ASSETS 1 Assets Current Statement Date 4 2 3 December 31 Net Admitted Assets Prior Year Net Nonadmitted Assets (Cols. 1-2) Admitted Assets 1. Bonds 11,289,197,194 0 11,289,197,194 11,290,522,425 2. Stocks: 2.1 Preferred stocks 46,953,970 500,000 46,453,970 36,569,859 2.2 Common stocks 272,909,999 5,000 272,904,999 278,764,610 3. Mortgage loans on real estate: 3.1 First liens 1,775,120,089 0 1,775,120,089 1,622,626,506 3.2 Other than first liens 0 0 4. Real estate: 4.1 Properties occupied by the company (less $ encumbrances) 10,768,670 0 10,768,670 10,307,995 4.2 Properties held for the production of income (less $ encumbrances) 0 0 4.3 Properties held for sale (less $ encumbrances) 0 0 5. Cash ($ (72,460,830)), cash equivalents ($ 59,990,508 ) and short-term investments ($ 429,801,688 ) 417,331,366 0 417,331,366 301,286,304 6. Contract loans (including $ premium notes) 547,089,293 9,226,057 537,863,236 519,891,859 7. Derivatives 77,856,512 0 77,856,512 76,968,166 8. Other invested assets 89,743,380 0 89,743,380 91,308,842 9. Receivables for securities 3,280,185 58,848 3,221,337 8,570,774 10. Securities lending reinvested collateral assets 43,053,668 0 43,053,668 89,056,030 11. Aggregate write-ins for invested assets 0 0 0 0 12. Subtotals, cash and invested assets (Lines 1 to 11) 14,573,304,326 9,789,905 14,563,514,421 14,325,873,370 13. Title plants less $ charged off (for Title insurers only) 0 0 14. Investment income due and accrued 128,417,006 0 128,417,006 125,804,992 15. Premiums and considerations: 15.1 Uncollected premiums and agents' balances in the course of collection 56,511,685 0 56,511,685 47,012,221 15.2 Deferred premiums, agents' balances and installments booked but deferred and not yet due (including $ earned but unbilled premiums) 503,851,393 146,148 503,705,245 476,827,580 15.3 Accrued retrospective premiums ($ ) and 16. Reinsurance: contracts subject to redetermination ($ ) 0 0 16.1 Amounts recoverable from reinsurers 64,497,143 3,901,700 60,595,443 48,460,317 16.2 Funds held by or deposited with reinsured companies 386,662,626 0 386,662,626 381,662,626 16.3 Other amounts receivable under reinsurance contracts 20,950,849 0 20,950,849 21,630,646 17. Amounts receivable relating to uninsured plans 0 0 18.1 Current federal and foreign income tax recoverable and interest thereon 799,116 0 799,116 19,472,997 18.2 Net deferred tax asset 450,619,705 263,661,184 186,958,521 197,733,881 19. Guaranty funds receivable or on deposit 6,762,285 0 6,762,285 6,921,059 20. Electronic data processing equipment and software 13,246,807 13,216,238 30,569 60,989 21. Furniture and equipment, including health care delivery assets ($ ) 664,952 664,952 0 0 22. Net adjustment in assets and liabilities due to foreign exchange rates 0 0 23. Receivables from parent, subsidiaries and affiliates 500,888 0 500,888 0 24. Health care ($ ) and other amounts receivable 0 0 25. Aggregate write-ins for other than invested assets 23,766,025 1,736,459 22,029,566 26,076,008 26. Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines 12 to 25) 16,230,554,806 293,116,586 15,937,438,220 15,677,536,686 27. From Separate Accounts, Segregated Accounts and Protected Cell Accounts 6,748,092,884 0 6,748,092,884 6,770,217,881 28. Total (Lines 26 and 27) 22,978,647,690 293,116,586 22,685,531,104 22,447,754,567 1101. 1102. 1103. DETAILS OF WRITE-INS 1198. Summary of remaining write-ins for Line 11 from overflow page 0 0 0 0 1199. Totals (Lines 1101 through 1103 plus 1198)(Line 11 above) 0 0 0 0 2501. Miscellaneous receivables 13,681,640 1,312,083 12,369,557 14,975,333 2502. Premium tax refunds receivable 6,973,960 67,439 6,906,521 8,273,141 2503. Business services agreement receivable 2,753,488 0 2,753,488 2,827,534 2598. Summary of remaining write-ins for Line 25 from overflow page 356,937 356,937 0 0 2599. Totals (Lines 2501 through 2503 plus 2598)(Line 25 above) 23,766,025 1,736,459 22,029,566 26,076,008 2
LIABILITIES, SURPLUS AND OTHER FUNDS 1 Current 2 December 31 Prior Year Statement Date 1. Aggregate reserve for life contracts $ 11,961,682,181 less $ included in Line 6.3 (including $ 976,681,187 Modco Reserve) 11,961,682,181 11,794,982,835 2. Aggregate reserve for accident and health contracts (including $ 0 Modco Reserve) 1,654,536 1,833,660 3. Liability for deposit-type contracts (including $ 0 Modco Reserve) 648,918,428 677,845,430 4. Contract claims: 4.1 Life 80,668,230 87,428,581 4.2 Accident and health 30,655 49,514 5. Policyholders dividends $ 0 and coupons $ 0 due and unpaid 341,849 347,854 6. Provision for policyholders dividends and coupons payable in following calendar year - estimated amounts: 6.1 Dividends apportioned for payment (including $ Modco) 6.2 Dividends not yet apportioned (including $ 0 Modco) 6.3 Coupons and similar benefits (including $ 0 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 $ 0 discount; including $ 10,166 accident and health premiums 8,542,307 8,283,732 9. Contract liabilities not included elsewhere: 9.1 Surrender values on canceled contracts 9.2 Provision for experience rating refunds, including the liability of $ 0 accident and health experience rating refunds of which $ 0 is for medical loss ratio rebate per the Public Health Service Act 9.3 Other amounts payable on reinsurance, including $ 3,301,677 assumed and $ 132,650,194 ceded 135,951,871 144,885,218 9.4 Interest Maintenance Reserve 32,962,252 32,551,640 10. Commissions to agents due or accrued-life and annuity contracts $ 3,365, accident and health $ 13,354 and deposit-type contract funds $ 0 16,718 669,210 11. Commissions and expense allowances payable on reinsurance assumed 130,808 116,384 12. General expenses due or accrued 3,482,647 2,857,125 13. Transfers to Separate Accounts due or accrued (net) (including $ (18,019,528) accrued for expense allowances recognized in reserves, net of reinsured allowances) (42,009,995) (42,695,006) 14. Taxes, licenses and fees due or accrued, excluding federal income taxes 8,739,654 10,689,371 15.1 Current federal and foreign income taxes, including $ (4,888,932) on realized capital gains (losses) 12,116,550 0 15.2 Net deferred tax liability 0 16. Unearned investment income 9,041,634 8,306,555 17. Amounts withheld or retained by company as agent or trustee 11,719,018 14,559,941 18. Amounts held for agents' account, including $ 0 agents' credit balances 19. Remittances and items not allocated 12,319,848 25,298,971 20. Net adjustment in assets and liabilities due to foreign exchange rates 21. Liability for benefits for employees and agents if not included above 22. Borrowed money $ 0 and interest thereon $ 0 23. Dividends to stockholders declared and unpaid 24. Miscellaneous liabilities: 24.01 Asset valuation reserve 101,906,313 100,505,830 24.02 Reinsurance in unauthorized and certified ($ 0 ) companies 6,601 302,947 24.03 Funds held under reinsurance treaties with unauthorized and certified ($ 0 ) reinsurers 1,109,877,552 1,087,790,891 24.04 Payable to parent, subsidiaries and affiliates 1,565,080 3,382,659 24.05 Drafts outstanding 24.06 Liability for amounts held under uninsured plans 24.07 Funds held under coinsurance 120,807,997 113,322,599 24.08 Derivatives 6,644,987 1,151,959 24.09 Payable for securities 85,462,847 3,932,702 24.10 Payable for securities lending 43,053,668 89,056,030 24.11 Capital notes $ 0 and interest thereon $ 0 25. Aggregate write-ins for liabilities 20,004,548 22,629,494 26. Total liabilities excluding Separate Accounts business (Lines 1 to 25) 14,375,638,784 14,190,086,126 27. From Separate Accounts Statement 6,748,092,884 6,770,217,881 28. Total liabilities (Lines 26 and 27) 21,123,731,668 20,960,304,007 29. Common capital stock 25,651,000 25,651,000 30. Preferred capital stock 31. Aggregate write-ins for other than special surplus funds 0 0 32. Surplus notes 33. Gross paid in and contributed surplus 1,456,618,456 1,456,618,456 34. Aggregate write-ins for special surplus funds 0 0 35. Unassigned funds (surplus) 79,529,980 5,181,104 36. Less treasury stock, at cost: 36.1 0 shares common (value included in Line 29 $ 0 ) 36.2 0 shares preferred (value included in Line 30 $ 0 ) 37. Surplus (Total Lines 31+32+33+34+35-36) (including $ 0 in Separate Accounts Statement) 1,536,148,436 1,461,799,560 38. Totals of Lines 29, 30 and 37 1,561,799,436 1,487,450,560 39. Totals of Lines 28 and 38 (Page 2, Line 28, Col. 3) 22,685,531,104 22,447,754,567 DETAILS OF WRITE-INS 2501. Derivatives collateral and interest payable 20,004,548 22,629,494 2502. 2503. 2598. Summary of remaining write-ins for Line 25 from overflow page 0 0 2599. Totals (Lines 2501 through 2503 plus 2598)(Line 25 above) 20,004,548 22,629,494 3101. 0 3102. 3103. 3198. Summary of remaining write-ins for Line 31 from overflow page 0 0 3199. Totals (Lines 3101 through 3103 plus 3198)(Line 31 above) 0 0 3401. 3402. 3403. 3498. Summary of remaining write-ins for Line 34 from overflow page 0 0 3499. Totals (Lines 3401 through 3403 plus 3498)(Line 34 above) 0 0 3
SUMMARY OF OPERATIONS 1 Current Year 2 Prior Year To Date 3 Prior Year Ended December 31 To Date 1. Premiums and annuity considerations for life and accident and health contracts 559,441,745 (2,349,378,818) (2,356,561,164) 2. Considerations for supplementary contracts with life contingencies 7,584,154 8,999,366 18,072,999 3. Net investment income 318,715,384 334,708,754 741,589,817 4. Amortization of Interest Maintenance Reserve (IMR) 6,236 (1,827,001) (2,846,853) 5. Separate Accounts net gain from operations excluding unrealized gains or losses 6. Commissions and expense allowances on reinsurance ceded 76,142,337 3,076,571,154 3,325,320,041 7. Reserve adjustments on reinsurance ceded (38,965,098) (366,956,198) (404,556,569) 8. Miscellaneous Income: 8.1 Income from fees associated with investment management, administration and contract guarantees from Separate Accounts 62,937,403 63,727,689 127,237,767 8.2 Charges and fees for deposit-type contracts 588 642 13,041 8.3 Aggregate write-ins for miscellaneous income 14,135,724 13,319,766 26,103,267 9. Totals (Lines 1 to 8.3) 999,998,473 779,165,354 1,474,372,346 10. Death benefits 220,911,777 230,056,950 417,198,716 11. Matured endowments (excluding guaranteed annual pure endowments) 967,713 623,349 1,376,264 12. Annuity benefits 223,231,144 214,804,640 414,885,778 13. Disability benefits and benefits under accident and health contracts 2,064,870 2,490,801 4,483,828 14. Coupons, guaranteed annual pure endowments and similar benefits 15. Surrender benefits and withdrawals for life contracts 382,561,873 359,204,172 735,743,196 16. Group conversions 17. Interest and adjustments on contract or deposit-type contract funds 13,135,099 13,480,427 25,208,998 18. Payments on supplementary contracts with life contingencies 6,448,519 5,738,009 12,097,970 19. Increase in aggregate reserves for life and accident and health contracts 166,520,223 (36,206,812) (333,393,358) 20. Totals (Lines 10 to 19) 1,015,841,218 790,191,536 1,277,601,392 21. Commissions on premiums, annuity considerations, and deposit-type contract funds (direct business only) 36,246,575 58,013,598 97,876,609 22. Commissions and expense allowances on reinsurance assumed 90,643,143 53,472,662 462,810,482 23. General insurance expenses 69,484,550 99,949,902 166,609,429 24. Insurance taxes, licenses and fees, excluding federal income taxes 14,073,548 16,011,248 33,018,938 25. Increase in loading on deferred and uncollected premiums (26,590,140) 65,179,532 85,331,344 26. Net transfers to or (from) Separate Accounts net of reinsurance (315,016,773) (286,148,722) (575,783,873) 27. Aggregate write-ins for deductions (6,002,434) 4,198,033 (170,319) 28. Totals (Lines 20 to 27) 878,679,687 800,867,789 1,547,294,002 29. Net gain from operations before dividends to policyholders and federal income taxes (Line 9 minus Line 28) 121,318,786 (21,702,435) (72,921,656) 30. Dividends to policyholders 0 31. Net gain from operations after dividends to policyholders and before federal income taxes (Line 29 minus Line 30) 121,318,786 (21,702,435) (72,921,656) 32. Federal and foreign income taxes incurred (excluding tax on capital gains) 25,003,108 238,942,002 120,469,754 33. Net gain from operations after dividends to policyholders and federal income taxes and before realized capital gains or (losses) (Line 31 minus Line 32) 96,315,678 (260,644,437) (193,391,410) 34. Net realized capital gains (losses) (excluding gains (losses) transferred to the IMR) less capital gains tax of $ (5,326,303) (excluding taxes of $ 462,793 transferred to the IMR) (99,520) (12,472,760) (107,854,148) 35. Net income (Line 33 plus Line 34) 96,216,158 (273,117,197) (301,245,558) CAPITAL AND SURPLUS ACCOUNT 36. Capital and surplus, December 31, prior year 1,487,450,560 1,668,780,174 1,668,780,174 37. Net income (Line 35) 96,216,158 (273,117,197) (301,245,558) 38. Change in net unrealized capital gains (losses) less capital gains tax of $ 3,731,746 5,355,874 171,275,328 34,055,907 39. Change in net unrealized foreign exchange capital gain (loss) 40. Change in net deferred income tax 5,323,117 (215,171,657) (209,492,423) 41. Change in nonadmitted assets (12,897,511) 214,558,362 213,940,622 42. Change in liability for reinsurance in unauthorized and certified companies 296,346 59,743,570 59,664,521 43. Change in reserve on account of change in valuation basis, (increase) or decrease 0 44. Change in asset valuation reserve (1,400,483) (9,059,510) (10,898,899) 45. Change in treasury stock 0 46. Surplus (contributed to) withdrawn from Separate Accounts during period 47. Other changes in surplus in Separate Accounts Statement 48. Change in surplus notes 49. Cumulative effect of changes in accounting principles 50. Capital changes: 50.1 Paid in 50.2 Transferred from surplus (Stock Dividend) 50.3 Transferred to surplus 51. Surplus adjustment: 51.1 Paid in 0 (28,553,975) (28,553,975) 51.2 Transferred to capital (Stock Dividend) 51.3 Transferred from capital 51.4 Change in surplus as a result of reinsurance (18,544,625) 4,940,153 68,744,801 52. Dividends to stockholders 53. Aggregate write-ins for gains and losses in surplus 0 (7,544,610) (7,544,610) 54. Net change in capital and surplus for the year (Lines 37 through 53) 74,348,876 (82,929,536) (181,329,614) 55. Capital and surplus, as of statement date (Lines 36 + 54) 1,561,799,436 1,585,850,638 1,487,450,560 DETAILS OF WRITE-INS 08.301. Fund manager rebates 8,669,188 8,819,347 17,912,955 08.302. Miscellaneous income 5,466,536 4,500,419 8,190,312 08.303. 08.398. Summary of remaining write-ins for Line 8.3 from overflow page 0 0 0 08.399. Totals (Lines 08.301 through 08.303 plus 08.398) (Line 8.3 above) 14,135,724 13,319,766 26,103,267 2701. Interest expense on funds withheld 18,670,847 16,479,354 33,827,701 2702. IMR transfer (442,627) 16,310,612 16,283,105 2703. Modco adjustment on reinsurance assumed (24,230,654) (28,591,933) (50,281,125) 2798. Summary of remaining write-ins for Line 27 from overflow page 0 0 0 2799. Totals (Lines 2701 through 2703 plus 2798)(Line 27 above) (6,002,434) 4,198,033 (170,319) 5301. Reclassification of taxes between unassigned surplus and paid in capital 0 (7,544,610) (7,544,610) 5302. 5303. 5398. Summary of remaining write-ins for Line 53 from overflow page 0 0 0 5399. Totals (Lines 5301 through 5303 plus 5398)(Line 53 above) 0 (7,544,610) (7,544,610) 4
Cash from Operations CASH FLOW 1 Current Year To Date 2 Prior Year To Date 3 Prior Year Ended December 31 1. Premiums collected net of reinsurance 257,902,116 61,653,912 302,386,323 2. Net investment income 301,798,705 318,586,467 716,384,976 3. Miscellaneous income 90,706,329 412,412,423 105,594,260 4. Total (Lines 1 to 3) 650,407,150 792,652,802 1,124,365,559 5. Benefit and loss related payments 812,886,009 773,799,988 1,145,294,190 6. Net transfers to Separate Accounts, Segregated Accounts and Protected Cell Accounts (315,701,784) (281,368,886) (570,277,443) 7. Commissions, expenses paid and aggregate write-ins for deductions 124,608,010 198,410,672 324,123,929 8. Dividends paid to policyholders 6,005 6,291 10,405 9. Federal and foreign income taxes paid (recovered) net of $ tax on capital gains (losses) (14,935,933) (10,267,675) 127,711,982 10. Total (Lines 5 through 9) 606,862,307 680,580,390 1,026,863,063 11. Net cash from operations (Line 4 minus Line 10) 43,544,843 112,072,412 97,502,496 Cash from Investments 12. Proceeds from investments sold, matured or repaid: 12.1 Bonds 931,060,446 691,383,548 1,704,238,726 12.2 Stocks 4,068,114 234,546,112 309,069,732 12.3 Mortgage loans 67,944,479 120,721,042 215,828,355 12.4 Real estate 0 17,768,752 17,768,752 12.5 Other invested assets 3,532,184 3,500,310 10,135,208 12.6 Net gains or (losses) on cash, cash equivalents and short-term investments 0 0 12.7 Miscellaneous proceeds 156,873,234 25,722,542 6,694,868 12.8 Total investment proceeds (Lines 12.1 to 12.7) 1,163,478,457 1,093,642,306 2,263,735,641 13. Cost of investments acquired (long-term only): 13.1 Bonds 748,904,096 785,156,868 1,683,006,200 13.2 Stocks 11,959,338 52,542,487 117,548,494 13.3 Mortgage loans 171,889,849 120,400,000 167,102,371 13.4 Real estate 671,535 25,000 56,535 13.5 Other invested assets 44,010 1,386,207 1,450,705 13.6 Miscellaneous applications 5,169,769 44,563,717 128,403,184 13.7 Total investments acquired (Lines 13.1 to 13.6) 938,638,597 1,004,074,279 2,097,567,489 14. Net increase (or decrease) in contract loans and premium notes 3,067,809 41,720,645 30,908,876 15. Net cash from investments (Line 12.8 minus Line 13.7 and Line 14) 221,772,051 47,847,382 135,259,276 16. Cash provided (applied): Cash from Financing and Miscellaneous Sources 16.1 Surplus notes, capital notes 0 0 16.2 Capital and paid in surplus, less treasury stock 0 (28,553,975) (28,553,975) 16.3 Borrowed funds 0 0 16.4 Net deposits on deposit-type contracts and other insurance liabilities (95,861,358) (104,570,264) (213,437,220) 16.5 Dividends to stockholders 0 0 0 16.6 Other cash provided (applied) (53,410,474) 48,847,439 111,819,010 17. Net cash from financing and miscellaneous sources (Line 16.1 through Line 16.4 minus Line 16.5 plus Line 16.6) (149,271,832) (84,276,800) (130,172,185) RECONCILIATION OF CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS 18. Net change in cash, cash equivalents and short-term investments (Line 11, plus Lines 15 and 17) 116,045,062 75,642,993 102,589,587 19. Cash, cash equivalents and short-term investments: 19.1 Beginning of year 301,286,304 198,696,717 198,696,717 19.2 End of period (Line 18 plus Line 19.1) 417,331,366 274,339,710 301,286,304 Note: Supplemental disclosures of cash flow information for non-cash transactions: 20.0001. Securities exchanges bond proceeds (Line 12.1) (29,524,929) (37,985,672) (123,519,030) 20.0002. Securities exchanges bonds acquired (Line 13.1) (29,524,929) (37,985,672) (123,519,030) 20.0003. Tax sharing agreement transfer of taxes payable (Line 9) (4,285,101) (52,153,963) (3,915,323) 20.0004. Tax sharing agreement transfer of taxes payable (Line 12.2) (4,285,101) (52,153,963) (3,915,323) 20.0005. Interest capitalization (Line 2) (9,075,910) (11,064,964) (21,157,979) 20.0006. Interest capitalization (Line 13.1) (9,075,910) (11,064,964) (21,157,979) 20.0007. Reinsurance treaties non-cash transaction GLIC Term (Line 1) (64,459,927) 20.0008. Reinsurance treaties non-cash transaction GLIC Term (Line 7) 48,600,000 20.0009. Reinsurance treaties non-cash transaction GLIC Term (Line 13.1) (7,666,806) 20.0010. Reinsurance treaties non-cash transaction GLIC Term (Line 13.3) (8,193,121) 5
Note: Supplemental disclosures of cash flow information for non-cash transactions: 20.0011. Reinsurance treaties non-cash transaction GLIC UL (Line 1) (100,791,870) 20.0012. Reinsurance treaties non-cash transaction GLIC UL (Line 7) 4,900,000 20.0013. Reinsurance treaties non-cash transaction GLIC UL (Line 13.1) (79,789,704) 20.0014. Reinsurance treaties non-cash transaction GLIC UL (Line 13.3) (14,415,946) 20.0015. Reinsurance treaties non-cash transaction GLIC SPWL (Line 1) (134,258,373) 20.0016. Reinsurance treaties non-cash transaction GLIC SPWL (Line 7) 2,800,000 20.0017. Reinsurance treaties non-cash transaction GLIC SPWL (Line 13.1) (89,773,876) 20.0018. Reinsurance treaties non-cash transaction GLIC SPWL (Line 13.3) (26,077,973) 20.0019. Reinsurance treaties non-cash transaction GLIC SPWL (Line 14) 14,903,568 20.0020. Reinsurance treaties non-cash transaction (Line 1) 2,689,325,366 2,919,268,394 20.0021. Reinsurance treaties non-cash transaction (Line 3) (2,689,325,366) (2,919,268,394) 20.0022. Reinsurance treaties non-cash transaction UL Recapture (Line 1) (318,134,583) (318,134,583) 20.0023. Reinsurance treaties non-cash transaction UL Recapture (Line 5) 318,134,583 318,134,583 20.0024. Reinsurance treaties non-cash transaction TLC-UL Recapture (Line 3) (99,999,694) 20.0025. Reinsurance treaties non-cash transaction TLC-UL Recapture (Line 7) 376,065,501 20.0026. Transfer of bonds to Separate Accounts (Line 12.1) (8,265,316) 20.0027. Transfer of bonds from Separate Accounts (Line 13.1) 7,525,675 20.0028. Transfer of bonds to Separate Accounts (Line 16.6) (8,265,316) 20.0029. Transfer of bonds from Separate Accounts (Line 16.6) 7,525,675 20.0030. Transfer of bonds to affiliates (Line 12.1) (276,065,807) 20.0031. Transfer of bonds to affiliates (Line 12.3) (1,336,638) (1,336,638) 20.0032. Transfer of bonds to affiliates (Line 16.6) 1,336,638 1,336,638 5.1
EXHIBIT 1 DIRECT PREMIUMS AND DEPOSIT-TYPE CONTRACTS 1 Current Year To Date 2 Prior Year To Date 3 Prior Year Ended December 31 1. Industrial life 34,849 44,427 78,732 2. Ordinary life insurance 628,374,326 657,096,198 1,271,163,290 3. Ordinary individual annuities 16,192,608 120,248,996 136,396,473 4. Credit life (group and individual) 0 5. Group life insurance 1,056,415 1,325,511 3,352,865 6. Group annuities 825,689 1,001,128 2,154,283 7. A & H - group (102) 23,568 23,859 8. A & H - credit (group and individual) 0 9. A & H - other 25,391,647 25,099,207 51,078,735 10. Aggregate of all other lines of business 0 0 0 11. Subtotal 671,875,432 804,839,035 1,464,248,237 12. Deposit-type contracts 0 3,137,427 2,507,742 13. Total 671,875,432 807,976,462 1,466,755,979 DETAILS OF WRITE-INS 1001. 1002. 1003. 1098. Summary of remaining write-ins for Line 10 from overflow page 0 0 0 1099. Totals (Lines 1001 through 1003 plus 1098)(Line 10 above) 0 0 0 6
STATEMENT AS OF JUNE 30, 2017 OF THE GENWORTH LIFE AND ANNUITY INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS Note# Description Page # 1 Summary of Significant Accounting Policies and Going Concern... 2 Accounting Changes and Corrections of Errors... 3 Business Combinations and Goodwill... 4 Discontinued Operations... 5 Investments... 6 Joint Ventures, Partnerships and Limited Liability Companies... 7 Investment Income... 8 Derivative Instruments... 9 Income Taxes... 10 Information Concerning Parent, Subsidiaries, Affiliates and Other Related Parties... 11 Debt... 12 Retirement Plans, Deferred Compensation, Postemployment Benefits and Compensated Absences and Other Postretirement Benefit Plans... 13 Capital and Surplus, Shareholders Dividend Restrictions and Quasi-Reorganizations... 14 Liabilities, Contingencies and Assessments... 15 Leases... 16 Information About Financial Instruments With Off-Balance Sheet Risk And Financial Instruments With Concentrations of Credit Risk... 17 Sale, Transfer and Servicing of Financial Assets and Extinguishments of Liabilities... 18 Gain or Loss to the Reporting Entity from Uninsured Plans and the Uninsured Portion of Partially Insured Plans... 19 Direct Premium Written/Produced by Managing General Agents/Third Party Administrators... 20 Fair Value Measurements... 21 Other Items... 22 Events Subsequent... 23 Reinsurance... 24 Retrospectively Rated Contracts & Contracts Subject to Redetermination... 25 Change in Incurred Losses and Loss Adjustment Expenses... 26 Intercompany Pooling Arrangements... 27 Structured Settlements... 28 Health Care Receivables... 29 Participating Policies... 30 Premium Deficiency Reserves... 31 Reserves for Life Contracts and Annuity Contracts... 32 Analysis of Annuity Actuarial Reserves and Deposit Type Liabilities by Withdrawal Characteristics... 33 Premiums and Annuity Considerations Deferred and Uncollected... 34 Separate Accounts... 35 Loss/Claim Adjustment Expenses... 7. 11 7. 1 7. 1 7. 1 7. 1 7. 1 7. 2 7. 2 7. 2 7. 2 7. 2 7. 3 7. 4 7. 4 7. 4 7. 5 7. 5 7. 5 7. 5 7. 5 7. 5 7. 9 7. 9 7. 10 7. 10 7. 10 7. 10 7. 10 7. 10 7. 10 7. 10 7. 10 7. 10 7. 10 7. 10 7
STATEMENT AS OF JUNE 30, 2017 OF THE GENWORTH LIFE AND ANNUITY INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS Note 1 - Summary of Significant Accounting Policies and Going Concern A. Accounting Practices The accompanying statutory financial statements of Genworth Life and Annuity Insurance Company (the Company ) have been prepared on the basis of accounting practices prescribed or permitted by the Bureau of Insurance of the Commonwealth of Virginia (the "Virginia Bureau"). The Virginia Bureau requires insurance companies domiciled in the state to prepare their statutory financial statements in accordance with the National Association of Insurance Commissioners ( NAIC ) Accounting Practices and Procedures Manual ( NAIC SAP ) subject to any deviations prescribed or permitted by the Virginia Bureau. A reconciliation of the Company s net income (loss) and capital and surplus between NAIC SAP and practices prescribed or permitted by the Virginia Bureau is shown below: NET INCOME (LOSS) (1) Company state basis (Page 4, Line 35, Columns 1&2) (2) State Prescribed Practices that increase/(decrease) NAIC SAP: (3) State Permitted Practices that increase/(decrease) NAIC SAP: (4) NAIC SAP (1-2-3=4) SURPLUS (5) Company state basis (Page 3, Line 38, Columns 1&2) (6) State Prescribed Practices that increase/(decrease) NAIC SAP: (7) State Permitted Practices that increase/(decrease) NAIC SAP: (8) NAIC SAP (5-6-7=8) SSAP # F/S Page F/S Line # June 30, 2017 December 31, 2016 XXX XXX XXX $ 96,216,158 $ (301,245,558) XXX XXX XXX $ 96,216,158 $ (301,245,558) XXX XXX XXX $1,561,799,436 $ 1,487,450,560 XXX XXX XXX $1,561,799,436 $ 1,487,450,560 C. Accounting Policy (6) Loan-backed bonds and structured securities ( LBaSS ) other than non-agency residential mortgage-backed securities are stated at amortized cost using the scientific method except where the NAIC designation has fallen to 6 and the fair value has fallen below amortized cost, in which case they are carried at fair value. Amortization of LBaSS is based on prepayment assumptions that are updated at least annually. Significant changes of estimated cash flows from original purchase assumptions are accounted for using the retrospective adjustment method for all such securities except for securities for which the Company recorded other-than-temporary impairment ( OTTI ) charges. In such instances, the prospective method is used. D. Going Concern As of June 30, 2017, the Company's management has not raised any doubts about the entity's ability to continue as a going concern. Note 2 - Accounting Changes and Corrections of Errors No significant change. Note 3 - Business Combinations and Goodwill No significant change. Note 4 - Discontinued Operations No significant change. Note 5 - Investments D. Loan-Backed Securities (1) Prepayment assumptions for mortgage-backed/asset-backed structured securities were obtained from third-party providers, broker dealer research reports or internal estimates. (2) The Company had no loaned-backed securities with recognized OTTI where the Company had the intent to sell or does not have the intent and ability to retain the investment for a period of time sufficient to recover the amortized cost basis as of June 30, 2017. (3) The Company had no loan-backed securities which recognized OTTI as of June 30, 2017. 7. 1
STATEMENT AS OF JUNE 30, 2017 OF THE GENWORTH LIFE AND ANNUITY INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS (4) All impaired securities (fair value is less than cost or amortized cost) for which an OTTI has not been recognized in earnings as a realized loss (including securities with a recognized OTTI for non-interest related declines when a nonrecognized interest related impairment remains) as of June 30, 2017: a. The aggregate amount of unrealized losses: 1. Less than 12 months $ 9,775,659 2. 12 months or longer 1,854,599 b. The aggregate related fair value of securities with unrealized losses: 1. Less than 12 months $ 435,526,066 2. 12 months or longer 66,975,741 (5) The Company regularly evaluates securities in an unrealized loss position for OTTI. For debt securities, the Company considers all available information relevant to the collectability of the security, including information about past events, current conditions, and reasonable and supportable forecasts, when developing the estimate of cash flows expected to be collected. More specifically for mortgage-backed and asset-backed securities, the Company also utilizes performance indicators of the underlying assets including defaults or delinquency rates, loans to collateral value ratio, third-party credit enhancements, current levels of subordination, vintage and other relevant characteristics of the security or underlying assets to develop the Company s estimate of cash flows. Estimating the cash flows expected to be collected is a quantitative and qualitative process that incorporates information received from third-party sources along with certain internal assumptions and judgments regarding the future performance of the underlying collateral. Where possible, this data is benchmarked against third-party sources. E. Repurchase Agreements and/or Securities Lending Transactions (3) Collateral received as of June 30, 2017: b. The fair value of that collateral and of the portion of that collateral that it has sold or repledged. $ 43,053,668 Collateral received as of December 31, 2016: b. The fair value of that collateral and of the portion of that collateral that it has sold or repledged. $ 89,056,030 I. Working Capital Finance Investments The Company does not have any working capital finance investments as of June 30, 2017. J. Offsetting and Netting of Assets and Liabilities The Company did not have any derivatives, repurchase and reverse repurchase, and securities borrowing and securities lending assets and liabilities that were offset and reported net during the reporting period. Note 6 - Joint Ventures, Partnerships and Limited Liability Companies No significant change. Note 7 - Investment Income No significant change. Note 8 - Derivative Instruments No significant change. Note 9 - Income Taxes The Company has special tax agreements with its subsidiaries, River Lake Insurance Company VII ("RLIC VII") and River Lake Insurance Company VIII ("RLIC VIII"). The agreements obligate the Company to receive or make payments on behalf of RLIC VII and RLIC VIII for Federal income tax amounts receivable or payable by RLIC VII and RLIC VIII under a separate Tax Allocation Agreement. The Company accounts for these payments as additional investment in common stock of affiliates. As of June 30, 2017, the Company has recorded a tax receivable and decrease in investment in common stock of affiliates of $1,742,886 and $2,542,215 for RLIC VII and RLIC VIII, respectively. Note 10 - Information Concerning Parent, Subsidiaries, Affiliates and Other Related Parties In April 2017, the Company received bonds and mortgage loans from Genworth Life Insurance Company ("GLIC") under various reinsurance transactions discussed in Note 23. On June 26, 2017, one security with a book value of $7,084,550 and accrued interest of $1,244 was sold by the Company to Genworth Mortgage Insurance Corporation in exchange for cash. 7. 2
STATEMENT AS OF JUNE 30, 2017 OF THE GENWORTH LIFE AND ANNUITY INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS Note 11 - Debt B. Federal Home Loan Bank ("FHLB") Agreements (1) The Company is a member of FHLB Atlanta. Through its membership, the Company has periodically issued funding agreements to FHLB Atlanta. There were no outstanding liabilities as of June 30, 2017 or December 31, 2016. When active, the Company uses these funds for asset-liability management in an investment spread strategy, consistent with its other investment spread programs. The Company records the funds under Statements of Statutory Accounting Principles ("SSAP") No. 52, Deposit Type Contracts, consistent with its accounting for other deposit type contracts. It is not part of the Company s strategy to utilize these funds for operations, and any funds obtained from the FHLB Atlanta for use in general operations would be accounted for under SSAP No. 15, Debt and Holding Company Obligations, as borrowed money. The Company has Letters of Credit ("LoCs") with FHLB Atlanta in the amount of $28,214,806, none of which has been drawn upon as of June 30, 2017. The table below indicates the amount of FHLB Atlanta stock purchased, collateral pledged, assets and liabilities related to the agreement with FHLB Atlanta as of June 30, 2017 and December 31, 2016. The Company s borrowing capacity, including issuance of LoCs, is subject to a broad regulatory restriction that limits an insurer from pledging more than 7.0% of its net admitted assets. (2) The tables below indicate the amount of FHLB Atlanta stock purchased, collateral pledged, assets and liabilities related to the agreement with FHLB Atlanta as of June 30, 2017 and December 31, 2016. FHLB Capital Stock a. Aggregate totals 1. As of June 30, 2017: 1 Total (2+3) 2 General account 3 Separate account (a) Membership stock Class A $ $ $ (b) Membership stock Class B 15,000,000 15,000,000 (c) Activity stock (d) Excess stock (e) Aggregate total (a+b+c+d) 15,000,000 15,000,000 (f) Actual or estimated borrowing capacity as determined by the insurer 1,000,000,000 XXX XXX 2. As of December 31, 2016: 1 Total (2+3) 2 General account 3 Separate account (a) Membership stock Class A $ $ $ (b) Membership stock Class B 15,000,000 15,000,000 (c) Activity stock (d) Excess stock (e) Aggregate total (a+b+c+d) 15,000,000 15,000,000 (f) Actual or estimated borrowing capacity as determined by the insurer 1,000,000,000 XXX XXX b. Membership stock (Class A and B) eligible and not eligible for redemption as of June 30, 2017: Eligible for redemption Membership stock 1 Current year total (2+3+4+5+6) 2 Not eligible for redemption 3 Less than 6 months 4 6 months to less than 1 year 5 1 to less than 3 years 6 3 to 5 years 1. Class A $ $ $ $ $ $ 2. Class B 15,000,000 15,000,000 7. 3
STATEMENT AS OF JUNE 30, 2017 OF THE GENWORTH LIFE AND ANNUITY INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS (3) Collateral Pledged to FHLB a. Amount pledged as of June 30, 2017 and December 31, 2016: Fair value Carrying value Aggregate total borrowing 1.Current year total general and separate accounts total collateral pledged (Lines 2+3) $ 47,235,097 $ 35,650,959 $ 2. Current year general account total collateral pledged 47,235,097 35,650,959 3. Current year separate accounts total collateral pledged 4. Prior year-end year total general and separate accounts total collateral pledged 45,142,534 35,412,667 b. Maximum amount pledged during reporting period ending June 30, 2017 and December 31, 2016: Fair value Carrying value Amount borrowed at time of maximum collateral 1. Current year total general and separate accounts maximum collateral pledged (Lines 2+3) $ 47,235,097 $ 35,650,959 $ 2. Current year general account maximum collateral pledged 47,235,097 35,650,959 3. Current year separate accounts maximum collateral pledged 4. Prior year-end year total general and separate accounts maximum collateral pledged 646,630,982 566,395,374 (4) The Company does not have any outstanding borrowings as of June 30, 2017. Note 12 - Retirement Plans, Deferred Compensation, Postemployment Benefits and Compensated Absences and Other Postretirement Benefit Plans The Company has no employees, however, it is allocated costs for services provided by employees of affiliated companies. A. Defined Benefit Plan The Company does not have any employees. Note 13 - Capital and Surplus, Shareholders Dividend Restrictions and Quasi-Reorganizations No significant change. Note 14 - Liabilities, Contingencies and Assessments F. All Other Contingencies In April 2017, the Company was named as a defendant in a putative class action lawsuit captioned Avazian, et al v. Genworth Life and Annuity Insurance Company, et al, in the United States District Court for the Central District of California. Plaintiff alleges breach of contract and breach of the covenant of good faith and fair dealing based upon the Company's termination of plaintiff's life insurance policy for nonpayment of premium. Plaintiff alleges that the termination for nonpayment of premium failed to comply with certain notice requirements of the California Insurance Code and seeks certification as a California class action on behalf of all insureds and beneficiaries of life insurance policies issued or delivered by the Company in California before January 1, 2013 who lost either their coverage or their ability to make a claim because of the termination of their policies by the Company for nonpayment of premium, and further seeks unspecified damages, prejudgment and post-judgment and post-judgment interest, punitive damages, fees, costs and such other relief as the court deems just and proper. On June 23, 2017, the Company filed a motion to dismiss the complaint. See Note 22 for additional information. 7. 4
STATEMENT AS OF JUNE 30, 2017 OF THE GENWORTH LIFE AND ANNUITY INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS Note 15 - Leases No significant change. Note 16 - Information About Financial Instruments With Off-Balance Sheet Risk And Financial Instruments With Concentrations of Credit Risk No significant change. Note 17 - Sale, Transfer and Servicing of Financial Assets and Extinguishments of Liabilities B. Transfer and Servicing of Financial Assets (2) The Company does not have any servicing assets or liabilities. (4) The Company did not have any securitizations, asset-based financing arrangements or similar transfers during the reporting period. C. Wash Sales The Company did not have any wash sales in the statement period. Note 18 - Gain or Loss to the Reporting Entity from Uninsured Plans and the Uninsured Portion of Partially Insured Plans No significant change. Note 19 - Direct Premium Written/Produced by Managing General Agents/Third Party Administrators No significant change. Note 20 - Fair Value Measurements All assets and liabilities carried at fair value are classified and disclosed in one of the following three categories: Level 1 Quoted prices for identical instruments in active markets. Level 2 Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 Instruments whose significant value drivers are unobservable. Refer to No. 4 below for discussion of valuation techniques. A. Fair Value Classifications (1) The following table sets forth the Company s assets and liabilities that were measured at fair value as of June 30, 2017: Description for each class of asset or liability Level 1 Level 2 Level 3 Total a. Assets at fair value Common stocks Industrial and miscellaneous $ $ $ 15,000,000 $ 15,000,000 Total common stocks 15,000,000 15,000,000 Derivative assets Equity index options 80,787,922 80,787,922 Interest rate swaps 101,981 101,981 Credit default swaps 35,018 35,018 Total derivatives 136,999 80,787,922 80,924,921 Separate account assets 6,691,969,196 41,675,566 4,633,366 6,738,278,128 Total assets at fair value $ 6,691,969,196 $ 41,812,565 $ 100,421,288 $ 6,834,203,049 b. Liabilities at fair value Derivative liabilities Equity index options $ $ $ 11,411 $ 11,411 Equity return swaps 6,633,577 6,633,577 Total derivative liabilities 6,633,577 11,411 6,644,988 Total liabilities at fair value $ $ 6,633,577 $ 11,411 $ 6,644,988 7. 5
STATEMENT AS OF JUNE 30, 2017 OF THE GENWORTH LIFE AND ANNUITY INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS The following table sets forth the Company s assets and liabilities that were measured at fair value as of December 31, 2016: Description for each class of asset or liability Level 1 Level 2 Level 3 Total a. Assets at fair value Bonds Commercial Mortgage-Backed $ $ 164,577 $ $ 164,577 Total Bonds 164,577 164,577 Common stocks Industrial and miscellaneous 15,000,000 15,000,000 Total common stocks 15,000,000 15,000,000 Derivative assets Equity index options 71,959,074 71,959,074 Interest rate swaps 176,608 176,608 Credit default swaps 58,057 58,057 Total derivatives 234,665 71,959,074 72,193,739 Separate account assets 6,712,359,610 43,330,781 5,050,882 6,760,741,273 Total assets at fair value $ 6,712,359,610 $ 43,730,023 $ 92,009,956 $ 6,848,099,589 b. Liabilities at fair value Derivative liabilities Equity index options $ $ $ 14,262 $ 14,262 Equity return swaps 1,137,697 1,137,697 Total derivative liabilities 1,137,697 14,262 1,151,959 Total liabilities at fair value $ $ 1,137,697 $ 14,262 $ 1,151,959 (2) Level 3 Classifications The following table presents additional information about assets and liabilities measured at fair value for which the Company has utilized significant unobservable (Level 3) inputs to determine fair value as of June 30, 2017: Description a. Assets: Beginning balance as of April 1, 2017 Transfers into Level 3 Transfers out of Level 3 Total gains and (losses) included in net income (loss) Total gains and (losses) included in surplus Purchases Issuances Sales Settlements Ending balance as of June 30, 2017 Common stocks $ 15,000,000 $ $ $ $ $ $ $ $ $ 15,000,000 Derivatives 76,857,087 9,583,539 3,008,419 9,051,859 (17,712,982) 80,787,922 Separate account assets 4,839,853 56,351 (262,838) 4,633,366 Total Assets $ 96,696,940 $ $ $ 9,583,539 $ 3,064,770 $ 9,051,859 $ $ (17,712,982) $ (262,838) $ 100,421,288 b. Liabilities: Derivatives $ 12,416 $ $ $ $ (1,005) $ $ 11,411 Total Liabilities $ 12,416 $ $ $ $ (1,005) $ $ $ $ $ 11,411 The following table presents additional information about assets and liabilities measured at fair value for which the Company has utilized significant unobservable (Level 3) inputs to determine fair value as of December 31, 2016: Description a. Assets: Beginning balance as of January 1, 2016 Transfers into Level 3(a) Transfers out of Level 3(b) Total gains and (losses) included in net income (loss) Total gains and (losses) included in surplus Purchases Issuances Sales Settlements Ending balance as of December 31, 2016 Loan-backed and structured securities (NAIC 3-6) $ $ 170,361 $ (170,361) $ $ $ $ $ $ $ Derivatives 28,277,391 (3,162,470) 15,333,330 74,232,422 (43,638,610) 917,011 71,959,074 Preferred and common stocks 15,000,000 15,000,000 Separate account assets 6,017,345 (139,641) (826,822) 5,050,882 Total Assets $ 49,294,736 $ 170,361 $ (170,361) $ (3,162,470) $ 15,193,689 $ 74,232,422 $ $ (43,638,610) $ 90,189 $ 92,009,956 b. Liabilities: Derivatives $ 337,958 $ $ $ 249,484 $ (509,349) $ (74,283) $ 10,452 $ $ $ 14,262 Total Liabilities $ 337,958 $ $ $ 249,484 $ (509,349) $ (74,283) $ 10,452 $ $ $ 14,262 (a) Transferred from Level 2 to Level 3 because of lack of observable market data due to decrease in market activity for these securities or movement from amortized cost reporting to fair value. (b) Transferred from Level 3 to Level 2 because of observable market data became available for these securities or movement from fair value reporting to amortized cost. 7. 6
STATEMENT AS OF JUNE 30, 2017 OF THE GENWORTH LIFE AND ANNUITY INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS Realized and unrealized gains (losses) on Level 3 assets and liabilities are primarily reported in either net income (loss) or change in net unrealized capital gains (losses) based on the appropriate accounting treatment for the instrument. Purchases, sales, issuances and settlements represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and settlements of derivative instruments. There were no gains or losses for the year included in net income (loss) attributable to unrealized gains (losses) related to assets still held as of the reporting date. (3) Transfers Between Levels The Company reviews the fair value hierarchy classifications each reporting period. Changes in the observability of the valuation attributes may result in a reclassification of certain financial assets or liabilities. Such reclassifications are reported as transfers in and out of Level 3 at the beginning fair value for the reporting period. (4) Valuation Techniques and Inputs The vast majority of long-term bonds use Level 2 inputs for the determination of fair value. These fair values are obtained primarily from industry-standard pricing methodologies based on market observable information. Certain structured securities valued using industry-standard pricing methodologies utilize significant unobservable inputs to estimate fair value, resulting in the fair value measurements being classified as Level 3. The Company also utilizes internally developed pricing models to produce estimates of fair value primarily utilizing Level 2 inputs along with certain Level 3 inputs. The internally developed models include matrix pricing where the Company discounts expected cash flows utilizing market interest rates obtained from market sources based on the credit quality and duration of the instrument to determine fair value. For securities that may not be reliably priced using internally developed pricing models, fair value is estimated using indicative market prices. These prices are indicative of an exit price, but the assumptions used to establish the fair value may not be observable, or corroborated by market observable information, and represent Level 3 inputs. The valuation of interest rate swaps is determined using an income approach. The primary input into the valuation represents the forward interest rate swap curve, which is generally considered an observable input, and results in the derivative being classified as Level 2. For certain interest rate swaps, the inputs into the valuation also include the total returns of certain bonds that would primarily be considered an observable input and result in the derivative being classified as Level 2. For certain other swaps, there are features that provide an option to the counterparty to terminate the swap at specified dates and would be considered a significant unobservable input and results in the fair value measurement of the derivative being classified as Level 3. For single name credit default swaps, an income approach is used to determine fair value based on using current market information for the credit spreads of the reference entity, which is considered observable inputs based on the reference entities of derivatives and results in these derivatives being classified as Level 2. The valuation of equity index options is determined using an income approach. The primary inputs into the valuation represent forward interest rate volatility and time value component associated with the optionality in the derivative, which are considered significant unobservable inputs in most instances. The equity index volatility surface is determined based on market information that is not readily observable and is developed based upon inputs received from several third-party sources. Accordingly, these options are classified as Level 3. The valuation of equity return swaps is determined using an income approach. The primary inputs into the valuation represent the forward interest rate swap curve and underlying equity index values, which are generally considered observable inputs, and results in the derivative being classified as Level 2. The fair value of the majority of separate account assets is based on the quoted prices of the underlying fund investments and, therefore represents Level 1 pricing. The remaining separate account assets represent Level 2 and 3 pricing, as defined above. 7. 7
STATEMENT AS OF JUNE 30, 2017 OF THE GENWORTH LIFE AND ANNUITY INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS C. Aggregate Fair Value of All Financial Instruments The following table sets forth the Company s financial instruments fair values, admitted amounts and level of fair value amounts as of June 30, 2017: Type of financial instrument Aggregate fair value Admitted assets Level 1 Level 2 Level 3 Not practicable (Carrying value) Bonds $ 12,139,637,091 $ 11,289,197,194 $ $ 10,988,263,641 $1,151,373,450 $ Preferred and common stocks 64,736,036 61,453,970 32,746,500 16,104,440 15,885,096 Separate account assets 6,738,278,128 6,738,278,128 6,691,969,196 41,675,566 4,633,366 Mortgage loans 1,850,982,823 1,775,120,089 1,850,982,823 Short-term investments 489,792,196 489,792,196 489,792,196 Other invested assets 52,927,475 42,437,917 52,927,475 Reinvested securities lending collateral 43,053,668 43,053,668 43,053,668 Derivative assets 80,924,921 80,924,921 136,998 80,787,922 Derivative liabilities 6,644,987 6,633,577 11,411 The following table sets forth the Company s financial instruments fair values, admitted amounts and level of fair value amounts as of December 31, 2016: Type of financial instrument Aggregate fair value Admitted assets Level 1 Level 2 Level 3 Not practicable (Carrying value) Bonds $ 11,855,156,209 $ 11,290,522,425 $ $ 10,706,526,945 $1,148,629,264 $ Preferred and common stocks 53,320,396 51,569,859 30,137,275 7,361,254 15,821,867 Separate account assets 6,760,741,273 6,760,741,272 6,712,359,610 43,330,781 5,050,882 Mortgage loans 1,649,238,609 1,622,626,506 1,649,238,609 Short-term investments 366,699,280 366,699,280 366,699,280 Other invested assets 50,504,023 42,454,381 50,504,023 Reinvested securities lending collateral 89,056,030 89,056,030 89,056,030 Derivative assets 72,193,739 72,193,739 234,665 71,959,074 Derivative liabilities 1,151,959 1,137,697 14,262 D. There were no financial instruments for which it was not practicable to estimate fair value. 7. 8