance.
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PAYOUT - The settlement of 2012 performance units will be made in cash on
March 16, 2015 or on the immediately following day that is a business day if
March 16, 2015 is not a business day. The units will be valued based on the
average closing price of the AXA ordinary share on NYSE Euronext Paris SA
during the last 20 trading days immediately preceding the settlement date and
converted to U.S. dollars using the euro to U.S. dollar exchange rate as
published by the European Central Bank (or equivalent institution in the
absence thereof) on the trading day immediately preceding the settlement date.
The 2012 Performance Unit Plan provides that, in the case of retirement, a
participant is treated as if he or she continued employment until the end of
the vesting period. Accordingly, Mr. Silver will receive a payout under this
plan even though he retired prior to the end of the vesting period.
Grants under 2012 AXA Miles Program
On March 16, 2012, eligible AXA Group employees worldwide were each granted 50
AXA miles. AXA miles are "phantom" shares of AXA stock that will convert to
actual AXA ordinary shares at the end of a four-year vesting period on
March 16, 2016. In addition, 25 of the AXA miles are subject to performance
conditions. Specifically, at least one of the following two metrics must have
improved in 2012 in order for these 25 AXA miles to convert to actual shares:
AXA's underlying earnings per share (1.57 euro in 2011) or AXA's customer scope
index (79.3 in 2011).
PAYOUT OF 2010 PERFORMANCE UNITS IN 2012
In 2012, the Named Executive Officers with the exception of Mr. Piazzolla
received a 50% payout under AXA's 2010 Performance Unit Plan. The payout of the
units was in cash.
The 2010 Performance Unit Plan was similar to the 2012 Performance Unit Plan
except that 50% of the units earned were vested after two years, on March 19,
2012, and the remaining 50% will be vested on March 19, 2013. As in the 2012
Performance Unit Plan, AXA Financial Life and Savings Operations and AXA Group
each had their own performance objectives under the 2010 Performance Unit Plan,
with AXA Financial Life and Savings Operations' performance over a two-year
performance period counting for two-thirds and AXA Group's performance over the
same period counting for one-third toward the final determination of how many
performance units a participant earned. AXA Group's performance was based on
net income per share while AXA Financial Life and Savings Operations'
performance was based on net income (weighted 50%) and underlying earnings
(weighted 50%). The performance percentage that was ultimately achieved under
the plan was 77.28%.
Detailed information on the stock option and performance unit grants for each
of the Named Executive Officers in 2012 is reported in the 2012 Grants of
Plan-Based Awards Table included in this section.
OTHER COMPENSATION AND BENEFITS
AXA Equitable believes a comprehensive benefits program that offers long-term
financial support and security for all employees plays a critical role in
attracting high caliber executives and encouraging their long-term service.
Accordingly, it offers employees, including the Named Executive Officers, a
benefits program that includes group health and disability coverage, group life
insurance and various deferred compensation and retirement benefits.
AXA Equitable reviews the program from time to time to ensure that the benefits
it provides continue to serve business objectives and remain cost-effective and
competitive with the programs offered by other diversified financial services
companies.
TAX-QUALIFIED RETIREMENT PLANS
The following tax-qualified retirement plans are offered to eligible employees,
including the Named Executive Officers, except Mr. Malmstrom who continues to
participate in the Switzerland retirement fund:
AXA EQUITABLE 401(K) PLAN (THE "401(K) PLAN"). AXA Equitable sponsors the
401(k) Plan, a tax-qualified defined contribution plan with a cash or deferred
arrangement, for its eligible employees, including the Named Executive Officers
except for Mr. Malmstrom. Eligible employees may contribute to the 401(k) Plan
on a before tax, after-tax, or Roth 401(k) basis (or any combination of the
foregoing), up to a percentage of annual eligible compensation as defined in
the plan. Before-tax and Roth 401(k) contributions are subject to contribution
limits ($17,000 in 2012 and $17,500 in 2013) and compensation limits ($250,000
in 2012 and $255,000 in 2013) imposed by the Internal Revenue Code of 1986, as
amended
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(the "Code"). Prior to February 10, 2012, eligible employees received a
matching contribution for their before-tax and Roth 401(k) contributions on a
dollar for dollar basis up to three percent of the participant's annual
eligible compensation. Company matching contributions were subject to a
three-year cliff-vesting schedule. On February 10, 2012, the matching
contribution for AXA Equitable employees was replaced with a discretionary
profit sharing contribution opportunity. The discretionary profit sharing
contribution for a calendar year is based on company performance for that year
and will range from 0% to 4% of eligible compensation. Any contribution for a
calendar year is expected to be made in the first quarter of the following
year. No profit sharing contribution was made for the 2012 plan year.
AXA EQUITABLE RETIREMENT PLAN (THE "RETIREMENT PLAN"). AXA Equitable sponsors
the Retirement Plan, a tax-qualified defined benefit plan, for its eligible
employees, including the Named Executive Officers except Mr. Malmstrom. The
Retirement Plan provides for retirement benefits upon reaching age sixty-five
and has provisions for early retirement, death benefits, and benefits upon
termination of employment for vested participants. It has a three-year
cliff-vesting schedule.
The Retirement Plan currently provides a cash balance benefit whereby AXA
Equitable establishes a notional account in the name of each Retirement Plan
participant. This notional account is credited with deemed pay credits equal to
5% of eligible compensation up to the Social Security wage base plus 10% of
eligible compensation above the Social Security wage base. Eligible
compensation is subject to limits imposed by the Code ($250,000 in 2012 and
$255,000 in 2013). In addition, the notional account is credited with deemed
interest credits. For pay credits earned on or after April 1, 2012, the
interest rate is determined annually based on the average discount rates for
one-year Treasury Constant Maturities. For pay credits earned prior to April 1,
2012, the annual interest rate is the greater of 4% or a rate derived from the
average discount rates for one-year Treasury Constant Maturities. For pay
credits earned prior to April 1, 2012 the rate was 4% for 2012 and for any pay
credits earned on or after April 1, 2012, the rate was 0.25% for 2012.
For certain grandfathered participants, the Retirement Plan provides benefits
under a formula based on final average pay, estimated Social Security benefits
and service.
For additional information on retirement plan benefits for the Named Executive
Officers, see the Pension Benefits Table included in this section.
NONQUALIFIED RETIREMENT PLANS
AXA EQUITABLE EXCESS RETIREMENT PLAN (THE "EXCESS PLAN"). AXA Equitable
sponsors the Excess Plan which allows eligible employees, including the Named
Executive Officers except Mr. Malmstrom, to earn retirement benefits in excess
of what is permitted under the Code with respect to the Retirement Plan.
Specifically, the Retirement Plan is subject to rules under the Code that cap
both the amount of eligible earnings that may be taken into account for
determining benefits under the plan and the amount of benefits the plan may pay
annually. The Excess Plan permits participants, including the Named Executive
Officers, to accrue and be paid benefits that they would have earned and been
paid under the Retirement Plan but for these limits. AXA Equitable believes the
Excess Plan is an important component of competitive market-based compensation
in both its peer group and generally.
NONQUALIFIED DEFERRED COMPENSATION PLAN
THE AXA EQUITABLE POST-2004 VARIABLE DEFERRED COMPENSATION PLAN FOR EXECUTIVES
(THE "POST-2004 PLAN"). AXA Equitable sponsors the Post-2004 Plan which allows
eligible employees to defer the receipt of compensation. The amount deferred is
credited to a bookkeeping account established in the participant's name and
participants may choose from a range of nominal investments according to which
their accounts rise or decline. Participants annually elect the amount they
want to defer, the date on which payment of their deferrals will begin and the
form of payment. AXA Equitable believes that compensation deferral is a
cost-effective method of enhancing the savings of executives.
For additional information on these plan benefits for the Named Executive
Officers, see the Nonqualified Deferred Compensation Table included in this
section.
FINANCIAL PROTECTION
THE AXA EQUITABLE EXECUTIVE SURVIVOR BENEFITS PLAN (THE "ESB PLAN"). AXA
Equitable sponsors the ESB Plan which offers financial protection to a
participant's family in the case of his or her death. Eligible employees may
choose up to four levels of coverage and the form of benefit to be paid at each
level. Each level provides a benefit equal to one times the participant's
eligible compensation (generally, base salary plus higher of most recent
short-term incentive compensation award and the average of the three highest
short-term incentive compensation awards) and offers different coverage
choices. Generally, the participant can choose between a life insurance death
benefit and a deferred compensation benefit payable upon death at each level.
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SEVERANCE ARRANGEMENTS
THE AXA EQUITABLE SEVERANCE BENEFIT PLAN (THE "SEVERANCE PLAN"). AXA Equitable
sponsors the Severance Plan to provide severance benefits to eligible employees
whose jobs are eliminated for specific defined reasons. The Severance Plan
generally bases severance payments to eligible employees on length of service
or salary. Payments are capped at 52 weeks' of salary or, in some cases,
$300,000. To obtain benefits under the Severance Plan, participants must
execute a general release and waiver of claims against AXA Equitable and
affiliates.
THE AXA EQUITABLE SUPPLEMENTAL SEVERANCE PLAN FOR EXECUTIVES (THE "SUPPLEMENTAL
SEVERANCE PLAN"). AXA Equitable sponsors the Supplemental Severance Plan for
officers at the level of Executive Director or above. The Supplemental
Severance Plan is intended solely to supplement, and is not duplicative of, any
severance benefits for which an executive may be eligible under the Severance
Plan. The Supplemental Severance Plan provides that eligible executives will
receive, among other benefits:
. Severance payments equal to 52 weeks' of salary, reduced by any severance
payments for which the executive may be eligible under the Severance Plan;
. Additional severance payments equal to the greater of:
. The most recent short-term incentive compensation award paid to
the executive;
. The average of the three most recent short-term incentive
compensation awards paid to the executive; and
. The annual target short-term incentive compensation award for the
executive for the year in which he or she receives notice of job
elimination; and
. A lump sum payment equal to the sum of: (a) the executive's short-term
incentive compensation for the year in which the executive receives
notice of job elimination, pro-rated based on the number of the
executive's full calendar months of service in that year and (b) $40,000.
MR. PEARSON'S EMPLOYMENT AGREEMENT. Mr. Pearson waived the right to receive any
benefits under the Severance Plan or the Supplemental Severance Plan. Rather,
his employment agreement provides that, if his employment is terminated by AXA
Equitable prior to his age 65 other than for cause, excessive absenteeism or
death, or Mr. Pearson resigns for "good reason," Mr. Pearson will be entitled
to certain severance benefits, including (i) severance pay equal to the sum of
two years of salary and two times the greatest of: (a) Mr. Pearson's most
recent bonus, (b) the average of Mr. Pearson's last three bonuses and
(c) Mr. Pearson's target bonus for the year in which termination occurred,
(ii) a pro-rated bonus at target for the year of termination, (iii) excess
pension plan accruals on the severance pay, (iv) continued participation in the
ESB Plan for an additional year following termination and (v) access to the
company medical plans at Mr. Pearson's or his spouse's sole expense for two
years from the date of termination. For this purpose, "good reason" includes a
material reduction in Mr. Pearson's duties or authority, the removal of
Mr. Pearson from his positions, AXA Equitable requiring Mr. Pearson to be based
at an office more than 75 miles from New York City, a diminution of
Mr. Pearson's titles, a material failure by the company to comply with the
agreement's compensation provisions, a failure of the company to secure a
written assumption of the agreement by any successor company and a change in
control of AXA Financial (provided that Mr. Pearson delivers notice of
termination within 180 days after the change in control). The severance
benefits are contingent upon Mr. Pearson releasing all claims against AXA
Equitable and its affiliates and his entitlement to severance pay will be
discontinued if he provides services for a competitor. Also, in the event of a
termination of Mr. Pearson's employment by AXA Equitable without cause or
Mr. Pearson's resignation due to a change in control, Mr. Pearson's severance
benefits will cease after one year if certain performance conditions are not
met.
CHANGE IN CONTROL ARRANGEMENTS
AXA Equitable believes that it is important to provide employees with a level
of protection to reduce anxiety that may accompany a change in control.
Accordingly, change in control benefits are provided for stock options,
restricted stock and performance units.
For stock options granted under the Stock Option Plan in 2005 or later, if
there is a change in control of AXA Financial, all stock options will become
immediately exercisable for their term regardless of the otherwise applicable
exercise schedule. For stock options granted to employees prior to 2005 under
The AXA Financial, Inc. 1997 Stock Incentive Plan and restricted stock granted
under that plan, each stock option will, at the discretion of the Organization
and Compensation Committee of the AXA Financial Board of Directors (the "AXA
Financial OCC"), either be canceled in exchange for a payment in cash or become
immediately exercisable and all restricted stock will become non-forfeitable
and be immediately transferable unless the AXA Financial OCC reasonably
determines that: (i) the stock options or restricted stock will be honored,
(i) the stock options or restricted stock will be assumed or (iii) alternative
awards will be substituted for the stock options and restricted stock. Such
alternative awards must, among other items, provide rights and entitlements
substantially equivalent to, or better than, the rights and entitlements of the
existing awards and must have substantially equivalent economic value.
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Under the 2012, 2011 and 2010 Performance Unit Plans, if there is a change in
control of AXA Financial at any time between the end of the performance period
and the settlement date of the performance units, participants in the plan will
maintain the right to receive the settlement of their performance units on the
settlement date.
PERQUISITES
Named Executive Officers are provided with certain perquisites. Pursuant to his
employment agreement, Mr. Pearson is entitled to unlimited personal use of a
car and driver, two business class trips to the United Kingdom per year with
his spouse, expatriate tax services, a company car for his personal use, excess
liability insurance coverage, and repatriation costs. Each of the Named
Executive Officers may use a car and driver for personal purposes from time to
time and may occasionally bring spouses and guests on private aircraft flights
otherwise being taken for business reasons. Also, Mr. McMahon and Mr. Lane are
each permitted to use a corporate membership in a country club for personal
purposes and, in 2012, the company paid for various relocation costs for
Mr. Malmstrom and Mr. Lane.
In addition to the above, the Named Executive Officers receive financial
planning and tax preparation services.
All the Named Executive Officers also receive tax gross-up payments in respect
of their transportation and financial planning and tax preparation benefits.
Additional tax gross-ups were paid in 2012 for Mr. Malmstrom's and Mr. Lane's
relocation costs and for Mr. Pearson's excess liability insurance coverage. Tax
gross-ups on most perquisites will be discontinued for 2013.
The incremental costs of perquisites for the Named Executive Officers during
2012 are included in the column entitled "All Other Compensation" in the
Summary Compensation Table included in this Item 12.
OTHER COMPENSATION POLICIES
CLAWBACKS
In the event an individual's employment is terminated for cause, all stock
options and restricted stock awards held by the individual are forfeited as of
the date of termination. In addition, if an individual retires and induces
others to leave the employment of an AXA affiliate, misuses confidential
information learned while in the employ of AXA affiliate or otherwise acts in a
manner that is substantially detrimental to the business or reputation of any
AXA affiliate, all outstanding stock options held by the individual will be
forfeited.
SHARE OWNERSHIP POLICY
In September 2006, AXA Financial Group approved stock ownership guidelines for
senior officers of AXA Equitable including the Named Executive Officers. The
stock ownership requirements are expressed as a multiple of base salary, with
the chief executive officer required to own stock valued at five times his base
salary, executive vice presidents required to own stock equal to three times
their base salary and senior vice presidents required to own stock one and one
half times their base salary. The requirement can be satisfied by owning AXA
ordinary shares or AXA ADRs, including AXA ADRs held in accounts under the
401(k) Plan, vested restricted stock units held in the deferred compensation
plan and earned performance units. Senior officers were given a five-year
compliance window.
In September 2010, the OCC suspended the compliance window until 2015 due to
stock price decline, and because AXA's delisting of its ADRs and deregistration
from the SEC decreased the number of vehicles available for the officers to
meet their obligations.
DERIVATIVES TRADING AND HEDGING POLICIES
AXA Equitable's reputation for integrity and high ethical standards in the
conduct of its affairs is of paramount importance to it. To preserve this
reputation, all employees, including the Named Executive Officers, are subject
to the AXA Financial Insider Trading Policy. This policy prohibits, among other
items, all short sales of securities of AXA and its publicly-traded
subsidiaries and any hedging of equity compensation awards (including stock
option, performance unit, restricted stock or similar awards) or the securities
underlying those awards. Members of AXA's Management Committee must pre-clear
with the AXA Group General Counsel any derivatives transactions with respect to
AXA securities and/or the securities of other AXA Group publicly-traded
subsidiaries (including AllianceBernstein).
IMPACT OF TAX POLICIES
Code Section 162(m) limits tax deductions relating to executive compensation of
certain executives of publicly held companies. Because neither AXA Financial
nor any of its subsidiaries within the Insurance Segment, including AXA
Equitable and MLOA, is deemed to be publicly held for purposes of Code
Section 162(m), these limitations are not applicable to the executive
compensation program described above.
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COMPENSATION COMMITTEE REPORT
Not applicable.
CONSIDERATION OF RISK MATTERS IN DETERMINING COMPENSATION
AXA Equitable considered whether its compensation practices are reasonably
likely to have a material adverse effect on AXA Equitable and determined that
they do not. When conducting its analysis, AXA Equitable considered that the
programs have a number of features that contribute to prudent decision-making
and avoid an incentive to take excessive risk. The overall incentive design and
metrics of the incentive compensation program effectively balance performance
over time, considering both company earnings and individual results with
various multi-year time-vesting and performance periods. The short-term
incentive program mitigates risk by permitting discretionary adjustments for
both funding and granting purposes. AXA Equitable also considered that its
general risk management controls, oversight of its programs, award review and
governance processes preclude decision-makers from taking excessive risk to
achieve targets under the compensation plans.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Organization and Compensation Committee served as an officer
or employee of AXA Equitable.
In 2012, Directors Duverne and Slutsky also served on the Compensation
Committee of the Board of Directors of AllianceBernstein Corporation. Mr. de
Castries resigned as a member of the Compensation Committee of the Board of
Directors of AllianceBernstein Corporation in February 2012.
Mr. Kraus is a director of AXA Equitable. Mr. Kraus is Chairman of the Board
and Chief Executive Officer of AllianceBernstein Corporation and, accordingly,
also serves in that capacity for AllianceBernstein and AllianceBernstein
Holding.
For additional information about the Organization and Compensation Committee,
see "Directors, Executive Officers and Corporate Governance".
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SUMMARY COMPENSATION TABLE
The following table presents the compensation of our Named Executive Officers
for services performed for MLOA for the years ended December 31,
2010, December 31, 2011, and December 31, 2012 allocated to MLOA in a manner
consistent with the allocation of compensation expenses under the Services
Agreement. The amounts listed in this table as well as all other tables reflect
all payments made to the Named Executive Officers by AXA Equitable even though
a portion of these costs may have been reimbursed by certain affiliates
pursuant to various service agreements. The compensation reported includes
items such as salary and non-equity incentive compensation as well as the grant
date fair value of performance unit, restricted stock and stock option grants.
The performance units, restricted stock and stock options may never become
payable or may end up with a value that is substantially different from the
value reported here. The amounts in the Total column do not represent "total
compensation" as described in the Compensation Discussion and Analysis.
CHANGE IN
PENSION
VALUE AND
NON-EQUITY NONQUALIFIED ALL OTHER
FISCAL STOCK OPTION INCENTIVE DEFERRED COMP-
NAME YEAR SALARY/(1)/ BONUS/(2)/ AWARDS/(3)/ AWARDS/(4)/ COMPENSATION/(5)/ COMP- ENSATION/(7)/
PEARSON, MARK 2012 $ 44,794 -- $ 46,924 $ 11,155 $ 69,381 $ 56,432 $ 3,940
CHAIRMAN AND CHIEF 2011 $ 39,800 $ 69,155 $ 34,742 $ 13,336 $ 1,747 $ 6,378 $ 10,663
EXECUTIVE OFFICER
MALMSTROM, ANDERS 2012 $ 14,457 $ 5,850 $ 13,650 $ 590 $ 4,073
SENIOR EXECUTIVE
DIRECTOR AND CHIEF
FINANCIAL OFFICER
POUPART-LAFARGE
BERTRAND 2012 $ 10,127 $ 9,531 $ 1,451 $ 5,494 -- $ 12,384
INTERIM CHIEF
FINANCIAL OFFICER
DZIADZIO, RICHARD 2012 $ 5,984 $ 22,827 $ 3,483 -- $ 24,567 $ 14,371
FORMER SENIOR 2011 $ 19,448 $ 20,268 $ 5,208 $ 37,050 $ 24,418 $ 1,584
EXECUTIVE 2010 $ 18,999 $ 17,852 $ 6,371 $ 46,410 $ 14,197 $ 1,565
VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
MCMAHON, ANDREW 2012 $ 23,337 $ 38,886 $ 5,938 $ 59,670 $ 28,353 $ 3,947
PRESIDENT 2011 $ 22,888 $ 38,003 $ 9,765 $ 59,670 $ 23,778 $ 3,145
2010 $ 18,999 $ 34,297 $ 8,760 $ 78,000 $ 12,626 $ 2,784
PIAZZOLLA, SALVATORE 2012 $ 35,070 -- $ 13,157 $ 2,006 $ 32,760 $ 11,091 $ 3,680
SENIOR EXECUTIVE 2011 $ 29,012 $ 5,850 $ 10,556 $ 2,713 $ 25,350 $ 3,960 $ 9,255
DIRECTOR AND CHIEF
HUMAN RESOURCES
OFFICER
LANE, NICHOLAS 2012 $ 19,223 $ 24,208 $ 3,695 $ 27,300 $ 11,963 $ 3,685
SENIOR EXECUTIVE 2011 $ 16,838 $ 12,667 $ 3,255 $ 21,060 $ 9,575 $ 2,086
DIRECTOR AND PRESIDENT,
RETIREMENT SAVINGS
SILVER, RICHARD 2012 $ 6,433 $ 21,445 $ 3,272 -- $ 30,210 $ 124,717
FORMER SENIOR 2011 $ 19,448 $ 20,268 $ 5,208 $ 37,440 $ 36,457 $ 2,067
EXECUTIVE 2010 $ 18,999 $ 17,852 $ 6,371 $ 46,410 $ 27,914 $ 2,165
VICE PRESIDENT, CHIEF
ADMINISTRATIVE OFFICER
AND CHIEF LEGAL OFFICER
NAME TOTAL
PEARSON, MARK $ 232,626
CHAIRMAN AND CHIEF $ 175,821
EXECUTIVE OFFICER
MALMSTROM, ANDERS $ 38,620
SENIOR EXECUTIVE
DIRECTOR AND CHIEF
FINANCIAL OFFICER
POUPART-LAFARGE
BERTRAND $ 38,987
INTERIM CHIEF
FINANCIAL OFFICER
DZIADZIO, RICHARD $ 71,232
FORMER SENIOR $ 107,976
EXECUTIVE $ 105,394
VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
MCMAHON, ANDREW $ 160,131
PRESIDENT $ 157,249
$ 155,466
PIAZZOLLA, SALVATORE $ 97,764
SENIOR EXECUTIVE $ 86,696
DIRECTOR AND CHIEF
HUMAN RESOURCES
OFFICER
LANE, NICHOLAS $ 90,074
SENIOR EXECUTIVE $ 65,481
DIRECTOR AND PRESIDENT,
RETIREMENT SAVINGS
SILVER, RICHARD $ 186,077
FORMER SENIOR $ 120,888
EXECUTIVE $ 119,711
VICE PRESIDENT, CHIEF
ADMINISTRATIVE OFFICER
AND CHIEF LEGAL OFFICER
/(1)/Mr. Malmstrom's salary was paid from his hire date of June 1, 2012 to
December 31, 2012. Mr. Poupart-Lafarge's salary was paid from January 1,
2012 until his employment termination date of September 1, 2012.
Mr. Dziadzio's salary was paid from January 1, 2012 until his employment
termination date of April 13, 2012. Mr. Silver's salary was paid from
January 1, 2012 until his retirement on May 1, 2012.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
/(2)/For Mr. Malmstrom, this amount represents a sign-on bonus that he received
in June 2012. The bonus is subject to recoupment in the event
Mr. Malmstrom's employment is terminated for any reason (other than death
or job elimination) prior to one full year of employment.
/(3)/The amounts reported in this column represent the aggregate grant date
fair value of performance units, AXA miles and restricted stock awarded in
each year in accordance with US GAAP accounting guidance. The 2012
performance unit and AXA miles grants were valued at target which
represents the probable outcome at grant date. A maximum payout for the
performance unit grants would result in additional values of: Pearson
$61,000, Poupart-Lafarge $12,346, McMahon $50,508, Piazzolla $17,060, Lane
$31,427.
/(4)/The amounts reported in this column represent the aggregate grant date
fair value of stock options awarded in each year in accordance with
US GAAP accounting guidance.
/(5)/The amounts reported for 2012 are the awards paid in February 2013 to each
of the Named Executive Officers based on their 2012 performance. The
amounts reported for 2011 are the awards paid in February 2012 for 2011
performance. The amounts reported for 2010 are the awards paid in February
2011 for 2010 performance.
/(6)/The amounts reported represent the change in the actuarial present value
of accumulated pension benefits for each Named Executive Officer. The
Named Executive Officers did not have any above-market earnings on
non-qualified deferred compensation in 2010, 2011 or 2012.
/(7)/The following table provides additional details for the compensation
information found in the All Other Compensation column.
EXCESS TAX LIFE OTHER
LIABILITY FINANCIAL GROSS INSURANCE PERQUISITES/
NAME TRANSPORT/(A)/ INSURANCE/(B)/ ADVICE/(C)/ UPS/(D)/ PREMIUMS/(E)/ BENEFITS/(F)/ TOTAL
---- ------------- ------------- ---------- -------- ------------ ------------ ----------
PEARSON, MARK 2012 $ 422 $ 194 $ 1,079 $ 2,072 -- $ 173 $ 3,940
2011 $ 235 $ 180 $ 835 $ 4,949 -- $ 4,463 $ 10,662
MALMSTROM, ANDERS 2012 $ 8 -- $ 503 $ 836 $ 30 $ 2,697 $ 4,074
POUPART-LAFARGE, BERTRAND 2012 $ 1 -- -- $ 2,790 -- $ 9,593 $ 12,384
DZIADZIO, RICHARD 2012 -- -- $ 204 $ 211 -- $ 13,956 $ 14,371
2011 -- $ 68 $ 590 $ 640 -- $ 287 $ 1,585
2010 -- $ 68 $ 567 $ 612 -- $ 318 $ 1,565
MCMAHON, ANDREW 2012 $ 518 -- $ 630 $ 1,547 $ 553 $ 699 $ 3,947
2011 $ 409 $ 68 $ 590 $ 1,138 $ 599 $ 342 $ 3,146
2010 $ 419 $ 68 $ 567 $ 1,042 $ 401 $ 287 $ 2,784
PIAZZOLLA, SALVATORE 2012 $ 16 -- $ 1,546 $ 1,550 $ 130 $ 438 $ 3,680
2011 $ 3 $ 68 $ 835 $ 3,744 $ 158 $ 4,448 $ 9,256
LANE, NICHOLAS 2012 $ 28 -- $ 482 $ 1,627 $ 40 $ 1,508 $ 3,685
2011 $ 13 $ 68 $ 835 $ 762 $ 54 $ 353 $ 2,085
SILVER, RICHARD 2012 -- -- $ 951 $ 787 $ 656 $ 122,324 $ 124,718
2011 -- $ 68 $ 590 $ 548 $ 575 $ 287 $ 2,068
2010 -- $ 68 $ 567 $ 584 $ 632 $ 313 $ 2,164
/(a)/Mr. Pearson is entitled to the business and personal use of a dedicated
car and driver. The personal use of this vehicle for 2012 was valued based
on a formula considering the annual lease value of the vehicle, the
compensation of the driver and the cost of fuel. The other Named Executive
Officers may use cars and drivers for personal matters from time to time.
The value for each executive's car use is based on a similar formula
taking into account the annual lease value of the vehicle and the
compensation of the driver.
/(b)/Prior to 2012, the company paid the premiums for excess liability
insurance coverage for each of the Named Executive Officers. The company
no longer offers this benefit to the Named Executive Officers, except for
Mr. Pearson who is entitled to this benefit under his employment agreement.
/(c)/The company pays for financial planning and tax preparation services for
each of the Named Executive Officers other than Mr. Poupart-Lafarge.
/(d)/The company pays for tax gross-ups related to the transport and financial
planning and tax preparation services for each of the Named Executive
Officers who incurred the applicable expenses. In addition, Mr. Pearson
received tax gross-ups related to his excess liability insurance and his
imputed income related to having a guest accompany him on private aircraft
flights. Also, Mr. McMahon, Mr. Piazzolla and Mr. Lane received a tax
gross-up related to having a guest accompany them on certain business
trips. Mr. Malmstrom, Mr. Poupart-Lafarge and Mr. Lane received a tax
gross-up related to their relocation costs. Mr. Lane also received a tax
gross-up related to his personal use of a company membership in a country
club.
108
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
/(e)/This column shows the cost of life insurance coverage provided to the
Named Executive Officers under the AXA Equitable Executive Survivor
Benefits Plan less the amount of any contributions made by the Named
Executive Officers. For this purpose, the cost of the life insurance
coverage was determined by multiplying the amount of coverage by the
actual policy cost of insurance rates.
/(f)/This column includes the amount of any employer matching contributions
received by each Named Executive Officer under the AXA Equitable 401(k)
Plan. This column also includes a cash incentive received by the Named
Executive Officers who completed a health risk assessment in connection
with the company's wellness program. For Mr. Malmstrom, this column
includes certain relocation costs and the amount of contributions made by
the Company to his Swiss retirement plan. For Mr. Poupart-Lafarge, this
column includes certain relocation costs. For Mr. Dziadzio, this column
includes amounts received for a pay-out of unused vacation pay and a
partial bonus payment for 2012. For Mr. McMahon and Mr. Piazzolla, this
column includes certain costs related to having a guest accompany them on
business trips. For Mr. Lane, this column includes the value of his
personal use of a company membership in a country club, certain relocation
costs and certain costs related to having a guest accompany him on
business trips. For Mr. Silver, this column includes amounts received
under a consulting agreement, amounts received under his severance
agreement and a pay-out of unused vacation days.
2012 GRANTS OF PLAN-BASED AWARDS
The following table provides additional information about plan-based
compensation disclosed in the Summary Compensation Table allocated to MLOA in a
manner consistent with the allocation of compensation expenses under the
Services Agreement. This table include both equity and non-equity awards
granted during 2012.
ESTIMATED ESTIMATED
FUTURE PAYOUTS FUTURE PAYOUTS ALL OTHER ALL OTHER
UNDER NON-EQUITY UNDER EQUITY STOCK OPTION CLOSING GRANT
INCENTIVE PLAN INCENTIVE PLAN AWARDS: AWARDS: EXERCISE MARKET DATE FAIR
AWARDS/(1)/ AWARDS/(2)/ NUMBER OF NUMBER OF OR BASE PRICE VALUE OF
- ------------------ ------------------ SHARES OF SECURITIES PRICE OF ON STOCK AND
GRANT THRE- MAX- THRE- MAX- STOCKS OR UNDERLYING OPTION DATE OF OPTION
NAME DATE SHOLD TARGET IMUM SHOLD TARGET IMUM UNITS OPTIONS AWARDS/(3)/ GRANT/(4)/ AWARDS/(5)/
---- ---------- ----- ------- ---- ----- ------ ----- --------- ---------- ---------- --------- ----------
PEARSON, MARK -- $76,245 N/A
03/16/2012 -- 4,524 4,524 $15.96 $17.29 $11,155
03/16/2012 -- 2,714 3,529 $46,924
MALMSTROM, ANDERS -- $13,650 N/A
POUPART-LAFARGE, -- $ 6,464 N/A
BERTRAND 03/16/2012 -- 196 196 392 $15.96 $17.29 $ 1,451
03/16/2012 -- 549 714 $ 9,497
03/16/2012 -- 1 1 1 $ 34
DZIADZIO, RICHARD -- $46,800 N/A
03/16/2012 -- 471 471 942 $15.96 $17.29 $ 3,483
03/16/2012 -- 1,319 1,714 $22,793
03/16/2012 -- 1 1 1 $ 34
MCMAHON, ANDREW -- $70,200 N/A
03/16/2012 -- 803 803 1,605 $15.96 $17.29 $ 5,938
03/16/2012 -- 2,247 2,922 $38,852
03/16/2012 -- 1 1 1 $ 34
PIAZZOLLA, SALVATORE -- $31,200 N/A
03/16/2012 -- 271 271 542 $15.96 $17.29 $ 2,006
03/16/2012 -- 759 987 $13,123
03/16/2012 -- 1 1 1 $ 34
LANE, NICHOLAS -- $27,300 N/A
03/16/2012 -- 499 499 999 $15.96 $17.29 $ 3,695
03/16/2012 -- 1,398 1,818 $24,174
03/16/2012 -- 1 1 1 $ 34
SILVER, RICHARD -- $46,800 N/A
03/16/2012 -- 442 442 885 $15.96 $17.29 $ 3,272
03/16/2012 -- 1,239 1,610 $21,412
03/16/2012 -- 1 1 1 $ 34
/(1)/The target column shows the target award for 2012 for each Named Executive
Officer under the AXA Equitable 2012 Short-Term Incentive Compensation
Plan for Senior Officers assuming the plan was fully funded.
Mr. Malmstrom's target was pro-rated based on his hire date of June 1,
2012. There is no minimum or maximum award for any participant in this
plan. The actual 2012 awards granted to the Named Executive Officers are
listed in the Non-Equity Incentive Compensation column of the Summary
Compensation Table.
109
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
/(2)/The second row for each Named Executive Officer (other than Mr. Malmstrom)
shows the stock options granted under The AXA Stock Option Plan for AXA
Financial Employees and Associates on March 16, 2012. Except for those
awarded to Mr. Pearson, these stock options have a ten-year term and a
vesting schedule of four years, with one-third of the grant vesting on
each of the second, third and fourth anniversaries of the grant date,
provided that the last third is subject to a performance condition
requiring the AXA ordinary share to perform at least as well as the
DowJones Europe Stoxx Insurance Index over a specified period. This
performance condition applies to all of Mr. Pearson's options. The third
row for each Named Executive Officer shows the performance units granted
under the 2012 AXA Performance Unit Plan on March 16, 2012. These
performance units have a cliff vesting schedule of three years.
Performance units are granted unearned. Under the 2012 AXA Performance
Unit Plan, the number of units that is earned is determined at the end of
a two-year performance period by multiplying the number of units granted
by a percentage that is determined based on the performance of AXA Group
and AXA Financial Life and Savings Operations over the performance period.
The fourth row for each Named Executive Officer shows the AXA miles
granted on March 16, 2012.
/(3)/The exercise price for the stock options granted on March 16, 2012 is
equal to the average of the closing prices for the AXA ordinary share on
Euronext Paris over the 20 trading days immediately preceding March 16,
2012. For purposes of this table, the exercise price was converted to U.S.
dollars using the euro to U.S. dollar exchange rate on March 15, 2012.
/(4)/The closing market price on the date of grant was determined by converting
the closing AXA ordinary share price on NYSE Euronext Paris SA on
March 16, 2012 to U.S. dollars using the euro to U.S. dollar exchange rate
on March 16, 2012.
/(5)/The amounts in this column represent the aggregate grant date fair value
of stock options and performance units granted in 2012 in accordance with
US GAAP accounting guidance.
OUTSTANDING EQUITY AWARDS AS OF DECEMBER 31, 2012
The following table lists outstanding equity grants for each Named Executive
Officer as of December 31, 2012 allocated in a manner consistent with the
allocation of compensation expenses to MLOA under the Services Agreement. The
table includes outstanding equity grants from past years as well as the current
year.
OPTION AWARDS STOCK AWARDS
------------------------------------------------------------------ ----------------------------------
EQUITY
INCENTIVE
EQUITY PLAN
INCENTIVE AWARDS:
PLAN NUMBER OF
AWARDS: NUMBER MARKET UNEARNED
NUMBER OF NUMBER OF NUMBER OF OF SHARES VALUE OF SHARES,
SECURITIES SECURITIES SECURITIES OR UNITS SHARES OR UNITS OR
UNDERLYING UNDERLYING UNDERLYING OF STOCK UNITS OF OTHER
UNEXERCISED UNEXERCISED UNEXERCISED OPTION OPTION THAT STOCK THAT RIGHTS THAT
OPTIONS OPTIONS UNEARNED EXERCISE EXPIRATION HAVE NOT HAVE NOT HAVE NOT
NAME EXERCISABLE/(1)/ UNEXERCISABLE/(1)/ OPTIONS/(1)/ PRICE/(2)/ DATE VESTED/(3)/ VESTED VESTED/(4)/
---- --------------- ----------------- ----------- --------- ---------- ---------- ---------- -----------
PEARSON, MARK 246 $ 11.37 03/14/13 340 $5,990.85 4,469
249 $ 20.50 03/26/14
225 $ 25.57 03/29/15
199 $ 33.57 03/31/16
229 115 $ 44.60 05/10/17
229 115 $ 33.21 04/01/18
899 449 $ 21.59 06/10/19
787 787 786 $ 21.08 03/19/20
5,363 $ 20.63 03/18/21
4,524 $ 15.96 03/16/22
MALMSTROM,
ANDERS 117 58 $ 13.34 03/20/19 114 $2,002.45 729
114 114 114 $ 21.08 03/19/20
300 150 $ 20.63 03/18/21
281 140 $ 15.96 0316/22
-------------
EQUITY
INCENTIVE
PLAN AWARDS:
MARKET OR
PAYOUT VALUE
OF UNEARNED
SHARES, UNITS
OR OTHER
RIGHTS THAT
HAVE NOT
NAME VESTED
---- -------------
PEARSON, MARK $78,724
MALMSTROM,
ANDERS $12,836
110
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
OPTION AWARDS STOCK AWARDS
------------------------------------------------------------------ -----------------------------------
EQUITY
INCENTIVE
EQUITY PLAN
INCENTIVE AWARDS:
PLAN NUMBER OF
AWARDS: NUMBER MARKET UNEARNED
NUMBER OF NUMBER OF NUMBER OF OF SHARES VALUE OF SHARES,
SECURITIES SECURITIES SECURITIES OR UNITS SHARES OR UNITS OR
UNDERLYING UNDERLYING UNDERLYING OF STOCK UNITS OF OTHER
UNEXERCISED UNEXERCISED UNEXERCISED OPTION OPTION THAT STOCK THAT RIGHTS THAT
OPTIONS OPTIONS UNEARNED EXERCISE EXPIRATION HAVE NOT HAVE NOT HAVE NOT
NAME EXERCISABLE/(1)/ UNEXERCISABLE/(1)/ OPTIONS/(1)/ PRICE/(2)/ DATE VESTED/(3)/ VESTED VESTED/(4)/
---- --------------- ----------------- ----------- --------- ---------- ---------- ----------- -----------
POUPART-LAFARGE,
BERTRAND 246 $ 11.37 03/14/13 77 $1,356.72 855
347 $ 20.50 03/26/14
306 $ 25.57 03/29/15
23 $ 23.34 06/27/15
318 $ 33.57 03/31/16
156 78 $ 44.60 05/10/17
132 66 $ 33.21 04/01/18
121 61 $ 13.34 03/20/19
68 68 68 $ 21.08 03/19/20
273 137 $ 20.63 03/18/21
392 196 $ 15.96 03/16/22
DZIADZIO,
RICHARD
MCMAHON,
ANDREW 2,666 $ 25.90 03/29/15 1,064 $18,741.94 4,168
1,243 $ 33.78 03/31/16
700 350 $ 45.72 05/10/17
723 361 $ 33.21 04/01/18
782 391 $ 13.34 03/20/19
783 783 783 $ 21.08 03/19/20
2,618 1,309 $ 20.63 03/18/21
1,605 803 $ 15.96 03/16/22
PIAZZOLLA,
SALVATORE 727 364 $ 20.63 03/18/21 1 $ 17.17 1,293
542 271 $ 15.96 03/16/22
LANE, NICHOLAS 107 $ 23.37 06/06/15 133 $ 2,334.93 2,039
148 $ 33.78 03/31/16
109 $ 45.72 05/10/17
176 88 $ 33.21 04/01/18
224 112 $ 13.34 03/20/19
137 137 137 $ 21.08 03/19/20
873 436 $ 20.63 03/18/21
999 499 $ 15.96 03/16/22
SILVER, RICHARD 2,430 $ 11.95 03/14/13 324 $ 5,699.59 2,263
1,778 $ 19.68 03/26/14
1,357 $ 25.90 03/29/15
1,421 $ 33.78 03/31/16
744 372 $ 45.72 05/10/17
768 384 $ 33.21 04/01/18
782 391 $ 13.34 03/20/19
569 569 569 $ 21.08 03/19/20
1,396 698 $ 20.63 03/18/21
885 442 $ 15.96 03/16/22
-------------
EQUITY
INCENTIVE
PLAN AWARDS:
MARKET OR
PAYOUT VALUE
OF UNEARNED
SHARES, UNITS
OR OTHER
RIGHTS THAT
HAVE NOT
NAME VESTED
---- -------------
POUPART-LAFARGE,
BERTRAND $15,052
DZIADZIO,
RICHARD
MCMAHON,
ANDREW $73,418
PIAZZOLLA,
SALVATORE $22,781
LANE, NICHOLAS $35,920
SILVER, RICHARD $39,868
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
/(1)/All stock options have ten-year terms. All stock options granted in 2007
and later (other than the options granted to Mr. Lane in 2007) have a
vesting schedule of four years, with one-third of the grant vesting on
each of the second, third and fourth anniversaries of the grant date,
provided that the last third will vest only if the AXA ordinary share
performs at least as well as the DowJones EuroStoxx Insurance Index during
a specified period (this condition applies to all options granted to
Mr. Pearson in 2012 and 2011). All stock options granted in 2006 and
earlier are vested.
/(2)/Stock options granted prior to 2005 to each Named Executive Officer other
than Mr. Pearson and Mr. Poupart-Lafarge have U.S. dollar exercise prices.
Stock options granted in 2005 and later, and all options granted to
Mr. Pearson, Mr. Malmstrom and Mr. Poupart-Lafarge, have euro exercise
prices. All euro exercise prices have been converted to U.S. dollars based
on the euro to U.S. dollar exchange rate on the day prior to the grant
date. The actual U.S. dollar equivalent of the exercise price will depend
on the exchange rate at the date of exercise.
/(3)/For Mr. Pearson, this column reflects earned performance units. For
Mr. Malmstrom, Mr. Poupart-Lafarge, Mr. Lane and Mr. Silver, this column
reflects earned performance units and AXA miles. For Mr. McMahon, this
column reflects earned performance units, restricted AXA ordinary shares
granted in 2010 and AXA miles. For Mr. Piazzolla, this column reflects AXA
miles.
/(4)/The amounts in this column include all unearned and unvested performance
units as of December 31, 2012 as well as the AXA miles granted on
March 16, 2012 which are subject to both time vesting and performance
conditions.
OPTION EXERCISES AND STOCK VESTED IN 2012
The following table summarizes the value received from stock option exercises
and stock grants vested during 2012, allocated in a manner consistent with the
allocation of compensation expenses to MLOA under the Services Agreement.
OPTION AWARDS STOCK AWARDS
--------------------- -----------------------
NUMBER OF VALUE NUMBER OF VALUE
SHARES REALIZED SHARES REALIZED
ACQUIRED ON ACQUIRED ON ON
NAME ON EXERCISE EXERCISE VESTING/(1)/ VESTING/(2)/
---- ----------- --------- ----------- -----------
PEARSON, MARK 450 $ 7,427
MALMSTROM, ANDERS -- --
POUPART-LAFARGE, BERTRAND 76 $ 1,313
DZIADZIO, RICHARD 2,094 $ 5,406 323 $ 5,572
MCMAHON, ANDREW 444 $ 7,661
PIAZZOLLA, SALVATORE -- --
LANE, NICHOLAS 132 $ 2,272
SILVER, RICHARD 2,430 $ 12,224 323 $ 5,572
/(1)/This column reflects the number of performance units granted to the
executives under the 2010 AXA Performance Unit Plan that vested on
March 19, 2012. The payout of the units was 100% in cash. For Mr. Pearson,
this column also includes 110 shares granted under AXA's 2008 Performance
Share Plan that vested on April 28, 2012.
/(2)/The value of the performance units that vested in 2012 was determined
based on the average of the high and low AXA ordinary share price on
March 19, 2012, converted to U.S. dollars using euro to U.S. dollar
exchange rate on March 19, 2012.
112
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
PENSION BENEFITS AS OF DECEMBER 31, 2012
The following table lists the pension program participation and actuarial
present value of each Named Executive Officer's defined benefit pension at
December 31, 2012, allocated in a manner consistent with the allocation of
compensation expenses to MLOA under the Services Agreement.
PAYMENTS
NUMBER PRESENT DURING
OF YEARS VALUE OF THE LAST
CREDITED ACCUMULATED FISCAL
NAME PLAN NAME/(1)/ SERVICE BENEFIT YEAR
---- ---------------------------------------------- -------- ----------- ---------
PEARSON, MARK AXA Equitable Retirement Plan 3 $ 1,671 0
AXA Equitable Excess Retirement Plan 3 $ 6,414 0
AXA Equitable Executive Survivor Benefit Plan 3 $ 54,726 0
MALMSTROM, ANDERS AXA Equitable Retirement Plan 0 0
AXA Equitable Excess Retirement Plan 0 0
AXA Equitable Executive Survivor Benefit Plan $ 590 0
POUPART-LAFARGE, BERTRAND AXA Equitable Retirement Plan 0 0
AXA Equitable Excess Retirement Plan 0 0
AXA Equitable Executive Survivor Benefit Plan 0 0
DZIADZIO, RICHARD AXA Equitable Retirement Plan 7 $ 6,982 0
AXA Equitable Excess Retirement Plan 7 0 $ 32,245
AXA Equitable Executive Survivor Benefit Plan 7 $ 43,675 0
MCMAHON, ANDREW AXA Equitable Retirement Plan 6 $ 6,483 0
AXA Equitable Excess Retirement Plan 6 $ 44,049 0
AXA Equitable Executive Survivor Benefit Plan 6 $ 29,185 0
PIAZZOLLA, SALVATORE AXA Equitable Retirement Plan 1 $ 703 0
AXA Equitable Excess Retirement Plan 1 $ 1,827 0
AXA Equitable Executive Survivor Benefit Plan 1 $ 12,520 0
LANE, NICHOLAS AXA Equitable Retirement Plan 6 $ 6,176 0
AXA Equitable Excess Retirement Plan 6 $ 9,366 0
AXA Equitable Executive Survivor Benefit Plan 6 $ 10,981 0
SILVER, RICHARD AXA Equitable Retirement Plan 26 $ 26,234 0
AXA Equitable Excess Retirement Plan 26 $ 30,326 $45,496
AXA Equitable Executive Survivor Benefit Plan 26 $ 90,558 0
/(1)/Except as described in the following sentence, the December 31, 2012
liabilities for the AXA Equitable Retirement Plan (the "Retirement Plan"),
the AXA Equitable Excess Retirement Plan (the "Excess Plan") and the AXA
Equitable Executive Survivor Benefits Plan (the "ESB Plan") were
calculated using the same participant data, plan provisions and actuarial
methods and assumptions used under U.S. GAAP accounting guidance. A
retirement age of 65 is assumed for all pension plan calculations except
that Mr. Silver is assumed to begin receiving payments at age 60 since he
is eligible for an unreduced Prior Plan Annuity Benefit (as defined below)
at that time.
THE RETIREMENT PLAN
The Retirement Plan is a tax-qualified defined benefit plan for eligible
employees. Employees become eligible to participate after one year of service
and become vested in their benefits after three years of service. Participants
are eligible to retire and begin receiving benefits under the Retirement Plan:
(a) at age 65 (the "normal retirement date") or (b) if they are at least age 55
with at least 5 full years of service (an "early retirement date").
The Retirement Plan currently provides a cash balance benefit whereby a
notional account is established for each Retirement Plan participant. This
notional account is credited with deemed pay credits equal to 5% of eligible
earnings up to the Social Security wage base plus 10% of eligible earnings
above the Social Security wage base. Eligible earnings include base salary and
short-term incentive compensation and are subject to limits imposed by the
Internal Revenue Code of 1986, as amended (currently, $255,000 in 2013). In
addition, the notional account is credited with deemed interest credits. For
pay credits earned on or after April 1, 2012, the interest rate is determined
annually based on the
113
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
average discount rates for one-year Treasury Constant Maturities. For pay
credits earned prior to April 1, 2012, the annual interest rate is the greater
of 4% or a rate derived from the average discount rates for one-year Treasury
Constant Maturities. For pay credits earned prior to April 1, 2012 the rate was
4% for 2012 and for any pay credits earned on or after April 1, 2012, the rate
was 0.25% for 2012.
All of the Named Executive Officers, except Mr. Malmstrom and
Mr. Poupart-Lafarge, are entitled to a cash balance benefit. In addition,
Mr. Silver is entitled to a monthly annuity benefit that is provided to
employees who were participants in the Retirement Plan before January 1, 1989
(the "Prior Plan Annuity Benefit"). His Prior Plan Annuity Benefit is the
product of 60% of his final average monthly earnings and his service reduction
factor, with an offset for Social Security benefits. For this purpose, his
final average monthly earnings is the average of his highest monthly eligible
earnings for any 60-consecutive months during the 120-month period ending
December 31, 1988 and his service reduction factor is the quotient of his
actual years of service as of December 31, 1988 divided by 30.
Participants elect the time and form of payment of their Retirement Plan
benefits after they separate from service. The normal form of payment for
retirement plan benefits depends on a participant's marital status as of the
payment commencement date. If the participant is unmarried, the normal form
will be a single life annuity. If the participant is married, the normal form
will be a 50% joint and survivor annuity. Subject to spousal consent
requirements, participants may elect the following optional forms of payment:
. Single life annuity;
. Optional joint and survivor annuity of any whole percentage between 1%
and 100%; and
. Lump sum (cash balance benefits only).
THE EXCESS PLAN
The Excess Plan allows eligible employees to earn retirement benefits in excess
of what is permitted under the Retirement Plan. Specifically, the Retirement
Plan is subject to rules under the Internal Revenue Code of 1986, as amended
(the "Code"), that cap both the amount of eligible earnings that may be taken
into account for determining benefits under the Retirement Plan and the amount
of benefits that the Retirement Plan may pay annually. The Excess Plan permits
participants to accrue and be paid benefits that they would have earned and
been paid under the Retirement Plan but for these limits. The Excess Plan is an
unfunded plan and no assets are actually set aside in participants' names.
The Excess Plan was amended effective September 1, 2008 to comply with the
provisions of Code Section 409A. Pursuant to the amendment, a participant's
Excess Plan benefits vested after 2005 will generally be paid in a lump sum on
the first day of the month following the month in which separation from service
occurs, provided that payment will be delayed six months for "specified
employees" (generally, the fifty most highly-compensated officers of AXA
Group), unless the participant made a special one-time election with respect to
the time and form of payment of those benefits by November 14, 2008. The time
and form of payment of Excess Plan benefits that vested prior to 2005 is the
same as the time and form of payment of the participant's Retirement Plan
benefits. Mr. Malmstrom and Mr. Poupart-Lafarge do not participate in the
Excess Plan.
THE ESB PLAN
The ESB Plan offers financial protection to a participant's family in the case
of his or her death. Eligible employees may choose up to four levels of
coverage and the form of benefit to be paid at each level. Each level provides
a benefit equal to one times the participant's eligible compensation
(generally, base salary plus higher of most recent short-term incentive
compensation award and the average of the three highest short-term incentive
compensation awards), subject to an overall $25 million cap. Each level offers
different coverage choices. Generally, the participant can choose between a
life insurance death benefit and a deferred compensation benefit payable upon
death at each level.
Level 1
A participant can choose between two options at Level 1:
. Lump Sum Option - Under the Lump Sum Option, a life insurance policy is
purchased on the participant's life. At death, the participant's
beneficiary receives a tax-free lump sum death benefit from the policy.
The participant is taxed annually on the value of the life insurance
coverage provided.
. Survivor Income Option - Upon the participant's death, the Survivor
Income Option provides the participant's beneficiary with 15 annual
payments approximating the value of the Lump Sum Option or a payment
equal to the amount of the lump sum. The payments will be taxable but the
participant is not subject to annual taxation.
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Level 1 coverage continues after retirement until the participant attains age
65.
Level 2
At Level 2, a participant can choose among the Lump Sum Option and Survivor
Income Option, described above, and:
. Surviving Spouse Benefit Option - The Surviving Spouse Benefit Option
provides the participant's spouse with monthly income equal to about
25.0% of the participant's monthly compensation (with an offset for
social security). The payments are taxable but there is no annual
taxation to the participant. The duration of the monthly income depends
on the participant's years of service at death (minimum of 5 years).
Level 2 coverage continues after retirement until the participant's death.
Levels 3 and 4
At Levels 3 and 4, a participant can choose among the Lump Sum Option and
Survivor Income Option, described above and:
. Surviving Spouse Income Addition Option - The Surviving Spouse Income
Addition Option provides monthly income to the participant's spouse for
life equal to 10.0% of the participant's monthly compensation. The
payments are taxable but there is no annual taxation to the participant.
Participants are required to contribute to the cost of any option elected under
Levels 3 and 4. Level 3 and 4 coverage continues after retirement until the
participant's death provided that contributions are still made by the
participant until age 65.
NON-QUALIFIED DEFERRED COMPENSATION TABLE AS OF DECEMBER 31, 2012
The following table provides information on compensation the Named Executive
Officers have elected to defer as described in the narrative that follows,
allocated in a manner consistent with the allocation of compensation expenses
to MLOA under the Services Agreement.
EXECUTIVE REGISTRANT AGGREGATE AGGREGATE AGGREGATE
CONTRIBUTIONS CONTRIBUTIONS EARNINGS WITHDRAWALS/ BALANCE AT
NAME IN LAST FY IN LAST FY IN LAST FY DISTRIBUTIONS AT LAST FYE
---- ------------- ------------- ---------- ------------- -----------
PEARSON, MARK
MALMSTROM, ANDERS
POUPART-LAFARGE,
BERTRAND
DZIADZIO, RICHARD
MCMAHON, ANDREW
PIAZZOLLA, SALVATORE
LANE, NICK
SILVER, RICHARD $ 2,458 $ 1,047 $ 22,909
THE VARIABLE DEFERRED COMPENSATION PLAN FOR EXECUTIVES
The above table reflects amounts deferred by Mr. Silver under The Variable
Deferred Compensation Plan for Executives (the "VDCP"). Under the VDCP,
eligible employees were permitted to defer the receipt of up to 25% of their
base salary and short-term incentive compensation, as well as 100% of any
restricted stock grants. Deferrals were credited to a bookkeeping account in
the participant's name on the first day of the month following the month in
which the compensation otherwise would have been paid to him or her. The
account is used solely for record keeping purposes and no assets are actually
placed into any account in the participant's name. The VDCP was frozen as of
December 31, 2004 so that no amounts earned or vested after 2004 could be
deferred under the VDCP.
Account balances in the VDCP that are attributable to deferrals of base salary
and short-term incentive compensation are credited with gains and losses as if
invested in the available earnings crediting options chosen by the participant.
The VDCP currently offers a variety of earnings crediting options which are
among those offered by the AXA Premier VIP Trust and EQ Advisors Trust.
For deferrals of restricted stock awards, participants received deferred stock
units in the same number and with the same vesting restrictions as the
underlying awards. The participant is entitled to receive dividend equivalents
on the deferred stock units, if applicable. The deferred stock units are
distributed in stock.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
Participants in the VDCP could elect to credit their deferrals to in-service or
retirement distribution accounts. For retirement accounts, payments may be
received in any combination of a lump sum and/or annual installments paid in
consecutive years. Payments may begin in any January or July following the
participant's termination date, but they must begin by either the first January
or the first July following the later of: (a) the participant's attainment of
age 65 and (b) the date that is thirteen months following the participant's
termination date. For in-service accounts, payments are made to the participant
in December of the year elected by the participant in a lump sum or in up to
five annual installments over consecutive years.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The table below and the accompanying text presents the hypothetical payments
and benefits that would have been payable if the Named Executive Officers
terminated employment, or a change-in-control of AXA Financial occurred, on
December 31, 2012 (the "Trigger Date"), allocated in a manner consistent with
the allocation of compensation expenses to MLOA under the Services Agreement.
The payments and benefits described are hypothetical only, as no such payments
or benefits have been paid or made available. Hypothetical payments or benefits
that would be due under arrangements that are generally available on the same
terms to all salaried employees are not described.
RETIREMENT
No Named Executive Officers were eligible to retire on the Trigger Date. For
this purpose, "retirement" means termination of service on or after the normal
retirement date or any early retirement date under the Retirement Plan.
VOLUNTARY TERMINATION OTHER THAN RETIREMENT
NAMED EXECUTIVE OFFICERS OTHER THAN MR. PEARSON
If the Named Executive Officers, other than Mr. Pearson, had voluntarily
terminated employment other than by retirement on the Trigger Date:
Short-Term Incentive Compensation: The executives would not have been entitled
to any short-term incentive compensation awards for 2012.
Stock Options: All stock options granted under the Stock Option Plan to the
executives after 2004 would have been forfeited on the termination date. All
stock options granted prior to 2005 under The AXA Financial, Inc. 1997 Stock
Incentive Plan would have continued to be exercisable until the earlier of
their expiration date and 30 days following the termination date.
Performance Units: The executives would have forfeited all performance units.
AXA Miles: The executives would have forfeited all 50 of the AXA miles granted
on March 16, 2012.
Restricted Stock: All non-transferable stock granted to the executives in
connection with a performance unit payout would have immediately become
transferable. Mr. McMahon's restricted stock grant would have been forfeited.
Retirement Benefits: The executives would have been entitled to the benefits
described in the pension and nonqualified deferred compensation tables above.
MR. PEARSON
If Mr. Pearson had voluntarily terminated on the Trigger Date for "Good Reason"
as described below, he would have been entitled to: (i) severance pay equal to
the sum of two years of salary and two times the greatest of: (a) Mr. Pearson's
most recent bonus, (b) the average of Mr. Pearson's last three bonuses and
(c) Mr. Pearson's target bonus for the year in which termination occurred,
(ii) a pro-rated bonus at target for the year of termination, (iii) excess
pension plan accruals on the severance pay, (iv) continued participation in the
ESB Plan for an additional year following termination and (v) access to the
company medical plans at Mr. Pearson's or his spouse's sole expense for two
years from the date of termination.
For this purpose, "good reason" includes a material reduction in Mr. Pearson's
duties or authority, the removal of Mr. Pearson from his positions, AXA
Equitable requiring Mr. Pearson to be based at an office more than 75 miles
from New York City, a diminution of Mr. Pearson's titles, a material failure by
the company to comply with the agreement's compensation provisions, a failure
of the company to secure a written assumption of the agreement by any successor
company and a change in control of AXA Financial (provided that Mr. Pearson
delivers notice of termination within 180 days after the change in control).
The severance benefits are contingent upon Mr. Pearson releasing all claims
against
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
AXA Equitable and its affiliates and his entitlement to severance pay will be
discontinued if he provides services for a competitor. Also, in the event of a
termination of Mr. Pearson's employment by AXA Equitable without cause or
Mr. Pearson's resignation due to a change in control, Mr. Pearson's severance
benefits will cease after one year if certain performance conditions are not
met.
The following table quantifies severance payments or benefits Mr. Pearson would
have received if he had voluntarily terminated for Good Reason on the Trigger
Date:
Severance Pay............... $ 6,210,000
Pro-Rated Bonus............. $ 1,955,000
Additional Pension Accruals. $ 609,630
DEATH
If the Named Executive Officers had terminated employment due to death on the
Trigger Date:
Short-Term Incentive Compensation: The executives would not have been entitled
to any short-term incentive compensation awards for 2012.
Stock Options: All stock options would have immediately vested. All stock
options granted under the Stock Option Plan to the executives after 2004, and
all options granted to Mr. Pearson, would have continued to be exercisable
until the earlier of their expiration date and the six-month anniversary of the
date of death. If the Participant's beneficiary did not exercise the options
within this time limit, the beneficiary would be granted a stock appreciation
right ("SAR") which would entitle the beneficiary to a cash payment equal to
the appreciation in the stock over the exercise price of the forfeited option.
The SAR would automatically be paid out on the date that is the earlier of
(i) 5 years from the date of death and (ii) the expiration date of the
forfeited option (note that in the case of Mr. Pearson, this SAR provision
applies only to his 2011 and 2012 options). All stock options granted prior to
2005 under The AXA Financial, Inc. 1997 Stock Incentive Plan would have
continued to be exercisable until their expiration date.
Performance Units: The number of unearned performance units outstanding on the
Trigger Date would have been multiplied by an assumed Performance Factor of 1.3
and the resulting amount would have been paid to the executive's heirs. The
units would have been valued based on the closing price of the AXA ordinary
share on Euronext Paris and the euro to U.S. dollar exchange rate on the
Trigger Date.
AXA Miles: The executive's heirs would receive 50 AXA ordinary shares at the
end of the vesting period (i.e., March 16, 2016).
Restricted Stock: All non-transferable stock granted to the executives in
connection with a performance unit payout would have immediately become
transferable. Mr. McMahon's restricted stock grant would have become
immediately non-forfeitable and transferable.
Retirement Benefits: The executives' heirs would have been entitled to the
benefits described in the pension and nonqualified deferred compensation tables
above.
INVOLUNTARY TERMINATION WITHOUT CAUSE
NAMED EXECUTIVE OFFICERS OTHER THAN MR. PEARSON
Mr. Poupart-Lafarge, Mr. Silver and Mr. Dziadzio actually terminated employment
during 2012. For the other Named Executive Officers excluding Mr. Pearson, had
they been terminated, they would have been eligible for severance benefits
under the AXA Equitable Severance Benefit Plan, as supplemented by the AXA
Equitable Supplemental Severance Plan for Executives (collectively, the
"Severance Plan"), if an involuntary termination of employment had occurred on
the Trigger Date that satisfied the conditions in the Severance Plan. To
receive benefits, the executives would have been required to sign a separation
agreement including a release of all claims against AXA Equitable and its
affiliates and non-solicitation provisions.
The severance benefits would have included:
. severance pay equal to 52 weeks' of salary;
. additional severance pay equal to the greater of: (i) the most recent
STIC award paid to the executive, (ii) the average of the three most
recent STIC awards paid to the executive or (iii) the executive's target
STIC award for 2012;
. a lump sum payment equal to the sum of: (i) the executive's target STIC
award for 2012 and (ii) $40,000;
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
. one year's continued participation in the ESB Plan; and
. pension accruals for all severance pay, subject to the terms of the
Retirement Plan and the Excess Plan.
The following table lists the payments and pension accruals that the executives
would have received if they were involuntarily terminated under the Severance
Plan on the Trigger Date as well as the implications for their stock option,
performance unit and restricted stock awards:
SEVERANCE BENEFITS EQUITY GRANTS
- ------------------------------ ------------------------------------------------------
ADDITIONAL
LUMP SUM PENSION PERFORMANCE
NAME SEVERANCE PAYMENT ACCRUALS STOCK OPTIONS UNITS RESTRICTED STOCK/(1)/
---- --------- --------- ---------- --------------------- ----------- --------------------
MALMSTROM, ANDERS $ 48,230 $ 15,210 $ 4,601 Options would Forfeited N/A
continue to vest
and be
exercisable until
the earlier of their
expiration date
and 30 days after
the end of the
one-year
severance period.
MCMAHON, ANDREW $ 93,349 $ 71,760 $ 9,113 Options would Forfeited A pro-rated
continue to vest portion of each
and be grant would
exercisable until become non-
the earlier of their forfeitable on the
expiration date Trigger Date
and 30 days after based on the
the end of the number of
one-year months worked
severance period. since the grant
date but remain
non- transferable
until the fifth
anniversary of the
grant date.
PIAZZOLLA, SALVATORE $ 66,122 $ 32,760 $ 6,391 Options would Forfeited N/A
continue to vest
and be
exercisable until
the earlier of their
expiration date
and 30 days after
the end of the
one-year
severance period.
LANE, NICHOLAS $ 46,674 $ 28,860 $ 4,446 Options would Forfeited N/A
continue to vest
and be
exercisable until
the earlier of their
expiration date
and 30 days after
the end of the
one-year
severance period.
/(1)/This column only lists rules applicable to restricted stock grants other
than non-transferable stock granted in connection with a performance unit
plan payout. Such stock would have become immediately transferable.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
Mr. Pearson
Under Mr. Pearson's employment agreement, he waived any right to participate in
the Severance Plan. Rather, if Mr. Pearson's employment had been terminated
without "Cause" as defined below on the Trigger Date, he would have been
entitled to the same benefits as termination for Good Reason as described
above, subject to the same conditions. "Cause" is defined in Mr. Pearson's
employment agreement as: (i) willful failure to perform substantially his
duties after reasonable notice of his failure, (ii) willful misconduct that is
materially injurious to the company, (iii) conviction of, or plea of NOLO
CONTEDERE to, a felony or (iv) willful breach of any written covenant or
agreement with the company to not disclose information pertaining to them or to
not compete or interfere with the company.
CHANGE-IN-CONTROL
With the exception of Mr. Pearson, none of the Named Executive Officers are
entitled to any special benefits upon a change-in-control of AXA Financial
other than the benefits provided to all employees for their stock options,
restricted stock and performance units.
For stock options granted under the Stock Option Plan in 2005 or later, if
there is a change in control of AXA Financial, all stock options will become
immediately exercisable for their term regardless of the otherwise applicable
exercise schedule. For stock options granted to employees prior to 2005 under
the AXA Financial, Inc. 1997 Stock Incentive Plan and restricted stock granted
under that plan, each stock option will, at the discretion of the Organization
and Compensation Committee of the AXA Financial Board of Directors (the "AXA
Financial OCC"), either be canceled in exchange for a payment in cash or become
immediately exercisable and all restricted stock will become non-forfeitable
and be immediately transferable unless the AXA Financial OCC reasonably
determines that: (i) the stock options or restricted stock will be honored,
(i) the stock options or restricted stock will be assumed or (iii) alternative
awards will be substituted for the stock options and restricted stock. Such
alternative awards must, among other items, provide rights and entitlements
substantially equivalent to, or better than, the rights and entitlements of the
existing awards and must have substantially equivalent economic value.
Under the 2012, 2011 and 2010 Performance Unit Plans, if there is a change in
control of AXA Financial at any time between the end of the performance period
and the settlement date of the performance units, participants in the plan will
maintain the right to receive the settlement of their performance units.
As mentioned above, Mr. Pearson's employment agreement provides that "Good
Reason" includes Mr. Pearson's termination of employment in the event of a
change-in-control (provided that Mr. Pearson delivers notice of termination
within 180 days after the change in control). Accordingly, Mr. Pearson would
have been entitled to the benefits described above, subject to the same
conditions. For this purpose, a change-in-control includes: (a) any person
becoming the beneficial owner of more than 50% of the voting stock of AXA
Financial, (b) AXA and its affiliates ceasing to control the election of a
majority of the AXA Financial Board of directors and (c) approval by AXA
Financial's stock holders of a reorganization, merger or consolidation or sale
of all or substantially all of the assets of AXA Financial unless AXA and its
affiliates owned directly or indirectly more than 50% of voting power of the
company resulting from such transaction.
2012 DIRECTOR COMPENSATION TABLE
The following table provides information on compensation that was paid to our
directors for their services on the board of MLOA in 2012.
CHANGE IN
PENSION VALUE
AND
FEES NONQUALIFIED
EARNED NON-EQUITY DEFERRED
OR PAID STOCK OPTION INCENTIVE PLAN COMPENSATION ALL OTHER
NAME IN CASH/(1)/ AWARDS/(2)/ AWARDS/(3)/ COMPENSATION EARNINGS COMPENSATION/(4)/ TOTAL
---- ----------- ----------- ---------- -------------- ------------- ---------------- -------
DE CASTRIES, HENRI..... -- -- -- -- -- $ 141 $ 141
DUVERNE, DENIS......... -- -- -- -- -- $ 163 $ 163
DE OLIVEIRA, RAMON..... $ 16,250 $ 20,000 $ 1,377 -- -- $ 177 $37,804
FALLON-WALSH, BARBARA.. $ 10,823 $ 7,861 -- -- -- $ 322 $19,006
GOINS, CHARLYNN (5).... $ 18,050 $ 20,000 $ 1,377 -- -- $ 680 $40,107
HALE, DANNY L.......... $ 23,525 $ 20,000 $ 1,377 -- -- $ 682 $45,584
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CHANGE IN
PENSION VALUE
AND
FEES NONQUALIFIED
EARNED OR NON-EQUITY DEFERRED
PAID STOCK OPTION INCENTIVE PLAN COMPENSATION ALL OTHER
NAME IN CASH/(1)/ AWARDS/(2)/ AWARDS/(3)/ COMPENSATION EARNINGS COMPENSATION/(4)/ TOTAL
---- ----------- ----------- ---------- -------------- ------------- ---------------- ---------
HAMILTON, ANTHONY L... $ 24,850 $ 20,000 $ 1,377 -- -- $ 225 $ 46,452
HIGGINS, JAMES F. (5). $ 2,948 $ 1,365 -- -- -- $ 54 $ 4,367
KRAUS, PETER S........ -- -- -- -- -- -- --
MILLER, SCOTT D. (5).. $ 1,775 $ 1,365 -- -- -- $ 34 $ 3,174
SCOTT, BERTRAM........ $ 11,348 $ 7,861 -- -- -- $ 130 $ 19,339
SLUTSKY, LORIE A...... $ 20,877 $ 20,000 $ 1,377 -- -- $ 225 $ 42,479
SULEIMAN, EZRA (5).... $ 19,925 $ 20,000 $ 1,377 -- -- $ 710 $ 42,012
TOBIN, PETER J. (5)... $ 3,391 $ 1,365 -- -- -- $ 88 $ 4,844
VAUGHAN, RICHARD C.... $ 25,409 $ 20,000 $ 1,377 -- -- $ 284 $ 47,070
/(1)/For 2012, each of our non-officer directors received the following cash
compensation:
. $16,250 cash retainer (pro-rated for partial years of service);
. $300 for each special board meeting attended;
. $375 for each Audit Committee meeting attended; and
. $300 for all other Committee meetings attended.
In addition, the Chairpersons of the Organization and Compensation
Committee, the Investment Committee and the Investment and Finance Committee
each received an additional $2,500 retainer and the Chairman of the Audit
Committee received a $3,125 retainer.
/(2)/The amounts reported in this column represent the aggregate grant date
fair value of restricted and unrestricted stock awarded in 2012 in
accordance with U.S. GAAP accounting guidance. As of December 31, 2012,
our directors had outstanding restricted stock awards in the following
amounts:
Mr. De Oliveira....................... 434 restricted shares
Ms. Goins............................. 1,164 restricted shares
Mr. Hale.............................. 812 restricted shares
Mr. Hamilton.......................... 1,164 restricted shares
Mr. Higgins........................... 730 restricted shares
Mr. Miller............................ 730 restricted shares
Ms. Slutsky........................... 1,164 restricted shares
Mr. Suleiman.......................... 1,164 restricted shares
Mr. Tobin............................. 730 restricted shares
Mr. Vaughan........................... 812 restricted shares
/(3)/The amounts reported in this column represent the aggregate grant date
fair value of stock options awarded in 2012 in accordance with U.S. GAAP
accounting guidance. As of December 31, 2012, our directors had
outstanding stock options in the following amounts:
Mr. De Oliveira....................... 558 options
Ms. Goins............................. 2,794 options
Mr. Hale.............................. 1,044 options
Mr. Hamilton.......................... 3,947 options
Mr. Higgins........................... 3,389 options
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
Mr. Miller............................ 3,389 options
Ms. Slutsky........................... 2,794 options
Mr. Suleiman.......................... 2,794 options
Mr. Tobin............................. 3,389 options
Mr. Vaughan........................... 1,044 options
/(4)/This column lists premiums paid by the company for group life insurance
coverage and any amounts paid by the company for a director's spouse to
accompany the director on a business trip or event (as well as any related
tax gross-up).
/(5)/Mr. Higgins, Mr. Miller and Mr. Tobin retired effective February 10, 2012.
Ms. Goins and Mr. Suleiman retired effective January 1, 2013.
THE EQUITY PLAN FOR DIRECTORS
Under The Equity Plan for Directors (the "Equity Plan"), non-officer directors
are granted the following each year:
. an option award (granted in the first quarter);
. a restricted stock award (granted in the first quarter); and
. a stock retainer of $12,500, payable in two installments in June and
December.
Stock Options
The value of the stock option grants are determined using the Black-Scholes
methodology or other methodology used with respect to option awards
contemporaneously made to employees. The options are subject to a four-year
vesting schedule whereby one-third of each grant vests on the second, third and
fourth anniversaries of the grant date.
Restricted Stock
The number of shares of restricted stock to be granted to each non-officer
director is determined by dividing $7,500 by the fair market value of the stock
on the applicable grant date (rounded down to the nearest whole number). During
the restricted period, the directors are entitled to exercise full voting
rights on the restricted stock and receive all dividends and distributions. The
restricted stock has a three-year cliff vesting schedule.
Termination of Service
In the event a non-officer director dies or, after completing one year of
service, is removed without cause, is not reelected, retires or resigns:
(a) his or her options will become fully vested and exercisable at any time
prior to the earlier of the expiration of the grant or five years from
termination of service and (b) his or her restricted stock will immediately
become non-forfeitable; provided that if the director performs an act of
misconduct, all of his or her options and restricted stock then outstanding
will become forfeited. Upon any other type of termination, all outstanding
options and restricted stock are forfeited.
Deferrals of Restricted Stock and Stock Retainer
Non-officer directors may elect to defer receipt of at least ten percent of
their stock retainer and/or restricted stock awards. Upon deferral, the
director receives deferred stock units in the same number and with the same
vesting restrictions, if any, as the underlying awards. The director is
entitled to receive dividend equivalents on such deferred stock units, if
applicable. The deferred stock units will be distributed in stock on an elected
distribution date or upon the occurrence of certain events.
Change in Control
Upon a change in control of AXA Financial, unless the awards will be assumed or
substituted following the change in control: (a) the options will either become
fully exercisable or cancelled in exchange for a payment in cash equal to the
excess, if any, of the change in control price over the exercise price, and
(b) the restricted stock will become immediately non-forfeitable.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
CHARITABLE AWARD PROGRAM FOR DIRECTORS
Under the Charitable Award Program for Directors, a non-officer director may
designate up to five charitable organizations and/or education institutions to
receive an aggregate donation of $125,000 after his or her death. Although the
company may purchase life insurance policies insuring the lives of the
participants to financially support the program, it has not elected to do so.
MATCHING GIFTS
Non-officer directors may participate in AXA Foundation's Matching Gifts
program. Under this program, the AXA Foundation matches donations made by
participants to public charities of $50 or more, up to $500 per year.
BUSINESS TRAVEL ACCIDENT
All directors are covered for accidental loss of life while traveling to, or
returning from:
. board or committee meetings;
. trips taken at our request; and
. trips for which the director is compensated.
Each director is covered up to four times their annual compensation, subject to
certain maximums.
DIRECTOR EDUCATION
All directors are encouraged to attend director education programs as they deem
appropriate to stay abreast of developments in corporate governance and best
practices relevant to their contribution to the board generally, as well as to
their responsibilities in their specific committee assignments and other roles.
We generally reimburse non-officer directors for the cost to attend director
education programs offered by third parties, including related reasonable
travel and lodging expenses, up to a maximum amount of $1,250 per director each
calendar year.
THE POST-2004 VARIABLE DEFERRED COMPENSATION PLAN FOR DIRECTORS
Non-officer directors may defer up to 100% of their annual cash retainer and
meetings fees under The Post-2004 Variable Deferred Compensation Plan for
Directors (the "Deferral Plan"). Deferrals are credited to a bookkeeping
account in the director's name in the month that the compensation otherwise
would have been paid to him or her. The account is used solely for record
keeping purposes and no assets are actually placed into any account in the
director's name. The minimum deferral is 10%.
Account balances in the Deferral Plan are credited with gains and losses as if
invested in the available earnings crediting options chosen by the participant.
The Deferral Plan currently offers a variety of earnings crediting options
which are among those offered by the AXA Premier VIP Trust and EQ Advisors
Trust.
Participants in the Deferral Plan elect the form and timing of payments from
their accounts. Payments may be received in any combination of a lump sum
and/or annual installments paid in consecutive years. Payments may begin in any
July or December after the year of deferral, but they must begin by the first
July or the first December following age 70 (72 in the case of certain
grandfathered directors). Participants make alternate elections in the event of
separation from service prior to the specified payment date and death prior to
both the specified payment date and separation from service.
The Deferral Plan was designed, and is intended to be administered, in
accordance with the requirements of Code Section 409A.
DIRECTOR STOCK OWNERSHIP GUIDELINES
Stock ownership guidelines for non-officer directors were implemented in 2007
with a five-year compliance window. The guidelines require holdings of two
times the annual cash retainer.
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APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
We are an indirect wholly-owned subsidiary of AXA Financial. AXA Financial's
common stock is 100% owned by AXA and its subsidiaries. For additional
information regarding AXA, see "Business - Parent Company".
SECURITY OWNERSHIP BY MANAGEMENT
The following table sets forth, as of March 1, 2013, certain information
regarding the beneficial ownership of common stock of AXA by each of our
directors and executive officers and by all of our directors and executive
officers as a group.
AXA COMMON STOCK/(1)/
NAME OF BENEFICIAL OWNER NUMBER OF SHARES AND NATURE OF BENEFICIAL OWNERSHIP PERCENT OF CLASS
------------------------ --------------------------------------------------- ----------------
Mark Pearson/(2)/ 145,403 *
Andrew McMahon/(3)/ 271,501 *
Henri de Castries/(4)/ 3,839,246 *
Ramon de Oliveria 7,682 *
Denis Duverne/(5)/ 2,931,907 *
Barbara Fallon-Walsh 1,989 *
Danny L. Hale/(6)/ 12,049 *
Anthony J. Hamilton/(7)/ 51,824 *
Peter S. Kraus -- *
Bertram L. Scott 1,989 *
Lorie A. Slutsky/(8)/ 27,940 *
Richard C. Vaughan/(9)/ 12,150 *
Dave Hattem/(10)/ 137,184 *
Nick Lane/(11)/ 60,022 *
Anders Malmstrom/(12)/ 14,288 *
Salvatore Piazzolla/(13)/ 9,373 *
Amy J. Radin 50 *
All directors, director nominees and executive officers as
a group (17 persons)/(14)/ 7,524,597 *
* Number of shares listed represents less than 1% of the outstanding AXA
common stock.
/(1)/Holdings of AXA American Depositary Shares ("ADS") are expressed as their
equivalent in AXA ordinary shares. Each AXA ADS represents the right to
receive one AXA ordinary share.
/(2)/Includes 98,694 shares Mr. Pearson can acquire within 60 days under option
plans. Also includes (i) 4,719 restricted AXA shares, representing the 30%
payout of AXA performance units awarded to Mr. Pearson in 2009 and
(ii) 8,721 earned and unpaid AXA performance units, which he can elect to
receive in the form of shares or cash.
/(3)/Includes 230,488 shares Mr. McMahon can acquire within 60 days under
option plans. Also includes (i) 4,165 restricted AXA shares, representing
the 30% payout of AXA performance units awarded to Mr. McMahon in 2009,
(ii) 15,883 restricted shares that will vest on May 20, 2015, and
(iii) 11,375 earned and unpaid AXA performance units, which he can elect
to receive in the form of shares or cash.
/(4)/Includes 2,330,890 shares Mr. de Castries can acquire within 60 days under
option plans. Also includes 231,000 unvested AXA performance shares, which
are paid out when vested based on the price of an AXA ordinary share at
that time and are subject to achievement of internal performance
conditions.
/(5)/Includes 2,059,669 shares Mr. Duverne can acquire within 60 days under
option plans. Also includes 196,200 on vested AXA performance shares,
which are paid out when vested based on the price of an AXA ordinary share
at that time and are subject to achievement of internal performance
conditions.
/(6)/Includes 648 shares Mr. Hale can acquire within 60 days under options
plans.
/(7)/Includes (i) 11,661 shares Mr. Hamilton can acquire within 60 days under
options plans and (ii) 31,978 deferred stock units under The Equity Plan
for Directors.
/(8)/Includes (i) 7,050 shares Ms. Slutsky can acquire within 60 days under
options plans and (ii) 19,845 deferred stock units under The Equity Plan
for Directors.
/(9)/Includes 648 shares Mr. Vaughan can acquire within 60 days under options
plans.
123
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
/(10)/Includes 80,356 shares Mr. Hattem can acquire within 60 days under option
plans. Also includes (i) 1,406 restricted AXA shares, representing the
30% payout of AXA performance units awarded to Mr. Hattem in 2009 and
(ii) 3,055 earned and unpaid AXA performance units, which he can elect to
receive in the form of shares or cash.
/(11)/Includes 37,790 shares Mr. Lane can acquire within 60 days under option
plans. Also includes (i) 6,097 restricted AXA shares, representing the
30% payout of AXA performance units awarded to Mr. Lane in 2009 and
(ii) 3,374 earned and unpaid AXA performance units, which he can elect to
receive in the form of shares or cash
/(12)/Includes 10,316 shares Mr. Malmstrom can acquire within 60 days under
option plans. Also includes 1,032 restricted AXA shares, representing the
30% payout of AXA performance units awarded to Mr. Malmstrom in 2009 and
(ii) 2,890 earned and unpaid AXA performance units, which he can elect to
receive in the form of shares or cash.
/(13)/Includes 9,323 shares Mr. Piazzolla can acquire within 60 days under
option plans.
/(14)/Includes 4,707,033 shares the directors and executive officers as a group
can acquire within 60 days under option plans.
124
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS
POLICIES AND PROCEDURES REGARDING TRANSACTIONS WITH RELATED PERSONS
AXA Financial, our parent company, has formal policies covering its employees
and directors that are designed to avoid conflicts of interests that may arise
in certain related party transactions. For example, employees of AXA Financial
and its subsidiaries are subject to the AXA Financial Policy Statement on
Ethics (the "Ethics Policy Statement"). The Ethics Policy Statement includes
provisions designed to avoid conflicts of interests that may lead to divided
loyalties by requiring that employees, among other things, not exercise any
responsibility in a transaction in which they have an interest, receive certain
approvals before awarding any contract to a relative or close personal friend
and not take for their own benefit business opportunities developed or learned
of during the course of employment. Similarly, MLOA's non-officer directors are
subject to the AXA Financial Policy Statement on Interests of Directors and
Contracts With Directors And Their Relatives for Non-Officer Directors (the
"Policy Statement"). The Policy Statement includes provisions designed to
maintain the directors' independent judgment by requiring, among other things,
disclosure of interests in any proposed transaction and abstention from voting
if a director has a significant financial interest in the transaction or the
transaction is with a business organization in which the director has an
official affiliation. It further prohibits certain credit related transactions
and requires disclosure of potential contracts with and employment of close
relatives. Each director must submit a report annually regarding his or her
compliance with the Policy Statement.
Other than as set forth above, MLOA does not have written policies regarding
the employment of immediate family members of any of its related persons.
As a wholly-owned subsidiary of AXA Financial, and ultimately of AXA, MLOA
enter into various transactions with both AXA Financial and AXA and their
subsidiaries in the normal course of business including, among others, service
agreements, reinsurance transactions, and lending and other financing
arrangements. While there is no formal written policy for the review and
approval of transactions between MLOA and AXA and/or AXA Financial, such
transactions are routinely subject to a review and/or approval process. For
example, payments made by MLOA to AXA and its subsidiaries pursuant to certain
intercompany service or other agreements ("Intercompany Agreements") are
reviewed with the Audit Committee on an annual basis. The amount paid by MLOA
for any personnel, property and services provided under such Intercompany
Agreements may not exceed the fair market value of such personnel, property and
services. Additionally, Intercompany Agreements to which MLOA is a party are
subject to the approval of the Arizona Department of Insurance, pursuant to
Arizona's insurance holding company systems act.
In practice, any proposed related party transaction which management deems to
be significant or outside of the ordinary course of business would be submitted
to the Board of Directors for its approval.
TRANSACTIONS BETWEEN MLOA AND AFFILIATES
Under MLOA's service agreement with AXA Equitable, personnel services, employee
benefits, facilities, supplies and equipment are provided to MLOA to conduct
its business. The associated costs related to the service agreement are
allocated to MLOA based on methods that management believes are reasonable,
including a review of the nature of such costs and activities performed to
support MLOA. As a result of such allocations, MLOA incurred expenses of
$85,398,849, $50,783,523 and $47,224,671 for 2012, 2011 and 2010, respectively.
In August 2012, MLOA sold its entire portfolio of agricultural mortgage loans
on real estate to AXA Equitable Life Insurance Company in exchange for
$42,000,000 in cash.
MLOA paid $11,025,653, $36,259,328 and $31,139,274 in commissions and fees for
the sale of its insurance products to AXA Distribution Holding Corporation and
its subsidiaries in 2012, 2011 and 2010 respectively. AXA Distribution Holding
Corporation is an indirect wholly-owned subsidiary of AXA Financial and its
subsidiaries include AXA Advisors, LLC, AXA Network LLC and PlanConnect, LLC.
MLOA charged AXA Distribution Holding Corporation and its subsidiaries
$24,495,729, $3,135,608 and $3,330,769 for their applicable share of operating
expenses in 2012, 2011 and 2010, respectively.
Various AXA affiliates cede a portion of their life, health and catastrophe
insurance business through reinsurance agreements to AXA Global Life. AXA
Global Life, in turn, retrocedes a quota share portion of these risks to MLOA
on a one-year term basis. Premiums and experience refunds earned under this
arrangement totaled $1,160,113, $1,820,395 and $1,775,120 in 2012, 2011 and
2010, respectively. Claims and expenses paid were $724,780, $1,119,749 and
$1,530,059 in 2012, 2011 and 2010, respectively.
125
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
MLOA cedes a portion of its life business through excess of retention treaties
to AXA Equitable on a yearly renewal term basis. Premiums paid to AXA Equitable
totaled $570,437, $426,414 and $395,877 in 2012, 2011 and 2010, respectively.
Claims and expenses were $0, $0 and $894,974 in 2012, 2011 and 2010,
respectively.
MLOA ceded new variable life policies on an excess of retention basis with AXA
Equitable and reinsured the no lapse guarantee riders through AXA RE Arizona
Company. Ceded premiums totaled $317,488, $334,772 and $361,422 in 2012, 2011
and 2010, respectively.
In addition to the AXA Equitable service agreement, MLOA has various other
service and investment advisory agreements with affiliates. The amount of
expenses incurred by MLOA related to these agreements was $1,939,543,
$1,933,690 and $1,992,087 for 2012, 2011 and 2010, respectively.
126
APPENDIX: INFORMATION ABOUT MONY LIFE INSURANCE COMPANY OF AMERICA
PART II
ITEM 13.OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
ESTIMATED
ITEM OF EXPENSE EXPENSE
--------------- ---------
Registration fees........................................... $ 1
Federal taxes............................................... N/A
State taxes and fees (based on 50 state average)............ N/A
Trustees' fees.............................................. N/A
Transfer agents' fees....................................... N/A
Printing and filing fees.................................... $50,000*
Legal fees.................................................. N/A
Accounting fees............................................. N/A
Audit fees.................................................. $20,000*
Engineering fees............................................ N/A
Directors and officers insurance premium paid by Registrant. N/A
--------
* Estimated expense.
ITEM 14.INDEMNIFICATION OF DIRECTORS AND OFFICERS
The By-Laws of MONY Life Insurance Company of America provide, in Article VI
as follows:
ARTICLE VI
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
SECTION 1. NATURE OF INDEMNITY. The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative, by reason of the fact that he or she is or
was or has agreed to become a director or officer of the Corporation, or is or
was serving or has agreed to serve at the request of the Corporation as a
director or officer of another corporation, partnership, joint venture, trust
or other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, and may indemnify any person who was or is a party or
is threatened to be made a party to such an action, suit or proceeding by
reason of the fact that he or she is or was or has agreed to become an employee
or agent of the Corporation, or is or was serving or has agreed to serve at the
request of the Corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her or on his or her behalf in
connection with such action, suit or proceeding and any appeal therefrom, if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding had no reasonable cause to believe his or
her conduct was unlawful; except that in the case of an action or suit by or in
the right of the Corporation to procure a judgment in its favor (1) such
indemnification shall be limited to expenses (including attorneys' fees)
actually and reasonably incurred by such person in the defense or settlement of
such action or suit, and (2) no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the court in which
such action or suit was brought or other court of competent jurisdiction shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
1
entitled to indemnity.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of no contest 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 or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his or her conduct was
unlawful.
SECTION 6. SURVIVAL; PRESERVATION OF OTHER RIGHTS. The foregoing
indemnification provisions shall be deemed to be a contract between the
Corporation and each director, officer, employee and agent who serves in any
such capacity at any time while these provisions as well as the relevant
provisions of Title 10, Arizona Revised Statutes are in effect and any repeal
or modification thereof shall not affect any right or obligation then existing
with respect to any state of facts then or previously existing or any action,
suit or proceeding previously or thereafter brought or threatened based in
whole or in part upon any such state of facts. Such a "contract right" may not
be modified retroactively without the consent of such director, officer,
employee or agent.
The indemnification provided by this Article shall not be deemed exclusive
of any other right to which those indemnified may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise, both
as to action in his or her official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
SECTION 7. INSURANCE. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director or officer of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against such person and
incurred by such person in any such capacity or arising out of his or her
status as such, whether or not the Corporation would have the power to
indemnify such person against such liability under the provisions of this
By-Law.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
None
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(1) Underwriting Agreement.
(a) Wholesale Distribution Agreement dated April 1, 2005 by and
between MONY Life Insurance Company of America, MONY Securities
Corporation, and AXA Distributors, LLC, is incorporated herein by
reference to the Registration Statement on Form S-3 (File No.
333-177419) filed on October 20, 2011.
(b) Broker-Dealer Distribution and Servicing Agreement dated June 6,
2005, made by and between MONY Life Insurance Company of America and AXA
Advisors, LLC, is incorporated herein by reference to Post-Effective
Amendment No. 1 to the Registration Statement on Form S-1 (File No.
333-180068), filed on March 13, 2012.
(c) General Agent Sales Agreement dated June 6, 2005, by and between
MONY Life Insurance Company of America and AXA Network, LLC,
incorporated herein by reference to Post-Effective Amendment No. 1 to
the Registration Statement on Form S-1 (File No. 333-180068), filed on
March 13, 2012.
(i) First Amendment dated as of August 1, 2006 to General Agent Sales
Agreement dated as of August 1, 2006 by and between MONY Life Insurance
Company of America and AXA Network, incorporated herein by reference to
Exhibit (c)(9) to the Registration Statement on Form N-6 (File
No. 333-134304) filed on March 1, 2012.
(ii) Second Amendment dated as of April 1, 2008 to General Agent
Sales Agreement dated as of April 1, 2008 by and between MONY Life
Insurance Company of America and AXA Network, LLC, is incorporated
herein by reference to Exhibit (d) (ii) to the Registration Statement on
Form S-1 (File No. 333-180068) filed on March 13, 2012.
(2) Not Applicable.
(3)(i) Articles of Incorporation.
(a) Articles of Restatement of the Articles of Incorporation of MONY
Life Insurance Company of America (as Amended July 22, 2004), incorporated
herein by reference to post-effective amendment no. 7 to the registration
statement on Form N-4 (File No. 333-72632) filed on April 22, 2005.
(3)(ii) By-Laws.
(a) By-Laws of MONY Life Insurance Company of America (as Amended
July 22, 2004), incorporated herein by reference to post-effective
amendment no. 8 to the registration statement on Form N-4 (File No.
333-72632) filed on May 4, 2005.
(4) Form of contract.
(a) Proposed form of flexible payment variable annuity contract,
incorporated herein by reference to Exhibit 4 to Registration Statement
(File No. 333-59717) on Form N-4, filed on July 23, 1998.
(b) Proposed form of flexible payment variable annuity contract,
incorporated herein by reference to Exhibit 4 to Registration Statement
(File No. 333-72632) on Form N-4, filed on January 9,2002.
2
(5) Opinion and consent of counsel regarding legality
(a) Opinion and consent of Dodie Kent as to the legality of
securities being registered, filed herewith.
(8) Opinion and consent of Robert Levy as to tax matters, incorporated
herein by reference to Post-Effective Amendment No. 1 to Form S-l on Form S-2
(File No. 333-105089) filed on August 4,2004.
(9) Not Applicable.
(10) Material Contracts.
(a) Services Agreement between The Mutual Life Insurance Company of
New York and MONY Life Insurance Company of America, incorporated herein
by reference to Post-Effective Amendment No. 22 to the registration
statement on Form N-6 (File No. 333-06071) filed on April 30, 2003.
(b) Amended and Restated Services Agreement between MONY Life
Insurance Company of America and AXA Equitable Life Insurance Company
dated as of February 1, 2005, incorporated herein by reference to
Exhibit 10.2 to Annual Report (File No. 333-65423) on Form 10-K, filed
on March 31, 2005.
(11) Not Applicable.
(12) Not Applicable.
(15) Not Applicable.
(16) Not Applicable.
(21) Not Applicable.
(23) Consents of Experts and Counsel.
(a) Consent of Pricewaterhouse Coopers, LLP filed herewith.
(b) See Item (5) above.
(24) Powers of Attorney.
(a) Powers of Attorney, filed herewith.
(25) Not Applicable.
(26) Not Applicable.
101.INS. XBRL Instance Document, filed herewith.
101.SCH. XBRL Taxonomy Extension Schema Document, filed herewith.
101.CAL. XRL Taxonomy Extension Calculation Linkbase Document, filed herewith.
101.LAB. XBRL Taxonomy Label Linkbase Document, filed herewith.
101.PRE. XBRL Taxonomy Extension Presentation Linkbase Document, filed
herewith.
101.DEF. XBRL Taxonomy Extension Definition Linkbase Document, filed herewith.
3
ITEM 17.UNDERTAKINGS
(a) 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) 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;
provided, however, that paragraphs (a) (1) (i), (a) (1) (ii) and
(a) (1) (iii) do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the registrant pursuant
to Section 13 or 15 (d) of the Securities Act of 1934 that are incorporated
by reference in the registration statement, or is contained in a form of
prospectus filed pursuant to Rule 424 (b) that is part of this 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, 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.
4
(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; (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.
(b) 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.
5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City and State of
New York, on this 25th day of April, 2013.
MONY Life Insurance Company of America
(Registrant)
By: /s/ Dodie Kent
-----------------------------------
Dodie Kent
Vice President and Associate General Counsel
MONY Life Insurance Company of America
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
PRINCIPAL EXECUTIVE OFFICERS:
*Mark Pearson Chairman of the Board,
Chief Executive Officer and
Director
PRINCIPAL FINANCIAL OFFICER:
*Anders B. Malmstrom Senior Executive Vice
President and Chief Financial
Officer
PRINCIPAL ACCOUNTING OFFICER:
*Andrea M. Nitzan Executive Director
and Chief Accounting Officer
*DIRECTORS:
Mark Pearson Danny L. Hale Ramon de Oliveira
Denis Duverne Anthony J. Hamilton Bertram L. Scott
Barbara Fallon-Walsh Peter S. Kraus Lorie A. Slutsky
Andrew J. McMahon Richard C. Vaughan
*By: /s/ Dodie Kent
-------------------------
Dodie Kent
Attorney-in-Fact
April 25, 2013
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION TAG VALUE
----------- ------------------------------------------------------ -----------
(5) (a) Opinion and Consent of Dodie Kent EX-99.5a
(23) (a) Consent of Pricewaterhouse Coopers LLC EX-99.23a
(24) (a) Powers of Attorney Ex-99.24a
101.INS XBRL Instance Document EX-101.INS
101.SCH XBRL Taxonomy Extension Schema Document EX-101.SCH
101.CAL XRL Taxonomy Extension Calculation Linkbase Document EX-101.CAL
101.LAB XBRL Taxonomy Label Linkbase Document EX-101.LAB
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document EX-101.PRE
101.DEF XBRL Taxonomy Extension Definition Linkbase Document EX-101.DEF