* * LIFE AND ACCIDENT AND HEALTH COMPANIES - ASSOCIATION EDITION

Transcription

1 * * LIFE AND ACCIDENT AND HEALTH COMPANIES - ASSOCIATION EDITION ANNUAL STATEMENT FOR THE YEAR ENDED DECEMBER, 06 OF THE CONDITION AND AFFAIRS OF THE MML Bay State Life Insurance Company NAIC Group Code NAIC Company Code 706 Employer's ID Number (Current) (Prior) Organized under the Laws of Connecticut, State of Domicile or Port of Entry CT Country of Domicile United States of America Incorporated/Organized 0/0/95 Commenced Business 07/0/89 Statutory Home Office 00 Bright Meadow Boulevard, Enfield, CT, US 0608 (Street and Number) (City or Town, State, Country and Zip Code) Main Administrative Office 95 State Street (Street and Number) Springfield, MA, US 0, (City or Town, State, Country and Zip Code) (Area Code) (Telephone Number) Mail Address 95 State Street, Springfield, MA, US 0 (Street and Number or P.O. Box) (City or Town, State, Country and Zip Code) Primary Location of Books and Records 95 State Street (Street and Number) Springfield, MA, US 0, (City or Town, State, Country and Zip Code) (Area Code) (Telephone Number) Internet Website Address Statutory Statement Contact Tammy A. Peatman, (Name) (Area Code) (Telephone Number) tpeatman@massmutual.com, ( Address) (FAX Number) OFFICERS President and Chief Executive Officer Roger William Crandall Treasurer Todd Garett Picken Secretary Pia Denise Flanagan Apointed Actuary Douglas Wright Taylor Elizabeth Ward Chicares #, Chief Financial Officer Melvin Timothy Corbett, Executive Vice President OTHER Mark Douglas Roellig, Executive Vice President and General Counsel Michael Robert Fanning, Executive Vice President DIRECTORS OR TRUSTEES Roger William Crandall - Chairman Michael Robert Fanning Elizabeth Ward Chicares # Mark Douglas Roellig State of County of Massachusetts Hampden SS: The officers of this reporting entity being duly sworn, each depose and say that they are the described officers of said reporting entity, and that on the reporting period stated above, all of the herein described assets were the absolute property of the said reporting entity, free and clear from any liens or claims thereon, except as herein stated, and that this statement, together with related exhibits, schedules and explanations therein contained, annexed or referred to, is a full and true statement of all the assets and liabilities and of the condition and affairs of the said reporting entity as of the reporting period stated above, and of its income and deductions therefrom for the period ended, and have been completed in accordance with the NAIC Annual Statement Instructions and Accounting Practices and Procedures manual except to the extent that: () state law may differ; or, () that state rules or regulations require differences in reporting not related to accounting practices and procedures, according to the best of their information, knowledge and belief, respectively. Furthermore, the scope of this attestation by the described officers also includes the related corresponding electronic filing with the NAIC, when required, that is an exact copy (except for formatting differences due to electronic filing) of the enclosed statement. The electronic filing may be requested by various regulators in lieu of or in addition to the enclosed statement. Roger William Crandall Pia Denise Flanagan Todd Garett Picken President and Chief Executive Officer Secretary Treasurer a. Is this an original filing? Yes [ X ] No [ ] Subscribed and sworn to before me this b. If no, day of. State the amendment number. Date filed. Number of pages attached

2 ANNUAL STATEMENT FOR THE YEAR 06 OF THE MML Bay State Life Insurance Company ASSETS Assets Current Year Nonadmitted Assets Net Admitted Assets (Cols. - ) Prior Year Net Admitted Assets. Bonds (Schedule D) 0,6,806 0,6,806,88,96. Stocks (Schedule D):. Preferred stocks. Common stocks. Mortgage loans on real estate (Schedule B):. First liens,007,088,007,088 5,87,58. Other than first liens. Real estate (Schedule A):. Properties occupied by the company (less $ encumbrances). Properties held for the production of income (less $ encumbrances). Properties held for sale (less $ encumbrances) 5. Cash ($ (,0,765), Schedule E - Part ), cash equivalents ($ 6,99,90, Schedule E - Part ) and short-term investments ($, Schedule DA) 6,69,65 6,69,65 6,89,8 6. Contract loans (including $ premium notes) 95,7,77 95,7,77 95,606,56 7. Derivatives (Schedule DB) 8. Other invested assets (Schedule BA) 9. Receivables for securities 0. Securities lending reinvested collateral assets (Schedule DL). Aggregate write-ins for invested assets. Subtotals, cash and invested assets (Lines to ) 7,06,9 7,06,9 85,57,8. Title plants less $ charged off (for Title insurers only). Investment income due and accrued,60,97,760,59,57,0,98 5. Premiums and considerations: 5. Uncollected premiums and agents' balances in the course of collection, , Deferred premiums and agents' balances and installments booked but deferred and not yet due (including $ earned but unbilled premiums) (,080,05) (,080,05) (,,980) 5. Accrued retrospective premiums ($ ) and 6. Reinsurance: contracts subject to redetermination ($ ) 6. Amounts recoverable from reinsurers,9,68,9,68 5,5,6 6. Funds held by or deposited with reinsured companies 6. Other amounts receivable under reinsurance contracts 8,7,759 8,7,759,08,96 7. Amounts receivable relating to uninsured plans 8. Current federal and foreign income tax recoverable and interest thereon,088,75 8. Net deferred tax asset 9,97,90,7,0 6,8,60,76,9 9. Guaranty funds receivable or on deposit 98,6 98,6,6 0. Electronic data processing equipment and software. Furniture and equipment, including health care delivery assets ($ ). Net adjustment in assets and liabilities due to foreign exchange rates. Receivables from parent, subsidiaries and affiliates 5,90 5,90 8,66. Health care ($ ) and other amounts receivable 5. Aggregate write-ins for other than invested assets 6. Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines to 5) 55,97,77,75,59 50,5,68,57,70 7. From Separate Accounts, Segregated Accounts and Protected Cell Accounts,,05,79,,05,79,78,88, 8. Total (Lines 6 and 7),88,0,556,75,59,8,87,07,700,075, DETAILS OF WRITE-INS 98. Summary of remaining write-ins for Line from overflow page 99. Totals (Lines 0 thru 0 plus 98)(Line above) Summary of remaining write-ins for Line 5 from overflow page 599. Totals (Lines 50 thru 50 plus 598)(Line 5 above)

3 ANNUAL STATEMENT FOR THE YEAR 06 OF THE MML Bay State Life Insurance Company LIABILITIES, SURPLUS AND OTHER FUNDS Prior Year Current Year. Aggregate reserve for life contracts $ 8,58,7 (Exh. 5, Line ) less $ included in Line 6. (including $,06,560 Modco Reserve) 8,58,7 6,68,08. Aggregate reserve for accident and health contracts (including $ Modco Reserve). Liability for deposit-type contracts (Exhibit 7, Line, Col. ) (including $ Modco Reserve),58,99 9,89,86. Contract claims:. Life (Exhibit 8, Part, Line., Col. less sum of Cols. 9, 0 and ),8,60 6,7,5. Accident and health (Exhibit 8, Part, Line., sum of Cols. 9, 0 and ) 5. Policyholders dividends $ and coupons $ due and unpaid (Exhibit, Line 0) 6. Provision for policyholders dividends and coupons payable in following calendar year - estimated amounts: 6. Dividends apportioned for payment (including $ Modco) 6. Dividends not yet apportioned (including $ Modco) 6. Coupons and similar benefits (including $ Modco) 7. Amount provisionally held for deferred dividend policies not included in Line 6 8. Premiums and annuity considerations for life and accident and health contracts received in advance less $ discount; including $ accident and health premiums (Exhibit, Part, Col., sum of lines and ),8,8 9. Contract liabilities not included elsewhere: 9. Surrender values on canceled contracts 9. Provision for experience rating refunds, including the liability of $ accident and health experience rating refunds of which $ is for medical loss ratio rebate per the Public Health Service Act,578,6,7,56 9. Other amounts payable on reinsurance, including $ assumed and $ (,,656) ceded (,,656) 798,7 9. Interest maintenance reserve (IMR, Line 6) 89,59 65, Commissions to agents due or accrued-life and annuity contracts $ 67,0 accident and health $ and deposit-type contract funds $ 67,0 66,65. Commissions and expense allowances payable on reinsurance assumed. General expenses due or accrued (Exhibit, Line, Col. 6),60 99,8. Transfers to Separate Accounts due or accrued (net) (including $ (577,77) accrued for expense allowances recognized in reserves, net of reinsured allowances) 5,996,6 6,5,68. Taxes, licenses and fees due or accrued, excluding federal income taxes (Exhibit, Line 9, Col. 5) 99,60,58 5. Current federal and foreign income taxes, including $ (7,,50) on realized capital gains (losses) 8,697,89 5. Net deferred tax liability 6. Unearned investment income 7. Amounts withheld or retained by company as agent or trustee 6,675 6,90 8. Amounts held for agents' account, including $ agents' credit balances 9. Remittances and items not allocated 5,895,9 (75,08) 0. Net adjustment in assets and liabilities due to foreign exchange rates. Liability for benefits for employees and agents if not included above. Borrowed money $ and interest thereon $. Dividends to stockholders declared and unpaid. Miscellaneous liabilities:.0 Asset valuation reserve (AVR, Line 6, Col. 7),997,95,666,0.0 Reinsurance in unauthorized and certified ($ ) companies.0 Funds held under reinsurance treaties with unauthorized and certified ($ ) reinsurers.0 Payable to parent, subsidiaries and affiliates,0,79,08,98.05 Drafts outstanding.06 Liability for amounts held under uninsured plans.07 Funds held under coinsurance.08 Derivatives.09 Payable for securities.0 Payable for securities lending. Capital notes $ and interest thereon $ 5. Aggregate write-ins for liabilities 87,860 55, Total liabilities excluding Separate Accounts business (Lines to 5),9,99 89,956, From Separate Accounts Statement,,05,79,78,88, 8. Total liabilities (Lines 6 and 7),55,99,578,68,77,80 9. Common capital stock,500,00,500,00 0. Preferred capital stock. Aggregate write-ins for other than special surplus funds. Surplus notes. Gross paid in and contributed surplus (Page, Line, Col. plus Page, Line 5., Col. ),76,9,76,9. Aggregate write-ins for special surplus funds 5. Unassigned funds (surplus),057,5 85,06,89 6. Less treasury stock, at cost: 6. shares common (value included in Line 9 $ ) 6. shares preferred (value included in Line 0 $ ) 7. Surplus (Total Lines ) (including $ in Separate Accounts Statement) 85,79,9 8,800, Totals of Lines 9, 0 and 7 (Page, Line 55) 88,9,9,0, Totals of Lines 8 and 8 (Page, Line 8, Col. ),8,87,07,700,075,85 DETAILS OF WRITE-INS 50. Miscellaneous liabilities 0,6 97,8 50. Funds awaiting escheat 7,598 8, Summary of remaining write-ins for Line 5 from overflow page 599. Totals (Lines 50 thru 50 plus 598)(Line 5 above) 87,860 55, Summary of remaining write-ins for Line from overflow page 99. Totals (Lines 0 thru 0 plus 98)(Line above) Summary of remaining write-ins for Line from overflow page 99. Totals (Lines 0 thru 0 plus 98)(Line above)

4 ANNUAL STATEMENT FOR THE YEAR 06 OF THE MML Bay State Life Insurance Company SUMMARY OF OPERATIONS Prior Year Current Year. Premiums and annuity considerations for life and accident and health contracts (Exhibit, Part, Line 0., Col., less Col. ) (05,85,696),68,709. Considerations for supplementary contracts with life contingencies 65,6. Net investment income (Exhibit of Net Investment Income, Line 7),88,75,85,5. Amortization of Interest Maintenance Reserve (IMR, Line 5) 88,00 97, Separate Accounts net gain from operations excluding unrealized gains or losses 6. Commissions and expense allowances on reinsurance ceded (Exhibit, Part, Line 6., Col. ) 6,5,60 5,6,95 7. Reserve adjustments on reinsurance ceded,685,75 (5,069,) 8. Miscellaneous Income: 8. Income from fees associated with investment management, administration and contract guarantees from Separate Accounts 7,95,5 70,05,65 8. Charges and fees for deposit-type contracts 8. Aggregate write-ins for miscellaneous income (76,9) (9,85) 9. Total (Lines to 8.) 5,6,99 97,8,78 0. Death benefits 0,78,6 6,59,558. Matured endowments (excluding guaranteed annual pure endowments). Annuity benefits (Exhibit 8, Part, Line 6., Cols. + 8),,80 98,87. Disability benefits and benefits under accident and health contracts 6,5 79,67. Coupons, guaranteed annual pure endowments and similar benefits 5. Surrender benefits and withdrawals for life contracts 9,89,69 8,806,55 6. Group conversions 7. Interest and adjustments on contract or deposit-type contract funds,096,059 70,7 8. Payments on supplementary contracts with life contingencies 9. Increase in aggregate reserves for life and accident and health contracts,90,099,95,66 0. Totals (Lines 0 to 9) 96,69,6 0,7,5. Commissions on premiums, annuity considerations, and deposit-type contract funds (direct business only) (Exhibit, Part, Line, Col. ),95,769,99,66. Commissions and expense allowances on reinsurance assumed (Exhibit, Part, Line 6., Col. ). General insurance expenses (Exhibit, Line 0, Cols.,, and ) 7,955,0 8,068,586. Insurance taxes, licenses and fees, excluding federal income taxes (Exhibit, Line 7, Cols. + + ) 990,6,8,6 5. Increase in loading on deferred and uncollected premiums (79) (556) 6. Net transfers to or (from) Separate Accounts net of reinsurance (5,570,9) (5,87,68) 7. Aggregate write-ins for deductions,55,7 6,5 8. Totals (Lines 0 to 7) 07,9,86 69,8,89 9. Net gain from operations before dividends to policyholders and federal income taxes (Line 9 minus Line 8) 5,869,077 7,50,9 0. Dividends to policyholders. Net gain from operations after dividends to policyholders and before federal income taxes (Line 9 minus Line 0) 5,869,077 7,50,9. Federal and foreign income taxes incurred (excluding tax on capital gains) 5,6,9 6,658,79. Net gain from operations after dividends to policyholders and federal income taxes and before realized capital gains or (losses) (Line minus Line ) 0,,78 0,69,555. Net realized capital gains (losses) (excluding gains (losses) transferred to the IMR) less capital gains tax of $ 0,59 (excluding taxes of $ 60,8 transferred to the IMR) 0,56 (5,0) 5. Net income (Line plus Line ) 0,55,9 0,657,5 CAPITAL AND SURPLUS ACCOUNT 6. Capital and surplus, December, prior year (Page, Line 8, Col. ),0,005,69, Net income (Line 5) 0,55,9 0,657,5 8. Change in net unrealized capital gains (losses) less capital gains tax of $ (0,50) (9,) 9. Change in net unrealized foreign exchange capital gain (loss) 0. Change in net deferred income tax,,00 (,09,067). Change in nonadmitted assets (9,887,99) 60,56. Change in liability for reinsurance in unauthorized and certified companies. Change in reserve on account of change in valuation basis, (increase) or decrease. Change in asset valuation reserve (,85) (,595) 5. Change in treasury stock (Page, Lines 6. and 6., Col. minus Col. ) 6. Surplus (contributed to) withdrawn from Separate Accounts during period 7. Other changes in surplus in Separate Accounts Statement 8. Change in surplus notes 9. Cumulative effect of changes in accounting principles 50. Capital changes: 50. Paid in 50. Transferred from surplus (Stock Dividend) 50. Transferred to surplus 5. Surplus adjustment: 5. Paid in 5. Transferred to capital (Stock Dividend) 5. Transferred from capital 5. Change in surplus as a result of reinsurance 5. Dividends to stockholders 5. Aggregate write-ins for gains and losses in surplus,66,69 5. Net change in capital and surplus for the year (Lines 7 through 5) 56,99, 9,607, Capital and surplus, December, current year (Lines 6 + 5) (Page, Line 8) 88,9,9,0,005 DETAILS OF WRITE-INS Sub-advisory fees (,7,8) (,50,57) Other miscellaneous income 98,05 608, Summary of remaining write-ins for Line 8. from overflow page Totals (Lines 08.0 thru 08.0 plus 08.98)(Line 8. above) (76,9) (9,85) 70. Reinsurance ceded adjustment,66, Miscellaneous charges to operations (0,) 6, Summary of remaining write-ins for Line 7 from overflow page 799. Totals (Lines 70 thru 70 plus 798)(Line 7 above),55,7 6,5 50. Reinsurance ceded adjustment,66, Summary of remaining write-ins for Line 5 from overflow page 599. Totals (Lines 50 thru 50 plus 598)(Line 5 above),66,69

5 ANNUAL STATEMENT FOR THE YEAR 06 OF THE MML Bay State Life Insurance Company CASH FLOW Current Year Prior Year Cash from Operations. Premiums collected net of reinsurance (0,8,58),,78. Net investment income,98,,057,77. Miscellaneous income,6,856 58,56,708. Total (Lines through ) 5,6,7 9,66,56 5. Benefit and loss related payments 95,7, 9,08, Net transfers to Separate Accounts, Segregated Accounts and Protected Cell Accounts (5,0,6) (5,57,05) 7. Commissions, expenses paid and aggregate write-ins for deductions,8,05,0, Dividends paid to policyholders 9. Federal and foreign income taxes paid (recovered) net of $,005,085 tax on capital gains (losses),98,85,5,8 0. Total (Lines 5 through 9) 75,99,5 6,9,50. Net cash from operations (Line minus Line 0) 78,75,0 8,, Cash from Investments. Proceeds from investments sold, matured or repaid:. Bonds 7,8,76 6,695,569. Stocks. Mortgage loans,8,77 7,57. Real estate.5 Other invested assets.6 Net gains or (losses) on cash, cash equivalents and short-term investments (56) 55.7 Miscellaneous proceeds,096 99,607.8 Total investment proceeds (Lines. to.7) 9,780, 7,906,90. Cost of investments acquired (long-term only):. Bonds 5,00,5 0,59,6. Stocks. Mortgage loans,99,9,997. Real estate.5 Other invested assets.6 Miscellaneous applications.7 Total investments acquired (Lines. to.6) 5,0,6 06,987,. Net increase (decrease) in contract loans and premium notes (58,7),586,60 5. Net cash from investments (Line.8 minus Line.7 minus Line ) (8,86,070) (80,666,770) Cash from Financing and Miscellaneous Sources 6. Cash provided (applied): 6. Surplus notes, capital notes 6. Capital and paid in surplus, less treasury stock 6. Borrowed funds 6. Net deposits on deposit-type contracts and other insurance liabilities,86,5,85,5 6.5 Dividends to stockholders 6.6 Other cash provided (applied) 6,5,8 (09,75) 7. Net cash from financing and miscellaneous sources (Lines 6. to 6. minus Line 6.5 plus Line 6.6) 7,5,066,075,90 RECONCILIATION OF CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS 8. Net change in cash, cash equivalents and short-term investments (Line, plus Lines 5 and 7),0,97 (9,6,967) 9. Cash, cash equivalents and short-term investments: 9. Beginning of year 6,89,8 0,76,95 9. End of year (Line 8 plus Line 9.) 6,69,65 6,89,8 Note: Supplemental disclosures of cash flow information for non-cash transactions: Bond conversions and refinancing 9,855,77, Interest capitalization for long-term debt,09 5

6 6 ANNUAL STATEMENT FOR THE YEAR 06 OF THE MML Bay State Life Insurance Company ANALYSIS OF OPERATIONS BY LINES OF BUSINESS Ordinary 6 Group Accident and Health Aggregate of All Total Industrial Life Life Insurance Individual Annuities Supplementary Contracts Credit Life (Group and Individual) Life Insurance (a) Annuities Group Credit (Group and Individual) Other Other Lines of Business. Premiums and annuity considerations for life and accident and health contracts (05,85,696) (0,,667),760 (,5,789). Considerations for supplementary contracts with life contingencies 65,6 65,6. Net investment income,88,75,95,776 7,99 50,057,0,9. Amortization of Interest Maintenance Reserve (IMR) 88,00 60,5,6,05 5,06 5. Separate Accounts net gain from operations excluding unrealized gains or losses 6. Commissions and expense allowances on reinsurance ceded 6,5,60 55,55,87 5,78,78 7. Reserve adjustments on reinsurance ceded,685,75,06,560 (9,0,809) 8. Miscellaneous Income: 8. Fees associated with income from investment management, administration and contract guarantees from Separate Accounts 7,95,5 9,600,00 67,7,77, Charges and fees for deposit-type contracts 8. Aggregate write-ins for miscellaneous income (76,9) 87,80 09,9 (,7,) 9. Totals (Lines to 8.) 5,6,99 8,759,699 8,99 6,8,66,7 0. Death benefits 0,78,6,0,9 6,,8. Matured endowments (excluding guaranteed annual pure endowments). Annuity benefits,,80,,80. Disability benefits and benefits under accident and health contracts 6,5 6,5. Coupons, guaranteed annual pure endowments and similar benefits 5. Surrender benefits and withdrawals for life contracts 9,89,69,78,8,88, 75, Group conversions 7. Interest and adjustments on contract or deposit-type contract funds,096,059 69,99 8,586 70, 77,6 8. Payments on supplementary contracts with life contingencies 9. Increase in aggregate reserves for life and accident and health contracts,90,099,778,00,06 0,59 0. Totals (Lines 0 to 9) 96,69,6 6,97,669 7,,906 70, 7,97,77. Commissions on premiums, annuity considerations and deposit-type contract funds (direct business only),95,769,698,7,566,9,90. Commissions and expense allowances on reinsurance assumed. General insurance expenses 7,955,0,765,78 8,57 66,00,08. Insurance taxes, licenses and fees, excluding federal income taxes 990,6 890,900 6,88 5 9,99 5. Increase in loading on deferred and uncollected premiums (79) (79) 6. Net transfers to or (from) Separate Accounts net of reinsurance (5,570,9) (,076,7) (7,669,56) (,8,8) 7. Aggregate write-ins for deductions,55,7,,67,7 7,8 8. Totals (Lines 0 to 7) 07,9,86 88,908,06 (07,06) 7,009 8,0,88 9. Net gain from operations before dividends to policyholders and federal income taxes (Line 9 minus Line 8) 5,869,077 9,85,68 98,5 (5,79) 5,, Dividends to policyholders. Net gain from operations after dividends to policyholders and before federal income taxes (Line 9 minus Line 0) 5,869,077 9,85,68 98,5 (5,79) 5,,905. Federal income taxes incurred (excluding tax on capital gains) 5,6,9,595,078 78,78 (5,6) 8,. Net gain from operations after dividends to policyholders and federal income taxes and before realized capital gains or (losses) (Line minus Line ) 0,,78 5,56,560 69,597 (0,8),9,77 DETAILS OF WRITE-INS Sub-advisory fees (,7,8) (,7,8) Other miscellaneous income 98,05 87,80 09,9 () Summary of remaining write-ins for Line 8. from overflow page Totals (Lines 08.0 thru 08.0 plus 08.98) (Line 8. above) (76,9) 87,80 09,9 (,7,) 70. Reinsurance ceded adjustment,66,69,66, Miscellaneous charges to operations (0,) (0,955),7 7, Summary of remaining write-ins for Line 7 from overflow page 799. Totals (Lines 70 thru 70 plus 798) (Line 7 above),55,7,,67,7 7,8 (a) Includes the following amounts for FEGLI/SGLI: Line, Line 0, Line 6, Line, Line

7 ANNUAL STATEMENT FOR THE YEAR 06 OF THE MML Bay State Life Insurance Company ANALYSIS OF INCREASE IN RESERVES DURING THE YEAR Ordinary 6 Group 5 7 Total Industrial Life Life Insurance Individual Annuities Supplementary Contracts Credit Life (Group and Individual) Life Insurance 8 Annuities Involving Life or Disability Contingencies (Reserves) (Net of Reinsurance Ceded). Reserve December, prior year 6,68,08,596,0,6,0,89,07. Tabular net premiums or considerations 6,6,0 9,67,89,760 (,5,50). Present value of disability claims incurred XXX. Tabular interest 5,59,8 5,068,50 9,9 5. Tabular less actual reserve released (,,68) (,,68) 6. Increase in reserve on account of change in valuation basis 7 7. Other increases (net),8,8,56,6 (8,76) 9,768,8 8. Totals (Lines to 7) 68,07,6 57,90,890,58,69 7,6,05 9. Tabular cost 9,50,0 9,05,0 XXX 0,5,68 0. Reserves released by death,,9,79,57 XXX XXX 0,5,6 XXX. Reserves released by other terminations (net) 7,7,997,0,75,885,577 75,675. Annuity, supplementary contract and disability payments involving life contingencies,958, 6,5,59,9. Net transfers to or (from) Separate Accounts (8,885,9) (,78,8) (7,67,85) (5,6,90). Total Deductions (Lines 9 to ) 9,56,57,58,89 (,95,076) 6,0,0 5. Reserve December, current year 8,58,7,7,60,7,75,9,80

8 ANNUAL STATEMENT FOR THE YEAR 06 OF THE MML Bay State Life Insurance Company EXHIBIT OF NET INVESTMENT INCOME Collected During Year Earned During Year. U.S. Government bonds (a) 697,07 75,8. Bonds exempt from U.S. tax (a). Other bonds (unaffiliated) (a) 8,,78 8,,68. Bonds of affiliates (a) 6,50 57,8. Preferred stocks (unaffiliated) (b). Preferred stocks of affiliates (b). Common stocks (unaffiliated). Common stocks of affiliates. Mortgage loans (c),89,6. Real estate (d) 5 Contract loans 5,5,6 5,05,0 6 Cash, cash equivalents and short-term investments (e) 55,696 55,696 7 Derivative instruments (f) 8. Other invested assets 9. Aggregate write-ins for investment income Total gross investment income,60,77,9,. Investment expenses (g) 6,97. Investment taxes, licenses and fees, excluding federal income taxes (g),99. Interest expense (h). Depreciation on real estate and other invested assets (i) 5. Aggregate write-ins for deductions from investment income 6. Total deductions (Lines through 5) 6,6 7. Net investment income (Line 0 minus Line 6),88,75 DETAILS OF WRITE-INS 090. Miscellaneous income Summary of remaining write-ins for Line 9 from overflow page Totals (Lines 090 thru 090 plus 0998) (Line 9, above) Summary of remaining write-ins for Line 5 from overflow page 599. Totals (Lines 50 thru 50 plus 598) (Line 5, above) (a) Includes $ 98,6 accrual of discount less $ 77,6 amortization of premium and less $ 59,08 paid for accrued interest on purchases. (b) Includes $ accrual of discount less $ amortization of premium and less $ paid for accrued dividends on purchases. (c) Includes $, accrual of discount less $,06 amortization of premium and less $ paid for accrued interest on purchases. (d) Includes $ for company s occupancy of its own buildings; and excludes $ interest on encumbrances. (e) Includes $ 5,97 accrual of discount less $ amortization of premium and less $ paid for accrued interest on purchases. (f) Includes $ accrual of discount less $ amortization of premium. (g) Includes $ investment expenses and $ investment taxes, licenses and fees, excluding federal income taxes, attributable to segregated and Separate Accounts. (h) Includes $ interest on surplus notes and $ interest on capital notes. (i) Includes $ depreciation on real estate and $ depreciation on other invested assets. EXHIBIT OF CAPITAL GAINS (LOSSES) 5 Total Realized Capital Gain (Loss) (Columns + ) Change in Unrealized Capital Gain (Loss) Realized Gain (Loss) On Sales or Maturity Other Realized Adjustments. U.S. Government bonds 7,75 7,75. Bonds exempt from U.S. tax. Other bonds (unaffiliated) 0,66 (,66) 8,00 (67). Bonds of affiliates (6,5) (6,5) (9,06). Preferred stocks (unaffiliated). Preferred stocks of affiliates. Common stocks (unaffiliated). Common stocks of affiliates. Mortgage loans. Real estate 5. Contract loans 6. Cash, cash equivalents and short-term investments (56) (56) 7. Derivative instruments 8. Other invested assets 9. Aggregate write-ins for capital gains (losses),06,06 0. Total capital gains (losses), (9,),09 (9,57) DETAILS OF WRITE-INS 090. Miscellaneous gain and loss,06, Summary of remaining write-ins for Line 9 from overflow page Totals (Lines 090 thru 090 plus 0998) (Line 9, above),06,06 Change in Unrealized Foreign Exchange Capital Gain (Loss) 8

9 9 ANNUAL STATEMENT FOR THE YEAR 06 OF THE MML Bay State Life Insurance Company EXHIBIT - PART - PREMIUMS AND ANNUITY CONSIDERATIONS FOR LIFE AND ACCIDENT AND HEALTH CONTRACTS Ordinary 5 Group Accident and Health Aggregate of All Total Industrial Life Life Insurance Individual Annuities Credit Life (Group and Individual) Life Insurance Annuities Group Credit (Group and Individual) Other Other Lines of Business FIRST YEAR (other than single). Uncollected. Deferred and accrued. Deferred, accrued and uncollected:. Direct. Reinsurance assumed. Reinsurance ceded. Net (Line + Line ). Advance 5. Line. - Line 6. Collected during year: 6. Direct Reinsurance assumed 6. Reinsurance ceded Net (8) (8) 7. Line 5 + Line 6. (8) (8) 8. Prior year (uncollected + deferred and accrued - advance) 9. First year premiums and considerations: 9. Direct Reinsurance assumed 9. Reinsurance ceded Net (Line 7 - Line 8) (8) (8) SINGLE 0. Single premiums and considerations: 0. Direct 0. Reinsurance assumed 0. Reinsurance ceded 0. Net RENEWAL. Uncollected,,. Deferred and accrued (5,097,99) (,860,067) (,7,96). Deferred, accrued and uncollected:. Direct (,85,885) 9,75 (,578,6). Reinsurance assumed. Reinsurance ceded 60,865,95,569 (,0,70). Net (Line + Line ) (5,096,75) (,858,8) (,7,96). Advance,8,8 5. Line. - Line (5,099,88) (,86,6) (,7,96) 6. Collected during year: 6. Direct 7,9,7 7,9,69,760,97 6. Reinsurance assumed 6. Reinsurance ceded 9,9,7 9,76,668 70, Net (0,8,57) (0,68,09),760 (6,879) 7. Line 5 + Line 6. (7,58,6) (0,9,0),760 (,7,805) 8. Prior year (uncollected + deferred and accrued - advance) (,79,00) (,887,0) (9,8,06) 9. Renewal premiums and considerations: 9. Direct,08,5 7,89,0,760 (,7,7) 9. Reinsurance assumed 9. Reinsurance ceded 9,89,88 9,7,96 60, 9. Net (Line 7 - Line 8) (05,85,5) (0,,86),760 (,5,789) TOTAL 0. Total premiums and annuity considerations: 0. Direct,08,689 7,89,76,760 (,7,7) 0. Reinsurance assumed 0. Reinsurance ceded 9,89,85 9,7,0 60, 0. Net (Lines ) (05,85,696) (0,,667),760 (,5,789)

10 0 DIVIDENDS AND COUPONS APPLIED (included in Part ). To pay renewal premiums. All other REINSURANCE COMMISSIONS AND EXPENSE ALLOWANCES INCURRED. First year (other than single):. Reinsurance ceded. Reinsurance assumed. Net ceded less assumed. Single:. Reinsurance ceded. Reinsurance assumed. Net ceded less assumed 5. Renewal: ANNUAL STATEMENT FOR THE YEAR 06 OF THE MML Bay State Life Insurance Company EXHIBIT - PART - DIVIDENDS AND COUPONS APPLIED, REINSURANCE COMMISSIONS AND EXPENSE ALLOWANCES AND COMMISSIONS INCURRED (Direct Business Only) Ordinary 5 Group Accident and Health Total Industrial Life Life Insurance Individual Annuities Credit Life (Group and Individual) Life Insurance 5. Reinsurance ceded 6,5,60 55,55,87 5,78,78 5. Reinsurance assumed 5. Net ceded less assumed 6,5,60 55,55,87 5,78,78 6. Totals: 6. Reinsurance ceded (Page 6, Line 6) 6,5,60 55,55,87 5,78,78 6. Reinsurance assumed (Page 6, Line ) 6. Net ceded less assumed 6,5,60 55,55,87 5,78,78 COMMISSIONS INCURRED (direct business only) 7. First year (other than single) (,906) (,906) 8. Single 9. Renewal,98,67,70,79,566,9,90 0. Deposit-type contract funds. Totals (to agree with Page 6, Line ),95,769,698,7,566,9,90 Annuities Group Credit (Group and Individual) Other Aggregate of All Other Lines of Business

11 ANNUAL STATEMENT FOR THE YEAR 06 OF THE MML Bay State Life Insurance Company EXHIBIT - GENERAL EXPENSES Insurance 5 6 Accident and Health Life Cost Containment All Other All Other Lines of Business Investment Total. Rent 7,,06 0,50. Salaries and wages,05,79 0,9,6,66. Contributions for benefit plans for employees 580,95 5,60 586,556. Contributions for benefit plans for agents 0,07,9 0,985. Payments to employees under non-funded benefit plans. Payments to agents under non-funded benefit plans. Other employee welfare 8,8 7 8,50. Other agent welfare. Legal fees and expenses 95, ,876. Medical examination fees 5, ,77. Inspection report fees (8) () (). Fees of public accountants and consulting actuaries 7,80 7 8,00.5 Expense of investigation and settlement of policy claims 0,68 0 0,70 5. Traveling expenses 98, ,5 5. Advertising 85, ,8 5. Postage, express, telegraph and telephone,78,8, Printing and stationery 8, , Cost or depreciation of furniture and equipment 00, , 5.6 Rental of equipment 5,77,9 56,6 5.7 Cost or depreciation of EDP equipment and software 8, ,95 6. Books and periodicals,9 5, Bureau and association fees 8,75 8 8,96 6. Insurance, except on real estate 9,0 8 9, Miscellaneous losses 5, , Collection and bank service charges,80 0,0 6.6 Sundry general expenses 7, , Group service and administration fees 7,786 6,895 7, Reimbursements by uninsured plans 7. Agency expense allowance,00,0 9,679,0,08 7. Agents balances charged off (less $ recovered) 7. Agency conferences other than local meetings 8, , Real estate expenses 9. Investment expenses not included elsewhere 56,6 56,6 9. Aggregate write-ins for expenses 7, ,00 0. General expenses incurred 7,955,0 6,97 (a) 8,586,99. General expenses unpaid December, prior year,6,507 80,708,607,5. General expenses unpaid December, current year,50,08 70,796,0,8. Amounts receivable relating to uninsured plans, prior year. Amounts receivable relating to uninsured plans, current year 5. General expenses paid during year (Lines 0+--+) 8,,9 6,89 8,87,0 DETAILS OF WRITE-INS Miscellaneous 56, , Management services income 665,86 665, Summary of remaining write-ins for Line 9. from overflow page Totals (Lines 09.0 thru 09.0 plus 09.98) (Line 9. above) 7, ,00 (a) Includes management fees of $ 7,9, to affiliates and $ to non-affiliates. EXHIBIT - TAXES, LICENSES AND FEES (EXCLUDING FEDERAL INCOME TAXES) Insurance 5 Life Accident and Health All Other Lines of Business Investment Total. Real estate taxes. State insurance department licenses and fees 99,77 99,77. State taxes on premiums 50,55 50,55. Other state taxes, including $ for employee benefits 95,909 95, U.S. Social Security taxes 8,9,99 87, 6. All other taxes 7. Taxes, licenses and fees incurred 990,6,99 99,6 8. Taxes, licenses and fees unpaid December, prior year,8 7,58 9. Taxes, licenses and fees unpaid December, current year 99,08 99,60 0. Taxes, licenses and fees paid during year (Lines ),0,967,9,07,60 EXHIBIT - DIVIDENDS OR REFUNDS. Applied to pay renewal premiums. Applied to shorten the endowment or premium-paying period. Applied to provide paid-up additions. Applied to provide paid-up annuities 5. Total Lines through 6. Paid in cash 7. Left on deposit 8. Aggregate write-ins for dividend or refund options 9. Total Lines 5 through 8 0. Amount due and unpaid. Provision for dividends or refunds payable in the following calendar year NONE. Terminal dividends. Provision for deferred dividend contracts. Amount provisionally held for deferred dividend contracts not included in Line 5. Total Lines 0 through 6. Total from prior year 7. Total dividends or refunds (Lines ) DETAILS OF WRITE-INS Summary of remaining write-ins for Line 8 from overflow page Totals (Lines 080 thru 080 plus 0898) (Line 8 above) Life Accident and Health

12 ANNUAL STATEMENT FOR THE YEAR 06 OF THE MML Bay State Life Insurance Company EXHIBIT 5 - AGGREGATE RESERVE FOR LIFE CONTRACTS Valuation Standard Total Industrial Ordinary 5 Credit (Group and Individual) 6 Group CET.00% NLP 69,00 69, CSO.00% MOD CRVM 7,57 7, CSO.50% CRVM 6,67 6, CSO.00%,50,000,50, CSO.00%,98, CSO.50% CRVM 8,0,59 8,0, CSO 5.50% CRVM 60,9,95 60,9, Totals (Gross) 7,7,575 5,78,59,5, Reinsurance ceded,08,8,08,00 5, Life Insurance: Totals (Net),090,09,670,9,9, MGDB Table IY/FIG,0,8 XXX,0,8 XXX a %, XXX, XXX a-000.5% 9,68 XXX 9,68 XXX a %,79 XXX,79 XXX a % 87 XXX 87 XXX a % 9,5 XXX 9,5 XXX a-0.00% 5,65 XXX 5,65 XXX Totals (Gross),8,07 XXX,8,07 XXX Reinsurance ceded XXX XXX Annuities: Totals (Net),8,07 XXX,8,07 XXX Reinsurance ceded SCWLC: Totals (Net) ADB + 58 CSO.50%,695, ADB + 58 CSO 5.50% Totals (Gross),09, Reinsurance ceded Accidental Death Benefits: Totals (Net),09, % 5 INTERCO DISA.50%,056, % 5 INTERCO DISA 5.50% 9,898 9, INTERCO + 58 CSO.50% 9, 9, Totals (Gross) 60,078 60, Reinsurance ceded Disability-Active Lives: Totals (Net) 60,078 60, DISAB TABLE BEN 5.50% 8,886 8, DISAB TABLE BEN 5.00% 75,07 75, DISAB TABLE BEN 5.50% 5,506,89 5,506, DISAB TABLE BEN %,5,99,5, Totals (Gross) 8,,085 8,, Reinsurance ceded Disability-Disabled Lives: Totals (Net) 8,,085 8,, AG reserve 9,65 9, Minimum death benefit 78,86 78, Policy loans,,7,, Term cost reserve Totals (Gross),,779,, Reinsurance ceded Miscellaneous Reserves: Totals (Net),,779,, Totals (Net) - Page, Line 8,58,7 7,8,6,9,80

13 ANNUAL STATEMENT FOR THE YEAR 06 OF THE MML Bay State Life Insurance Company EXHIBIT 5 - INTERROGATORIES. Has the reporting entity ever issued both participating and non-participating contracts? Yes [ ] No [ X ]. If not, state which kind is issued. Non-Participating. Does the reporting entity at present issue both participating and non-participating contracts? Yes [ ] No [ X ]. If not, state which kind is issued. Non-Participating. Does the reporting entity at present issue or have in force contracts that contain non-guaranteed elements? Yes [ X ] No [ ] If so, attach a statement that contains the determination procedures, answers to the interrogatories and an actuarial opinion as described in the instructions.. Has the reporting entity any assessment or stipulated premium contracts in force? Yes [ ] No [ X ] If so, state:. Amount of insurance? $. Amount of reserve? $. Basis of reserve:. Basis of regular assessments:.5 Basis of special assessments:.6 Assessments collected during the year $ 5. If the contract loan interest rate guaranteed in any one or more of its currently issued contracts is less than 5%, not in advance, state the contract loan rate guarantees on any such contracts. 6. Does the reporting entity hold reserves for any annuity contracts that are less than the reserves that would be held on a standard basis? Yes [ ] No [ X ] 6. If so, state the amount of reserve on such contracts on the basis actually held: $ 6. That would have been held (on an exact or approximate basis) using the actual ages of the annuitants; the interest rate(s) used in 6.; and the same mortality basis used by the reporting entity for the valuation of comparable annuity benefits issued to standard lives. If the reporting entity has no comparable annuity benefits for standard lives to be valued, the mortality basis shall be the table most recently approved by the state of domicile for valuing individual annuity benefits: $ Attach statement of methods employed in their valuation. 7. Does the reporting entity have any Synthetic GIC contracts or agreements in effect as of December of the current year? Yes [ ] No [ X ] 7. If yes, state the total dollar amount of assets covered by these contracts or agreements $ 7. Specify the basis (fair value, amortized cost, etc.) for determining the amount: 7. State the amount of reserves established for this business: $ 7. Identify where the reserves are reported in the blank: 8. Does the reporting entity have any Contingent Deferred Annuity contracts or agreements in effect as of December of the current year? Yes [ ] No [ X ] 8. If yes, state the total dollar amount of account value covered by these contracts or agreements: $ 8. State the amount of reserves established for this business: $ 8. Identify where the reserves are reported in the blank: 9. Does the reporting entity have any Guaranteed Lifetime Income Benefit contracts, agreements or riders in effect as of December of the current year? Yes [ ] No [ X ] 9. If yes, state the total dollar amount of any account value associated with these contracts, agreements or riders: $ 9. State the amount of reserves established for this business: $ 9. Identify where the reserves are reported in the blank: EXHIBIT 5A - CHANGES IN BASES OF VALUATION DURING THE YEAR Valuation Basis Increase in Actuarial NONE Reserve Due to Description of Valuation Class Changed From Changed To Change Total (Column, only)

14 ANNUAL STATEMENT FOR THE YEAR 06 OF THE MML Bay State Life Insurance Company Exhibit 6 - Aggregate Reserves for Accident and Health Contracts N O N E

15 ANNUAL STATEMENT FOR THE YEAR 06 OF THE MML Bay State Life Insurance Company EXHIBIT 7 - DEPOSIT TYPE CONTRACTS Total Guaranteed Interest Contracts Annuities Certain Supplemental Contracts 5 Dividend Accumulations or Refunds 6 Premium and Other Deposit Funds. Balance at the beginning of the year before reinsurance 9,89,86 6,08 9,89,788. Deposits received during the year,906,778,906,778. Investment earnings credited to the account 70, 70,. Other net change in reserves 6,0 (6,0) 5. Fees and other charges assessed 6. Surrender charges 7. Net surrender or withdrawal payments,50,56,50,56 8. Other net transfers to or (from) Separate Accounts 5 9. Balance at the end of current year before reinsurance (Lines ),58,99,68,, 0. Reinsurance balance at the beginning of the year. Net change in reinsurance assumed. Net change in reinsurance ceded. Reinsurance balance at the end of the year (Lines 0+-). Net balance at the end of current year after reinsurance (Lines 9 + ),58,99,68,,

16 . Due and unpaid:. In course of settlement:. Direct. Reinsurance assumed. Reinsurance ceded. Net. Resisted. Direct. Reinsurance assumed. Reinsurance ceded ANNUAL STATEMENT FOR THE YEAR 06 OF THE MML Bay State Life Insurance Company EXHIBIT 8 - CLAIMS FOR LIFE AND ACCIDENT AND HEALTH CONTRACTS PART - Liability End of Current Year Ordinary 6 Group Accident and Health Total Industrial Life Life Insurance Individual Annuities Supplementary Contracts Credit Life (Group and Individual) Life Insurance Annuities Group Credit (Group and Individual). Net (b) (b) (b) (b) Other 6. Other. Direct,7,597 7,890,508,58,089. Reinsurance assumed. Reinsurance ceded 8,8,5,799,,58,089. Net,09,066 (b),09,066 (b) (b) (b) (b) (b) (b). Incurred but unreported:. Direct,0,9,0,9. Reinsurance assumed. Reinsurance ceded 96,900 96,900. Net 7,9 (b) 7,9 (b) (b) (b) (b) (b) (b). TOTALS. Direct,60,89 9,00,80,58,089. Reinsurance assumed. Reinsurance ceded 8,780, 5,96,,58,089. Net,8,60 (a) (a),8,60 (a) (a) Including matured endowments (but not guaranteed annual pure endowments) unpaid amounting to $ in Column, $ in Column and $ in Column 7. (b) Include only portion of disability and accident and health claim liabilities applicable to assumed "accrued" benefits. Reserves (including reinsurance assumed and net of reinsurance ceded) for unaccrued benefits for Ordinary Life Insurance $ 75,07 Individual Annuities $, Credit Life (Group and Individual) $, and Group Life $, are included in Page, Line, (See Exhibit 5, Section on Disability Disabled Lives); and for Group Accident and Health $ Credit (Group and Individual) Accident and Health $, and Other Accident and Health $ are included in Page, Line (See Exhibit 6, Claim Reserve).

17 7 ANNUAL STATEMENT FOR THE YEAR 06 OF THE MML Bay State Life Insurance Company EXHIBIT 8 - CLAIMS FOR LIFE AND ACCIDENT AND HEALTH CONTRACTS PART - Incurred During the Year Ordinary 6 Group Accident and Health Total Industrial Life (a) Life Insurance (b) Individual Annuities Supplementary Contracts Credit Life (Group and Individual) Life Insurance (c) Annuities Group Credit (Group and Individual). Settlements During the Year:. Direct 69,87,80 7,757,58,,80 8,8,6. Reinsurance assumed. Reinsurance ceded,60,6,0,586 0,58,70. Net (d),77,85,655,997,,80 7,959,685. Liability December, current year from Part :. Direct,60,89 9,00,80,58,089. Reinsurance assumed. Reinsurance ceded 8,780, 5,96,,58,089. Net,8,60,8,60. Amounts recoverable from reinsurers December, current year,9,68,0,690,806,99. Liability December, prior year:. Direct,8,6,885,5 7,98,68. Reinsurance assumed. Reinsurance ceded 5,6,,,06,99,095. Net 6,7,5,,8,99,7 5. Amounts recoverable from reinsurers December, prior year 5,5,6 7,66,590, Incurred Benefits 6. Direct 69,09,07,89,,,80,0,07 6. Reinsurance assumed 6. Reinsurance ceded 5,8,855 7,5,6 7,959,79 6. Net,,6,668,095,,80 6,,8 (a) Including matured endowments (but not guaranteed annual pure endowments) amounting to $ in Line., $ in Line.. $ in Line 6., and $ in Line 6.. (b) Including matured endowments (but not guaranteed annual pure endowments) amounting to $ in Line., $ in Line.. $ in Line 6., and $ in Line 6.. (c) Including matured endowments (but not guaranteed annual pure endowments) amounting to $ in Line., $ in Line.. $ in Line 6., and $ in Line 6.. (d) Includes $ 0,867 premiums waived under total and permanent disability benefits. Other

18 . Bonds (Schedule D). Stocks (Schedule D):. Preferred stocks. Common stocks ANNUAL STATEMENT FOR THE YEAR 06 OF THE MML Bay State Life Insurance Company. Mortgage loans on real estate (Schedule B):. First liens. Other than first liens. Real estate (Schedule A):. Properties occupied by the company. Properties held for the production of income. Properties held for sale EXHIBIT OF NON-ADMITTED ASSETS 5. Cash (Schedule E - Part ), cash equivalents (Schedule E - Part ) and short-term investments (Schedule DA) 6. Contract loans 7. Derivatives (Schedule DB) 8. Other invested assets (Schedule BA) 9. Receivables for securities 0. Securities lending reinvested collateral assets (Schedule DL). Aggregate write-ins for invested assets. Subtotals, cash and invested assets (Lines to ). Title plants (for Title insurers only) Current Year Total Nonadmitted Assets Prior Year Total Nonadmitted Assets Change in Total Nonadmitted Assets (Col. - Col. ). Investment income due and accrued,760 (,760) 5. Premiums and considerations: 5. Uncollected premiums and agents' balances in the course of collection 77 (77) 5. Deferred premiums, agents' balances and installments booked but deferred and not yet due 5. Accrued retrospective premiums and contracts subject to redetermination 6. Reinsurance: 6. Amounts recoverable from reinsurers 6. Funds held by or deposited with reinsured companies 6. Other amounts receivable under reinsurance contracts 7. Amounts receivable relating to uninsured plans 8. Current federal and foreign income tax recoverable and interest thereon 8. Net deferred tax asset,7,0,87,60 (9,885,69) 9. Guaranty funds receivable or on deposit 0. Electronic data processing equipment and software. Furniture and equipment, including health care delivery assets. Net adjustment in assets and liabilities due to foreign exchange rates. Receivables from parent, subsidiaries and affiliates. Health care and other amounts receivable 5. Aggregate write-ins for other than invested assets 6. Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines to 5),75,59,87,60 (9,887,99) 7. From Separate Accounts, Segregated Accounts and Protected Cell Accounts 8. Total (Lines 6 and 7),75,59,87,60 (9,887,99) DETAILS OF WRITE-INS 98. Summary of remaining write-ins for Line from overflow page 99. Totals (Lines 0 thru 0 plus 98)(Line above) Summary of remaining write-ins for Line 5 from overflow page 599. Totals (Lines 50 thru 50 plus 598)(Line 5 above) 8

19 ANNUAL STATEMENT FOR THE YEAR 06 OF MML Bay State Life Insurance Company NOTES TO FINANCIAL STATEMENTS TABLE OF CONTENTS Note Summary of Significant Accounting Policies and Going Concern Note Accounting Changes and Corrections of Errors Note Business Combinations and Goodwill Note Discontinued Operations Note 5 Investments Note 6 Joint Ventures, Partnerships and Limited Liability Companies Note 7 Investment Income Note 8 Derivative Instruments Note 9 Income Taxes Note 0 Information Concerning Parent, Subsidiaries and Affiliates Note Debt Note Retirement Plans, Deferred Compensation, Postemployment Benefits and Compensated Absences and Other Postretirement Benefit Plans Note Capital and Surplus, Shareholders Dividend Restrictions and Quasi-Reorganizations Note Liabilities, Contingencies and Assessments Note 5 Leases Note 6 Information About Financial Instruments With Off-Balance Sheet Risk and Financial Instruments With Concentrations of Credit Risk Note 7 Sale, Transfer and Servicing of Financial Assets and Extinguishments of Liabilities Note 8 Gain or Loss to the Reporting Entity from Uninsured Plans and the Uninsured Portion of Partially Insured Plans Note 9 Direct Premium Written/Produced By Managing General Agents/Third Party Administrators Note 0 Fair Value Measurements Note Other Items Note Events Subsequent Note Reinsurance Note Retrospectively Rated Contracts and Contracts Subject to Redetermination Note 5 Change in Incurred Losses and Loss Adjustment Expenses Note 6 Intercompany Pooling Arrangements Note 7 Structured Settlements Note 8 Health Care Receivables Note 9 Participating Policies Note 0 Premium Deficiency Reserves Note Reserves for Life Contracts and Annuity Contracts Note Analysis of Annuity Actuarial Reserves and Deposit Type Liabilities by Withdrawal Characteristics Note Premium and Annuity Considerations Deferred and Uncollected Note Separate Accounts Note 5 Loss/Claim Adjustment Expenses 9

20 ANNUAL STATEMENT FOR THE YEAR 06 OF MML Bay State Life Insurance Company NOTES TO FINANCIAL STATEMENTS Note Summary of Significant Accounting Policies and Going Concern a. Accounting practices: The accompanying financial statements of MML Bay State Life Insurance Company (the Company) have been prepared in conformity with the Statutory Accounting Practices (SAP) of the National Association of Insurance Commissioners (NAIC) and the accounting practices prescribed or permitted by the State of Connecticut Insurance Department (the Department). A reconciliation of the Company's net income and capital and surplus between NAIC SAP and practices prescribed and permitted by the State of Connecticut is shown below: F/S F/S SSAP # Page Line NET INCOME () State basis (Page, Line 5, Columns & ) XXX XXX XXX $ 0,55,9 $ 0,657,5 () State prescribed practices that increase/(decrease) NAIC SAP: N/A N/A N/A - - () State permitted practices that increase/(decrease) NAIC SAP: N/A N/A N/A - - () NAIC SAP (--=) XXX XXX XXX $ 0,55,9 $ 0,657,5 SURPLUS (5) State basis (Page, Line 8, Columns & ) XXX XXX XXX $ 88,9,9 $,0,005 (6) State prescribed practices that increase/(decrease) NAIC SAP: N/A N/A N/A - - (7) State permitted practices that increase/(decrease) NAIC SAP: N/A N/A N/A - - (8) NAIC SAP (5-6-7=8) XXX XXX XXX $ 88,9,9 $,0,005 b. Use of estimates in the preparation of the financial statements: The preparation of financial statements requires management to make estimates and assumptions that impact the reported amounts of assets and liabilities, the disclosure of assets and liabilities as of the date of the statutory financial statements and the reported amounts of revenues and expenses during the reporting periods. The most significant estimates include those used in determining the carrying values of investments including the amount of mortgage loan investment valuation reserves, other-than-temporary impairment(s) (OTTI), the liabilities for policyholders reserves, the determination of admissible deferred tax assets (DTAs), the liability for taxes and litigation contingencies. Future events including, but not limited to, changes in the level of mortality, morbidity, interest rates, persistency, asset valuations and defaults could cause results to differ from the estimates used in the statutory financial statements. Although some variability is inherent in these estimates, management believes the amounts presented are appropriate. c. Accounting policy: Life insurance premium revenue is generally recognized annually on the anniversary date of the policy. However, premium for flexible products, primarily universal life and variable universal life contracts, is recognized as revenue when received. Annuity premium is recognized as revenue when received. Expenses incurred in connection with acquiring new insurance business, including certain acquisition costs, such as commissions, are charged to current operations as incurred. Policy loans are carried at the outstanding loan balance less amounts unsecured by the cash surrender value of the policy. Unsecured amounts can occur when subsequent charges are incurred on the underlying policy without the receipt of additional premium. Where applicable, the values of invested assets have been adjusted for impairments considered OTTI. In addition, the Company uses the following accounting policies: () Short-term investments, which are carried at amortized cost, consist of all highly liquid investments purchased with maturities of greater than three months and less than or equal to months. Investments in short-term bonds are classified as short-term investments. () Bonds are generally valued at amortized cost using the constant yield interest method with the exception of NAIC Category 6 bonds, which are in or near default, and certain residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities (CMBS), which are rated by outside modelers, which are carried at the lower of amortized cost or fair value. NAIC ratings are applied to bonds and other securities. Categories and are considered investment grade, while Categories through 6 are considered below investment grade. Bond transactions are recorded on a trade date basis, except for private placement bonds, which are recorded on the funding date. The fair value of bonds is based on quoted market prices when available. If quoted market prices are not available, values provided by other third-party organizations are used. If values provided by other third-party organizations are unavailable, fair value is estimated using internal models by discounting expected future cash flows using observable current market rates applicable to yield, credit quality and maturity of the investment or using quoted market values for comparable investments. Internal inputs used in the determination of fair value include estimated prepayment speeds, default rates, discount rates and collateral values, among others. Structure characteristics and cash flow priority are also considered. Fair values resulting from internal models are those expected to be received in an orderly transaction between willing market participants at the financial statement date. Refer to Note c. Accounting policy () for information on the Company s policy for determining OTTI. () As of December, 06 and 05, the Company did not hold any common stocks. () As of December, 06 and 05, the Company did not hold any preferred stocks. (5) Mortgage loans are valued at the unpaid principal balance of the loan, net of unamortized premium, discount, mortgage origination fees and valuation allowances. Mortgage loans comprised primarily seasoned pools of homogeneous residential mortgage loans substantially backed by Federal Housing Administration (FHA) and Veterans Administration (VA) guarantees. (6) For loan-backed and structured securities, such as asset-backed securities (ABS), mortgage-backed securities (MBS), including residential mortgage-backed securities and commercial mortgage-backed securities, and structured securities, including collateralized debt obligations (CDOs), amortization or accretion is revalued quarterly based on the current estimated cash flows, using either the prospective or retrospective adjustment methodologies. Certain fixed income securities, with the highest ratings from a rating agency follow the retrospective method of accounting. Under the retrospective method, the recalculated effective yield equates the present value of the actual and anticipated cash flows, including new prepayment assumptions, to the original cost of the investment. Prepayment assumptions are based on borrower constraints and economic incentives such as the original term, age and coupon of the loan as affected by the 9.