MONY GROUP INC, 10-K405, 2000-03-28

MONY GROUP INC
10-K405, 2000-03-28
LIFE INSURANCE

Previous: ECKLAN CORP, 10KSB, 2000-03-28

Next: ONEIDA FINANCIAL CORP, 10-K, 2000-03-28

<PAGE> 1

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------------

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER: 1-14603

THE MONY GROUP INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C>
DELAWARE 13-3976138
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>

1740 BROADWAY
NEW YORK, NEW YORK 10019
(212) 708-2000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

<TABLE>
<S> <C>
COMMON STOCK, PAR VALUE $0.01 PER SHARE NEW YORK STOCK EXCHANGE
(TITLE OF CLASS) (NAME OF EACH EXCHANGE ON
WHICH REGISTERED)
</TABLE>

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

8.35% SENIOR NOTES, DUE 2010

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

As of March 13, 2000 there were outstanding 46,996,528 shares of Common
Stock, $0.01 par value per share, of the Registrant. The aggregate market value
of the shares of Common Stock held by non-affiliates of the Registrant was
approximately $1.3 billion, based on the closing price of $27.0625 per share on
March 13, 2000.

DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Registrant's Proxy
Statement dated March 30, 2000 for the 2000 Annual Meeting of Shareholders are
incorporated by reference into Part III of this Form 10-K.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
ITEM DESCRIPTION PAGE
---- ----------- ----
<S> <C> <C> <C>
PART I 1 Business of the MONY Group Inc. ............................ 3
1A Executive Officers.......................................... 18
2 Properties.................................................. 19
3 Legal Proceedings........................................... 20
4 Submission of Matters to a Vote of Security Holders......... 20
PART II 5 Market for the Registrant's Common Equity and Related
Stockholder Matters......................................... 21
6 Selected Consolidated Financial Information................. 22
7 Management's Discussion and Analysis of Financial Condition
and Results of Operation.................................... 24
7A Quantitative and Qualitative Disclosures About Market
Risk........................................................ 59
8 Financial Statements and Supplementary Data................. 61
9 Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure.................................... 61
PART III 10 Directors and Executive Officers of the Registrant.......... 62
11 Executive Compensation...................................... 62
12 Security Ownership of Certain Beneficial Owners and
Management.................................................. 62
13 Certain Relationships and Related Transactions.............. 62
PART IV 14 Exhibits, Financial Statement Schedules, and Reports on Form
8-K......................................................... 62
Index to Consolidated Financial Statements.................. F-1
Exhibits Index.............................................. E-1
Signatures.................................................. S-1
</TABLE>

1
<PAGE> 3

FORWARD-LOOKING STATEMENTS

The Company's management has made in this report, and from time to time may
make in its public filings and press releases as well as in oral presentations
and discussions, forward-looking statements concerning the Company's operations,
economic performance and financial condition. Forward-looking statements
include, among other things, discussions concerning the Company's potential
exposure to market risks, as well as statements expressing management's
expectations, beliefs, estimates, forecasts, projections and assumptions, as
indicated by words such as "believes," "estimates," "intends," "anticipates,"
"expects," "projects," "should," "probably," "risk," "target," "goals,"
"objectives," or similar expressions. The Company claims the protection afforded
by the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995, and assumes no duty to update any
forward-looking statement. Forward-looking statements are subject to risks and
uncertainties. Actual results could differ materially from those anticipated by
forward-looking statements due to a number of important factors including those
discussed elsewhere in this report and in the Company's other public filings,
press releases, oral presentations and discussions and the following: (i) losses
with respect to the Company's equity real estate, and the success of the
Company's continuing process of selectively selling its equity real estate; (ii)
the success of the recently implemented "tiering" of the Company's career agency
sales force, and the ability to attract and retain productive agents; (iii) the
success of the restructuring of agent compensation; (iv) The Company's ability
to control operating expenses; (v) the outcome of pending litigation; (vi)
deterioration in the experience of the Closed Block established in connection
with the Demutualization; (vii) the performance of the financial markets; (viii)
the intensity of competition for other financial institutions; (ix) the
Company's mortality, morbidity, persistency and claims experience; (x) the
Company's ability to develop, distribute and administer competitive products and
services in a timely, cost-effective manner; (xi) the Company's financial and
claims paying ratings; (xii) the effect of changes in laws and regulations
affecting the Company's businesses, including changes in tax laws affecting
insurance and annuity products; (xiii) market risks related to interest rates,
equity prices, derivatives, foreign currency exchange and credit; and (xiv) the
ability of the Company to identify and consummate on successful terms any future
acquisitions, and to successfully integrate acquired businesses with minimal
disruption.

2
<PAGE> 4

All financial data in Part I and Part II (except Item 7A of Part II) is
presented on a combined basis as explained in Management's Discussion and
Analysis of Financial Condition and Results of Operations unless otherwise
indicated.

PART I

ITEM 1. BUSINESS OF THE MONY GROUP INC.

ORGANIZATION AND BUSINESS

The MONY Group Inc. (the "MONY Group" or the "Holding Company") is the
parent holding company of MONY Life Insurance Company (formerly, The Mutual Life
Insurance Company of New York). On November 16, 1998, pursuant to a Plan of
Reorganization (the "Plan") approved by the New York Superintendent of
Insurance, The Mutual Life Insurance Company of New York ("MONY") converted from
a mutual life insurance company to a stock life insurance company (the
"Demutualization") and became a wholly owned subsidiary of the MONY Group, which
was organized on June 24, 1997 for the purpose of becoming the parent holding
company of MONY. The MONY Group has no other operations or subsidiaries. Also,
on November 16, 1998, MONY changed its name to MONY Life Insurance Company (MONY
Life Insurance Company and its subsidiaries are hereafter collectively referred
to as "MONY Life") and the MONY Group consummated an initial public offering
(the "Offerings") of approximately 12.9 million shares of its common stock. The
shares of common stock issued in the Offerings are in addition to approximately
34.3 million shares of common stock of the MONY Group distributed pursuant to
the Plan to certain eligible policyholders of MONY in exchange for their
ownership interests in MONY.

On December 31, 1998, MONY Life acquired 100% of Sagamore Financial
Corporation, the parent company of U.S. Financial Life Insurance Company ("U.S.
Financial") for a purchase price of $48.0 million. U.S. Financial is a
special-risk carrier based in Ohio, which distributes its products in 41 states
through brokerage general agencies.

The MONY Group, through MONY Life and its subsidiaries (hereafter
collectively referred to as the "Company"), is primarily engaged in the business
of providing a wide range of life insurance, annuity, and investment products to
higher income individuals, particularly family builders, pre-retirees, and small
business owners. The Company primarily distributes its products through its
career agency sales force and various complementary distribution channels. These
include sales of mutual funds sold by Enterprise Capital Management through
third-party broker dealers, sales of certain protection products through
brokerage general agencies, sales of corporate-owned life insurance ("COLI")
products by the Company's corporate marketing team and sales of a variety of
financial products and services through the Company's Trusted Advisors
subsidiary. The Company principally sells its products in all 50 of the United
States, the District of Columbia, the U.S. Virgin Islands, Guam and the
Commonwealth of Puerto Rico and currently insures or provides other financial
services to more than one million people.

For management and reporting purposes, the Company's business is organized
in two principal operating segments, the "Protection Products" segment and the
"Accumulation Products" segment. Substantially all of the Company's other
business activities are combined in the "Other Products" segment. In its
Protection Products segment, the Company offers a wide range of life insurance
products, including whole life, term life, universal life, variable universal
life, corporate-owned life insurance, last survivor variable life, group
universal life and special-risk protection products. The Protection Products
segment also includes in-force business from last survivor universal life and
last survivor whole life. Also included in the Protection Products segment are
the: (i) assets and liabilities transferred pursuant to the Group Pension
Transaction, as well as the Group Pension Profits, (ii) the Closed Block assets
and liabilities, as well as the Contribution from the Closed Block, and (iii)
the Company's disability income insurance business which was transferred in the
DI Transaction. In its Accumulation Products segment, the Company offers
primarily flexible payment variable annuities and proprietary retail mutual
funds. The Accumulation products segment also includes in-force business from
single premium deferred annuities and immediate annuities. The Company's Other
Products segment primarily consists of a securities broker-dealer operation, an
insurance brokerage operation and certain lines of business no longer written by
the Company (the "Run-Off Businesses") (See "Information About Business
Segments"). In addition to selling the Company's proprietary investment
products, the securities broker-dealer operation provides customers of the
Company's protection and accumulation products access to other non-proprietary
investment products (including stocks, bonds, limited partnership interests,
tax-exempt unit investment trusts and other investment securities). The
insurance brokerage operation provides the Company's career agency sales force
with access to life, annuity, small group health and specialty insurance
products written by other carriers to meet the insurance and investment needs of
its customers.

For an explanation of the Group Pension Transaction and the Group Pension
Profits see Note 10 to the Consolidated Financial Statements. For an explanation
of the Closed Block and the Contribution from the Closed Block see Note 3 to the
Consolidated Financial Statements. For an explanation of the DI Transaction see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- DI Transaction".

The Company had total consolidated assets and equity at December 31, 1999
of approximately $24.8 billion and $1.8 billion, respectively. Of the Company's
total consolidated assets at such date, $7.1 billion represented assets held in
the

3
<PAGE> 5

Company's general account, $5.1 billion represented assets transferred pursuant
to the Group Pension Transaction, $6.2 billion represented assets allocated to
the Closed Block, and $6.4 billion represented assets held in the Company's
separate accounts, for which the Company does not generally bear investment risk
(see "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Notes 3, 10 and 20 to the Consolidated Financial Statements).

Total revenues reported in the Company's Consolidated Financial Statements
for the year ended December 31, 1999 and 1998 were $1,245.6 million and $1,856.2
million, respectively. Revenues reported for such periods by the Company's
Protection Products, Accumulation Products and Other Products segments (which
amounts are presented before unallocated amounts and non-recurring items -- see
Note 5 to the Consolidated Financial Statements) were $772.4 million, $301.7
million and $164.4 million, respectively, for the year ended December 31, 1999
and $1,429.4 million, $275.8 million and $143.1 million, respectively, for the
year ended December 31, 1998.

Consolidated income before income taxes and extraordinary item reported in
the Company's Consolidated Financial Statements for the year ended December 31,
1999 and 1998 was $382.6 million and $294.2 million, respectively. Consolidated
pre-tax earnings reported by the Company's aforementioned operating segments for
such periods (which amounts are presented before unallocated amounts and pre-tax
non-recurring items -- see Note 5 to the Consolidated Financial Statements) were
$315.0 million, $89.6 million and $35.8 million, respectively, for the year
ended December 31, 1999 and $193.7 million, $80.5 million and $20.0 million,
respectively, for the year ended December 31, 1998.

The following chart sets forth the Company's life insurance and annuities
in force for the periods indicated.

LIFE INSURANCE AND ANNUITIES IN FORCE

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C>
PROTECTION PRODUCTS:
Traditional life:(1)
Number of policies (in thousands).......... 915.6 967.5 1,006.3 1,060.8 1,116.5
Life reserves.............................. $ 7,205.6 $ 6,823.3 $ 6,651.4 $ 6,491.7 $ 6,313.3
Face amounts............................... $62,473.0 $62,156.7 $60,640.1 $62,319.8 $63,635.1
Universal life:
Number of policies (in thousands).......... 79.8 79.3 60.8 61.3 63.0
Account values............................. $ 646.5 $ 610.9 $ 507.6 $ 492.0 $ 459.5
Face amounts............................... $11,389.1 $ 9,924.3 $ 8,858.0 $ 8,603.8 $ 8,603.9
Variable universal life:
Number of policies (in thousands).......... 40.9 29.0 21.0 12.1 4.1
Account values............................. $ 283.8 $ 176.1 $ 106.4 $ 41.3 $ 10.7
Face amounts............................... $ 9,243.8 $ 6,285.4 $ 4,515.7 $ 2,508.1 $ 857.8
Corporate-owned life insurance:
Numbers of policies (in thousands)......... 1.5 0.5 -- -- --
Account values............................. $ 154.1 $ 87.9 -- -- --
Face amounts............................... $ 1,415.9 $ 872.1 -- -- --
Group universal life:
Number of policies (in thousands).......... 48.7 54.0 57.5 50.6 49.2
Account values............................. $ 63.1 $ 63.2 $ 60.4 $ 54.8 $ 51.6
Face amounts............................... $ 1,763.9 $ 2,012.1 $ 2,143.3 $ 1,890.6 $ 1,821.4
ACCUMULATION PRODUCTS:
Variable annuities:
Number of contracts (in thousands)......... 110.0 114.1 107.2 92.5 75.3
Account values............................. $ 4,888.4 $ 4,774.1 $ 4,314.1 $ 3,146.6 $ 2,217.2
Fixed annuities:
Number of contracts (in thousands)......... 13.0 15.7 17.9 22.3 26.8
Account values............................. $ 891.2 $ 997.4 $ 1,103.8 $ 1,311.8 $ 1,508.1
</TABLE>

- ---------------
(1) Consists of whole life and term life contracts.

4
<PAGE> 6

INFORMATION ABOUT BUSINESS SEGMENTS

Protection Products --

The Company offers a diverse portfolio of Protection Products consisting
primarily of traditional life insurance, universal life insurance and variable
universal life insurance.

The Company's traditional protection products consist of whole life
insurance products and term insurance products. The whole life insurance
products vary in their level and duration of premiums and guaranteed cash
values, providing flexibility to the Company's primary marketplace of
individuals and small businesses with varying needs. The Company's term
insurance products include annual renewable term insurance, term insurance
providing coverage for a limited number of years and term insurance featuring a
level premium for a variable number of years.

The Company's universal life insurance products permit customers to vary
the amount and frequency of periodic cash premiums they pay, depending upon the
needs of the customer and the availability of value within the policy necessary
to maintain the policy. The Company's universal life insurance products vary as
to the initial premium required and the resulting degree of flexibility in
future policy years.

Through its U.S. Financial subsidiary, the Company offers term and
universal life insurance products designed for the special risk market. These
products focus on customers with treatable medical conditions which, based on
U.S. Financial's underwriting guidelines, have been mis-underwritten by other
insurance carriers. U.S. Financial primarily distributes its products through
brokerage general agencies.

The Company's variable universal life insurance is a universal life
insurance type of product that features the ability of the policyholder to
allocate premiums among sub-accounts of the Company's separate accounts,
allowing a choice among a wide variety of investment objectives. These
sub-accounts have the same investment objectives and investment advisors as the
sub-accounts that support the Company's variable annuities. See "-- Accumulation
Products".

The Company's corporate-owned life insurance ("COLI") product, which is
offered through its MONY Life Insurance Company of America subsidiary, is a
flexible premium variable universal life insurance product designed for
corporate plan sponsors. This product is specifically designed to have
sub-accounts which purchase shares of externally managed underlying funds as
well as those available from MONY Series Fund and Enterprise Accumulation Trust.
In addition, the COLI product offers a Guaranteed Interest Account which is part
of the general account of the Company.

Several of the Company's protection products are designed to particularly
meet the needs of clients for estate planning vehicles. Survivorship life
products insure two lives and provide for the payment of death benefits upon the
death of the last surviving insured. A variety of policy riders are available
for the Company's protection products. These riders are designed to provide
additional benefits or flexibility at the option of the policyholder. They
include riders that waive premium payments upon disability, pay higher benefits
in the event of accidental death, allow the purchase of additional coverage
without evidence of insurability and permit the addition of term insurance to
either the insured or the insured's spouse or dependent children.

The Company also offers protection products designed for marketing to
employees in their work sites. This program is designed to offer employers the
opportunity to provide employees a means of purchasing life insurance through
payroll deductions.

The following table presents Protection Products segment sales of life
insurance and life insurance account values or reserves for the periods
indicated. Management uses this information to measure the Company's sales
production from period to period by product. The amounts presented with respect
to life insurance sales represent annualized statutory-basis premiums. Statutory
basis premiums are used in lieu of GAAP basis premiums because, in accordance
with statutory accounting practices, revenues from all classes of long-duration
contracts are measured on the same basis, whereas GAAP provides different
revenue recognition rules for different classes of long-duration contracts as
defined by the requirements of Statement of Financial Accounting Standards
("SFAS") No. 60, Accounting and Reporting by Insurance Enterprises, SFAS No. 97,
Accounting and Reporting by Insurance Enterprises for Certain Long Duration
Contracts and for Realized Gains and Losses from the Sale of Investments, and
Statement of Position ("SOP") 95-1, Accounting for Certain Insurance Activities
of Mutual Life Insurance Enterprises.

5
<PAGE> 7

PROTECTION PRODUCTS SEGMENT -- SALES AND ACCOUNT VALUE OR RESERVES (3)

<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C>
SALES:
Traditional life:(1)............................ $ 38.0 $ 22.2 $ 28.5 $ 37.3 $ 46.5
Universal life.................................. 20.3 11.2 13.3 16.4 43.4
Variable universal life......................... 64.6 53.9 56.4 41.4 19.0
Group Universal Life............................ 2.4 3.6 5.5 4.4 7.0
Corporate-owned life insurance.................. 69.0 79.9 2.0 -- --
Disability income insurance(2).................. 0.0 1.5 4.9 5.6 7.2
-------- -------- -------- -------- --------
Total................................. $ 194.3 $ 172.3 $ 110.6 $ 105.1 $ 123.1
======== ======== ======== ======== ========
ACCOUNT VALUE OR RESERVES:
Traditional life:(1)............................ $7,205.6 $6,823.3 $6,651.4 $6,491.7 $6,313.3
Universal life.................................. 646.5 610.9 507.6 492.0 459.5
Variable universal life......................... 437.9 176.1 106.4 41.3 10.7
Group Universal Life............................ 63.1 63.2 60.4 54.8 51.6
Corporate-owned life insurance.................. 154.1 87.9 -- -- --
Disability income insurance(2).................. 391.4 390.5 376.2 345.2 316.3
-------- -------- -------- -------- --------
Total................................. $8,898.6 $8,151.9 $7,702.0 $7,425.0 $7,151.4
======== ======== ======== ======== ========
</TABLE>

- ---------------
(1) Consists of whole life and term life policies.
(2) No longer offered; at December 31, 1997 all existing in force disability
income insurance has been reinsured. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- DI
Transaction".
(3) The information presented in this table has been restated from that
presented in the Company's 1998 10-K. This restatement reflects the way that
management measures its results. The restatement primarily relates to the
inclusion in annualized premiums of 100% of single premium business written
in each year. Prior to 1999, the Company defined (and reported) annualized
premiums to include only 10% of single premium business written each year.
Single premiums represented approximately $83.3 million, $97.6 million,
$31.8 million, $27.1 million and $37.7 million for the years ended December
31, 1999, 1998, 1997, 1996 and 1995, respectively.

The following table sets forth the Company's Protection Products segment's
direct premiums on a statutory basis for the periods indicated.

PROTECTION PRODUCTS SEGMENT -- DIRECT PREMIUMS BY PRODUCT

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- ------ --------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C>
LIFE INSURANCE:
TRADITIONAL LIFE(1):
First year & single............................. $ 169.9 $ 158.0 $ 169.3 $169.2 $ 166.6
Renewal......................................... 559.8 571.5 594.4 616.3 630.1
-------- -------- -------- ------ --------
Total................................... $ 729.7 $ 729.5 $ 763.7 $785.5 $ 796.7
======== ======== ======== ====== ========
UNIVERSAL LIFE:
First year & single............................. $ 25.1 $ 10.4 $ 13.4 $ 17.5 $ 43.8
Renewal......................................... 92.8 67.0 67.5 65.0 55.6
-------- -------- -------- ------ --------
Total................................... $ 117.9 $ 77.4 $ 80.9 $ 82.5 $ 99.4
======== ======== ======== ====== ========
VARIABLE UNIVERSAL LIFE:
First year & single............................. $ 69.5 $ 54.0 $ 47.9 $ 32.4 $ 12.3
Renewal......................................... 53.9 37.4 18.3 3.3 --
-------- -------- -------- ------ --------
Total................................... $ 123.4 $ 91.4 $ 66.2 $ 35.7 $ 12.3
======== ======== ======== ====== ========
CORPORATE-OWNED LIFE INSURANCE:
First year & single............................. $ 55.3 $ 77.9 -- -- --
Renewal......................................... 11.7 8.7 -- -- --
-------- -------- -------- ------ --------
Total................................... $ 67.0 $ 86.6 -- -- --
======== ======== ======== ====== ========
</TABLE>

6
<PAGE> 8

- ---------------
(1) Consists of whole life and term life premiums.
(2) No longer offered. At December 31, 1997 all existing in force disability
income insurance has been reinsured. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- DI
Transaction".

Effective December 31, 1997, the Company ceased writing new disability
insurance business. In conjunction therewith, the Company transferred all of its
existing in force disability income insurance business to a third party
reinsurer under an indemnity reinsurance contract. The transfer was accomplished
through a novation of its existing disability income reinsurance coverage and a
concurrent amendment to such existing reinsurance contract. In connection with
the transaction, the Company entered into an agreement with an unrelated
insurance company to distribute its disability insurance products through the
Company's career agency sales force. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- DI Transaction".

Accumulation Products --

The Company's Accumulation Products focus on the savings and retirement
needs of the growing number of individuals who are preparing for retirement or
have already retired. The Company offers a variety of accumulation products,
such as flexible premium variable annuities ("FPVA") and proprietary retail
mutual funds. The Company's annuity and mutual fund products offer numerous
investment alternatives to meet the customer's individual investment objectives.
As of December 31, 1999, the Company had $5.8 billion of assets under management
with respect to its annuity products and, additionally, $4.8 billion of assets
under management with respect to its proprietary retail mutual funds.

By offering a variable annuity with a number of separate accounts and a
fixed account in its Accumulation Products segment, the Company believes it has
the ability to grow profitably in a variety of market environments. The fixed
account variable annuities are attractive to consumers during periods of rising
interest rates, whereas the separate account variable annuities are attractive
to consumers during periods of market expansion and for consumers who prefer a
higher risk.

In addition to variable annuities, the Company also offers proprietary
retail mutual funds. The Company conducts its proprietary retail mutual funds
operations through its subsidiary, Enterprise Capital Management, Inc. ("ECM").
ECM is the registered investment advisor of The Enterprise Group of Funds, a
group of mutual funds that provides investors with a broad range of investment
alternatives through 17 separate investment portfolios. In addition, Enterprise
Accumulation Trust, for which ECM is also the registered investment advisor, is
the principal funding vehicle for the Company's variable annuities and variable
universal life insurance products. Enterprise Accumulation Trust provides
investors with a broad range of investment alternatives through 12 separate
investment portfolios. The Company earns investment management fees on the
assets managed in connection with both its variable annuities and its
proprietary retail mutual funds. In addition to Enterprise Accumulation Trust,
the Company has entered into agreements with Fidelity, Janus, and Dreyfus to
provide additional investment choices for the Company's variable annuities and
variable universal life products.

7
<PAGE> 9

The following table sets forth the total account value and sales of the
principal products offered by the Company in its Accumulation Products segment.

ACCUMULATION PRODUCTS SEGMENT -- ASSETS UNDER MANAGEMENT AND SALES

<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1999 1998 1997 1996 1995
--------- -------- -------- -------- --------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C>
ASSETS UNDER MANAGEMENT
Individual variable annuities(1)............... $ 4,888.4 $4,774.1 $4,314.1 $3,146.6 $2,217.2
Individual fixed annuities(1).................. 891.2 997.4 1,103.8 1,311.8 1,508.1
Proprietary mutual funds....................... 4,762.3 2,962.1 1,716.7 952.1 679.6
--------- -------- -------- -------- --------
$10,541.9 $8,733.6 $7,134.6 $5,410.5 $4,404.9
========= ======== ======== ======== ========
SALES BY PRODUCT
Individual variable annuities(1)............... $ 422.8 $ 611.7 $ 712.7 $ 668.4 $ 495.3
Individual fixed annuities(1).................. 8.9 7.6 15.9 14.8 25.4
Proprietary retail mutual funds................ 1,832.2 1,295.0 751.6 347.0 207.2
--------- -------- -------- -------- --------
$ 2,263.9 $1,914.3 $1,480.2 $1,030.2 $ 727.9
========= ======== ======== ======== ========
</TABLE>

- ---------------
(1) Represents account values for annuities.

The Company's fixed annuity products include a single premium deferred
annuity contract. This is a tax-deferred annuity contract with a one-time
premium payment with a resulting cash accumulation over time and the option to
receive a lump sum distribution or various payout options over the life of the
annuitant. The Company also offers a single payment immediate annuity contract
which provides for a single premium payment that is immediately annuitized to
provide the annuitant with a guaranteed level income for life or for a minimum
number of years.

Variable annuity contractholders and variable universal life insurance
policyholders have a range of investment accounts in which to place the assets
held under their contracts, including accounts with interest rates guaranteed by
the Company. More than 93% of the aggregate amount held under these contracts
and policies is presently in investment accounts not guaranteed by the Company.

Since early 1992, the Company has emphasized the sale of its separate
account variable annuities over its general account annuities. The Company
believes that it benefits from a shift towards separate account variable annuity
products, as this reduces the Company's investment risks (by shifting such risks
to the separate account contractholder) and capital requirements because the
assets are held in the Company's separate accounts, while enabling the Company
to earn fee income from the management of assets held in the separate accounts.
The selection of separate accounts also permits contractholders to choose more
aggressive or conservative investment strategies without affecting the
composition and quality of assets in the Company's general account. The Company
believes there will be a continuation in the trend among U.S. employers away
from defined benefit plans (under which the employer makes the investment
decisions) toward employee-directed, defined contribution retirement and savings
plans (which allow employees to choose from a variety of investment options),
which will benefit its accumulation business. The following table illustrates
the growth in individual variable annuity account value from the beginning to
the end of each period presented and the principal factors which caused the
increase in account value for such period.

ACCUMULATION PRODUCTS SEGMENT -- INDIVIDUAL VARIABLE ANNUITY ACCOUNT VALUE

<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C>
ACCOUNT VALUE
Beginning total account value................... $4,774.1 $4,314.1 $3,146.6 $2,217.2 $1,370.6
Sales and other deposits(1)..................... 422.8 611.7 712.7 668.4 495.3
Market appreciation............................. 506.6 298.9 738.9 448.5 471.2
Surrenders and withdrawals(1)................... (815.1) (450.6) (284.1) (187.5) (119.9)
-------- -------- -------- -------- --------
Ending total account value...................... $4,888.4 $4,774.1 $4,314.1 $3,146.6 $2,217.2
======== ======== ======== ======== ========
</TABLE>

- ---------------
(1) Excludes approximately $727.0 million in 1999 relating to surrenders
associated with an exchange program offered by the Company wherein
contractholders surrender old FPVA contracts and reinvested the proceeds in
a new enhanced FPVA offered by the Company.

8
<PAGE> 10

Approximately 86.3% of the Company's career agents were licensed through
MONY Securities Corp. at December 31, 1999 to sell variable annuities (with
68.8% having National Association of Securities Dealers, Inc. ("NASD") Series 6
licenses and 31.2% having NASD Series 7 licenses).

The Company offers a variety of proprietary retail mutual funds to retail
customers. ECM's wholly-owned subsidiary, Enterprise Fund Distributors, Inc.,
acts as the broker-dealer in distributing shares in the Enterprise Group of
Funds through MONY Securities Corp. and third-party broker-dealer firms. ECM
recently made available Enterprise Accumulation Trust as a funding vehicle for
variable product offerings of third-party insurance companies, initially
concentrating on small and mid-size insurance companies.

As of December 31, 1999, ECM had $8.8 billion in assets under management,
of which $4.8 billion related to the proprietary retail mutual funds and $4.0
billion related to the Enterprise Accumulation Trust. The Company earns
management fees on both of these categories of assets.

ECM offers an opportunity for individual retail investors to have access to
the advice and expertise of leading institutional money managers, which is
generally not available to those individual retail investors.

Other Products --

In its broker-dealer operations, in addition to selling the Company's
proprietary investment products, the Company facilitates transactions for its
accumulation customers by providing access to other non-proprietary investment
products (including stocks, bonds, limited partnership interests, tax-exempt
unit investment trusts and other investment securities).

MONY Securities Corporation ("MSC") is a registered securities
broker-dealer and investment advisor and a member of the NASD. MSC is a
wholly-owned subsidiary of MONY Life Insurance Company. MSC performs brokerage
and other investment services relating to a wide range of securities, including
mutual funds, stocks, bonds, limited partnership interests (primarily in real
estate, oil and gas and equipment leasing) and tax-exempt unit investment
trusts. For the years ended December 31, 1999, 1998, and 1997, 39%, 47%, and
40%, respectively, based on brokerage commissions, of the investment products
sold by MSC are shares in mutual funds in the Enterprise Group of Funds. MSC's
products and services are distributed through registered representatives who
belong to MONY Life's career agency sales force. MSC transacts business in all
50 of the United States, the District of Columbia and Puerto Rico. Sales of
other non-proprietary investment products were $547.0 million, $340.8 million
and $296.0 million, respectively for the years ended December 31, 1999, 1998 and
1997.

In its insurance brokerage operation, the Company provides its career
agency sales force with access to life, annuity, small group health and
specialty insurance products written by other carriers to meet the insurance and
investment needs of its customers. MONY's insurance brokerage subsidiary, MONY
Brokerage Inc., is licensed as an insurance broker in Delaware and most other
states.

The Run-Off Businesses include certain lines of business no longer written
by the Company. The Run-Off Businesses primarily consist of group life and
health insurance and the group pension business that was not included in the
Group Pension Transaction.

Financial information with respect to each of the Company's business
segments is included in Management's Discussion and Analysis of Financial
Condition and Results of Operations and in Note 5 of the Consolidated Financial
Statements.

MARKETING AND DISTRIBUTION

The Company's marketing strategy focuses on small business owners and
higher income individuals, particularly family builders and pre-retirees. The
Company believes this strategy capitalizes on the Company's key strengths,
namely its wide range of individual protection and accumulation products and its
career agency sales force. Based on annualized premiums, the career agency sales
force generated approximately half of all protection and accumulation product
new sales in 1999, including sales of proprietary retail mutual funds.

Career Agency Sales Force --

The Company believes that its managerial agency system and career agency
sales force is a competitive advantage in the marketplace. Distribution through
career agents allows the Company to establish closer relationships with
customers than is typical of insurers using third party brokers, thereby
enhancing the ability of the Company to evaluate customer needs and underwriting
risks.

The Company's career agency sales force consisted of approximately 2,100
domestic field agents at December 31, 1999. The sales force is organized as a
managerial agency system under which 55 agency managers as of December 31, 1999
supervise the marketing and sales activities of agents in defined marketing
territories in the United States and Europe. The agency managers are all
employees of the Company, while the career agents are all independent
contractors and not employees of the Company. The contract with each career
agent requires the agent to submit to the Company applications for policies of
insurance issued by the Company. The Company's compensation arrangements with
career agents contain incentives for the career agents to solicit applications
for products issued by MONY Life and for products issued by insurance companies
not affiliated with the Company, made available by the Company's insurance
brokerage operations, MONY Brokerage, Inc. and its broker-dealer, MONY
Securities Corp. ("MSC"). Those incentives include counting first year
commissions (weighted in the case of products made available by MONY Brokerage,
Inc.) for the
9
<PAGE> 11

purposes of expense reimbursement programs, sales awards and certain other
benefits. In addition, MONY Brokerage, Inc. and MSC make available products
issued by other insurance companies that the Company does not offer.

In 1999, the Company had 475 agents who were members of Million Dollar
Round Table ("MDRT"), an industry designation based on sales which result in
annual first-year commissions of $57,000 or more, down from 513 in 1998. The
Company's percentage of its career agents who are MDRT members is among the
highest in the industry.

The Company believes that the two most significant challenges of operating
a career agency system are ensuring that the interests of the agency management
organization are aligned with the interests of the Company and providing a cost-
effective and appropriate level of marketing, training and recruiting support to
each of the Company's career agents and agency managers. To address these
challenges, over the last several years the Company has made several changes in
its compensation structure for its agency management organization, which changes
culminated in January of 1998 when the Company revised its compensation
structure to provide a salary plus incentive compensation system for all of its
agency managers and sales managers designed to more closely align the interests
of the managers with those of the Company.

To further address the challenges of operating a career agency sales force,
the Company has initiated several programs directed at targeted efforts in
recruiting, marketing and training of its career agents. As a result of its new
recruiting program, the Company hired 862 new agents in 1999. In the area of
training, the Company redesigned its training programs directed at new agents in
order to provide them with increased knowledge and skills.

In early 1998, in order to increase the productivity and size of its career
agency sales force, the Company adopted a plan to "tier" its agents and agencies
and to provide focused marketing, recruiting and training support tailored to
meet the particular needs of each "tier". The plan was fully implemented in
1999. By restructuring its agencies into tiers, the Company is able to segment
its career agency sales force into groups according to experience and
productivity levels and to assign agency managers to tiers based on their skill
sets and the particular needs and goals of such tiers. For example, separate
tiers were established for new agents with little or no experience in the
industry, experienced agents who are producing at superior levels and one or
more groups of agents with experience or production levels falling between those
two levels.

The Company believes that this tiering system is unique in the life
insurance industry and gives the Company a competitive advantage in the
marketplace. For example, by having certain managers responsible solely for
recruiting and providing necessary support systems for new recruits, the Company
is able to increase the number and quality of new agents recruited each year.
The Company believes that the tiering system allows the Company to attract and
retain already established and successful agents by providing an environment in
which such agents can compete favorably with other producer groups, such as
third-party brokers or general agents and to attract and retain other agents by
providing marketing and training support that is responsive to such agents'
career development needs.

Complementary Distribution Channels --

In addition to sales by the career agents, the Company also distributes its
products through a variety of complementary distribution channels including
third-party broker-dealers, brokerage general agencies, and through its
subsidiary, Trusted Securities Advisors Corp.

The Company utilizes third-party broker-dealers to sell its mutual fund
products through 41 wholesalers. The Company expects to increase the number of
these specialized sales agents in the future.

The Company also sells certain protection products through a network of
brokerage general agencies in 41 states through its U.S. Financial subsidiary.
U.S. Financial distributes its products through approximately 245 brokerage
general agencies, which operate under the same agency contract.

Through Trusted Securities Advisors Corp., the Company sells a variety of
financial products and services to customers through certified public
accountants and other tax professionals who are registered representatives of
the Company.

PRICING AND UNDERWRITING

Insurance underwriting involves a determination of the type and amount of
risk which an insurer is willing to accept. The Company underwrites each
application. The Company's underwriters evaluate policy applications on the
basis of information provided by the applicant and others. The Company follows
detailed and uniform underwriting practices and procedures designed to properly
assess and quantify risks before issuing coverage to qualified applicants. The
Company's insurance underwriting standards are developed to produce mortality
results consistent with the assumptions used in product pricing while also
allowing competitive risk selection. Factors considered by the Company in
setting premiums and charges for products include assumptions which are
considered prudent by management as to future investment returns, expenses,
persistency, mortality and taxes, where appropriate. The long-term profitability
of the Company's products is affected by the degree to which future experience
deviates from these assumptions.

10
<PAGE> 12

MONY Life implemented a new contract issuance and administrative system for
the majority of new products introduced effective with the demutualization. The
existing systems continue to be used for older products. For the new products
MONY Life anticipates using a newer version of the field submit or electronic
application supported on the new system, however, on an interim basis, MONY Life
currently is having the applications centrally submitted at the Syracuse
Operations center using the new Cyberlife system, which is a vendor package
which supports both issue and administrative functions. In underwriting this
business, MONY Life uses its automated underwriting system, which it believes to
be technologically superior to the systems of many of its competitors. MONY
Life's Underwriting Complex (UC) automatically requests and processes data
necessary to underwrite life insurance applications, including blood test
results and motor vehicle records. MONY Life's in-force policy administrative
systems, which contain MONY Life's policyholder database, handles policy billing
and administrative services. MONY Life's agencies each have computers connected
to this integrated system, enabling agents in the field to automatically submit
applications and access policyholder data.

The Company believes that its underwriting staff is highly experienced and
qualified. Of the Company's 31 Home Office Underwriting professionals, 11 have
over 20 years of industry experience and 16 others have at least 10 years of
industry experience.

REINSURANCE

MONY Life utilizes a variety of indemnity reinsurance agreements with
reinsurers to control its loss exposure. Generally, these agreements are
structured either on an automatic basis, where risks meeting prescribed criteria
are automatically covered, or on a facultative basis, where the reinsurer must
agree to accept the specific reinsurance risk before it becomes liable. The
amount of each risk retained by MONY Life depends on its evaluation of the
specific risk, subject, in certain circumstances, to maximum limits based on
characteristics of coverages. Under the terms of the reinsurance agreements, the
reinsurer will be liable to reimburse MONY Life for the ceded amount in the
event the claim is paid. However, MONY Life remains contingently liable for all
benefits payable even if the reinsurer fails to meet its obligations to MONY
Life.

Life insurance business is ceded on a yearly renewable term basis under
various reinsurance contracts. The Company's general practice is to retain no
more than $4.0 million of risk on any one person for individual products and
$6.0 million for last survivor products. The total amount of reinsured life
insurance in force on this basis was $11.9 billion, $9.3 billion, and $7.4
billion at December 31, 1999, 1998, and 1997, respectively.

The Company also had in place two "surplus relief" reinsurance contracts.
On March 31, 1999, one of these contracts was recaptured by MONY Life resulting
in a $30.1 million decrease in statutory surplus. At December 31, 1999, MONY
Life's statutory surplus included $39.4 million relating to MONY Life's
outstanding surplus relief reinsurance contract, or 3.7% of MONY Life's
statutory surplus at that date. On Jan. 1, 2000, the Company recaptured its
remaining outstanding surplus relief reinsurance contract. This reduced the
Company's statutory surplus by $39.4 million. Surplus relief reinsurance has the
effect of increasing current statutory surplus while reducing future statutory
earnings. Although these agreements do not qualify to be accounted for as
reinsurance under GAAP, the Company's agreements qualify for reinsurance
accounting under accounting practices prescribed or permitted by the New York
Insurance Department ("SAP") and have specifically been approved by the New York
State Insurance Department.

As of December 31, 1997 the Company's outstanding individual disability
income insurance business is reinsured on an indemnity basis. See "-- Protection
Products".

The following table presents the Company's principal reinsurers and the
percentage of total reinsurance recoverable reported in the Company's
consolidated financial statements at December 31, 1999 that was due from each
reinsurer, including reinsurance recoverable reported in the consolidated
financial statements under the caption "Amounts Due From Reinsurers" (which
amounted to $488.0 million), reinsurance recoverable in the Closed Block (which
amounted to $114.5 million), and indemnity reinsurance in connection with the
"Group Pension Transaction" (which amounted to $88.9 million).

<TABLE>
<S> <C>
REINSURERS:
Centre Life Reinsurance, Ltd. .............................. 54.9%
AUSA Life Insurance Company, Inc. .......................... 13.0
Life Reassurance Corp of America............................ 11.5
Unum Life Insurance Company of America...................... 2.9
All Other................................................... 17.7
----
100%
====
</TABLE>

INTERNATIONAL BUSINESS

MONY Life, through its subsidiaries, MONY Life Insurance Company of the
Americas, Ltd. and MONY Bank & Trust Company of the Americas, Ltd. markets its
products (including life insurance, annuities, mutual funds and trust services)
internationally, principally in Latin America.

11
<PAGE> 13

RATINGS

In 1999, ratings of the Company's primary domestic life insurance companies
were upgraded by the four rating agencies which rate the Company's claims-paying
ability and financial strength. Standard & Poor's ("S&P") upgraded the Company's
rating to AA- (Very Strong), Moody's Investors Services ("Moody's") upgraded the
Company to A2 (Good), Duff & Phelps ("D&P") upgraded the Company to AA- (Very
High) and A.M. Best upgraded the Company's domestic insurance subsidiaries to A
(Excellent). Ratings with respect to claims-paying ability and financial
strength have become an increasingly important factor in establishing the
competitive position of insurance companies. Ratings are important to
maintaining public confidence in MONY Life and its ability to market its
products. Rating organizations continually review the financial performance and
condition of insurers, including MONY Life. Any lowering of MONY Life's ratings
could have a material adverse effect on MONY Life's ability to market its
products and retain its current policyholders. These consequences could,
depending upon the extent thereof, have a material adverse effect on MONY Life's
liquidity and, under certain circumstances, net income. A.M. Best's ratings for
insurance companies currently range from "A++" to "F", and some companies are
not rated. A.M. Best publications indicate that "A" ratings are assigned to
those companies that in A.M. Best's opinion have achieved excellent overall
performance when compared to the standards established by A.M. Best. "A"
companies are considered to have a strong ability to meet their obligations to
policyholders over a long period of time. The Demutualization and the Offerings
are part of management's strategy to enhance the Company's capital base and its
access to capital in order to improve ratings.

Moody's ratings for insurance companies currently range from "Aaa" to "C",
S&P's ratings for insurance companies range from "AAA" to "CCC-", and Duff &
Phelps' ratings for insurance companies range from "AAA" to "CCC-". In
evaluating a company's financial and operating performance, Moody's, S&P and
Duff & Phelps review its profitability, leverage and liquidity as well as its
book of business, the adequacy and soundness of its reinsurance, the quality and
estimated market value of its assets, the adequacy of its policy reserves and
the experience and competence of its management.

These rating agencies have also rated the Company's recently issued 8.35%
Senior Notes, due March 15, 2010 -- see Liquidity and Capital
Resources -- Issuance of Senior Notes and Repurchase of Surplus Notes. The
ratings are: A-(Strong) by S&P, Baa1 (Investment Grade) by Moody's, A- (High
Credit Quality) by D&P and a- (Strong) by A.M. Best.

The foregoing ratings reflect each rating agency's current opinion of the
Company's claims-paying ability, financial strength, operating performance and
ability to meet its obligations to policyholders and are not evaluations
directed toward the protection of investors in the common stock. Such factors
are of concern to policyholders, agents and intermediaries.

COMPETITION

The Company believes that competition in the Company's lines of business is
based on service, product features, price, commission structure, perceived
financial strength, claims-paying ratings and name recognition. The Company
competes with a large number of other insurers as well as non-insurance
financial services companies, such as banks, broker-dealers and asset managers,
many of which have greater financial resources, offer alternative products or
more competitive pricing and, with respect to other insurers, have higher claims
paying ability ratings than the Company. Competition exists for individual
consumers and agents and other distributors of insurance and investment
products. National banks, with their pre-existing customer bases for financial
services products, increasingly compete with insurers as a result of court cases
that permit national banks to sell annuity products of life insurance companies
in certain circumstances.

In addition, there has been recently enacted legislation removing
restrictions on bank affiliations with insurers. This legislation, the
Gramm-Leach-Bliley Act of 1999, permits mergers that combine commercial banks,
insurers and securities firms under one holding company. Until passage of the
Gramm-Leach-Bliley Act, the Glass-Steagall Act of 1933 had limited the ability
of banks to engage in securities-related businesses, and the Bank Holding
Company Act of 1956 had restricted banks from being affiliated with insurance
companies. The ability of banks to affiliate with insurance companies and to
offer annuity products of life insurance companies may materially adversely
affect all of the Company's product lines by substantially increasing the
number, size and financial strength of potential competitors.

The Company must attract and retain productive agents to sell its insurance
and annuity products. Strong competition exists among insurance companies for
agents with demonstrated ability. Management believes that key bases of
competition among insurance companies for agents with demonstrated ability
include a company's financial position and the services provided to, and
relationships developed with, these agents in addition to compensation and
product structure. Changes arising from the Demutualization, as well as the
realignment of the career agency sales force and the transition to new products,
may affect the Company's ability to retain productive distributors of its
individual insurance and annuity products. Sales of individual insurance and
annuity products and the Company's financial position and results of operations
could be materially adversely affected if such changes occur.

REGULATION

General Regulation at the State Level

MONY Life Insurance Company is licensed to transact its insurance business
in, and is subject to regulation and supervision by, all 50 states, the District
of Columbia, the Commonwealth of Puerto Rico, Guam and the U.S. Virgin

12
<PAGE> 14

Islands. MONY Life Insurance Company of America ("MLOA") is licensed and
regulated in all states other than New York and U.S. Financial is licensed and
regulated in all states other than Arizona, Idaho, Minnesota, Nevada, New York,
Vermont, Virginia, West Virginia and the District of Columbia.

The laws of the various states establish state insurance departments with
broad administrative powers to approve policy forms and, for certain lines of
insurance, rates, grant and revoke licenses to transact business, regulate trade
practices, license agents, require statutory financial statements and prescribe
the type and amount of investments permitted. In addition, the New York
Insurance Department imposes additional regulations including restrictions on
certain selling expenses. The aforementioned regulation by the state insurance
departments is for the benefit of policyholders, not stockholders.

The Holding Company is not regulated as an insurance company but will, as
the direct or indirect owner of the capital stock of MONY Life Insurance
Company, MLOA and U.S. Financial, be subject to the insurance holding company
acts of the states in which MONY Life Insurance Company, MLOA and U.S. Financial
are domiciled (or deemed to be commercially domiciled). Most states have enacted
legislation that requires each insurance holding company and each insurance
company in an insurance holding company system to register with the insurance
regulatory authority of the insurance company's state of domicile and, annually,
to furnish financial and other information concerning the operations of
companies within the holding company system that may materially affect the
operations, management or financial condition of the insurers within such
system. The Company is subject to the insurance holding company laws in New
York, Arizona and Ohio. Under such laws, all transactions within an insurance
holding company system affecting insurers must be fair and equitable and each
insurer's policyholder surplus following any such transaction must be both
reasonable in relation to its outstanding liabilities and adequate for its
needs. The New York, Arizona and Ohio insurance holding company laws also
require prior notice or regulatory approval of the change of control of an
insurer or its holding company and of material intercorporate transfers of
assets or other material transactions within the holding company structure.
Generally, under such laws, a state insurance authority must approve in advance
the direct or indirect acquisition of 10% or more of the voting securities of an
insurance company domiciled in its state. Under the New York Insurance Law, for
a period of five years following the effective date of the Plan, no person may
acquire beneficial ownership of 5% or more of the outstanding shares of common
stock without the prior approval of the New York State Superintendent of
Insurance (the "New York Superintendent"). Certain affiliates of Goldman Sachs &
Co., one of the underwriters of the Offerings (the "Investors"), have received a
conditional waiver of this rule from the New York Superintendent in connection
with the potential exercise of warrants they hold prior to the end of such
five-year period. See "-- Determination of Non-Control".

In recent years, a number of life and annuity insurers have been the
subject of regulatory proceedings and litigation relating to alleged improper
life insurance pricing and sales practices. Some of these insurers have incurred
or paid substantial amounts in connection with the resolution of such matters.
See "Legal Proceedings". In addition, state insurance regulatory authorities
regularly make inquiries, hold investigations and administer market conduct
examinations with respect to insurers' compliance with applicable insurance laws
and regulations.

MONY Life Insurance Company, MLOA and U.S. Financial continuously monitor
sales, marketing and advertising practices and related activities of their
agents and personnel and provide continuing education and training in an effort
to ensure compliance with applicable insurance laws and regulations. There can
be no assurance that any non-compliance with such applicable laws and
regulations would not have a material adverse effect on the Company.

Insurance companies are required to file detailed annual and quarterly
financial statements with state insurance regulators in each of the states in
which they do business, and their business and accounts are subject to
examination by such regulators at any time. In addition, insurance regulators
periodically examine an insurer's financial condition, adherence to statutory
accounting practices and compliance with insurance department rules and
regulations. Applicable state insurance laws, rather than federal bankruptcy
laws, apply to the liquidation or the restructuring of insurance companies.
Insurance company subsidiaries of the Holding Company would be subject to such
state insurance laws; however, the Holding Company would generally be subject to
federal bankruptcy laws.

The National Association of Insurance Commissioners (the "NAIC") has
established a program of accrediting state insurance departments. NAIC
accreditation permits accredited states to conduct periodic examinations of
insurance companies domiciled in such states. NAIC-accredited states will not
accept reports of examination of insurance companies from unaccredited states
except under limited circumstances. As a direct result, insurers domiciled in
unaccredited states may be subject to financial examination by accredited states
in which they are licensed, in addition to any examinations conducted by their
domiciliary states. The accreditation of the New York Insurance Department, MONY
Life Insurance Company's principal insurance regulator, has been suspended as a
result of the New York legislature's failure to adopt certain model NAIC laws.
MONY Life Insurance Company believes that the suspension of the NAIC
accreditation of the New York Insurance Department, even if continued, will not
have a significant impact upon its ability to conduct its insurance businesses.

MONY Life Insurance Company's variable life insurance products and variable
annuity products are considered securities within the meaning of the federal
securities laws and are, therefore, subject to regulation thereunder, as well as
under state insurance laws. In addition, MONY Life Insurance Company and its
subsidiaries are generally subject to federal and state laws and regulations
which affect the conduct of their business.

13
<PAGE> 15

Statutory Examination

As part of their routine regulatory oversight process, state insurance
departments conduct periodic detailed examinations of the books, records and
accounts of insurance companies domiciled in their states. Such examinations are
generally conducted in cooperation with the departments of two or three other
states under guidelines promulgated by NAIC.

In 1998 the New York Insurance Department completed an examination of MONY
Life Insurance Company for each of the five years in the period ended December
31, 1996, and in 1998 the Arizona State Insurance Department completed an
examination of MLOA, for each of the three years in the period ended December
31, 1996. There were no material consequences which resulted from the findings
of either the New York or Arizona Departments of Insurance.

Shareholder Dividend Restrictions

The payment of dividends by MONY Life to the Holding Company is regulated
under state insurance law. Under the New York Insurance Law, MONY Life will be
permitted to pay shareholder dividends to the Holding Company only if it files
notice of its intention to declare such a dividend and the amount thereof with
the New York Superintendent and the New York Superintendent does not disapprove
the distribution. The applicable statute gives the New York Superintendent broad
discretion to disapprove dividend requests based upon a determination of whether
MONY Life's financial condition would support the payment of dividends. The New
York Insurance Department has established informal guidelines for the New York
Superintendent's determinations, which focus upon, among other things, overall
financial condition and profitability under statutory accounting practices.
There can be no assurance that MONY Life will have statutory earnings to support
the payment of dividends to the Holding Company in an amount sufficient to fund
its cash requirements, pay interest on its debt, and pay cash dividends. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources." In addition, Arizona and Ohio
insurance laws contain restrictions on the abilities of MLOA and U.S. Financial
respectively to pay dividends to MONY Life. MONY Life's inability to pay
dividends to the Holding Company in the future in an amount sufficient for the
Holding Company to pay dividends to its stockholders would have a material
adverse effect on the Holding Company and the market value of the common stock.

In January 2000, the New York Insurance Department approved and MONY Life
paid, a dividend to MONY Group in the amount of $75 million.

NAIC IRIS Ratios

The NAIC has developed a set of financial relationships or "tests" known as
the Insurance Regulatory Information System ("IRIS") that were designed for
early identification of companies which may require special attention or action
by insurance regulatory authorities. Insurance companies submit data annually to
the NAIC, which in turn analyzes the data by utilizing, in the case of life
insurance companies, 12 ratios, each with defined "usual ranges". Generally, an
insurance company will become subject to regulatory scrutiny if it falls outside
the usual ranges of four or more of the ratios, and regulators may then act, if
the company has insufficient capital, to constrain such company's underwriting
capacity. MONY Life, MLOA and U.S. Financial are not currently subject to
regulatory scrutiny based on their IRIS ratios.

Policy and Contract Reserve Sufficiency Analysis

Under the New York Insurance Law and the laws of several other states, MONY
Life Insurance Company and MLOA are required to conduct an annual analysis of
reserve sufficiency including all life and health insurance reserves and
interest-sensitive single premium life and annuity reserves. A qualified actuary
must submit an opinion which states that the reserves when considered in light
of the assets held with respect to such reserves make good and sufficient
provision for the associated contractual obligations and related expenses of the
insurance company. In order to provide such an opinion, the insurance company
may set up additional reserves by transferring funds from surplus. MONY Life
Insurance Company and MLOA have provided a current opinion, without
qualification, to applicable state regulators with respect to such reserves.
U.S. Financial has provided a current opinion to its state regulators with
respect to its reserves, without qualification, as applicable to companies of
its size.

Statutory Investment Valuation Reserves

Statutory Accounting Practices ("SAP") require a life insurance company to
maintain both an Asset Valuation Reserve ("AVR") and interest maintenance
reserve ("IMR") to absorb both realized and unrealized gains and losses on a
portion of its investments. AVR establishes statutory reserves for fixed
maturity securities, equity securities, mortgage loans, equity real estate, and
other invested assets. AVR is designed to capture all realized and unrealized
gains and losses on such assets, other than those resulting from changes in
interest rates. The level of AVR is based on both the type of investment and its
rating. In addition, the reserves required for similar investments, for example,
fixed maturity securities, differ according to the ratings of the investments,
which are based upon ratings established periodically by the NAIC Securities
Valuation Office. IMR applies to all types of fixed maturity investments,
including bonds, preferred stocks,

14
<PAGE> 16

mortgage backed securities and mortgage loans. IMR is designed to capture the
net gains which are realized upon the sale of such investments and which result
from changes in the overall level of interest rates. Such captured net realized
gains are then amortized into income over the remaining period to the stated
maturity of the investment sold. Any increase in AVR and IMR causes a reduction
in MONY Life's statutory capital and surplus which, in turn, reduces funds
available for stockholder dividends.

Risk-Based Capital Requirements

In order to enhance the regulation of insurer solvency, the NAIC has
adopted a model law to implement RBC requirements for life insurance companies.
The requirements are designed to monitor capital adequacy and to raise the level
of protection that statutory surplus provides for policyholders. The model law
measures four major areas of risk facing life insurers: (i) the risk of loss
from asset defaults and asset value fluctuation; (ii) the risk of loss from
adverse mortality and morbidity experience; (iii) the risk of loss from
mismatching of asset and liability cash flow due to changing interest rates and
(iv) business risks. Insurers having less statutory surplus than required by the
RBC model formula will be subject to varying degrees of regulatory action
depending on the level of capital inadequacy.

The RBC formula provides a mechanism for the calculation of an insurance
company's Authorized Control Level RBC and its total adjusted capital. The model
law sets forth the points at which a superintendent of insurance is authorized
and expected to take regulatory action. The first level is known as the Company
Action Level RBC, which is set at twice the Authorized Control Level RBC. The
second level is the Regulatory Action Level RBC, set at 1.5 times the Authorized
Control Level RBC. The third is the Authorized Control Level RBC, and the fourth
is the Mandatory Control Level RBC, set at 70% of the Authorized Control Level
RBC.

If an insurance company's adjusted capital is higher than the Regulatory
Action Level but below the Company Action Level, the insurance company must
submit to its superintendent of insurance a comprehensive financial plan. If an
insurance company's adjusted capital is higher than the Authorized Control level
but lower than the Regulatory Action Level, the superintendent of insurance
shall perform such examination or analysis as he or she deems necessary of the
insurer's business and operations and issue any appropriate corrective orders to
address the insurance company's financial problems. If an insurer's adjusted
capital is higher than the Mandatory Control Level but lower than the Authorized
Control Level, the superintendent may place the insurer under regulatory
control. If the insurance company's adjusted capital falls below the Mandatory
Control Level, the superintendent will be required to place the insurer under
regulatory control. The adjusted RBC capital ratios of all the Company's
insurance subsidiaries at December 31, 1999 and 1998 were in excess of the
Company Action Levels.

Regulation of Investments

MONY Life Insurance Company, MLOA and U.S. Financial are subject to state
laws and regulations that require diversification of their investment portfolios
and limit the amount of investments in certain investment categories such as
below investment grade fixed income securities, equity real estate and equity
investments. Failure to comply with these laws and regulations would cause
investments exceeding regulatory limitations to be treated as non-admitted
assets for purposes of measuring surplus, and, in some instances, would require
divestiture of such non-qualifying investments. As of December 31, 1999, MONY
Life Insurance Company, MLOA and U.S. Financial investments complied with all
such regulations.

DETERMINATION OF NON-CONTROL

On December 30, 1997, the Investors entered into an investment agreement
with MONY (the "Investment Agreement"), pursuant to which: (i) the Investors
purchased the MONY Notes and (ii) warrants (the "Warrants") to purchase from the
Company (after giving effect to the Offerings) in the aggregate 7.0% of the
fully diluted common stock as of the first date following such effectiveness on
which shares of common stock were first issued to policyholders.

The New York Superintendent issued a determination pursuant to Section
1501(c) of the New York Insurance Law, dated December 29, 1997, that the
Investors would not control MONY Life as a result of the transactions
contemplated by the Investment Agreement, subject to certain notice and approval
requirements, and certain commitments by the Investors. The Investors have
agreed to the following notice and approval requirements: (i) the Investors and
their affiliates will notify the New York Superintendent before exercising the
Warrants or selling any of the Warrants or MONY Notes; (ii) the Investors and
their affiliates must notify the New York Superintendent before the sale of any
securities of MONY Life, the Company or any of their affiliates acquired
pursuant to the Investment Agreement; (iii) the notice and non-disapproval
requirements of Section 1505(c) and (d) of the New York Insurance Law (relating
to transactions within a holding company system) apply to transactions between
the Investors and the Company or any affiliate, except transactions in the
ordinary course of the Investors' business other than transactions involving
investment management or investment advisory services performed by the Investors
for or on behalf of the Company or any affiliate, to which (along with certain
other transactions) the notice requirements of Section 1505(d) of the New York
Insurance Law will apply; and (iv) the Investors will provide to the New York
Superintendent quarterly and annual reports of transactions between the
Investors and the Company or any affiliate. The Investors have also made
commitments to the

15
<PAGE> 17

New York Superintendent as follows: (i) every transaction between the Investors
and the Company or any affiliate will comply with the standards of the New York
Insurance Law related to transactions within a holding company system; (ii) the
Investors will be subject to New York Insurance Law requirements regarding
examinations by the New York Superintendent and violations and penalties in the
context of holding company system; (iii) the Investors will not acquire,
directly or indirectly, any security issued by the Company or any affiliate
except pursuant to the Investment Agreement or in the ordinary course of their
business; (iv) the Investors will not exercise the rights of security holders to
vote (except for certain major corporate transactions), propose directors in
opposition to management, solicit proxies, call special meetings, or dispose or
threaten to dispose of securities as a condition for corporate action or
non-action by the Company or any affiliate; (v) the Investors may have one
representative (with certain restrictions on activities) on the boards of MONY
Life, the Company, or a key subsidiary thereof as long as such boards have at
least 13 members; and (vi) the Investors will not otherwise cause, or attempt to
cause, the direction of the management or policies of, or otherwise exercise
control over, the Company or any affiliate. The determination of non-control
will remain in effect until revoked by the New York Superintendent in accordance
with the New York Insurance Law, at the request of the Investors or upon the
initiative of the New York Superintendent, or the Investors own less than 2% of
the equity securities of the Company.

ASSESSMENTS AGAINST INSURERS

Insurance guaranty association laws exist in all states, the District of
Columbia and Puerto Rico. Insurers doing business in any of these jurisdictions
can be assessed for policyholder losses incurred by insolvent insurance
companies. These arrangements provide certain levels of protection to
policyholders from losses under insurance policies (and certificates issued
under group insurance policies issued by life insurance companies) issued by
insurance companies that become impaired or insolvent. Typically, assessments
are levied (up to prescribed limits) on member insurers on a basis which is
related to the member insurer's proportionate share of the business written by
all member insurers in the appropriate state.

While the amount and timing of any future assessment on MONY Life, under
these laws cannot be reasonably estimated and are beyond the control of MONY
Life. MONY Life has established reserves which it considers adequate for
assessments in respect to insurance companies that are currently subject to
insolvency proceedings. Recent regulatory actions against certain large life
insurers encountering financial difficulty have prompted the various state
insurance guaranty associations to begin assessing life insurance companies for
the deemed loss. Most of these laws do provide, however, that an assessment may
be excused or deferred if it would threaten an insurer's solvency and further
provide for annual limits on such assessments. A large part of the assessments
paid by MONY Life pursuant to these laws may be used as credits for a portion of
MONY Life's premium taxes. The Company believes the total assessments will not
be material to its operating results or financial position. For the years ended
December 31, 1999, 1998 and 1997, the Company paid approximately $0.0 million,
$0.8 million and $3.3 million, respectively, in assessments pursuant to state
insurance guaranty association laws.

General Regulation at Federal Level

Although the federal government generally does not directly regulate the
insurance business, federal initiatives often have an impact on the business in
a variety of ways. Current and proposed federal measures that may significantly
affect the insurance business include limitations on antitrust immunity, minimum
solvency requirements and the recent removal of barriers restricting banks from
engaging in the insurance and mutual fund business.

Securities Laws

The Company, certain of its subsidiaries and certain policies and contracts
offered by such subsidiaries are subject to various levels of regulation under
the federal securities laws administered by the Securities and Exchange
Commission (the "Commission") and under certain state securities laws. Certain
separate accounts and a variety of mutual funds and other pooled investment
vehicles are registered under the Investment Company Act of 1940, as amended
(the "Investment Company Act"). Certain annuity contracts and insurance policies
issued by subsidiaries are registered under the Securities Act of 1933, as
amended (the "Securities Act"), and certain other subsidiaries of the Company
are registered as broker-dealers under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").

MONY Life and certain of its subsidiaries are investment advisors
registered under the Investment Advisers Act of 1940, as amended (the
"Investment Advisers Act"). Certain investment companies managed by such
subsidiaries are registered with the Commission under the Investment Company Act
and the shares of certain of these entities are qualified for sale in certain
states in the United States and the District of Columbia. Certain subsidiaries
of the Company are also subject to the Commission's net capital rules.

All aspects of MONY Life's subsidiaries' investment advisory activities are
subject to various federal and state laws and regulations in jurisdictions in
which they conduct business. These laws and regulations are primarily intended
to benefit investment advisory clients and investment company shareholders and
generally grant supervisory agencies broad administrative powers, including the
power to limit or restrict the carrying on of business for failure to comply
with such laws and regulations. In such event, the possible sanctions which may
be imposed include the suspension of individual

16
<PAGE> 18

employees, limitations on the activities in which the investment advisor may
engage, suspension or revocation of the investment advisor's registration as an
advisor, censure and fines.

MONY Life and its subsidiaries may also be subject to similar laws and
regulations in the states and foreign countries in which they provide investment
advisory services, offer the products described above or conduct other
securities related activities.

ERISA Considerations

On December 13, 1993, the United States Supreme Court issued its opinion in
John Hancock Mutual Life Insurance Company v. Harris Trust and Savings Bank
holding that certain assets in excess of amounts necessary to satisfy guaranteed
obligations held by John Hancock in its general account under a participating
group annuity contract are "plan assets" and therefore subject to certain
fiduciary obligations under the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), which specifies that fiduciaries must perform their duties
solely in the interest of ERISA plan participants and beneficiaries. The Court
limited the imposition of ERISA fiduciary obligations in these instances to
assets in an insurer's general account that were not reserved to pay benefits of
guaranteed benefit policies (i.e., benefits whose value would not fluctuate in
accordance with the insurer's investment experience). On December 22, 1997 the
Secretary of Labor issued proposed regulations, providing guidance for the
purpose of determining, in cases where an insurer issues one or more policies
backed by the insurer's general account to or for the benefit of an employee
benefit plan, the extent to which assets of the insurer constitute plan assets
for purposes of ERISA and the Internal Revenue Code of 1986 (the "Code"). Final
regulations will be issued after a notice and comment period. The regulations
will apply only with respect to a policy issued by an insurer on or before
December 31, 1998. In the case of such a policy, the regulations will generally
take effect at the end of the 18-month period following the date such
regulations become final. Generally, no person will be liable under ERISA or the
Code for conduct occurring prior to the end of such 18-month period, where the
basis of a claim is that insurance company general account assets constitute
plan assets. Insurers issuing new policies after December 31, 1998, that are not
guaranteed benefit policies will be subject to fiduciary obligations under
ERISA.

The regulations should indicate the requirements that must be met in order
to satisfy ERISA's fiduciary standards. A review of the Company's procedures
with respect to its general account contracts will be required to ensure
compliance with the regulations.

Potential Tax Legislation

Congress has, from time to time, considered possible legislation that would
eliminate the deferral of taxation on the accretion of value within certain
annuities and life insurance products. Other possible legislation, including a
simplified "flat tax" income tax structure with an exemption from taxation for
investment income, could also adversely affect purchases of annuities and life
insurance if such legislation were to be enacted. There can be no assurance as
to whether legislation will be enacted which would contain provisions with
possible adverse effects on the Company's annuity and life insurance products.

Environmental Considerations

As owners and operators of real property, MONY Life and certain of its
subsidiaries are subject to extensive federal, state and local environmental
laws and regulations. Inherent in such ownership and operation is also the risk
that there may be potential environmental liabilities and costs in connection
with any required remediation of such properties. In addition, MONY Life and
certain of its subsidiaries hold equity stakes in companies that could
potentially be subject to environmental liabilities. MONY Life assesses the
business and properties and its level of involvement in the operation and
management of such companies. MONY Life routinely conducts environmental
assessments for real estate being acquired for investment and before taking
title through foreclosure to real property collateralizing mortgages held by
MONY Life. While there can be no assurance that unexpected environmental
liabilities will not arise, based on these environmental assessments and
compliance with MONY Life's internal procedures, management believes that any
costs associated with compliance with environmental laws and regulations or any
remediation of such properties would not have a material adverse effect on the
Company's financial position or results of operations.

EMPLOYEES

As of December 31, 1999, the Company had approximately 2,309 employees. No
employees are covered by a collective bargaining agreement. The Company is
represented by approximately 2,417 full time domestic and international career
agents, at December 31, 1999, who are all independent contractors and are not
employees of the Company. The Company believes that its employee and agent
relations are satisfactory.

17
<PAGE> 19

ITEM 1A. EXECUTIVE OFFICERS OF THE REGISTRANT

The names of the executive officers of the MONY Group and MONY Life
Insurance Company and their respective ages and positions are as
follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Michael I. Roth...................... 54 Chairman of the Board, Chief Executive Officer and
Director
Samuel J. Foti....................... 48 President, Chief Operating Officer and Director
Richard Daddario..................... 52 Executive Vice President and Chief Financial Officer
Kenneth M. Levine.................... 53 Executive Vice President, Chief Investment Officer and
Director
Lee M. Smith......................... 56 Vice President and Corporate Secretary
Richard E. Connors................... 47 Senior Vice President of MONY Life Insurance Company
Phillip A. Eisenberg................. 57 Senior Vice President and Chief Actuary of MONY Life
Insurance Company
Stephen J. Hall...................... 52 Senior Vice President of MONY Life Insurance Company
Victor Ugolyn........................ 52 Senior Vice President of MONY Life Insurance Company
Larry Cohen.......................... 47 Vice President and Controller
Dave Weigel.......................... 53 Vice President and Treasurer
</TABLE>

Officers of the Company are elected annually and serve until their
retirement, resignation, death or removal.

Set forth below is a description of the business positions during at
least the past five years for the executive officers of the Company and
MONY Life Insurance Company.

Mr. Roth has been a Director of the Company since September 1997 and is
Chairman and Chief Executive Officer of the Company. He is Chairman of
the Board (since July 1993) and Chief Executive Officer (since January
1993) of MONY Life and has been a Director since May 1991. Mr. Roth is
also a director of the following subsidiaries of MONY Life: MONY Life
Insurance Company of America (since July 1991), and 1740 Advisers, Inc.
(since December 1992). He has also served as MONY Life's President and
Chief Executive Officer (from January 1993 to July 1993), President and
Chief Operating Officer (from January 1991 to January 1993) and
Executive Vice President and Chief Financial Officer (from March 1989 to
January 1991). Mr. Roth has been with MONY Life for 11 years. Mr. Roth
serves on the board of directors of the American Council of Life
Insurance, The Life Insurance Council of New York, Enterprise Foundation
(a charitable foundation which develops housing and which is not
affiliated with the Enterprise Group of Funds), Metropolitan Development
Association of Syracuse and Central New York, Enterprise Group of Funds,
Inc., Enterprise Accumulation Trust, Pitney Bowes, Inc., Lincoln Center
for the Performing Arts Leadership Committee, Life Office Management
Association, New York City Partnership and Chamber of Commerce, Inc.,
and Committee for Economic Development. He is also Chairman of the Board
of Insurance Marketplace Standards Association..

Samuel J. Foti has been a Director of the Company since September 1997
and is President and Chief Operating Officer of the Company. He is
President and Chief Operating Officer (since February 1994) of MONY Life
Insurance Company and has been a Director since January 1993. He is also
President and Chief Operating Officer of MONY Life Insurance Company of
America (since February 1994). Mr. Foti is a director of the following
subsidiaries of MONY Life Insurance Company: MONY Life Insurance Company
of America (since October 1989), MONY Brokerage, Inc. (since January
1990), MONY International Holdings, Inc. (since October 1994), MONY Life
Insurance Company of the Americas, Ltd., (since December 1994) and MONY
Bank & Trust Company of the Americas, Ltd. (since December 1994). He has
also served as MONY Life Insurance Company's Executive Vice President
(from January 1991 to February 1994) and Senior Vice President (from
April 1989 to January 1991). Mr. Foti has been with MONY Life Insurance
Company for 11 years. Mr. Foti previously served on the board of
directors of the Life Insurance Marketing and Research Association,
where he served as Chairman from October 1996 through October 1997, and
currently serves on the boards of Enterprise Group of Funds, Inc.,
Enterprise Accumulation Trust and The American College.

Richard Daddario is Executive Vice President and Chief Financial Officer
of the Company. He is Executive Vice President and Chief Financial
Officer (since April 1994) of MONY Life Insurance Company. Mr. Daddario
is also a director of the following subsidiaries of MONY Life Insurance
Company: MONY Life Insurance Company of America (since October 1989),
MONY Brokerage, Inc. (since June 1997) and MONY Life Insurance Company
of the Americas, Ltd. (since December 1997). He has also served as MONY
Life Insurance Company's Chief Financial Officer (from January 1991 to
present) and Senior Vice President (from July 1989 to April 1994). Mr.
Daddario has been with MONY Life Insurance Company for 10 years.

Kenneth M. Levine has been a Director of the Company since September
1997 and is Executive Vice President and Chief Investment Officer of the
Company since August 1998. He has also been a Director

18
<PAGE> 20

(since May 1994) and Executive Vice President (since February 1990) and
Chief Investment Officer (since January 1991) of MONY Life Insurance
Company. Mr. Levine is also a director of the following subsidiaries of
MONY Life Insurance Company: MONY Life Insurance Company of America
(since July 1991), MONY Series Fund, Inc. (since December 1991), 1740
Advisers, Inc. (since December 1989), MONY Benefits Management Corp.
(formerly MONY Funding, Inc.) (since October 1991), MONY Realty
Partners, Inc. (since October 1991) and 1740 Ventures, Inc. (since
October 1991). He has also served as MONY Life Insurance Company's
Senior Vice President -- Pensions (from January 1988 to February 1990).
Prior to that time, Mr. Levine held various management positions within
MONY Life Insurance Company. Mr. Levine has been with MONY Life
Insurance Company for 27 years.

Lee M. Smith is Corporate Secretary and Vice President, Government
Relations of the Company since September 1999. He is also Corporate
Secretary and Vice President, Government Relations of MONY Life
Insurance Company (since September, 1999). Mr. Smith was Vice President
for Government Relations of MONY Life Insurance Company (from September
1985 to August 1999) and prior to that time held several positions with
MONY Life Insurance Company. Mr. Smith has been with MONY Life insurance
Company for 19 years.

Richard E. Connors is Senior Vice President of MONY Life Insurance
Company (since February 1994). Mr. Connors is also a director of the
following subsidiaries of MONY Life Insurance Company: MONY Life
Insurance Company of America (since June 1994) and MONY Brokerage, Inc.
(since May 1994). He has also served as MONY Life Insurance Company's
Regional Vice President -- Western Region (from June 1991 to February
1994), Vice President -- Small Business Marketing (from January 1990 to
June 1991) and Vice President -- Manpower Development (from March 1988
to January 1990). Mr. Connors has been with MONY Life Insurance Company
for 11 years.

Phillip A. Eisenberg is Senior Vice President and Chief Actuary of MONY
Life Insurance Company (since April 1993). Mr. Eisenberg is also a
director of the following subsidiary of MONY Life Insurance Company:
MONY Life Insurance Company of America (since June 1997). He has also
served as MONY Life Insurance Company's Vice President -- Individual
Financial Affairs (from January 1989 to March 1993). Prior to that time,
Mr. Eisenberg held various positions within MONY Life Insurance Company.
Mr. Eisenberg has been with MONY Life Insurance Company for 35 years.

Stephen J. Hall is Senior Vice President of MONY Life Insurance Company
(since February 1994). Mr. Hall is also a director of the following
subsidiaries of MONY Life Insurance Company: MONY Life Insurance Company
of America (since July 1991) and MONY Brokerage, Inc (since October
1991). He has also served as MONY Life Insurance Company's Vice
President & Chief Marketing Officer (from November 1990 to February
1994) and prior to that time was manager of MONY Life Insurance
Company's Boise, Idaho insurance agency. Mr. Hall has been with MONY
Life Insurance Company for 26 years.

Victor Ugolyn is Senior Vice President of MONY Life Insurance Company
(since May 1991). He is also Chairman and Chief Executive Officer of
Enterprise Capital Management, Inc. (since May 1991); Enterprise Group
of Funds, Inc. (since May 1991); Enterprise Accumulation Trust (since
September 1994); and Enterprise Fund Distributors, Inc. (since May
1991); Chairman of MONY Securities Corporation (since May 1991); and
Chairman and President of Enterprise International Group of Funds (since
October 1994). Mr. Ugolyn is also a Director of the following
subsidiaries or affiliates of MONY Life Insurance Company: Enterprise
Capital Management, Inc. (since May 1991); Enterprise Group of Funds,
Inc. (since May 1991), Enterprise Accumulation Trust (since September
1994), Enterprise Fund Distributors, Inc. (since May 1991), MONY
Securities Corporation (since May 1991), MONY Life Insurance Company of
the Americas, Ltd. (since October 1994), MONY Bank & Trust Company of
the Americas, Ltd. (since December 1994) and Enterprise International
Group of Funds (since October 1994). Mr. Ugolyn has been with MONY Life
Insurance Company for 9 years.

Larry Cohen is Vice President, Controller and Principal Accounting
Officer. He has held that position since 1994. Prior to that he was Vice
President and Tax Director. Mr. Cohen has been with the Company for 8
years.

David Weigel is Vice President and Treasurer (since April 1991). He was
Assistant Treasurer from 1983 to 1991 and prior to that, held several
positions at the Company. Mr. Weigel has been with the Company for 31
years.

ITEM 2. PROPERTIES

The Company leases its headquarters building which is located at 1740
Broadway, New York, New York and consists of approximately 234,903 square feet.
The Company also leases facilities in Syracuse, New York, for use in its
insurance operations, which consist of approximately 635,158 square feet in the
aggregate. The Company also leases all 111 of its agency and its subsidiary
offices, which consist of approximately 669,020 square feet in the aggregate.
The Company believes that such properties are suitable and adequate for its
current and anticipated business operations.
19
<PAGE> 21

ITEM 3. LEGAL PROCEEDINGS

Since late 1995 a number of purported class actions were commenced in
various state and federal courts against the Company alleging that the Company
engaged in deceptive sales practices in connection with the sale of whole and
universal life insurance policies from the 1980s through the mid 1990s. Although
the claims asserted in each case are not identical, they seek substantially the
same relief under essentially the same theories of recovery (i.e., breach of
contract, fraud, negligent misrepresentation, negligent supervision and
training, breach of fiduciary duty, unjust enrichment and violation of state
insurance and/or deceptive business practice laws). Plaintiffs in these cases
seek primarily equitable relief (e.g., reformation, specific performance,
mandatory injunctive relief prohibiting the Company from canceling policies for
failure to make required premium payments, imposition of a constructive trust
and creation of a claims resolution facility to adjudicate any individual issues
remaining after resolution of all class-wide issues) as opposed to compensatory
damages, although they also seek compensatory damages in unspecified amounts.
The Company has answered the complaints in each action, (except for one being
voluntarily held in abeyance), has denied any wrongdoing and has asserted
numerous affirmative defenses.

On June 7, 1996, the New York State Supreme Court certified one of those
cases, Goshen v. The Mutual Life Insurance Company of New York and MONY Life
Insurance Company of America, the Goshen case, being the first of the
aforementioned class actions filed, as a nationwide class consisting of all
persons or entities who have, or at the time of the policy's termination had, an
ownership interest in a whole life or universal life insurance policy issued by
the Company and sold on an alleged "vanishing premium" basis during the period
January 1, 1982 to December 31, 1995. On March 27, 1997, the Company filed a
motion to dismiss or, alternatively, for summary judgment on all counts of the
complaint. All of the other putative class actions have been consolidated and
transferred by the Judicial Panel on Multidistrict Litigation to the United
States District Court for the District of Massachusetts, or are being
voluntarily held in abeyance pending the outcome of the Goshen case.

On October 21, 1997, the New York State Supreme Court granted the Company's
motion for summary judgment and dismissed all claims filed in the Goshen case
against the Company. On December 20, 1999, the New York State Court of Appeals
affirmed the dismissal of all but one of the claims in the Goshen case (a claim
under New York's General Business Law), which has been remanded back to the New
York State Supreme Court for further proceedings consistent with the opinion.
The Company intends to defend itself vigorously against the sole remaining
claim. There can be no assurance that the present litigation relating to sales
practices will not have a material adverse effect on the Company.

On November 16, 1999, the MONY Group, Inc. and MONY Life Insurance Company
were served with a complaint in an action entitled Calvin Chatlos, M.D., and
Alvin H. Clement, On Behalf of Themselves And All Others Similarly Situated v.
The MONY Life Insurance Company, The MONY Group Inc., and Neil D. Levin,
Superintendent, New York Department of Insurance, filed in the United States
District Court for the Southern District of New York. The action purports to be
brought as a class action on behalf of all individuals who had an ownership
interest in one or more in-force life insurance policies issued by MONY Life
Insurance Company as of November 16, 1998. The complaint alleges that (i) the
New York Superintendent of Insurance Neil D. Levin, violated Section 7312 of the
New York Insurance Law by approving the plan of demutualization, which
plaintiffs claim was not fair and adequate, primarily because it allegedly
failed to provide for sufficient assets for the mechanism established under the
plan to preserve reasonable policyholder dividend expectations of the Closed
Block, and (ii) the Company violated Section 7312 by failing to develop and
submit to the Superintendent a plan of demutualization that was fair and
adequate. The plaintiffs seek equitable relief in the form of an order vacating
and/or modifying the Superintendent's order approving the plan of
demutualization and/or directing the Superintendent to order the Company to
increase the assets in the Closed Block, as well as unspecified monetary
damages, attorneys' fees and other relief.

In order to challenge successfully the New York Superintendent's approval
of the plan, plaintiffs would have to sustain the burden of showing that such
approval was arbitrary and capricious or an abuse of discretion, made in
violation of lawful procedures, affected by an error of law or not supported by
substantial evidence. In addition, Section 7312 provides that the Company may
ask the court to require the challenging party to give security for the
reasonable expenses, including attorneys' fees, which may be incurred by the
Company or the Superintendent or for which the Company may become liable, to
which security the Company shall have recourse in such amount as the court shall
determine upon the termination of the action.

On February 2, 2000, the District Court entered an order approving the
voluntary dismissal of the complaint. Under the terms of the order, plaintiffs
have six months from the date thereof to refile in state court, and defendants
have retained the right in any subsequent action to assert that plaintiffs'
claims were time-barred when initially asserted and/or barred by virtue of
plaintiffs' delay (laches) in bringing suit in the first place.

In addition to the foregoing, from time to time the Company is a party to
litigation and arbitration proceedings in the ordinary course of its business,
none of which is expected to have a material adverse effect on the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of 1999, there were no matters submitted to a
vote of security holders, through the solicitation of proxies or otherwise.

20
<PAGE> 22

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

The MONY Group's common stock began trading on the New York Stock Exchange
("NYSE") under the symbol "MNY" on November 11, 1998. Prior to such date, there
was no established public trading market for the common stock. The MONY Group's
common stock is traded on the New York Stock Exchange ("NYSE") under the trading
symbol "MNY". For a description of the use of proceeds from the Offerings see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources".

The following table presents the high and low closing prices for the common
stock of The MONY Group on the NYSE for the period indicated and the quarterly
dividends declared per share.

<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
------ ------ ---------
<S> <C> <C> <C>
1999
First Quarter............................................. $30.94 $23.44 $0.10
Second Quarter............................................ $31.63 $23.50 $0.10
Third Quarter............................................. $33.69 $25.31 $0.10
Fourth Quarter............................................ $31.19 $25.50 $0.10
1998
For the period from November 11, 1998 through December 31,
1998................................................... $32.50 $27.56 N/A
</TABLE>

As of March 13, 2000, the closing price of the MONY Group's common stock
was $27.0625. There were 606,753 holders of common stock at March 13, 2000.

The MONY Group expects to continue to pay a dividend on its common stock of
at least $0.40 per share in 2000. However, because the Company has changed the
frequency of dividend payments from quarterly to annual, it expects to increase
the $0.40 per share dividend to compensate shareholders for the time value of
money. Dividend decisions will be based on and affected by a number of factors,
including the operating results and financial requirements of the MONY Group and
the impact of regulatory restrictions. See "Regulation" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources".

21
<PAGE> 23

ITEM 6. SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following table sets forth Selected Consolidated Financial Information
for the Company. The Selected Consolidated Financial Information as of and for
the years ended December 31, 1999 and 1998 is different, as discussed in Note 1
below, from that presented in the Company's audited consolidated financial
statements contained elsewhere herein. The Selected Consolidated Financial
Information as of and for the years ended December 31, 1997 and 1996 and the
Selected Consolidated Income Statement Data for the year ended December 31, 1995
has been derived from audited financial statements. The consolidated balance
sheet data presented as of December 31, 1995 was derived from unaudited
consolidated financial information not included elsewhere herein which, in the
opinion of management, presents fairly such consolidated financial information
in conformity with GAAP. The selected consolidated financial information should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations", the Company's consolidated financial
statements and the notes thereto and the other financial information included
elsewhere herein.

<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1999 1998 1997 1996 1995(2)
--------- --------- --------- --------- ---------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
(1)(11)(12)
Revenues:
Premiums......................................... $ 717.1 $ 721.8 $ 838.6 $ 859.8 $ 875.9
Universal life and investment-type product policy
fees.......................................... 196.3 151.6 127.3 100.9 80.8
Net investment income............................ 902.3 735.7 733.0 751.6 728.8
Net realized gains (losses) on Investments(2).... 125.1 171.1 72.1 75.9 16.2
Group Pension Profits(3)......................... 63.0 56.8 60.0 59.5 61.7
Other income..................................... 197.2 163.2 145.4 117.3 96.2
--------- --------- --------- --------- ---------
Total revenues................................ 2,201.0 2,000.2 1,976.4 1,965.0 1,859.6
Total benefits and expenses................... 1,818.4 1,706.0 1,788.7 1,864.5 1,797.8
--------- --------- --------- --------- ---------
Income before income taxes and extraordinary
item............................................. 382.6 294.2 187.7 100.5 61.8
Income tax expense(4).............................. 132.0 103.0 57.3 44.0 21.4
--------- --------- --------- --------- ---------
Income before extraordinary item................... 250.6 191.2 130.4 56.5 40.4
Extraordinary item -- demutualization expense,
net.............................................. 2.0 27.2 13.3 -- --
--------- --------- --------- --------- ---------
Net income......................................... $ 248.6 $ 164.0 $ 117.1 $ 56.5 $ 40.4
========= ========= ========= ========= =========
Basic Earnings Per Share(5)........................ 5.26 0.19 xxxx xxxx xxxx
Diluted Earnings Per Share(5)...................... 5.20 0.18 xxxx xxxx xxxx
Cash Dividends Per Common Share.................... 0.40 xxxx xxxx xxxx xxxx

CONSOLIDATED BALANCE SHEET DATA:(11)
Total assets(6)(7)................................. $24,753.4 $24,958.2 $23,611.3 $22,143.5 $21,678.2
Total debt......................................... 298.8 375.4 423.6 422.7 578.4
Total liabilities(8)(9)............................ 22,927.9 23,180.6 22,290.7 20,973.0 20,504.3
Shareholders' equity(10)........................... 1,825.5 1,777.6 1,320.6 1,170.5 1,173.9
</TABLE>

- ---------------

(1) The conversion of the predecessor to MONY Life to a stock life insurance
company and the establishment of the Closed Block have significantly
affected the presentation of our consolidated financial statements. The
most significant effects are as follows:

- The results of the policies included in the Closed Block are reflected
as a single line item in our statements of income, entitled
"Contribution from the Closed Block," whereas, prior to the
establishment of the closed block, the results of such business were
reported in various line items in our income statement, including
premiums, net investment income, net realized gains, benefits,
amortization of deferred policy acquisition costs, etc.

- The assets and liabilities allocated to the closed block are reported
separately in our balance sheet under the captions "Closed Block
assets" and "Closed Block liabilities," respectively.

To assist interested parties in analyzing our consolidated financial
results, the consolidated income statement information for the year ended
December 31, 1999 and the year ended December 31, 1998 present the
individual components of the Closed Block activity for such periods,
combined on a line by line basis, with such activity outside the Closed
Block. This consolidated combined basis income statement is provided to
facilitate comparisons of current period results with that of the other
periods presented.

22
<PAGE> 24
NOTES TO SELECTED CONSOLIDATED FINANCIAL INFORMATION -- (CONTINUED)

(2) Includes writedowns for impairment and net changes in valuation allowances
on real estate, mortgage loans and investment securities aggregating $23.5
million, $24.4 million, $76.0 million, $20.1 million and $54.3 million for
the years ended December 31, 1999, 1998, 1997, 1996, and 1995,
respectively.

(3) For a description of the Group Pension Transaction, the Group Pension
Profits and certain summary financial information relating thereto, refer
to Note 10 of the Consolidated Financial Statements included herein.
Management believes that Group Pension Profits will decline in future
periods consistent with the continuing run-off of the underlying business
until they terminate as of December 31, 2002.

(4) Prior to November 16, 1998, MONY Life, as a mutual life insurance company,
was subject to the surplus tax imposed on mutual life insurance companies
under Section 809 of the Code. Section 809 requires (and the surplus tax
results from) the disallowance of a portion of a mutual life insurance
company's policyholder dividends as a deduction from taxable income. The
income tax expense amounts include $0.0 million, $0.0 million, $5.8
million, $12.8 million and $0.0 million of surplus tax for the years ended
December 31, 1999, 1998, 1997, 1996, and 1995, respectively.

(5) Prior to its reorganization on November 16, 1998, the Company had no common
stock outstanding and, accordingly, did not report per share earnings. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." In accordance with GAAP, per share amounts presented for 1998
include only the results of operations for the period from November 16,
1998 (the effective date of our reorganization) through December 31, 1998.
On a pro forma basis, assuming the reorganization occurred January 1, 1998,
basic and diluted earnings per share would have been $4.05 and $3.99
respectively. See Note 4 to the Consolidated Financial Statements.

(6) Includes assets transferred in the Group Pension Transaction of $5,109.8
million, $5,751.8 million, $5,714.9 million, $5,627.6 million and $5,992.8
million at December 31, 1999, 1998, 1997, 1996, and 1995, respectively. See
Note 10 to the Consolidated Financial Statements.

(7) Includes Closed Block assets of $6,182.1 million and $6,161.2 million at
December 31, 1999 and 1998, respectively. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Note 3 and
Note 20 to the Consolidated Financial Statements.

(8) Includes liabilities transferred in the Group Pension Transaction of
$5,099.1 million, $5,678.5 million, $5,638.7 million, $5,544.1 million and
$5,855.7 million at December 31, 1999, 1998, 1997, 1996, and 1995,
respectively. See Note 10 to the Consolidated Financial Statements.

(9) Includes Closed Block liabilities of $7,303.3 million and $7,290.7 million
at December 31, 1999 and 1998, respectively. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and Note 3
and Note 20 to the Consolidated Financial Statements.

(10) Shareholders' equity at December 31, 1998 includes approximately $248.7
million which represents the remaining net proceeds from MONY Group's
initial public offering after deducting cash used to pay cash to certain
eligible policyholders and cash used to fund policy credits given to
certain eligible policyholders in connection with the Demutualization. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note 1 to the Consolidated Financial Statements.

(11) Prior to 1996, MONY, as a mutual life insurance company, prepared its
financial statements in conformity with accounting practices prescribed or
permitted by the New York Insurance Department, which accounting practices
were considered to be GAAP for mutual life insurance companies. As of
January 1, 1996, MONY adopted Financial Accounting Standards Board (FASB)
Interpretation No. 40, Applicability of Generally Accepted Accounting
Principles to Mutual Life Insurance and Other Enterprises, and SFAS No.
120, Accounting and Reporting by Mutual Life Insurance Enterprises and by
Insurance Enterprises for Certain Long Duration Participating Policies.
Interpretation No. 40 and SFAS No. 120 require mutual life insurance
companies to adopt all applicable authoritative GAAP pronouncements in
their general purpose financial statements. Accordingly, the financial
information presented in the Selected Consolidated Financial Information
for periods prior to 1996 has been derived from financial information of
MONY which has been retroactively restated to reflect the adoption of all
applicable authoritative GAAP pronouncements. All such applicable
pronouncements were adopted as of the effective date originally specified
in each such pronouncement.

(12) The comparability of the Company's results of operations for the years
ended December 31, 1999 and 1998 with prior years is affected by the sale
of the Company's disability income business pursuant to the DI Transaction.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations".

23
<PAGE> 25

ITEM 7.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion addresses the financial condition and results of
operations of the Company for the periods indicated. The discussion of the
Company's financial results of operations is based on the results of the Closed
Block for the year ended December 31, 1999 and the period from November 16, 1998
through December 31, 1998 combined on a line by line basis with the results of
operations outside the Closed Block, for such respective periods as further
discussed below. The discussion and analysis of the Company's financial
condition and results of operations presented below should be read in
conjunction with the "Selected Consolidated Financial Information" and the
Consolidated Financial Statements and related footnotes and other financial
information included elsewhere herein.

GENERAL

The MONY Group was incorporated on June 24, 1997, under the laws of
Delaware, as a wholly owned subsidiary of MONY. The MONY Group was formed for
the purpose of becoming the parent holding company of MONY pursuant to the Plan.
On November 16, 1998, the Plan was approved by the New York Superintendent of
Insurance and MONY converted from a mutual life insurance company to a stock
life insurance company and became a wholly owned subsidiary of the MONY Group.
In connection with the Plan, MONY established the Closed Block to fund the
guaranteed benefits and dividends of certain participating insurance policies
(see Note 3 to the Consolidated Financial Statements) and eligible policyholders
of MONY received either cash, policy credits, or shares of common stock in the
MONY Group in exchange for their membership interests in MONY. Also, on November
16, 1998, the MONY Group consummated an initial public offering (the
"Offerings") of approximately 12.9 million shares of its common stock (see
"Liquidity and Capital Resources") and MONY changed its name to MONY Life. The
shares of common stock issued in the Offerings are in addition to approximately
34.3 million shares of common stock of the MONY Group distributed to the
aforementioned eligible policyholders. The MONY Group has no other operations or
subsidiaries.

MONY's conversion to a stock life insurance company and the establishment
of the Closed Block have significantly affected the presentation of the
consolidated financial statements of the Company. The most significant effects
are as follows:

(i) the actual results of the Closed Block's operations are reflected as a
single line item in the Company's statements of income, entitled
"Contribution from the Closed Block", whereas, prior to the
establishment of the Closed Block the results of its operations were
reported in various line items in the Company's income statement,
including premiums, net investment income, net realized gains,
benefits, amortization of deferred policy acquisition costs, etc.

(ii) all assets and liabilities allocated to the Closed Block are reported
separately in the Company's balance sheet under the captions "Closed
Block assets" and "Closed Block liabilities", respectively, whereas
prior to the establishment of the Closed Block such assets and
liabilities were reported in various line items in the Company's
balance sheet, including fixed maturity securities, mortgage loans on
real estate, policy loans, deferred policy acquisition costs, etc.

(iii) revenues and expenses reported in the income statement for the year
ended December 31, 1998 represent all revenues and associated
expenses earned or incurred during such period, however, in
accordance with generally accepted accounting principles, actual
"basic" and "diluted" per share amounts are presented only for
periods subsequent to the effective date of the Plan (see Notes 4 and
21 to the Consolidated Financial Statements).

The pre-tax Contribution from the Closed Block for the year ended December
31, 1999, the first full year operation for the Closed Block, was $44.8 million.
The pre-tax Contribution from the Closed Block for period from November 16, 1998
(the date of MONY's reorganization) through December 31, 1998 was $5.7 million.
The proforma basis pre-tax Contribution from the Closed Block for the year ended
December 31, 1998, assuming the Closed Block had been established on January 1,
1998 is $52.2 million. The Closed Block includes only those revenues, benefit
payments, dividends and premium taxes considered in funding the Closed Block and
excludes many costs and expenses associated with operating the Closed Block and
administering the policies included therein. Since many expenses related to the
Closed Block were excluded from the calculation of the Closed Block
contribution, the contribution from the Closed Block does not represent the
actual profitability of the business in the Closed Block. As a result, operating
costs and expenses outside the Closed Block are disproportionate to the business
outside the Closed Block.

SEGMENTS

24
<PAGE> 26

variable universal life, last survivor variable universal life, and group
universal life. The Protection Products segment also includes the in-force
business from sales of last survivor universal life and last survivor whole
life, which are not currently being offered by the Company. Also included in the
Protection Products segment are the: (i) assets and liabilities transferred
pursuant to the Group Pension Transaction, as well as the related profits
therefrom, as hereafter defined (see The Group Pension Transaction), (ii) the
Closed Block assets and liabilities, as well as the Contribution from the Closed
Block, and (iii) the Company's disability income insurance business which was
transferred in the DI Transaction (see DI Transaction). In its Accumulation
Products segment, the Company primarily offers flexible payment variable
annuities and proprietary retail mutual funds. The Accumulation Products segment
also includes the in-force business from single premium deferred annuities and
immediate annuities which are not currently being offered by the Company. The
Company's Other Products segment primarily consists of a securities
broker-dealer operation, an insurance brokerage operation and the Run-Off
Businesses. In addition to selling the Company's proprietary investment
products, the securities broker-dealer operation provides customers of the
Company's protection and accumulation products access to other non-proprietary
investment products (including stocks, bonds, limited partnership interests,
tax-exempt unit investment trusts and other investment securities). The
insurance brokerage operation provides the Company's career agency sales force
with access to life, annuity, small group health and specialty insurance
products written by other carriers to meet the insurance and investment needs of
its customers. The Run-Off Businesses primarily consist of group life and health
insurance as well as the group pension business that was not included in the
Group Pension Transaction.

Except for various allocations discussed below, the accounting policies of
the segments are the same as those described in the preparation of the
Consolidated Financial Statements (see Note 4 to the Consolidated Financial
Statements). The Company evaluates the performance of each operating segment
based on profit or loss from operations before income taxes and nonrecurring
items (e.g. items of an unusual or infrequent nature). The Company does not
allocate certain nonrecurring items to the segments. In addition, all segment
revenues are from external customers.

Assets have been allocated to the segments in amounts sufficient to support
the associated liabilities of each segment. Capital is allocated to each segment
in amounts sufficient to maintain a targeted regulatory risk-based capital
("RBC") level for each segment. Allocations of net investment income and net
realized gains on investments were primarily based on the amount of assets
allocated to each segment. Other costs and operating expenses were allocated to
each of the segments based on: (i) a review of the nature of such costs, (ii)
time studies analyzing the amount of employee compensation costs incurred by
each segment, and (iii) cost estimates included in the Company's product
pricing. Substantially all non-cash transactions and impaired real estate
(including real estate acquired in satisfaction of debt) have been allocated to
the Protection Products segment.

FACTORS AFFECTING PROFITABILITY

The Company derives its revenues principally from: (i) premiums on
participating individual life insurance, (ii) insurance, administrative and
surrender charges on universal life and annuity products, (iii) asset management
fees from separate account and mutual fund products, (iv) net investment income
on general account assets, (v) the Group Pension Profits, See "-- The Group
Pension Transaction" and (vi) commissions from securities and insurance
brokerage operations. The Company's expenses consist of insurance benefits
provided to policyholders, interest credited on policyholders' account balances,
dividends to policyholders, the cost of selling and servicing the various
products sold by the Company, including commissions to sales representatives
(net of any deferrals), and general business expenses.

The Company's profitability depends in large part upon (i) the amount of
its assets, (ii) the adequacy of its product pricing (which is primarily a
function of competitive conditions, management's ability to assess and manage
trends in mortality and morbidity experience as compared to the level of benefit
payments, and its ability to maintain expenses within pricing assumptions),
(iii) the maintenance of the Company's target spreads between credited rates on
policyholders' account balances and the rate of earnings on its investments,
(iv) the persistency of its policies (which affects the ability of the Company
to recover the costs incurred to sell a policy) and (v) its ability to manage
the market and credit risks associated with its invested assets. External
factors, such as legislation and regulation of the insurance marketplace and
products, may also affect the Company's profitability.

25
<PAGE> 27

The following tables present the Company's consolidated and segment results
of operations for the years ended December 31, 1999, 1998, and 1997. For
comparability with prior periods, the results of operations of the Closed Block
for the year ended December 31, 1999 and the period from November 16, 1998 (the
date of the formation of the Closed Block) to December 31, 1998 have been
combined on a line by line basis with the results of operations outside the
Closed Block. In all other respects the financial information herein is
presented in accordance with GAAP unless otherwise noted. Management's
Discussion and Analysis, which follows this table, discusses the Company's
consolidated and segment results of operations on the aforementioned combined
basis unless otherwise noted.

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1999
----------------------------------------------------------------------
PROTECTION ACCUMULATION OTHER RECONCILING(1) CONSOLIDATED
---------- ------------ ------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues
Premiums....................................... $ 702.8 $ 0.9 $ 13.4 $ -- $ 717.1
Universal life and investment-type product
policy fees.................................. 122.3 73.3 0.7 -- 196.3
Net investment income and realized gains on
investments.................................. 823.1 132.4 69.6 2.3 1,027.4
Group Pension Profits(2)....................... 63.0 -- -- -- 63.0
Other income................................... 16.6 95.1 80.7 4.8 197.2
-------- ------ ------ ------ --------
1,727.8 301.7 164.4 7.1 2,201.0
Benefits and Expenses
Benefits to policyholders...................... 741.8 18.4 22.4 4.5 787.1
Interest credited to policyholders' account
balances..................................... 48.9 55.3 11.3 -- 115.5
Amortization of deferred policy acquisition
costs........................................ 107.1 30.7 -- -- 137.8
Dividends to policyholders..................... 227.5 2.0 1.2 -- 230.7
Other operating costs and expenses............. 287.5 105.7 93.7 60.4 547.3
-------- ------ ------ ------ --------
1,412.8 212.1 128.6 64.9 1,818.4
-------- ------ ------ ------ --------
Income before income taxes and extraordinary
item........................................... $ 315.0 $ 89.6 $ 35.8 $(57.8) 382.6
======== ====== ====== ======
Income tax expense............................... 132.0
--------
Income before extraordinary items................ 250.6
Extraordinary items.............................. 2.0
--------
Net Income....................................... $ 248.6
========
</TABLE>

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1998
----------------------------------------------------------------------
PROTECTION ACCUMULATION OTHER RECONCILING(1) CONSOLIDATED
---------- ------------ ------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues
Premiums....................................... $ 702.3 $ 2.6 $ 16.9 $ -- $ 721.8
Universal life and investment-type product
policy fees.................................. 86.2 64.1 1.3 -- 151.6
Net investment income and realized gains on
investments.................................. 704.5 136.3 63.8 2.2 906.8
Group Pension Profits(2)....................... 56.8 -- -- -- 56.8
Other income................................... 23.6 72.8 61.1 5.7 163.2
-------- ------ ------ ---- --------
1573.4 275.8 143.1 7.9 2,000.2
Benefits and Expenses
Benefits to policyholders...................... 731.9 19.0 31.0 7.9 789.8
Interest credited to policyholders' account
balances..................................... 42.5 60.6 10.6 -- 113.7
Amortization of deferred policy acquisition
costs........................................ 101.4 29.6 -- -- 131.0
Dividends to policyholders..................... 215.2 1.7 1.3 -- 218.2
Other operating costs and expenses............. 288.7 84.4 80.2 -- 453.3
-------- ------ ------ ---- --------
1,379.7 195.3 123.1 7.9 1,706.0
-------- ------ ------ ---- --------
Income before income taxes and extraordinary
item........................................... $ 193.7 $ 80.5 $ 20.0 $ -- 294.2
======== ====== ====== ====
Income tax expense............................... 103.0
--------
Income before extraordinary items................ 191.2
Extraordinary items.............................. 27.2
--------
Net Income....................................... $ 164.0
========
</TABLE>

26
<PAGE> 28

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
----------------------------------------------------------------------
PROTECTION ACCUMULATION OTHER RECONCILING(1) CONSOLIDATED
---------- ------------ ------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues
Premiums................................ $ 817.0 $ 5.0 $ 16.6 $ -- $ 838.6
Universal life and investment-type
product policy fees.................. 74.9 50.9 1.5 -- 127.3
Net investment income and realized gains
on investments....................... 611.9 131.4 59.9 1.9 805.1
Group Pension Profits(2)................ 60.0 -- -- -- 60.0
Other income............................ 34.9 52.1 53.1 5.3 145.4
-------- ------ ------ ----- --------
1,598.7 239.4 131.1 7.2 1,976.4
Benefits and Expenses
Benefits to policyholders............... 776.8 21.2 35.0 7.1 840.1
Interest credited to policyholders'
account balances..................... 44.3 71.4 10.4 (0.2) 125.9
Amortization of deferred policy
acquisition costs.................... 146.8 34.4 -- -- 181.2
Dividends to policyholders.............. 221.0 2.0 1.2 0.1 224.3
Other operating costs and expenses...... 280.8 66.3 66.2 3.9 417.2
-------- ------ ------ ----- --------
1,469.7 195.3 112.8 10.9 1,788.7
-------- ------ ------ ----- --------
Income before income taxes and
extraordinary item...................... $ 129.0 $ 44.1 $ 18.3 $(3.7) 187.7
======== ====== ====== =====
Income tax expense........................ 57.3
--------
Income before extraordinary items......... 130.4
Extraordinary items....................... 13.3
--------
Net income................................ $ 117.1
========
</TABLE>

- ---------------
(1) Amounts reported as "reconciling" primarily relate to: (i) contracts issued
by MONY Life relating to its employee benefit plans, (ii) revenues and
expenses of the MONY Group and (iii) a one-time restructuring charge in 1999
of $59.7 million pretax relating to the Company's early retirement program.
(2) See Note 10 to the Consolidated Financial Statements contained herein.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

Premiums --

Premium revenue was $717.1 million for 1999, a decrease of $4.7 million, or
0.7%, from $721.8 million reported for 1998. The decrease resulted primarily
from $1.7 million of lower sales of immediate annuities in the Accumulation
Products segment and $3.5 million of lower premiums relating primarily to group
pension business recorded in the Other Products segment. The increase in
premiums of $0.5 million in the Protection Products segment was primarily due to
$20.6 million of premiums from Sagamore which was acquired at December 31, 1998,
offset by (i) lower renewal premiums of approximately $18.8 million, and (ii)
lower single premiums of approximately $1.8 million.

Universal life and investment-type product policy fees --

Universal life and investment-type product policy fees were $196.3 million
for 1999, an increase of $44.7 million, or 29.5%, from $151.6 million reported
for 1998. The increase in fees during 1999, as compared to 1998, consisted of
higher Protection Products segment fees of $36.1 million and higher Accumulation
Product segment fees of $9.2 million. The increase in fees in the Protection
Products segment was primarily due to higher fees from the Company's variable
universal life ("VUL") and corporate sponsored variable universal life ("CSVUL")
business of approximately $13.9 million and $3.3 million, respectively. For
1999, the Company reported total fees from its VUL business of $33.7 million, as
compared to $19.8 million reported for 1998. The increase in VUL fees is
primarily due to higher charges for the cost of insurance, loading,
administration, and surrender charges. The increase in fees in the Accumulation
Products segment was primarily due to an increase in surrender charges of $7.8
million on the Company's FPVA business. Surrenders were $872.6 million, as
compared to $537.8 million in 1998. The increase in surrenders were primarily
due to the aging of the block of business and consequent decrease in surrender
charges and increased competition. During 1999,

27
<PAGE> 29

FPVA account values increased by approximately $114.3 million. For 1999, the
Company reported total fees from its FPVA business of $72.8 million, as compared
to $63.4 million reported for 1998. See "New Business Information".

Net investment income and realized gains on investments --

Net investment income was $902.3 million for 1999, an increase of $166.6
million, or 22.6%, from $735.7 million reported for 1998. The increase in net
investment income is primarily due to the combination of higher yields on
invested assets (mostly due to higher equity partnerships income), higher
average balances, and changes in the mix of invested assets during 1999, as
compared to 1998. Higher yields on invested assets in 1999, resulted in higher
investment income of approximately $108.3 million. In addition, an increase in
the Company's average total invested assets between the periods of approximately
$379.8 million, as well as changes in the mix of invested assets from real
estate to relatively higher yielding fixed maturity securities, mortgages and
equity securities resulted in additional increases in investment income of
approximately $58.3 million. The increase in average invested assets was
primarily a result of IPO proceeds received, gains on sales of real estate, and
positive cash flow from operations and investing activities between the periods.
For 1999, the Company's average investment in fixed maturity securities (before
cumulative unrealized gains or losses), mortgages, equity securities and cash
and short term securities increased by approximately $494.1 million, $141.7
million, $91.0 million and $31.9 million, respectively, while real estate and
other invested assets (mostly real estate partnerships) decreased by
approximately $374.0 million, and $15.3 million, respectively. As of December
31, 1999, invested assets were $10,831.8 million (including cumulative
unrealized losses of $206.4 million for fixed maturity securities) compared to
$10,991.2 million (including cumulative unrealized gains of $252.5 million for
fixed maturity securities) for the prior period. At December 31, 1999, fixed
maturity securities, mortgage loans and real estate represented approximately
60.4%, 15.8% and 3.4%, respectively, of total invested assets, as compared to
61.0%, 12.9% and 5.7%, respectively, at December 31, 1998. The annualized yield
on the Company's invested assets before and after realized gains/(losses) on
investments was 8.3% and 9.4%, respectively, for the year ended December 31,
1999, as compared to 7.0% and 8.6%, respectively, for the year ended December
31, 1998.

Net realized capital gains were $125.1 million for 1999, a decrease of
$46.0 million, or 26.9%, from $171.1 million for the comparable prior year
period. The decrease is due to lower sales gains on real estate and real estate
partnerships of $89.2 million, lower gains on prepayments and sales of fixed
maturities securities of $25.5 million, higher valuation allowances on mortgages
of $6.1 million, higher valuation allowances for real estate added to the held
for sale category of $0.4 million, offset by higher sales gains on equity
securities of $70.1 million and lower losses for other than temporary impairment
on fixed maturities securities of $8.4 million. Gains on the sale of real estate
and real estate partnerships were $68.2 million for 1999, compared to $157.4
million for the prior year period. Prepayment/sales losses for fixed maturities
were $1.9 million for 1999, compared to gains of $23.6 million for the prior
year period. Additional allowances for mortgages were $3.1 million for 1999,
compared to gains of $3.0 million for the prior year period. Additional
provisions for valuation allowances on real estate held for sale were $12.1
million for 1999, compared to $11.7 million for the prior year period. Gains on
sales of equity securities were $77.6 for 1999, compared to $7.5 million for the
prior year period. Losses on other than temporary impairments on fixed maturity
securities we $6.7 million for 1999, compared to $15.1 million for the prior
year period.

Net investment income and net realized gains on investments are allocated
to the Company's segments based on the assets allocated to such segments to
support the associated liabilities of each segment and to maintain a targeted
regulatory risk-based capital level for each segment. See "Segments".

Group Pension Profits --

Group Pension Profits were $63.0 million for 1999, an increase of $6.2
million, or 10.9%, from $56.8 million in 1998. Group Pension Profits in 1999
consisted of $35.7 million of Group Pension Payments and $27.3 million relating
to adjustments required to reflect the earnings from such payments in accordance
with GAAP. Such adjustments primarily relate to changes in the valuation
allowances established to recognize impairment of assets supporting the business
transferred in the Group Pension Transaction. In 1998, Group Pension Profits
consisted of $49.8 million of Group Pension Payments and a $7.0 million
reduction in the valuation allowances established to recognize impairment of
assets supporting the business transferred in the Group Pension Transaction. The
increase in Group Pension Profits is primarily due to a release of valuation
allowances on real estate sold during 1999, offset by decreases in the Group
Pension Payments, which is consistent with the continuing run-off of the
Existing Deposits.

For a description of the Group Pension Transaction, the Group Pension
Profits and certain summary financial information relating thereto, refer to
Note 10 of the Consolidated Financial Statements included herein. Management
believes that Group Pension Profits will decline in future periods consistent
with the continuing run-off of the underlying business until they terminate as
of December 31, 2002.

28
<PAGE> 30

Other income --

Other income (which consists primarily of fees earned by the Company's
mutual fund management, broker-dealer, and insurance brokerage operations, as
well as revenues from interest on deposits held under financial reinsurance
arrangements, certain other asset management fees, and other miscellaneous
revenues) was $197.2 million for 1999, an increase of $34.0 million, or 20.8%,
from $163.2 million reported for 1998. The increase was primarily due to higher
income of $22.3 million and $19.6 million in the Accumulation Products and Other
Products segments, respectively, offset in part by lower income of $7.0 million
in the Protection Products segment. The increase in income recorded in the
Accumulation Products segment was primarily attributable to higher fees earned
by the Company's mutual fund management operations. The Company's mutual fund
management operations reported $84.9 million in fees from advisory, underwriting
and distribution services in 1999, as compared to $61.8 million reported in
1998, as assets under management increased to approximately $8.8 billion at
December 31, 1999 from $6.9 billion at December 31, 1998. The increase in income
recorded in the Other Products segment was primarily due to higher commissions
earned by the Company's broker-dealer operations of $19.9 million. During 1999,
the Company's broker-dealer operations reported commission earnings of $63.4
million, as compared to $43.5 million reported in 1998. The decrease in other
income recorded in the Protection Products segment of $7.0 million was primarily
due to reinsurance allowances of $5.9 million.

Benefits to policyholders --

Benefits to policyholders were $787.1 million for 1999, a decrease of $2.7
million, or 0.3%, from $789.8 million reported for 1998. The decrease consisted
primarily of; (i) lower benefits of approximately $0.6 million and $8.6 million
recorded in the Accumulation Products and Other Products segment, respectively,
(ii) lower benefits of approximately $3.4 million incurred by the Company's
benefit plans (which are reflected as a reconciling item in the table above),
offset in part by, (iii) higher benefits of $9.9 million in the Protection
Products segment. The decrease of $0.6 million in the Accumulation Products
segment was primarily due to lower reserves on immediate annuities resulting
from lower sales offset by an increase in the issuance of supplementary
contracts during 1999. The decrease of $8.6 million in the Other Products
segment was primarily due to lower benefits of $4.3 million relating to the
Company's retained group pension business and lower aviation losses of $2.0
million resulting from the Company's reduced participation in an aviation pool.
The increase in the Protection Products segment of $9.9 million was primarily
due to; (i) $26.7 million of benefits related to Sagamore and, (ii) a $60.6
million increase in surrenders on traditional business to $383.0 million for
1999, as compared to $322.4 million for 1998, offset in part by, (iii) a
decrease in reserves on traditional business of approximately $74.1 million at
December 31, 1999, from $165.6 million at December 31, 1998.

Interest credited to policyholders' account balances --

Interest credited to policyholders' account balances was $115.5 million for
1999, an increase of $1.8 million, or 1.6%, from $113.7 million reported for
1998. The increase consisted primarily of; (i) higher interest crediting of $4.3
million in the Protection Products segment resulting from the consolidation of
Sagamore, offset primarily by, (ii) lower interest crediting of approximately
$5.3 million in the Accumulation Products segment relating to the Company's
single premium deferred annuity ("SPDA") business. During 1999, SPDA account
value decreased approximately $77.8 million to $379.4 million, as compared to
$457.2 million at the end of 1998. The decrease in account value in 1999 was
primarily due to continuing withdrawals, which management believes partially
reflects consumer preferences for separate account products. Average interest
crediting rates on the Company SPDA's were approximately 5.3% and 5.5% in 1999
and 1998, respectively.

Amortization of deferred policy acquisition costs --

Amortization of deferred policy acquisition costs ("DAC") was $137.8
million for 1999, an increase of $6.8 million, or 5.2%, from $131.0 million
reported for 1998. The increase primarily resulted from higher amortization in
both the Protection Products and Accumulation Products segments of approximately
$5.7 million and $1.1 million, respectively. The increase in DAC amortization in
the Protection Products segment primarily consisted of: (i) $1.1 million related
to the consolidation of Sagamore, (ii) $6.6 million of higher amortization
related to the Company's VUL business as a result of better mortality and rapid
growth in this product, (iii) $5.9 million of higher amortization related to the
Company's international business as a result of poor persistency, offset in part
by, (iv) a decrease in amortization of approximately $8.3 million related to
traditional life products. The increase in DAC amortization of $1.1 million in
the Accumulation Products segment was primarily due to the aging block of FPVA
business.

Dividends to policyholders --

Dividends to policyholders were $230.7 million for 1999, an increase of
$12.5 million, or 5.7%, from $218.2 million reported for 1998. The increase,
substantially all of which occurred in the Protection Products segment, resulted
primarily the accrual of an additional dividend liability in the Closed Block of
approximately $9.5 million reflecting results that were more favorable than
assumed in the funding of the Closed Block. As further discussed in Note 3 to
the Consolidated Financial Statements included elsewhere herein, all the assets
in the Closed Block inure solely to the benefit of the Closed Block
policyholders, and to the extent that the results of the Closed Block are more
favorable than assumed in

29
<PAGE> 31

establishing the Closed Block, total dividends paid to Closed Block
policyholders will be increased and are, accordingly, accrued as an additional
dividend liability. Only the excess of the Closed Block liabilities over the
Closed Block assets at the date of the establishment of the Closed Block
(November 16, 1998) will be recognized in the Company's income over the period
the policies and contracts in the Closed Block remain in force.

Other operating costs and expenses --

Other operating costs and expenses were $547.3 million for 1999, an
increase of $94.0 million, or 20.7%, from $453.3 million reported for 1998. The
increase of $94.0 million consisted primarily of approximately $27.1 million,
$19.1 million, and $19.7 million of costs directly attributable to the
Protection Products, Accumulation Products and Other Products segment,
respectively, as well as higher allocable and other miscellaneous direct costs
of approximately $28.1 million. To the extent that costs are not directly
identifiable with an operating segment, such costs are allocated to the
Company's operating segments based on cost allocations utilizing time studies,
and cost estimates included in the Company's product pricing (see "Segments").
As further discussed below, the increase in operating costs and expenses in 1999
as compared to 1998 was primarily attributable to: (i) higher commissions and
other selling costs associated with the increase in revenues reported by the
Company's mutual fund and broker-dealer operations, (ii) the consolidation of
Sagamore, (iii) the Company's continuing investment in its international
operations and (iv) certain strategic initiatives, offset by (v) certain
operating efficiencies and other cost reductions. Following sets forth
additional information with respect to the increase in operating costs in 1999,
as compared to 1998:

The increase of $27.1 million in costs directly attributable to the
Protection Products segment consisted of $16.3 million from the consolidation of
Sagamore and an increase of $10.8 million in costs related to the company's
international operations, which was primarily due to increased compensation
costs associated with the recruitment of additional international sales
representatives and costs incurred to develop and administer new products.
During 1999, the number of international field representatives increased 139 to
318 at December 31, 1999, as compared to 179 at December 31, 1998. The increase
of $19.1 million in costs directly attributable to the Accumulation Products
segment primarily consisted of higher sub-advisory fees and other expenses
incurred by the Company's mutual fund management operations, which directly
corresponded with an increase in revenues from such operations (see discussion
and analysis of other income above). The increase of $19.7 million in costs
directly attributable to the Other Products segment primarily consisted of
higher commissions and other expenses incurred by the Company's broker-dealer
operations, which directly corresponded with an increase in revenues from such
operations (see discussion and analysis of other income above). The net increase
in other allocable operating costs and expenses primarily consisted of (i) a
one-time restructuring charge of $59.7 million relating to the Company's
voluntary early retirement program -- see Early Retirement Program discussion
below, (ii) $3.3 million of transfer agent fees, (iii) $7.1 million related to
and increase in company benefit plan expenses, offset by (iv) $10.8 million of
lower costs associated with addressing the Year 2000 issue, and (v) $25.8
million of lower cost associated with restructuring the Company's career agency
sales force, savings resulting from the early retirement program and other
strategic initiatives.

The Company's provision for federal income taxes in 1999 was $132.0
million, compared to $103.0 million in 1998. The Company's effective tax rate
before extraordinary item was approximately 34.5% in 1999, as compared to
approximately 35.0% in 1998.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

Premiums --

Premium revenue was $721.8 million for 1998, a decrease of $116.8 million,
or 13.9%, from $838.6 million reported for 1997. The decrease, substantially all
of which (approximately $114.7 million) occurred in the Company's Protection
Products segment, was primarily due to: (i) lower premiums of approximately
$74.4 million due to the transfer of the Company's disability income insurance
business in December of 1997 pursuant to the DI Transaction, as hereafter
defined (see "DI Transaction"), (ii) lower new and renewal premiums of
approximately $6.1 million and $26.1 million, respectively, and (iii) lower
single premiums of approximately $8.1 million due to a reduction in the
Company's dividend scales (substantially all single premiums result from
policyholders electing to buy additional insurance coverage with dividends
received on existing policies).

Universal life and investment-type product policy fees --

Universal life and investment-type product policy fees were $151.6 million
for 1998, an increase of $24.3 million, or 19.1%, from $127.3 million reported
for 1997. The increase in fees during 1998, as compared to 1997, consisted of
higher Protection Products segment fees of $11.3 million and higher Accumulation
Product segment fees of $13.2 million. The increase in fees in the Protection
Products segment was primarily due to higher fees from the Company's VUL and
corporate sponsored variable universal life ("CSVUL") business of approximately
$9.8 million and $3.2 million, respectively. The Company first began offering
CSVUL business during the 4th quarter of 1998. For 1998, the Company reported
total fees from its VUL business of $27.5 million, as compared to $17.7 million
reported for 1997. The increase in VUL fees is primarily due to higher charges
for the cost of insurance, administration, and loading. The increase in fees in
the Accumulation Products segment was primarily due to an increase of $13.4
million in fees from the Company's FPVA

30
<PAGE> 32

business resulting primarily from an increase in the account value of such
products. During 1998, FPVA account values increased by approximately $460.0
million. The average FPVA account value during 1998 was approximately $4.5
billion, as compared to $3.7 billion in 1997. For 1998, the Company reported
total fees from its FPVA business of $63.4 million, as compared to $50.0 million
reported for 1997. See "New Business Information".

Net investment income and realized gains on investments --

Net investment income was $735.7 million for 1998, an increase of $2.7
million, or 0.4%, from $733.0 million reported for 1997. Lower interest rates in
1998 resulted in lower investment income of approximately $22.0 million, while
an increase in the Company's average total invested assets during 1998 of
approximately $179.9 million, as compared to 1997, and changes in the mix of
invested assets from lower yielding real estate to higher yielding fixed
maturity securities resulted in an increase in investment income of
approximately $24.7 million. The effect of investing new money of approximately
$2.4 billion (including the proceeds from prepayments, sales and maturities of
its invested assets, as well as net cash flow from operating activities),
reduced the total yield on invested assets by approximately 10 basis points in
1998 compared to 1997. Average total invested assets in 1998 increased, as
compared to 1997; primarily as a result of proceeds received in the Offerings
and positive cash flow from operations and investing activities. During 1998,
the Company's average investment in fixed maturity securities (before unrealized
gains or losses) increased by approximately $539.8 million, while its average
investment in mortgage loans and real estate decreased by approximately $81.1
million and $435.5 million, respectively. At December 31, 1998, fixed maturity
securities, mortgage loans and real estate represented approximately 61.0%,
12.9% and 5.7%, respectively, of total invested assets, as compared to 56.9%,
13.7% and 10.6%, respectively, at December 31, 1997. The annualized yield on the
Company's invested assets before and after realized gains/(losses) on
investments was 7.0% and 8.6%, respectively, for the year ended December 31,
1998, as compared to 7.1% and 7.8%, respectively, for 1997. See "Investments".

Net realized gains on investments were $171.1 million for 1998, an increase
of $99.0 million, or 137.3%, from $72.1 million reported for 1997. The increase
is primarily due to higher gains on sales of real estate and real estate
partnership equities, lower provisions for valuation allowances on real estate
to be disposed of, lower impairment writedowns on real estate held for
investment, and higher gains on prepayments and sales of fixed maturities,
partially offset with lower gains from sales of equity securities, higher other
than temporary impairment losses on fixed maturities, and an increase in the
provision for mortgage loan valuation allowances. Realized gains on sales of
real estate and real estate partnership equities totaled $157.4 million for
1998, as compared to $88.1 million for 1997. See "Real Estate Sales". Provisions
for valuation allowances on real estate to be disposed of and impairment
writedowns on real estate held for investment aggregated $11.7 million in 1998,
as compared to $64.2 million in 1997. Net realized gains from prepayments and
sales of fixed maturities were $23.6 million in 1998, as compared to $13.3
million in 1997. Realized gains on sales of equity securities were $7.5 million
in 1998, as compared to $39.9 million in gains in 1997. Other than temporary
impairment losses on fixed maturities were $15.1 million in 1998, as compared to
$6.1 million in 1997. Provisions for mortgage loan valuation allowances were
$0.6 million in 1998, as compared to recoveries of $4.7 million in 1997.

Group Pension Profits --

Group Pension Profits (see Note 10 to the Consolidated Financial
Statements) were $56.8 million for 1998, a decrease of $3.2 million, or 5.3%,
from $60.0 million reported for 1997. Group Pension Profits in 1998 consisted of
$49.8 million of Group Pension Payments and $7.0 million relating to adjustments
required to reflect the earnings from such payments in accordance with GAAP.
Such adjustments primarily relate to changes in the valuation allowances
established to recognize impairment of assets supporting the business
transferred in the Group Pension Transaction. In 1997, Group Pension Profits
consisted of $55.7 million of Group Pension Payments and a $4.3 million
reduction in the valuation allowances established to recognize impairment of
assets supporting the business transferred in the Group Pension Transaction.
Group Pension Payments in 1998 decreased from that recorded in 1997 primarily
because of the continuing run-off of the Existing Deposits. The decrease in
valuation allowances in 1998 resulted primarily from the decrease in mortgage
loan assets supporting the transferred business due to prepayments of such
loans.

Other income --

31
<PAGE> 33

increase of $17.8 million, or 12.2%, from $145.4 million reported for 1997. The
increase was primarily due to higher income of $20.7 million and $8.0 million in
the Accumulation Products and Other Products segments, respectively, offset in
part by lower income of $11.3 million in the Protection Products segment.
Substantially all of the increase in income recorded in the Accumulation
Products segment was attributable to higher fees earned by the Company's mutual
fund management operations. The Company's mutual fund management operations
reported $61.8 million in fees from advisory, underwriting and distribution
services in 1998, as compared to $42.3 million reported in 1997, as assets under
management increased to approximately $6.9 billion at December 31, 1998 from
$5.4 billion at December 31, 1997. The increase in income recorded in the Other
Products segment in 1998 as compared to 1997 was primarily due to higher
commissions earned by the Company's broker-dealer operations of approximately
$11.1 million, offset by approximately $3.1 million of lower revenues from an
aviation reinsurance pool in which the Company participates. During 1998, the
Company's broker-dealer operations reported commission earnings of $43.5
million, as compared to $32.4 million reported in 1997. The decrease in other
income recorded in the Protection Products segment of $11.3 million was
primarily due to: (i) a non-recurring gain of $19.4 million recognized in 1997
relating to certain assets which had appreciated in value and were transferred
to partially fund the cost of the indemnity reinsurance purchased in connection
with the DI Transaction, as hereafter defined (see "DI Transaction"), partially
offset by, (ii) an increase in reinsurance allowances and officer life insurance
premiums of $5.9 million and $2.2 million, respectively.

Benefits to policyholders --

Benefits to policyholders were $789.8 million for 1998, a decrease of $50.3
million, or 6.0%, from $840.1 million reported for 1997. The decrease,
substantially all of which (approximately $44.9 million) occurred in the
Company's Protection Products segment, was primarily due to the transfer of the
Company's disability income insurance business pursuant to the DI Transaction in
1997, as hereafter defined (See "DI Transaction"). Benefits to policyholders
recorded in 1998 relating to the business transferred pursuant to the DI
Transaction decreased by $47.3 million to $0.9 million, as compared to $48.2
million recorded in 1997. In addition, the change in reserves on traditional
business in 1998 decreased $21.2 million to $168.1 million, as compared to
$189.3 million reported in 1997. Surrenders on traditional business in 1998
decreased $5.0 million to $322.4 million, as compared to $327.4 million in 1997.
These increases were partially offset by an increase in traditional death
benefits of $30.0 million.

Interest credited to policyholders' account balances --

Interest credited to policyholders' account balances was $113.7 million for
1998, a decrease of $12.2 million, or 9.7%, from $125.9 million reported for
1997. The decrease primarily resulted from lower interest crediting across all
product lines in both the Protection and Accumulation segments of approximately
$1.8 million and $10.8 million, respectively. The decrease in interest crediting
in the Accumulation Products segment was primarily due to lower interest
crediting of approximately $7.1 million relating to the Company's SPDA business.
During 1998, SPDA account value decreased approximately $100.9 million to $457.2
million, as compared to $558.1 million at the end of 1997. The decrease in
account value in 1998 was primarily due to continuing withdrawals, which
management believes partially reflects consumer preferences for separate account
products. Average interest crediting rates on the Company SPDA's were
approximately 5.5% in both 1998 and 1997, respectively.

Amortization of deferred policy acquisition costs --

Amortization of deferred policy acquisition costs ("DAC") was $131.0
million for 1998, a decrease of $50.2 million, or 27.7%, from $181.2 million
reported for 1997. The decrease primarily resulted from lower amortization in
both the Protection Products and Accumulation Products segments of approximately
$45.4 million and $4.8 million, respectively. The decrease in DAC amortization
in the Protection Products segment primarily resulted from: (i) a non-recurring
charge of $33.6 million recorded in 1997 relating to the transfer of the
Company's disability income insurance business pursuant to the DI Transaction,
as hereafter defined (See "DI Transaction"), (ii) lower amortization of
approximately $5.1 million resulting from a revision during 1997 of mortality
assumptions on the Company universal life business, and (iii) lower amortization
of approximately $6.7 million resulting from higher death claims in 1998 as
compared to 1997. The decrease in DAC amortization of $4.8 million in the
Accumulation Products segment was primarily due to approximately $2.9 million
relating to the Company's single premium deferred annuity business as a result
of lower profit margins caused by declining fund balances and a narrowing of
interest spreads.

Dividends to policyholders --

Dividends to policyholders were $218.2 million for 1998, a decrease of $6.1
million, or 2.7%, from $224.3 million reported for 1997. The decrease primarily
resulted from a decrease in the Protection Products segment of $5.8 million due
to a reduction in the interest component of the dividend during 1997 by amounts
ranging from 15 to 50 basis points, which was partially offset by an increase in
life insurance reserves.

32
<PAGE> 34

Other operating costs and expenses --

Other operating costs and expenses were $453.3 million for 1998, an
increase of $36.1 million, or 8.7%, from $417.2 million reported for 1997. The
increase consisted of approximately $15.7 million and $13.9 million of costs
directly attributable to the Accumulation Products and Other Products segment,
respectively, as well as higher allocable and other miscellaneous direct costs
of approximately $6.5 million. To the extent that costs are not directly
identifiable with an operating segment, other costs and operating expenses are
allocated to the Company's operating segments based on cost allocations
utilizing time studies, and cost estimates included in the Company's product
pricing (see "Segments"). Following sets forth additional information with
respect to the increase in operating costs in 1998, as compared to 1997:

The increase of $15.7 million in costs directly attributable to the
Accumulation Products segment primarily consisted of higher sub-advisory fees
and other expenses incurred by the Company's mutual fund management operations,
which directly corresponded with an increase in revenues from such operations
(see discussion and analysis of other income above). The increase of $13.9
million in costs directly attributable to the Other Products segment primarily
consisted of higher commissions and other expenses incurred by the Company's
broker-dealer operations, which directly corresponded with an increase in
revenues from such operations (see discussion and analysis of other income
above). The net increase in other allocable operating costs and expenses
primarily consisted of (i) $7.4 million of higher costs associated with
addressing the Year 2000 issue, (ii) $17.0 million of higher cost associated
with restructuring the Company's career agency sales force and other strategic
initiatives, and (iii) $9.5 million of higher interest expense primarily
relating to the MONY Notes issued on December 30, 1997, offset by (iv)
approximately $6.4 million relating to a reduction in the fair value of the
Company's liability under its non-qualified pension plan, (v) $3.7 million, $4.0
million and $2.7 million of non-recurring costs incurred in 1997 relating to the
issuance of the MONY Notes, the cancellation of an information technology
service agreement, and severance charges relating to the DI Transaction,
respectively, and (vi) other miscellaneous items.

Income tax expense --

The Company's provision for federal income taxes in 1998, including the tax
effect of demutualization expenses, of $103.0 million included no surplus tax,
compared to a surplus tax benefit of $5.8 million in 1997. The Company's
effective tax rate before the surplus tax and extraordinary item was 35.0% in
1998, as compared to approximately 33.6% in 1997. Prior to its reorganization
pursuant to the Plan, MONY Life was subject to the surplus tax imposed on mutual
life insurance companies under Section 809 of the Code. Section 809 requires
(and the surplus tax results from) the disallowance of a portion of a mutual
life insurance company's policyholder dividends as a deduction from taxable
income. As a stock company, the MONY Life is no longer subject to the surplus
tax.

NEW BUSINESS INFORMATION

The Company distributes its products primarily through its career agency
sales force and various complementary distribution channels which include: (i)
sales of proprietary retail mutual funds through third party broker-dealers,
(ii) sales of Protection Products by the Company's U.S. Financial subsidiary
through brokerage general agencies, (iii) sales of COLI products by the
Company's corporate marketing team, and (iv) sales of a variety of financial
products and services through the Company's Trusted Advisors subsidiary. The
table below and discussion which follows present certain information with
respect to the Company's sales of protection and accumulation products during
the years ended December 31, 1999, 1998 and 1997 by source of distribution.
Management uses this information to measure the Company's sales production from
period to period by source of distribution. The amounts presented with respect
to life insurance sales represent annualized statutory-basis premiums. Statutory
basis premiums are used in lieu of GAAP basis premiums because, in accordance
with statutory accounting practices, revenues from all classes of long-duration
contracts are measured on the same basis, whereas GAAP provides different
revenue recognition rules for different classes of long-duration contracts as
defined by the requirements of SFAS No. 60, Accounting and Reporting by
Insurance Enterprises, SFAS No. 97, Accounting and Reporting by Insurance
Enterprises for Certain Long Duration Contracts and for Realized Gains and
Losses from the Sale of Investments, and SOP 95-1, Accounting for Certain
Insurance Activities of Mutual Life Insurance Enterprises. The amounts presented
with respect to annuity and mutual funds sales represent deposits made by
customers during the periods presented.

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1999 1998 1997
-------- -------- --------
($ IN MILLIONS)
<S> <C> <C> <C>
SOURCE OF DISTRIBUTION/SEGMENT
Protection Products(1):
Career Agency system(2)................................... $101.2 $ 86.4 $103.7
U.S. Financial(2)......................................... 26.5 -- --
Complementary Distribution................................ 66.6 84.4 2.0
------ ------ ------
Total new annualized life insurance premiums...... $194.3 $170.8 $105.7
====== ====== ======
</TABLE>

33
<PAGE> 35

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1999 1998 1997
-------- -------- --------
($ IN MILLIONS)
<S> <C> <C> <C>
Accumulation Products(1):
Variable annuity(2)(3).................................... $ 423 $ 612 $ 713
Career Agency system -- Proprietary retail mutual funds... 634 546 362
Third-party distribution -- Proprietary retail mutual
funds.................................................. 1,198 749 389
------ ------ ------
Total Accumulation Product sales.................. $2,255 $1,907 $1,464
====== ====== ======
</TABLE>

- ---------------
(1) Annualized premiums represent the total premium scheduled to be collected on
a policy or contract over a twelve-month period. Pursuant to the terms of
certain of the policies and contracts issued by the Company, premiums and
deposits may be paid or deposited on a monthly, quarterly, or semi-annual
basis. Annualized premium does not apply to COLI business or single premium
paying business. All premiums received on COLI business and single premium
paying policies during the periods presented are included.
(2) Includes premiums or deposits that have been annualized.
(3) Excludes annualized premiums in 1999 associated with an exchange program
offered by the Company wherein contractholders surrendered old FPVA
contracts and reinvested the proceeds therefrom in a new enhanced FPVA
product offered by the Company.

Protection Segment --

New Business Information for the year ended December 31, 1999 compared to the
year ended December 31, 1998

Total new annualized and single life insurance premiums for the year ended
December 31, 1999 increased $23.5 million, or 13.8 %, to $194.3 million from
$170.8 million in 1998. This increase was primarily due to new life insurance
premiums produced by the Company's career agency system and international sales
force. Such new life insurance premiums increased $14.8 million, or 17.1%, to
$101.2 million in 1999 from $86.4 million in 1998. The number of agents
comprising the Company's career agency system and international field force
totaled 2,417 at December 31, 1999, compared to 2,447 at December 31, 1998. The
decrease in the number of agents from period to period was primarily due to
actions taken by the Company to terminate unproductive agents in response to new
agent productivity. The number agents based in the U.S. decreased in 1999, as
compared to 1998, while the Company's international sales force increased. U.S.
Financial, which was acquired on December 31, 1998 and which markets its
protection products primarily through brokerage general agents, contributed
$26.5 million of annualized premium in 1999. Offsetting the aforementioned
increases was a decrease in sales of COLI.

New Business Information for the year ended December 31, 1998 compared to the
year ended December 31, 1997

New annualized life insurance premiums for 1998 were $170.8 million
compared with $105.7 million in the prior year. The increase is due to sales of
corporate sponsored variable universal life business, which the Company began
marketing towards the end of 1997. This increase in sales was partially offset
by declines in premiums produced by the company's career agency system. Career
agency sales were lower due to delays in receiving product approval by
regulators in the key states of New York, New Jersey and Texas. The Company's
sales force grew 10% to 2,447 at year-end 1998 (career and international) from
2,216 at year-end 1997.

Accumulation Segment --

The following tables set forth assets under management at December 31,
1999, 1998, and 1997, as well as the changes in the primary components of assets
under management during the years then ended:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1999 1998 1997
----- ---- ----
($ IN BILLIONS)
<S> <C> <C> <C>
ASSETS UNDER MANAGEMENT:
Individual variable annuities............................... $ 4.9 $4.8 $4.3
Individual fixed annuities.................................. 0.9 1.0 1.1
Proprietary retail mutual funds............................. 4.8 3.0 1.7
----- ---- ----
$10.6 $8.8 $7.1
===== ==== ====
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1999 1998 1997
----- ----- -----
($ IN BILLIONS)
<S> <C> <C> <C>
INDIVIDUAL VARIABLE ANNUITIES:
Beginning account value..................................... $ 4.8 $ 4.3 $ 3.2
Sales(1).................................................... 0.4 0.6 0.7
Market appreciation......................................... 0.5 0.4 0.7
Surrenders and withdrawals(1)............................... (0.8) (0.5) (0.3)
----- ----- -----
Ending account value........................................ $ 4.9 $ 4.8 $ 4.3
===== ===== =====
</TABLE>

34
<PAGE> 36

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1999 1998 1997
----- ----- -----
($ IN BILLIONS)
<S> <C> <C> <C>
PROPRIETARY RETAIL MUTUAL FUNDS:
Beginning account value..................................... $ 3.0 $ 1.7 $ 1.0
Sales....................................................... 1.8 1.3 0.7
Dividends reinvested........................................ 0.2 0.2 0.1
Market appreciation......................................... 0.5 0.2 0.1
Redemptions................................................. (0.7) (0.4) (0.2)
----- ----- -----
Ending account value........................................ $ 4.8 $ 3.0 $ 1.7
===== ===== =====
</TABLE>

- ---------------
(1) Amount presented for 1999 is net of approximately $727 million of transfers
to new product series.

New Business Information for the year ended December 31, 1999 compared to the
year ended December 31, 1998

New sales of variable annuities during 1999 were $423 million, a decrease
of $189 million, or 14%, from $612 million reported for 1998. The decline in
annuity sales was primarily due to; (i) increased competition in the
marketplace, (ii) the introduction by some companies of bonus annuities, which
the Company elected not to offer, and (iii) delays in obtaining approval of the
Company's new annuity products in certain key states, primarily New York and New
Jersey. During 1999, the Company took actions to reverse this trend, including
changes in agent compensation plans, product improvements (including the
addition of new fund options offered through the Company's annuities), and
increased education and training of the Company's career agency sales force to
emphasize the value of our annuity line compared to the competition. The Company
recently received approval to market its new annuity products in the state of
New York and New Jersey. Management expects an improvement in annuity sales in
2000 as a result of the aforementioned approval and a broader selection of fund
choices introduced in 1999, as further discussed below.

Sales of proprietary retail mutual funds offered by the Company's
Enterprise Group of Funds subsidiary increased by $537 million, or 41%, to $1.8
billion at December 31, 1999, as compared to $1.3 billion at December 31, 1998.
Proprietary mutual fund sales through the Company's career agency system
increased approximately $87 million, or 16% to $634 million for 1999, as
compared to $546 million for 1998. Proprietary mutual fund sales through
third-party broker-dealers increased approximately $450 million, or 60%, to
$1,198 million for 1999, as compared to approximately $749 million for 1998. The
increase in sales primarily resulted from the expansion of third-party
distribution arrangements and the introduction of a new internet fund and a
multi cap fund which the Company began offering on July 1, 1999. Management
expects to increase sales through third-party distribution in 2000 as a result
of a distribution agreement entered into during the 4th quarter of 1999 with a
major broker-dealer.

New Business Information for the year ended December 31, 1998 compared to the
year ended December 31, 1997

New sales of variable annuities during 1998 were $612 million, a decrease
of $101 million or 14%, from $713 million reported for 1997. The introduction of
new products and delays in regulatory approvals in key states adversely affected
variable annuity sales. Sales of its proprietary retail mutual funds offered by
the Company's Enterprise Group of Funds subsidiary increased by $543 million, or
72% to $1.3 billion from $752 million at December 31, 1997. Proprietary mutual
fund sales through the Company's career agency system increased approximately
$184 million or 51% to $546 million at December 31, 1998 from $362 million at
December 31, 1997. Proprietary mutual fund sales through third party broker
dealers increased approximately $359 million or 92% to $749 million at December
31, 1998 from $389 million at December 31, 1997.

EARLY RETIREMENT PROGRAM

On June 30, 1999, the Company announced a voluntary retirement program for
approximately 500 eligible employees of which 300 employees elected to
participate. The program is part of a company wide realignment of staff and
resources, which may also include the elimination and/or shifting of certain job
functions and the addition of employees with new skill sets. The Company
recorded a one-time pre-tax restructuring charge of $59.7 million in 1999
related to this program which is reflected in other operating costs and
expenses.

EXTRAORDINARY CHARGE FOR PLAN OF REORGANIZATION

For the years ended December 31, 1999, 1998 and 1997, the Company reported
extraordinary charges of $2.0 million, $27.2 million and $13.3 million,
respectively, which were incurred in connection with the Plan. The costs
incurred in 1998 and 1997 primarily included the fees of financial, legal,
actuarial and accounting advisors to the Company and to the New York Insurance
Department, as well as printing and postage for communication with
policyholders. The charge reflected in 1999 represented expenses incurred in
connection with the Company's commission-free sale and purchase program (the
"Program") offered to shareholders pursuant to the Plan. The Program commenced
August 17, 1999 and ended on November 17, 1999. Pursuant to the Program,
shareholders who owned fewer than 100 shares could sell all of their shares or
purchase additional shares to round up to 100 shares without incurring
commissions.

35
<PAGE> 37

DI TRANSACTION

Effective December 31, 1997, the Company ceased writing new disability
insurance business and transferred all of its existing in force disability
income insurance business to a third party reinsurer, Centre Life Reinsurance,
Ltd. ("Centre Re"), under an indemnity reinsurance contract (the "DI
Transaction"). MONY Life Insurance Company remains contingently liable for all
benefits payable with respect to such business if Centre Re fails to meet its
obligations under the reinsurance agreement. As a result of this transaction,
the Company recorded a pre-tax loss for the year ended December 31, 1997 of
approximately $9.1 million which represented the excess of the amount paid for
the indemnity reinsurance and deferred acquisition costs relating to such
business (which were reflected on the Company's books at the date of the
transaction) over the carrying value of the liabilities transferred. In
addition, the indemnity reinsurance purchased pursuant to the DI Transaction
replaced a previously existing reinsurance contract, which had been accounted
for as a financing rather than reinsurance. The assets held on deposit under the
replaced contract, which had a fair value in excess of the carrying value of the
deposit on MONY's books at the date of the transaction, were used to partially
fund the cost of the aforementioned indemnity agreement. As a result thereof,
the Company recorded a gain of $19.4 million in 1997, which is separate from the
DI Transaction and reported in "Other Income". The impact on the Company's
historical consolidated operating results for the year ended December 31, 1997
from the Company's disability income insurance business was not material.

REPURCHASE OF SURPLUS NOTES

On March 8, 2000, MONY Life repurchased the surplus note indebtedness it
had outstanding at December 31, 1999. As a result of the repurchase, the Company
will record an after-tax loss of approximately $36.1 million during the first
quarter of 2000. The loss resulted from the premium paid by MONY Life to the
holders of the aforementioned surplus notes, reflecting the excess of their fair
value over their carrying value on the Company's books at the date of the
transaction, which aggregated approximately $55.5 million. This loss will be
reported, net of tax, as an extraordinary item on the Company's income statement
in 2000. See Liquidity and Capital Resources -- Issuance of Senior Notes and
Repurchase of Surplus Notes.

LIQUIDITY AND CAPITAL RESOURCES

MONY Group's cash flow consists of investment income from its invested
assets (including interest from the Inter-company Surplus Notes, as hereafter
defined) and dividends from MONY Life, if declared and paid, offset by expenses
incurred in connection with the administration of MONY Group's affairs and
interest expense on the Senior Notes, as hereafter defined (see Issuance of
Senior Notes and Repurchase of Surplus Notes below). As a holding company, MONY
Group's ability to meet its cash requirements, pay interest expense on the
Senior Notes, and pay dividends on its Common Stock substantially depend upon
payments from MONY Life, including the receipt of; (i) dividends, (ii) interest
income on the Inter-company Surplus Notes, and (iii) other payments. The payment
of dividends by MONY Life to MONY Group is regulated under state insurance law.
Under the New York Insurance Law, MONY Life will be permitted to pay shareholder
dividends to the MONY Group only if it files notice of its intention to declare
such a dividend and the amount thereof with the New York Superintendent and the
New York Superintendent does not disapprove the distribution. Under the New York
Insurance Law, the New York Superintendent has broad discretion in determining
whether the financial condition of a stock life insurance company would support
the payment of dividends to its shareholders. The New York Insurance Department
has established informal guidelines for the New York Superintendent's
determinations that focus on, among other things, overall financial condition
and profitability under statutory accounting practices. In addition, payments of
principal and interest on the Inter-company Surplus Notes can only be made with
the prior approval of the New York Superintendent "whenever, in his judgment,
the financial condition of such insurer warrants". Such payments further may be
made only out of surplus funds, which are available for such payments under the
New York Insurance Law. There can be no assurance that MONY Life will have
statutory earnings to support the payment of dividends to the MONY Group or that
the New York Superintendent will approve interest payments to MONY Group on the
Inter-company Surplus Notes. Accordingly, there can be no assurance that MONY
Group will have sufficient funds to meet its cash requirements and pay cash
dividends to shareholders. In addition, state insurance laws contain similar
restrictions on the ability of the life insurance subsidiaries to pay dividends
to MONY Life. There can be no assurance that state insurance laws will in the
future permit the payment of dividends by the life insurance subsidiaries to
MONY Life in an amount sufficient to support the ability of MONY Life to pay
dividends to the MONY Group.

In January 2000, the New York State Insurance Department approved, and MONY
Life paid, a dividend to MONY Group in the amount of $75.0 million.

36
<PAGE> 38

Issuance of Senior Notes and Repurchase of Surplus Notes --

On January 12, 2000, the Holding Company filed a registration statement on
Form S-3 with the Securities and Exchange Commission (the "SEC") to register
certain securities. This registration, known as a "Shelf Registration", provides
the Company with the ability to offer various securities to the public, when it
deems appropriate, to raise proceeds up to an amount not to exceed $1.0 billion
in the aggregate for all issuance's of securities thereunder. It is the
intention of the Company to use this facility to raise proceeds for mergers and
acquisitions and for other general corporate matters, as it considers necessary.

On March 8, 2000, the Holding Company issued $300.0 million principal
amount of senior notes (the "Senior Notes") pursuant to the aforementioned Shelf
Registration. The senior notes mature on March 15, 2010, bear interest at 8.35%
per annum and were priced at a discount to yield 8.38%. The principal amount of
the senior notes is payable at maturity and interest is payable semi-annually.
The net proceeds to the Company from the issuance of the senior notes, after
deducting underwriting commissions and other expenses (primarily legal and
accounting fees), were approximately $297.0 million. Approximately $267.6
million of the net proceeds from the issuance of the senior notes was used by
the Holding Company as discussed below to finance the repurchase, on March 3,
2000, by MONY Life of all of its outstanding $115.0 million face amount 9.5%
coupon surplus notes, and a $116.5 million face amount of its $125.0 million
face amount 11.25% coupon surplus notes (hereafter referred to as the "9.5%
Notes" and "11.25% Notes", respectively), which were outstanding at December 31,
1999. See Note 16 to the Consolidated Financial Statements. The balance of the
net proceeds from the issuance of the senior notes (approximately $29.4 million)
will be used by the Holding Company for general corporate purposes.

To finance MONY Life's repurchase of the 9.5% Notes and the 11.25% Notes,
the Holding Company, on March 8, 2000:

(i) purchased two surplus notes from MONY Life (hereafter referred to
as the "Inter-company Surplus Notes") to replace the 9.5% Notes and the
11.25% Notes. The terms of the Inter-company Surplus Notes are identical to
the 9.5% Notes and the 11.25% notes, except that the Inter-company Surplus
Notes were priced to yield a current market rate of interest and the
inter-company surplus note issued to replace the $116.5 million face amount
of the 11.25% Notes was issued at a face amount of $100.0 million, and

(ii) contributed capital to MONY Life in the amount of $52.6 million,
which was equal to the after-tax cost to MONY Life of the premium it paid
to repurchase the 9.5% Notes and the 11.25% Notes, plus an additional $16.5
million representing the difference between the face amounts of the
inter-company surplus note which replaced the 11.25% Notes and the $116.5
million face amount of the 11.25% Notes.

As a result of the repurchase of the 9.5% Notes and the 11.25% Notes, the
Company will record an after-tax loss of approximately $36.1 million during the
1st quarter of 2000. The loss resulted from the premium paid by MONY Life to the
holders of the 9.5% Notes and the 11.25% Notes reflecting the excess of their
fair value over their carrying value on the Company's books at the date of the
transaction of approximately $7.0 million and $48.5 million, respectively. This
loss will be reported, net of tax, as an extraordinary item on the Company's
income statement in 2000.

Capitalization --

The Company's total capitalization, excluding accumulated comprehensive
income, increased $153.1 million, or 7.6%, to $2,153.7 million at December 31,
1999, as compared to $2,000.6 million at December 31, 1998. The increase was
primarily the result of net income of $248.6 million offset by decreases in
total debt of $76.6 million (which related to the payment in full of certain
real estate financing transactions during 1999) and dividend payments of $18.9
million. The Company's debt to equity (excluding accumulated comprehensive
income) and debt to total capitalization ratios decreased to 16.1% and 13.9% at
December 31, 1999, respectively, from 23.1% and 18.8% at December 31, 1998,
respectively.

Initial Public Offering --

On November 16, 1998, the MONY Group consummated the Offerings. In
conjunction therewith, approximately 12.9 million shares of its common stock
were issued at an initial public offering price of $23.50 per share. Net
proceeds from the Offerings totalled $282.5 million. Approximately $60.6 million
of the net proceeds were retained by the MONY Group and the balance of
approximately $221.9 million was contributed to MONY Life.

Of the net proceeds contributed by the MONY Group to MONY Life,
approximately $168.2 million is for use by MONY Life in its general operations,
approximately $13.2 million was used to fund policy credits required to be
credited to Eligible Policyholders pursuant to the Plan, and $40.5 million
represents a reimbursement for the estimated after-tax cost of expenses incurred
by MONY Life to effect the Demutualization, as required by the New York
Insurance Law.

Of the net proceeds retained by the MONY Group, approximately $2.5 million
was used to pay cash to Eligible Policyholders who received cash as described in
the Plan (other than pursuant to an expression of a preference to receive cash),
$10.0 million is for working capital for the MONY Group, $30.0 million is to be
used to pay dividends on the MONY Group's common stock and $18.1 million was
used by the MONY Group to pay cash to Eligible Policyholders pursuant to an
expression of a preference to receive cash in accordance with the Plan.

37
<PAGE> 39

MONY Life

MONY Life's cash inflows are provided mainly from life insurance premiums,
annuity considerations and deposit funds, investment income and maturities and
sales of invested assets. Cash outflows primarily relate to the liabilities
associated with its various life insurance and annuity products, dividends to
policyholders, operating expenses, income taxes and principal and interest on
its outstanding debt obligations. The life insurance and annuity liabilities
relate to the Company's obligation to make benefit payments under its insurance
and annuity contracts, as well as the need to make payments in connection with
policy surrenders, withdrawals and loans. The Company develops an annual cash
flow projection which shows expected asset and liability cash flows on a monthly
basis. At the end of each quarter actual cash flows are compared to projections,
projections for the balance of the year are adjusted in light of the actual
results, if appropriate, and investment strategies are also changed, if
appropriate. The quarterly cash flow reports contain relevant information on all
of the following: new product sales and deposits versus projections, existing
liability cash flow versus projections and asset portfolio cash flow versus
projections. An interest rate projection is a part of the initial annual cash
flow projections for both assets and liabilities. Actual changes in interest
rates during the year and, to a lesser extent, changes in rate expectations will
impact the changes in projected asset and liability cash flows during the course
of the year. When the Company is formulating its cash flow projections it
considers, among other things, its expectations about sales of the Company's
products, its expectations concerning customer behavior in light of current and
expected economic conditions, its expectations concerning competitors and the
general outlook for the economy and interest rates. See
"Investments -- General."

The events most likely to cause an adjustment in the Company's investment
policies are: (i) a significant change in its product mix, (ii) a significant
change in the outlook for either the economy in general or for interest rates in
particular and (iii) a significant reevaluation of the prospective risks and
returns of various asset classes. See "Investments -- General."

The following table sets forth the withdrawal characteristics and the
surrender and withdrawal experience of the Company's total annuity reserves and
deposit liabilities at December 31, 1999 and 1998.

WITHDRAWAL CHARACTERISTICS OF ANNUITY RESERVES AND DEPOSIT LIABILITIES

<TABLE>
<CAPTION>
AMOUNT AT AMOUNT AT
DECEMBER 31, PERCENT DECEMBER 31, PERCENT
1999 OF TOTAL 1998(1) OF TOTAL
------------ -------- ------------ --------
($ IN MILLIONS)
<S> <C> <C> <C> <C>
Not subject to discretionary withdrawal provisions....... $1,449.9 18.5% $1,401.3 17.9%
Subject to discretionary withdrawal -- with market value
adjustment or at carrying value less surrender
charge................................................. 5,165.6 66.1 5,166.7 66.0
-------- ----- -------- -----
Subtotal................................................. 6,615.5 84.6 6,568.0 83.9
Subject to discretionary withdrawal -- without adjustment
at carrying value...................................... 1,205.1 15.4 1,264.5 16.1
-------- ----- -------- -----
Total annuity reserves and deposit liabilities (gross)... 7,820.6 100.0% 7,832.5 100.0%
-------- ===== -------- =====
Less reinsurance......................................... 89.3 121.7
-------- --------
Total annuity reserves and deposit liabilities (net)..... $7,731.3 $7,710.8
======== ========
</TABLE>

- ---------------
(1) Reflects certain reclassifications of amounts previously reported.

The following table sets forth by product line the actual amounts paid in
connection with surrenders and withdrawals for the periods indicated.

SURRENDERS AND WITHDRAWALS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------
1999 1998 1997
-------- -------- --------
($ IN MILLIONS)
<S> <C> <C> <C>
PRODUCT LINE(1):
Traditional life(2)......................................... $ 386.1 $ 323.5 $ 326.2
Variable and universal life................................. 38.9 33.2 29.5
Annuities(3)................................................ 872.6 537.8 461.2
Group pension............................................... 328.0 256.2 384.3
-------- -------- --------
Total............................................. $1,625.6 $1,150.7 $1,201.2
======== ======== ========
</TABLE>

- ---------------
(1) Prior years' amounts have been restated primarily to include surrenders and
withdrawals related to the retained group pension business.
(2) Includes $19.7 million in 1999 of surrenders in the Closed Block, the
proceeds from which remained with the Company to fund premiums on newly
issued traditional life policies outside the Closed Block.
(3) Excludes approximately $727.0 million in 1999 relating to surrenders
associated with an exchange program offered by the Company wherein contract
holders surrendered old FPVA contracts and reinvested the proceeds in a new
enhanced FPVA product offered by the Company.

38
<PAGE> 40

Annuity surrenders have increased for the year ended December 31, 1999 as
compared to the comparable prior year periods primarily due to the aging of the
block of business and consequent decrease in surrender charge rates and due to
an increase in competition. In July, 1999, the Company has responded to this
trend by enhancing its variable annuity products by offering new investment fund
choices.

The Company's principal sources of liquidity to meet cash outflows are its
portfolio of liquid assets and its net operating cash flow. During 1999, the
Company reported net cash outflows from operations of $30.0 million, as compared
to cash inflow of $76.7 million in 1998. In 1999 and 1998 cash flow from
operations excluded $175.7 million and $87.3 million, respectively of cash flow
relating to the Closed Block. Total combined cash flow from operations for 1999
and 1998, including the Closed Block was $145.7 million and $164.0 million,
respectively, a decrease of $18.3 million. The decrease from prior year is
primarily due to higher operating expenses, higher benefit payments, and lower
payments from the Group Pension Transaction (see Note 10 to the Consolidated
Financial Statements), offset by lower federal income tax payments. The combined
cash flow from operations for 1998 including the Closed Block was $164.0 million
as compared to $69.1 million for 1997, an increase of $94.9 million. The
increase was due to a non-recurring payment of $149.5 million made in 1997 in
connection with the DI transaction, offset by other miscellaneous items in 1998
principally, extraordinary expenses, Year 2000 costs and costs incurred in
connection with strategic initiatives. The Company's liquid assets include
substantial U.S. treasury holdings, short-term money market investments and
marketable long-term fixed maturity securities. Management believes that the
Company's sources of liquidity are adequate to meet its anticipated needs. As of
December 31, 1999, the Company had readily marketable fixed maturity securities
with a carrying value of $6,546.2 million (including fixed maturities in the
Closed Block), which were comprised of $3,577.6 million public and $2,968.6
million private fixed maturity securities. At that date, approximately 92.8% of
the Company's fixed maturity securities were designated in NAIC rating
categories 1 and 2 (considered investment grade, with a rating of "Baa" or
higher by Moody's or "BBB" or higher by S&P). In addition, at December 31, 1999
the Company had cash and cash equivalents of $377.2 million.

In addition, the Company has two bank line of credit facilities with
domestic banks aggregating $150.0 million, with scheduled renewal dates in
September 2000 and September 2003. Under these lines of credit, the Company is
required to maintain a certain statutory tangible net worth and debt to
capitalization ratio. The purpose of these facilities is to provide additional
liquidity for any unanticipated short-term cash needs the Company might
experience. The Company has not borrowed against these lines of credit since
their inception.

On January 12, 2000, the Company announced a plan to repurchase up to 5% or
approximately 2.4 million shares, of the outstanding common shares of the
Company. Under the repurchase plan, the Company may repurchase from time to
time, as market conditions and other factors warrant. The repurchase program may
be discontinued at any time.

At December 31, 1999, the Company had commitments to contribute capital to
its equity partnership investments of $118.2 million, and commitments of $15.0
million to purchase private fixed maturity securities with an interest rate of
9%.

At December 31, 1999, MONY Life had commitments to issue $8.7 million of
fixed rate agricultural loans with periodic interest rate reset dates. The
initial interest rates on such loans range from 7.25% to 8.75%. MONY Life also
had commitments outstanding to underwrite $70.2 million of commercial mortgage
loans as of December 31, 1999 with interest rates ranging from 7.00% to 8.92%.

Of the $1,141.4 million of currently outstanding commercial mortgage loans
in the Company's investment portfolio at December 31, 1999, $26.6 million, $89.3
million and $161.7 million are scheduled to mature in 2000, 2001 and 2002,
respectively. See "Investments -- Mortgage Loans -- Commercial Mortgage Loans".

The Company has mortgage loans on certain of its real estate properties.
The interest rates on these loans range from 6.3% to 7.7%. Maturities range from
June 2000 to February 2002. For the years ended December 31, 1999, 1998 and
1997, interest expense on such mortgage loans aggregated $5.0 million, $9.0
million, and $12.3 million, respectively.

During 1989, the Company entered into a transaction which is accounted for
as a financing arrangement involving certain real estate properties held for
investment. Pursuant to the terms of the agreement, the Company effectively
pledged the real estate properties as collateral for a loan of approximately
$35.0 million bearing simple interest at a rate of 8% per annum. The obligation
was paid in full on December 1, 1999. At December 31, 1998 and 1997, the
outstanding balance of the obligation including accrued interest was $42.4
million and $41.3 million, respectively. Interest expense on the obligation of
$2.9 million, $3.1 million, and $3.0 million is reflected in Other Operating
Costs and Expenses on the Company's statements of income for the years ended
December 31, 1999, 1998 and 1997, respectively.

In 1988, the Company financed one of its real estate properties under a
sale/leaseback arrangement. The facility was sold for $66.0 million, $56.0
million of which was in the form of an interest bearing note receivable and
$10.0 million in cash. The note was due January 1, 2009. The remaining balance
of the interest bearing note was paid in full on December 1, 1999, as part of
the sale of the property to a third party. This transaction continues to be
accounted for as a sale/leaseback arrangement, with the proceeds received
amortized into income over the life of the lease. The lease has a term of 20
years beginning December 21, 1988 and requires minimum annual rental payments of
$7.3 million in 2000, $7.4 million in 2001, $7.6 million in 2002, $7.7 million
in 2003, $7.9 million in 2004 and $33.1 million thereafter. The Company has the
option to renew the lease at the end of the lease term.

39
<PAGE> 41

At December 31, 1999, aggregate maturities of long-term debt based on
required principal payments for 2000 and the succeeding four years are $0.0
million, $0.0 million, $5.4 million, $0.0 million and $0.0 million,
respectively, and $240.0 million thereafter.

Aggregate contractual debt service payments on the Company's debt at
December 31, 1999, for 2000 and the succeeding four years are $25.4 million,
$25.4 million, $30.4 million, $25.0 million and $25.0 million, respectively, and
$608.7 million thereafter.

Among the assets allocated to the Closed Block are the Series A Notes. MONY
Life has undertaken to reimburse the Closed Block from its general account
assets outside the Closed Block for any reduction in principal payments on the
Series A Notes pursuant to the terms thereof, as described in Note 10 to the
Consolidated Financial Statements.

The NAIC established RBC requirements to help state regulators monitor and
safeguard life insurers' financial strength by identifying those companies that
may be inadequately capitalized. The RBC guidelines provide a method to measure
the adjusted capital (statutory-basis capital and surplus plus the Asset
Valuation Reserve ("AVR") and other adjustments) that a life insurance company
should have for regulatory purposes, taking into consideration the risk
characteristics of such company's investments and products. A life insurance
company's RBC ratio will vary over time depending upon many factors, including
its earnings, the nature, mix and credit quality of its investment portfolio and
the nature and volume of the products that it sells.

While the RBC guidelines are intended to be a regulatory tool only, and are
not intended as a means to rank insurers generally, comparisons of RBC ratios of
life insurers have become generally available. The adjusted RBC capital ratios
of all the Company's insurance subsidiaries at December 31, 1999 and December
31, 1998 were in excess of the minimum required RBC.

REAL ESTATE SALES

In accordance with its ongoing strategy to strengthen the Company's
financial position, management expects to continue to selectively sell equity
real estate. Once management identifies a real estate property to be sold and
commences a plan for marketing the property, the property is classified as to be
disposed of and a valuation allowance is established and periodically revised,
if necessary, to adjust the carrying value of the property to reflect the lower
of its current carrying value or its fair value, less associated selling costs
(see Note 4 to the Consolidated Financial Statements). Increases in such
valuation allowances are recorded as realized investment losses and,
accordingly, are reflected in the Company's results of operations. Real estate
classified as to be disposed of may also be net of impairment adjustments
recorded prior to the time such real estate was designated for sale or at the
time of foreclosure, if acquired in satisfaction of debt. At December 31, 1999,
1998 and 1997, the carrying value of real estate to be disposed of was $322.9
million, $312.9 million and $621.2 million, respectively, or 3.0%, 2.8% and 5.9%
of invested assets at such dates, respectively. The aforementioned carrying
values are net of valuation allowances of $22.0 million, $30.6 million and $82.7
million, respectively. In addition, the carrying value of real estate to be
disposed of at such dates is net of $62.3 million, $79.1 million and $182.3
million of impairment adjustments, respectively. For the years ended December
31, 1999, 1998, and 1997, such increases in valuation allowances aggregated
$12.1 million, $6.7 million and $63.8 million, respectively. Because the
carrying value of real estate to be disposed of is adjusted to reflect the
aforementioned valuation allowances, management expects that the net proceeds
from sales of real estate will not be materially different from the carrying
value of such real estate on a GAAP basis. However, there can be no assurance
that increases in valuation allowances will not be required in the future or
that future sales of real estate will not be made at amounts below recorded GAAP
carrying value which may have a material effect on the Company's financial
position and results of operations.

In addition, as a result of differences between SAP and GAAP, the carrying
value of real estate on a SAP basis exceeds the carrying value of such
investments on a GAAP basis. Accordingly, management expects to incur losses on
a SAP basis as a result of anticipated real estate sales, which losses could
materially affect the Company's statutory-basis surplus and net income. Although
there can be no assurance, the Company believes that any such impact on
statutory surplus will be substantially offset by the release of the statutory
investment reserves established by the Company. The Company will monitor the
results of its real estate sales strategy and its ongoing effect on statutory
surplus. The GAAP carrying value of real estate to be disposed of was $322.9
million at December 31, 1999 (or 3.0% of invested assets), which amount is net
of impairment adjustments and valuation allowances aggregating approximately
$62.3 million and $22.0 million, respectively. There can be no assurance as to
whether, when or for what amounts any real estate that is classified to be
disposed of will actually be disposed of. For the years ended December 31, 1999,
1998 and 1997 the GAAP carrying value of real estate sold was approximately
$281.4 million, $424.7 million and $346.3 million, respectively. For the years
ended December 31, 1999, 1998 and 1997, the SAP carrying value of real estate
sold was approximately $496.7 million, $593.8 million and $395.0 million,
respectively (see "Investments -- Equity Real Estate", "-- Investment
Impairments and Valuation Allowances" and Note 19 to the Consolidated Financial
Statements.)

40
<PAGE> 42

The following table sets forth certain data concerning the Company's real
estate sales during the periods indicated.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1999 1998 1997
-------- -------- -------
($ IN MILLIONS)
<S> <C> <C> <C>
Sales proceeds.............................................. $ 349.5 $ 573.4 $433.9
------- ------- ------
Carrying value before impairment adjustments and valuation
allowances................................................ $ 420.5 $ 570.1 $462.3
Impairment adjustments...................................... (121.1) (100.1) (88.9)
Valuation allowances........................................ (18.0) (45.3) (27.1)
------- ------- ------
Carrying value after impairment adjustments and valuation
allowances................................................ $ 281.4 $ 424.7 $346.3
------- ------- ------
Gain........................................................ $ 68.1 $ 148.7 $ 87.6
======= ======= ======
</TABLE>

- ---------------
(1) Excludes sales of unconsolidated real estate joint venture interests. Real
estate joint venture interests are reported in Other Invested Assets. Gains
from the sales of such interests in 1999, 1998 and 1997 were $0.0 million,
$19.6 million and $1.1 million, respectively. See Note 4 to the Consolidated
Financial Statements.

Most of the proceeds from real estate sales have been invested in fixed
maturity securities. This has served to make the overall asset portfolio
somewhat more sensitive to changes in interest rates. It has also served to
reduce exposure to an illiquid asset class, real estate, and increase exposure
to a more liquid asset class, fixed maturity securities.

YEAR 2000

The Company successfully completed its Year 2000 Project (the "Project") to
ensure Year 2000 readiness. The Company developed and implemented an
enterprise-wide plan to prepare for the Year 2000 issue by ensuring compliance
of all applications, operating systems and hardware on mainframe, PC and local
area network ("LAN") platforms; ensuring the compliance of voice and data
network software and hardware; addressing issues related to non-IT systems in
buildings, facilities and equipment which may contain date logic in embedded
chips; and addressing the compliance of key vendors and other third parties.

The total cost of the Project was $25.4 million. The Company does not
expect to incur any material future costs on the Project.

The Company has not experienced any significant Year 2000 related problems
post-December 31, 1999 with its operations or with any external parties with
which business is conducted. Based on this experience and the amount of work and
testing previously performed, the Company believes the likelihood of a Year 2000
issue that would have a material effect on the Company's consolidated financial
position and results of its operations continues to be remote as the Company
performs month-end, leap year, quarter-end, and year-end processing. However,
there is still the possibility that future Year 2000 related failures in the
Company's systems or equipment and/or failure of external parties to achieve
Year 2000 compliance could have a material adverse effect on the Company's
consolidated financial position and results of its operations.

EFFECTS OF INFLATION

The Company does not believe that inflation has had a material effect on
its consolidated results of operations except insofar as inflation affects
interest rates.

41
<PAGE> 43

INVESTMENTS

On the effective date of the Plan, the Company's invested assets were
allocated between the Closed Block and operations outside the Closed Block. In
view of the similar asset quality characteristics of the major asset categories
in the two portfolios, the invested assets in the Closed Block have been
combined with the Company's invested assets outside the Closed Block for
purposes of the following discussion and analysis. In addition, the following
discussion excludes invested assets transferred in the Group Pension
Transaction. Accordingly, this discussion should be read in conjunction with the
summary financial information regarding assets transferred in the Group Pension
Transaction presented in Note 10 to the Consolidated Financial Statements.

GENERAL

The Company's investment operations are managed by its investment area,
which reports directly to the Chief Investment Officer of the Company. The
investment area, in consultation with the product actuaries, is responsible for
determining, within specified risk tolerances and investment guidelines, the
general asset allocation, duration and other characteristics of the Company's
investment portfolio.

The primary investment objective of the Company is to maximize after-tax
returns consistent with acceptable risk parameters (including the management of
the interest rate sensitivity of invested assets to that of policyholder
obligations). The Company is exposed to two primary sources of investment risk:
credit risk, relating to the uncertainty associated with the continued ability
of a given obligor to make timely payments of principal and interest, and
interest rate risk, relating to the market price and/or cash flow variability
associated with changes in market yield curves. The Company manages credit risk
through industry and issuer diversification and asset allocation. The Company
manages interest rate risk as part of its asset/liability management strategies,
product design, such as the use of market value adjustment features and
surrender charges and proactive monitoring and management of certain
non-guaranteed elements of the Company's products (such as the resetting of
credited interest rates for policies that permit such adjustments). A key aspect
in managing interest rate exposure are the analyses performed by the Company to
assess the adequacy of its projected asset cash flows relative to its projected
liability cash flows. These analyses, many of which are required pursuant to the
standard valuation laws of virtually all states, involve evaluating the
potential gain or loss for over 95% of the Company's in force business under
various increasing and decreasing interest rate environments, including inverted
yield curves. For purposes of these analyses the Company has developed models of
its in force business which reflect product characteristics such as cost of
insurance rates, surrender charges, market value adjustments, dividends, cash
values, etc. The models include assumptions, based on current and anticipated
experience, regarding lapse and mortality rates and interest crediting
strategies. In addition, these models include asset cash flow projections
reflecting coupon payments, sinking fund payments, principal payments, defaults,
bond calls, and mortgage prepayments.

Generally, subject to certain minimum rates, these cash flow analyses are
based on projections of cash flows using ten different interest rate scenarios
over ten or more years. First a baseline interest rate is selected based on
current rates. Then from the selected baseline rate the ten scenarios are: (i)
level, (ii) an immediate increase of 3.0% and then level, (iii) an immediate
decrease of 3% and then level, (iv) a uniform increase over ten years of one
half a percent per year and then level, (v) a uniform decrease over ten years of
one half a percent per year and then level, (vi) a uniform increase of one
percent per year over five years followed by a uniform decrease of one percent
per year over the next five years and then level, (vii) a uniform decrease of
one percent per year over five years followed by a uniform increase of one
percent per year over the next five years and then level and (viii) a decrease
of 2.0% and then level. In addition, two of the scenarios are run with an
inverted yield curve.

Since most of its in force liabilities result from participating whole life
insurance and separate account products, the Company does not focus on more
precise liability duration measures because management believes that the
scenario testing employed is sufficient to adequately assess interest rate risk.
The Company does not use hedging instruments because management believes that
there is limited general account risk exposure from recurring cash flows and
limitations contained in product designs. The Company's strategy for the
management of investment risk also includes the continuing selective sale of
real estate. See "-- Equity Real Estate -- Real Estate Sales".

The Company had total consolidated assets at December 31, 1999 of
approximately $24.8 billion. Of the Company's total consolidated assets at such
date, approximately $13.3 billion represented assets held in the Company's
general account (which includes $6.2 billion of assets in the Closed Block),
approximately $5.1 billion represented assets transferred pursuant to the Group
Pension Transaction (see Note 10 to the Consolidated Financial Statements), and
approximately $6.4 billion were held in the Company's separate accounts, for
which the Company does not generally bear investment risk.

Separate account assets are managed in accordance with the prescribed
investment strategy that applies to the specific separate account. Separate
accounts are established in conformity with insurance laws and are generally not
chargeable with liabilities that arise from any other business of the Company.
Separate account assets are subject to general account claims only to the extent
that the value of such assets exceeds the separate account liabilities.
Investments held in separate accounts and liabilities of the separate accounts
are reported separately as assets and liabilities. Substantially all separate
account assets are reported at estimated fair value. Investment income and gains
or

42
<PAGE> 44

losses on the investments of separate accounts accrue directly to
contractholders and, accordingly, are not reflected in the Company's
consolidated statements of income and cash flows. Fees charged to the separate
accounts by the Company (including mortality charges, policy administration fees
and surrender charges) are reflected in the Company's revenues.

General account assets are managed to support all of the Company's life
insurance and annuity lines of business. With respect to the general account,
the Company seeks to protect policyholders' benefits through asset/liability
matching, emphasizing safety of principal, maintaining sufficient liquidity and
avoiding undue asset concentrations through diversification. At the same time,
the Company seeks to produce an investment return that supports competitive
product pricing and which contributes to achieving the required risk adjusted
return on surplus. The Company's general account consists of a diversified
portfolio of investments. Although all the assets of the general account support
all the Company's liabilities, the Company has developed separate investment
portfolios for specific classes of product liabilities within the general
account. The investment area works closely with the business lines to develop
investment guidelines, including duration targets, asset allocation,
asset/liability mismatch tolerances and return objectives, for each product line
in order to achieve each such product line's individual risk and return
objectives.

The following discussion analyzes the results of the major categories of
general account invested assets, which includes invested assets of the closed
block.

The table below summarizes the invested assets held in the general account
of the Company at the dates indicated.

INVESTED ASSETS

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
----------------------------------------
1999 1998
------------------ ------------------
CARRYING % OF CARRYING % OF
VALUE TOTAL VALUE TOTAL
--------- ----- --------- -----
($ IN MILLIONS)
<S> <C> <C> <C> <C>
Fixed maturities............................................ $ 6,546.2 60.4% $ 6,706.0 61.0%
Equity securities........................................... 519.8 4.8 457.2 4.2
Mortgage loans on real estate............................... 1,713.4 15.8 1,420.0 12.9
Policy loans................................................ 1,268.2 11.7 1,269.6 11.6
Real estate to be disposed of............................... 322.9 3.0 312.9 2.8
Real estate held for investment............................. 46.2 0.4 321.3 2.9
Other invested assets....................................... 38.0 0.4 40.7 0.4
Cash and cash equivalents................................... 377.1 3.5 463.5 4.2
--------- ----- --------- -----
Total invested assets....................................... $10,831.8 100.0% $10,991.2 100.0%
========= ===== ========= =====
</TABLE>

The following table illustrates the net investment income yields based on
average annual asset carrying values, excluding unrealized gains (losses) in the
fixed maturity asset category. Equity real estate income is shown net of
operating expenses, depreciation and minority interest. Total investment income
includes non-cash income from amortization, payment-in-kind distributions and
undistributed equity earnings. Investment expenses include mortgage servicing
fees and other miscellaneous fee income.

INVESTMENT RESULTS BY ASSET CATEGORY

<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Fixed maturities............................................ 7.2% 7.4% 7.6%
Equity securities........................................... 39.7 13.5 16.6
Mortgage loans on real estate............................... 8.2 8.7 9.1
Policy loans................................................ 6.5 6.6 6.6
Real estate................................................. 7.0 5.0 4.3
Other invested assets....................................... (0.5) 1.8 1.3
Cash and cash equivalents................................... 4.1 4.8 5.8

Total invested assets before investment expenses............ 8.6 7.4 7.5
Investment expenses.................................... (0.3) (0.4) (0.4)
---- ---- ----
Total invested assets after investment expenses............. 8.3% 7.0% 7.1%
==== ==== ====
</TABLE>

The yield on general account invested assets (including net realized gains
and losses on investments) was 9.4%, 8.6% and 7.8% for the years ended December
31, 1999, 1998 and 1997, respectively.

43
<PAGE> 45

FIXED MATURITIES

Fixed maturities consist of publicly traded debt securities, privately
placed debt securities and small amounts of redeemable preferred stock, and
represented 60.4% and 61.0% of total invested assets at December 31, 1999 and
1998, respectively.

The Securities Valuation Office of the NAIC evaluates the bond investments
of insurers for regulatory reporting purposes and assigns securities to one of
six investment categories called "NAIC Designations". The NAIC Designations
closely mirror the Nationally Recognized Securities Rating Organizations' credit
ratings for marketable bonds. NAIC Designations 1 and 2 include bonds considered
investment grade ("Baa" or higher by Moody's, or "BBB" or higher by S&P) by such
rating organizations. NAIC Designations 3 through 6 are referred to as below
investment grade ("Ba" or lower by Moody's, or "BB" or lower by S&P).

The following tables present the Company's private, public and total fixed
maturities by NAIC designation and the equivalent ratings of the Nationally
Recognized Securities Rating Organizations as of December 31, 1999 and 1998, as
well as the percentage, based on fair value, that each designation comprises.

PUBLIC FIXED MATURITIES BY CREDIT QUALITY

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999 AS OF DECEMBER 31, 1998
------------------------------ ------------------------------
NAIC RATING AGENCY AMORTIZED % OF ESTIMATED AMORTIZED % OF ESTIMATED
RATING EQUIVALENT COST TOTAL FAIR VALUE COST TOTAL FAIR VALUE
------ ------------------------------ --------- ----- ---------- --------- ----- ----------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
1.................. Aaa/Aa/A $2,745.1 74.1% $2,651.7 $2,556.5 71.8% $2,648.4
2.................. Baa 769.2 20.8 742.7 858.1 24.2 893.0
3.................. Ba 171.0 4.6 164.9 138.5 3.8 140.6
4.................. B 13.1 0.4 14.8 4.9 0.1 4.9
5.................. Caa and lower 1.1 0.1 2.2 1.0 -- 1.4
6.................. In or near default 0.4 -- 0.4 -- -- --
-------- ----- -------- -------- ----- --------
Subtotal 3,699.9 100.0 3,576.7 3,559.0 99.9 3,688.3
Redeemable preferred stock 1.0 -- 0.9 2.2 0.1 1.9
-------- ----- -------- -------- ----- --------
Total public fixed maturities $3,700.9 100.0% $3,577.6 $3,561.2 100.0% $3,690.2
======== ===== ======== ======== ===== ========
</TABLE>

PRIVATE FIXED MATURITIES BY CREDIT QUALITY

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999 AS OF DECEMBER 31, 1998
------------------------------ ------------------------------
NAIC RATING AGENCY AMORTIZED % OF ESTIMATED AMORTIZED % OF ESTIMATED
RATING EQUIVALENT COST TOTAL FAIR VALUE COST TOTAL FAIR VALUE
------ ------------------------------ --------- ----- ---------- --------- ----- ----------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
1.................. Aaa/Aa/A $ 996.0 32.8% $ 974.1 $ 996.8 35.0% $1,058.9
2.................. Baa 1,744.9 57.0 1,692.3 1,630.5 56.1 1,691.0
3.................. Ba 250.7 8.2 243.0 207.8 6.9 207.0
4.................. B 10.0 0.3 9.1 9.6 0.3 8.6
5.................. Caa and lower 25.0 0.8 24.9 24.7 0.9 26.8
6.................. In or near default 3.7 0.2 5.4 1.6 0.1 1.6
-------- ----- -------- -------- ----- --------
Subtotal 3,030.3 99.3 2,948.8 2,871.0 99.3 2,993.9
Redeemable preferred stock 21.4 0.7 19.8 21.3 0.7 21.9
-------- ----- -------- -------- ----- --------
Total private fixed maturities $3,051.7 100.0% $2,968.6 $2,892.3 100.0% $3,015.8
======== ===== ======== ======== ===== ========
</TABLE>

44
<PAGE> 46

TOTAL FIXED MATURITIES BY CREDIT QUALITY

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999 AS OF DECEMBER 31, 1998
------------------------------ ------------------------------
NAIC RATING AGENCY AMORTIZED % OF ESTIMATED AMORTIZED % OF TOTAL
RATING EQUIVALENT COST TOTAL FAIR VALUE COST TOTAL FAIR VALUE
------ ------------------------------ --------- ----- ---------- --------- ----- ----------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
1.................. Aaa/Aa/A $3,741.1 55.4% $3,625.8 $3,553.3 55.3% $3,707.3
2.................. Baa 2,514.1 37.2 2,435.0 2,488.6 38.5 2,584.0
3.................. Ba 421.7 6.2 407.9 346.3 5.2 347.6
4.................. B 23.1 0.4 23.9 14.5 0.2 13.5
5.................. Caa and lower 26.1 0.4 27.1 25.7 0.4 28.2
6.................. In or near default 4.1 0.1 5.8 1.6 -- 1.6
-------- ----- -------- -------- ----- --------
Subtotal 6,730.2 99.7 6,525.5 6,430.0 99.6 6,682.2
Redeemable preferred stock 22.4 0.3 20.7 23.5 0.4 23.8
-------- ----- -------- -------- ----- --------
Total fixed maturities $6,752.6 100.0% $6,546.2 $6,453.5 100.0% $6,706.0
======== ===== ======== ======== ===== ========
</TABLE>

The Company utilizes its investments in privately placed fixed maturities
to enhance the overall value of the portfolio, increase diversification and
obtain higher yields than are possible with comparable quality public market
securities. These privately placed securities are also used to enhance cash flow
as a result of sinking fund payments. Generally, private placements provide the
Company with broader access to management information, strengthened negotiated
protective covenants, call protection features and, where applicable, a higher
level of collateral. They are, however, generally not freely tradable because of
restrictions imposed by federal and state securities laws and illiquid trading
markets.

At December 31, 1999, the percentage, based on estimated fair value, of
total public and private placement fixed maturities that were investment grade
(NAIC Designation 1 or 2) was 92.8% compared to 94.1% for December 31, 1998. The
fixed maturities portfolio was comprised, based on estimated fair value, of
54.7% in public fixed maturities and 45.3% in private fixed maturities at
December 31, 1999 and 55.0% in public fixed maturities and 45.0% in private
fixed maturities at December 31, 1998.

The Company reviews all fixed maturity securities at least once each
quarter and identifies investments that management concludes require additional
monitoring. Among the criteria are: (i) violation of financial covenants, (ii)
public securities trading at a substantial discount as a result of specific
credit concerns and (iii) other subjective factors relating to the issuer.

The Company defines problem securities in the fixed maturity category as
securities (i) as to which principal and/or interest payments are in default or
are to be restructured pursuant to commenced negotiations or (ii) issued by a
company that went into bankruptcy subsequent to the acquisition of such
securities or (iii) are deemed to have other than temporary impairments to
value. The fair value of problem fixed maturities was $45.9 million and $33.9
million at December 31, 1999 and 1998, respectively. For the years ended
December 31, 1999, 1998 and 1997, $1.5 million, $0.9 million and $1.1 million of
interest income was not accrued on problem fixed maturities.

The Company defines potential problem securities in the fixed maturity
category as securities that are deemed to be experiencing significant operating
problems or difficult industry conditions. Typically these securities are
experiencing or anticipating liquidity constraints, having difficulty meeting
projections/budgets and would most likely be considered a below investment grade
risk. The fair value of potential problem fixed maturities was $32.8 million and
$82.9 million at December 31, 1999 and 1998, respectively.

The Company defines restructured securities in the fixed maturity category
as securities where a concession has been granted to the borrower related to the
borrower's financial difficulties that the Company would not have otherwise
considered. The Company restructures certain securities in instances where a
determination was made that greater economic value will be realized under the
new terms than through liquidation or other disposition. The terms of the
restructure generally involve some or all of the following characteristics: a
reduction in the interest rate, an extension of the maturity date and a partial
forgiveness of principal and/or interest. The fair value of restructured fixed
maturities was $0.0 million and $8.6 million at December 31, 1999 and 1998,
respectively.

As of December 31, 1999 the fair value of the Company's problem, potential
problem and restructured fixed maturities were $45.9 million, $32.8 million and
$0.0 million, respectively, which, in the aggregate, represented approximately
1.2% of total fixed maturities. As of December 31, 1998 the fair value of the
Company's problem, potential problem and restructured fixed maturities were
$33.9 million, $82.9 million and $8.6 million, respectively, which, in the
aggregate, represented approximately 1.9% of total fixed maturities.

45
<PAGE> 47

The Company believes that its long-term fixed maturities portfolio is well
diversified among industry types. The following tables set forth the fair value
of the Company's fixed maturities by industry category, as well as the
percentage of the total portfolio that each industry category comprises as of
December 31, 1999 and 1998, respectively. The tables also show by industry
category the relative amounts of publicly traded and privately placed
securities.

FIXED MATURITIES PORTFOLIO BY INDUSTRY AS OF DECEMBER 31, 1999

<TABLE>
<CAPTION>
PUBLICLY TRADED PRIVATELY PLACED TOTAL
------------------- ------------------- -------------------
FAIR % FAIR % FAIR %
INDUSTRY CLASS VALUE OF TOTAL VALUE OF TOTAL VALUE OF TOTAL
- -------------- -------- -------- -------- -------- -------- --------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Consumer Goods & Services..................... $ 349.1 9.8% $ 541.7 18.2% $ 890.8 13.6%
Other Manufacturing........................... 268.0 7.5 487.0 16.4 755.0 11.5
Non-Government -- Asset/Mortgage Backed....... 432.2 12.1 314.8 10.6 747.0 11.4
Public Utilities.............................. 458.4 12.8 246.2 8.3 704.6 10.8
Financial Services............................ 255.6 7.1 398.7 13.5 654.3 10.0
Energy........................................ 237.2 6.6 280.1 9.4 517.3 7.9
Transportation/Aerospace...................... 246.2 6.9 213.8 7.2 460.0 7.0
Banks......................................... 408.8 11.4 34.2 1.2 443.0 6.8
Mortgage Backed-Government & Agency(1)........ 388.3 10.9 3.2 0.1 391.5 6.0
Nat/Res/Manuf (non-energy).................... 99.1 2.8 252.9 8.5 352.0 5.4
Government & Agency........................... 233.5 6.5 0.9 -- 234.4 3.6
Telecommunications............................ 97.0 2.7 23.3 0.8 120.3 1.8
Other......................................... 82.7 2.3 25.8 0.9 108.5 1.7
Media/Adver/Printing.......................... 19.6 0.6 65.4 2.2 85.0 1.3
Bank Holding Companies........................ -- -- 33.7 1.1 33.7 0.5
Cable Television.............................. 1.0 -- 27.1 0.9 28.1 0.4
Redeemable Preferred Stock.................... 0.9 -- 19.8 0.7 20.7 0.3
-------- ----- -------- ----- -------- -----
Total............................... $3,577.6 100.0% $2,968.6 100.0% $6,546.2 100.0%
======== ===== ======== ===== ======== =====
</TABLE>

FIXED MATURITIES PORTFOLIO BY INDUSTRY AS OF DECEMBER 31, 1998

<TABLE>
<CAPTION>
PUBLICLY TRADED PRIVATELY PLACED TOTAL
------------------- ------------------- -------------------
FAIR % FAIR % FAIR %
INDUSTRY CLASS VALUE OF TOTAL VALUE OF TOTAL VALUE OF TOTAL
- -------------- -------- -------- -------- -------- -------- --------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Other Manufacturing........................... $ 312.2 8.5% $ 567.3 18.8% $ 879.5 13.0%
Consumer Goods & Services..................... 330.9 9.0 483.7 16.0 814.6 12.1
Public Utilities.............................. 497.4 13.5 264.2 8.8 761.6 11.4
Financial Services............................ 306.3 8.3 384.8 12.8 691.1 10.3
Non-Government -- Asset/Mortgage Backed....... 371.1 10.1 318.7 10.6 689.8 10.3
Transportation/Aerospace...................... 283.0 7.7 251.3 8.3 534.3 8.0
Mortgage Backed-Government & Agency(1)........ 467.8 12.7 3.7 0.1 471.5 7.0
Energy........................................ 245.8 6.6 220.5 7.3 466.3 7.0
Nat/Res/Manuf (non-energy).................... 116.7 3.2 234.0 7.8 350.7 5.2
Bank Holding Companies........................ 222.8 6.0 27.3 0.9 250.1 3.7
Banks......................................... 191.2 5.1 48.0 1.6 239.2 3.6
Telecommunications............................ 103.0 2.8 27.5 0.9 130.5 1.9
Government & Agency........................... 124.3 3.3 2.4 0.1 126.7 1.9
Media/Adver/Printing.......................... 39.8 1.1 86.0 2.9 125.8 1.9
Other......................................... 74.9 2.0 42.7 1.3 117.6 1.8
Cable Television.............................. 1.1 -- 31.8 1.1 32.9 0.5
Redeemable Preferred Stock.................... 1.9 0.1 21.9 0.7 23.8 0.4
-------- ----- -------- ----- -------- -----
$3,690.2 100.0% $3,015.8 100.0% $6,706.0 100.0%
======== ===== ======== ===== ======== =====
</TABLE>

- ---------------
(1) Mortgage-Backed -- Government & Agency industry are bonds collateralized by
mortgages backed by the Federal National Mortgage Association, Government
National Mortgage Association, Federal Home Loan Mortgage Corp., or Canadian
Housing Authority.

At December 31, 1999, the Company's largest unaffiliated single
concentration of fixed maturities consists of $230.2 million of carrying value
of Federal Home Loan Mortgage Corporation (FHLMC) fixed maturities which
represent approximately 2.1% of total invested assets at December 31, 1999. The
largest non-government issuer consists of $194.4 of AEGON notes purchased in
connection with the Group Pension Transaction. These notes represent
approximately 1.8%

46
<PAGE> 48

of total invested assets at December 31, 1999. (See Note 10 to the Consolidated
Financial Statements.) No other individual non-government issuer represents more
than 0.4% of invested assets.

The Company held approximately $1,138.5 million and $1,161.3 million of
mortgage-backed and asset-backed securities as of December 31, 1999 and 1998,
respectively. Of such amounts, $391.5 million and $471.5 million or 34.4% and
40.6%, respectively, represented agency-issued pass-through and collateralized
mortgage obligations ("CMOs") secured by the Federal National Mortgage
Association, Federal Home Loan Mortgage Corporation, Government National
Mortgage Association and Canadian Housing Authority collateral. The balance of
such amounts were comprised of other types of mortgage-backed and asset-backed
securities. The Company believes that its active monitoring of its portfolio of
mortgage-backed securities and the limited extent of its holdings of more
volatile types of mortgage-backed securities mitigate the Company's exposure to
losses from prepayment risk associated with interest rate fluctuations for this
portfolio. At December 31, 1999 and 1998, 85.7%, and 88.6%, respectively, of the
Company's mortgage-backed and asset-backed securities were assigned an NAIC
Designation 1. In addition, the Company believes that it holds a relatively low
percentage of CMOs compared to other life insurance companies.

The following table presents the types of mortgage-backed securities
("MBSs"), as well as other asset-backed securities, held by the Company as of
the dates indicated.

MORTGAGE AND ASSET-BACKED SECURITIES

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
--------------------
1999 1998
-------- --------
($ IN MILLIONS)
<S> <C> <C>
CMOs........................................................ $ 500.1 $ 569.5
Pass-through securities..................................... 31.0 40.6
Commercial MBSs............................................. 118.5 106.6
Asset-backed securities..................................... 488.9 444.6
-------- --------
Total MBS's and asset-backed securities........... $1,138.5 $1,161.3
======== ========
</TABLE>

CMOs are purchased to diversify the portfolio risk characteristics from
primarily corporate credit risk to a mix of credit and cash flow risk. The
majority of the CMOs in the Company's investment portfolio have relatively low
cash flow variability. In addition, approximately 72% of the CMOs in the
portfolio have minimal credit risk because the underlying collateral is backed
by the Federal National Mortgage Association, the Federal Home Loan Mortgage
Corporation, or the Government National Mortgage Association. These CMOs offer
greater liquidity and higher yields than corporate debt securities of similar
credit quality and expected average lives.

The principal risks inherent in holding CMOs (as well as pass-through
securities) are prepayment and extension risks arising from changes in market
interest rates. In declining interest rate environments, the mortgages
underlying the CMOs are prepaid more rapidly than anticipated, causing early
repayment of the CMOs. In rising interest rate environments, the underlying
mortgages are prepaid at a slower rate than anticipated, causing CMO principal
repayments to be extended. Although early CMO repayments may result in
acceleration of income from recognition of any unamortized discount, the
proceeds typically are reinvested at lower current yields, resulting in a net
reduction of future investment income.

The Company manages this prepayment and extension risk by investing in CMO
tranches that provide for greater stability of cash flows. The mix of CMO
tranches was as follows as of the dates indicated.

COLLATERALIZED MORTGAGE OBLIGATIONS BY TRANCHE

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------
1999 1998
------- -------
($ IN MILLIONS)
<S> <C> <C>
Planned Amortization Class.................................. $315.5 $384.2
Sequential.................................................. 131.3 164.9
Target Amortization Class................................... 24.1 18.4
Non Accelerated Security.................................... 14.1 --
Accretion Directed Support.................................. 13.7 1.5
Accretion Directed Component................................ 1.4 0.5
------ ------
Total CMO's....................................... $500.1 $569.5
====== ======
</TABLE>

The Planned Amortization Class ("PAC") tranche is structured to provide
more certain cash flows to the investor and therefore is subject to less
prepayment and extension risk than other CMO tranches. In general, the Company's
PACs are structured to provide average life stability for increases and
decreases in interest rates of 100 to 200 basis points. PACs derive their
stability from two factors: (i) early repayments are applied first to other
tranches to preserve the PACs' originally scheduled cash flows as much as
possible and (ii) cash flows applicable to other tranches are applied first to
the PAC if the PACs' actual cash flows are received later than originally
anticipated.

47
<PAGE> 49

The prepayment and extension risk associated with a sequential tranche can
vary as interest rates fluctuate, since this tranche is not supported by other
tranches. The Target Amortization Class tranche has protection similar to PACs
in decreasing interest rate environments, but has minimal protection in
increasing rate environments.

The majority of the securities contained in the Company's CMO portfolio are
traded in the open market. As such, the Company obtains market prices from
outside vendors. Any security price not received from such vendors is obtained
from the originating broker or internally calculated.

Asset-backed securities ("ABS") are purchased both to diversify the overall
credit risks of the fixed maturity portfolio and to provide attractive returns.
The ABS portfolio is diversified both by type of asset and by issuer. The
largest asset class exposure in the ABS portfolio is to credit card receivables.
These are comprised of pools of both general purpose credit card receivables
such as Visa and Mastercard and private label credit card receivable pools.
Excluding the exposures to home equity loans (which represented 2.0% and 2.9% of
the ABS portfolio as of December 31, 1999 and 1998, respectively), the ABS
portfolio is in general insensitive to changes in interest rates. As of December
31, 1999 and 1998, respectively, the ABS portfolio did not contain any pools of
assets outside of the United States.

The following table presents the types of ABS held by the Company as of the
dates indicated.

ASSET-BACKED SECURITIES BY TYPE

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------
1999 1998
------- -------
($ IN MILLIONS)
<S> <C> <C>
Credit cards................................................ $131.1 $148.0
Automobile receivables...................................... 52.9 55.3
Collateralized bond obligations/Collateralized loan
obligations............................................... 51.4 47.0
Franchisee receivables...................................... 46.1 45.7
Public Utilities Rate Reduction receivables................. 42.3 --
Lease receivables........................................... 27.2 28.3
Manufactured Housing........................................ 22.9 27.2
Student Loans............................................... 13.9 --
Home equity................................................. 9.7 13.6
Miscellaneous............................................... 91.4 79.5
------ ------
Total ABS......................................... $488.9 $444.6
====== ======
</TABLE>

The amortized cost and estimated fair value of fixed maturity securities,
by contractual maturity dates, (excluding scheduled sinking funds) as of
December 31, 1999 and 1998 are as follows:

FIXED MATURITY SECURITIES BY CONTRACTUAL MATURITY DATES

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999 AS OF DECEMBER 31, 1998
----------------------- -----------------------
AMORTIZED ESTIMATED AMORTIZED ESTIMATED
COST FAIR VALUE COST FAIR VALUE
--------- ---------- --------- ----------
($ IN MILLIONS)
<S> <C> <C> <C> <C>
Due in one year or less................................... $ 206.5 $ 208.5 $ 155.3 $ 155.9
Due after one year through five years..................... 1,506.6 1,487.9 1,536.2 1,573.5
Due after five years through ten years.................... 2,711.9 2,612.9 2,441.8 2,565.6
Due after ten years....................................... 1,153.9 1,098.4 1,187.4 1,249.7
-------- -------- -------- --------
Subtotal............................................. 5,578.9 5,407.7 5,320.7 5,544.7
Mortgage-backed and other asset-backed securities......... 1,173.7 1,138.5 1,132.8 1,161.3
-------- -------- -------- --------
Total........................................... $6,752.6 $6,546.2 $6,453.5 $6,706.0
======== ======== ======== ========
</TABLE>

MORTGAGE LOANS

Mortgage loans comprise 15.8% and 12.9% of total invested assets at
December 31, 1999 and 1998, respectively. Mortgage loans consist of commercial,
agricultural and residential loans. As of December 31, 1999 and 1998, commercial
mortgage loans comprised $1,141.4 million and $886.9 million or 66.6% and 62.5%
of total mortgage loan investments, respectively. Agricultural loans comprised
$570.7 million and $531.2 million or 33.3% and 37.4% of total mortgage loans,
and residential mortgages comprised $1.3 million and $1.9 million or 0.1% and
0.1% of total mortgage loan investments at the dates indicated.

In 1992, the Company discontinued making new commercial mortgage loans,
except to honor outstanding commitments or safeguard the values of existing
investments. In 1996, due to improving market conditions, the need to maintain a
diversified investment portfolio and advantageous yields, the Company started to
originate new commercial mortgage loans. New commercial mortgage loan
originations and purchases aggregated $396.1 million, $279.3 million, and $79.9
million for the years ended December 31, 1999, 1998 and 1997, respectively.

48
<PAGE> 50

Commercial Mortgage Loans

Following is a summary of the Company's commercial mortgage loans by
geographic area and property type as of December 31, 1999, and 1998,
respectively.

COMMERCIAL MORTGAGE LOAN DISTRIBUTION BY GEOGRAPHIC AREA AND BY PROPERTY TYPE

AS OF DECEMBER 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
GEOGRAPHIC AREA
- -----------------------------------------------------------
NUMBER CARRYING % OF
OF LOANS VALUE TOTAL
REGION
- --------------------- --- -------- -----
($ IN MILLIONS)
<S> <C> <C> <C>
Northeast............ 39 $ 359.7 31.5%
Southeast............ 35 303.9 26.6
West................. 23 157.3 13.8
Midwest.............. 21 156.0 13.7
Mountain............. 14 98.0 8.6
Southwest............ 14 66.5 5.8
--- -------- -----
Total........... 146 $1,141.4 100.0%
=== ======== =====
</TABLE>

<TABLE>
<CAPTION>
PROPERTY TYPE
- -----------------------------------------------------------
NUMBER CARRYING % OF
OF LOANS VALUE TOTAL
TYPE
- --------------------- --- -------- -----
($ IN MILLIONS)
<S> <C> <C> <C>
Office............... 74 $ 686.1 60.1%
Mixed Use............ 16 104.7 9.2
Retail............... 23 98.9 8.7
Industrial........... 19 96.3 8.4
Hotel................ 5 91.5 8.0
Apartments........... 7 47.4 4.2
Other................ 2 16.5 1.4
--- -------- -----
Total......... 146 $1,141.4 100.0%
=== ======== =====
</TABLE>

AS OF DECEMBER 31, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
GEOGRAPHIC AREA
- -----------------------------------------------------------
NUMBER CARRYING % OF
OF LOANS VALUE TOTAL
REGION
- --------------------- --- ------ -----
($ IN MILLIONS)
<S> <C> <C> <C>
Northeast............ 38 $299.1 33.7%
Southeast............ 30 270.9 30.5
West................. 18 125.0 14.1
Mountain............. 11 78.0 8.8
Midwest.............. 15 74.3 8.4
Southwest............ 13 39.6 4.5
--- ------ -----
Total........... 125 $886.9 100.0%
=== ====== =====
</TABLE>

<TABLE>
<CAPTION>
PROPERTY TYPE
- -----------------------------------------------------------
NUMBER CARRYING % OF
OF LOANS VALUE TOTAL
TYPE
- --------------------- --- ------ -----
($ IN MILLIONS)
<S> <C> <C> <C>
Office............... 69 $554.9 62.6%
Retail............... 21 106.7 12.0
Hotel................ 4 61.4 6.9
Mixed Use............ 11 55.2 6.2
Industrial........... 13 54.5 6.2
Apartments........... 4 30.0 3.4
Other................ 3 24.2 2.7
--- ------ -----
Total......... 125 $886.9 100.0%
=== ====== =====
</TABLE>

Below is a summary of the changes in the commercial mortgage portfolio for
the years ended December 31, 1999, 1998 and 1997, respectively.

COMMERCIAL MORTGAGE LOAN ASSET FLOWS

<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------------
1999 1998 1997
----------- --------- -----------
($ IN MILLIONS)
<S> <C> <C> <C>
Beginning balance........................................... $ 886.9 $914.9 $1,057.9
Plus: New loan originations and purchases................... 396.1 279.3 79.9
Other additions....................................... 0.9 6.1 14.4
Less: Scheduled principal payments.......................... 71.4 150.1 111.7
Prepayments........................................... 42.7 154.8 108.3
Mortgages foreclosed.................................. 26.2 3.8 13.7
Other................................................. 2.2 4.7 3.6
-------- ------ --------
Ending balance.............................................. $1,141.4 $886.9 $ 914.9
======== ====== ========
</TABLE>

The total number of commercial mortgage loans outstanding at December 31,
1999 and 1998 was 146 and 125, respectively, with an average loan size of $7.8
million and $7.1 million, respectively. The largest amount loaned on any single
property at such dates aggregated $45.5 million and $46.7 million, respectively,
and represented less than 0.5% and 0.5% of general account invested assets,
respectively. At such dates, amounts loaned on fifteen and seven properties were
$20 million or greater, representing in the aggregate 38.0% and 24.9%
respectively, of the total carrying value of the commercial mortgage loan
portfolio at such dates. Total mortgage loans to the five largest borrowers
accounted in the aggregate for approximately 21.6% and 26.7% of the total
carrying value of the commercial mortgage loan portfolio at December 31, 1999
and 1998, respectively, and less than 1.8% and 2.2%, respectively, of total
invested assets at such dates. All such loans were performing.

49
<PAGE> 51

The Company's commercial mortgage loan portfolio is managed by a group of
experienced real estate professionals. These professionals monitor the
performance of the loan collateral, physically inspect properties, collect
financial information from borrowers and keep in close contact with borrowers
and the local broker communities to assess the market conditions and evaluate
the impact of such conditions on property cash flows. The Company's real estate
professionals identify problem and potential problem mortgage assets and develop
workout strategies to deal with borrowers' financial weakness, whether by
foreclosing on properties to prevent a deterioration in collateral value, or by
restructuring mortgages with temporary cash flow difficulties.

Of the $124.0 million, $220.1 million and $195.5 million, respectively, in
maturing loans during the years ended December 31, 1999, 1998 and 1997, 33.9%,
7.6% and 13.9%, respectively, were refinanced, 38.9%, 58.2% and 48.1%,
respectively, were paid off, 0.0%, 2.2% and 6.9%, respectively, were foreclosed,
and 15.3%, 0.0% and 5.1%, respectively, were restructured. Of the $1,141.4
million of outstanding commercial mortgage loans in the Company's investment
portfolio at December 31, 1999, $26.6 million, $89.3 million and $161.7 million
are scheduled to mature in 2000, 2001 and 2002, respectively.

The following table presents the disposition of maturities for the years
ended December 31, 1999, 1998 and 1997.

DISPOSITIONS OF SCHEDULED MATURITIES OF COMMERCIAL MORTGAGE LOANS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------
1999 1998 1997
-------- -------- --------
($ IN MILLIONS)
<S> <C> <C> <C>
Repayment................................................... $ 48.2 $128.0 $ 94.0
Extension(1)................................................ 4.9 57.3 43.6
Refinance at market......................................... 42.0 16.7 27.1
Foreclosure................................................. -- 4.8 13.4
Restructure below market.................................... 19.0 -- 10.0
In process of negotiation................................... -- 13.1 4.7
Borrower extension(2)....................................... 9.3 -- 1.6
Principal write-off......................................... 0.6 0.2 1.1
------ ------ ------
Total............................................. $124.0 $220.1 $195.5
====== ====== ======
</TABLE>

- ---------------
(1) Consists of loans which have had their maturity date extended for a period
of less than one year.
(2) Consists of loans which have had their maturity date extended pursuant to
the borrower's option as provided by the loan documents.

The following table presents the Company's commercial mortgage loan
maturity profile for the periods indicated.

COMMERCIAL MORTGAGE LOAN PORTFOLIO MATURITY PROFILE

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
----------------------------------------------------
1999 1998
------------------------ ------------------------
CARRYING % OF CARRYING % OF
VALUE TOTAL VALUE TOTAL
-------- ----- -------- -----
($ IN MILLIONS) ($ IN MILLIONS)
<S> <C> <C> <C> <C>
1 year or less.................................... $ 26.6 2.3% $124.0 14.0%
Due after one year through five years............. 401.0 35.2 237.4 26.8
Due after five years through ten years............ 425.6 37.3 297.2 33.5
Due after ten years............................... 288.2 25.2 228.3 25.7
-------- ----- ------ -----
$1,141.4 100.0% $886.9 100.0%
======== ===== ====== =====
</TABLE>

PROBLEM, POTENTIAL PROBLEM AND RESTRUCTURED COMMERCIAL
MORTGAGES. Commercial mortgage loans are stated at their unpaid principal
balances, net of valuation allowances and writedowns for impairment. The Company
provides valuation allowances for commercial mortgage loans considered to be
impaired. Mortgage loans are considered impaired when, based on current
information and events, it is probable that the Company will be unable to
collect all amounts due according to the contractual terms of the loan
agreement. When the Company determines that a loan is impaired, a valuation
allowance for loss is established for the excess of the carrying value of the
mortgage loan over its estimated fair value. Estimated fair value is based on
either the present value of expected future cash flows discounted at the loan's
original effective interest rate, the loan's observable market price or the fair
value of the collateral. The provision for loss is reported as a realized loss
on investment.

The Company reviews its mortgage loan portfolio and analyzes the need for a
valuation allowance for any loan which is delinquent for 60 days or more, in
process of foreclosure, restructured, on "watchlist", or which currently has a
valuation allowance. Loans which are delinquent and loans in process of
foreclosure are categorized by the Company as "problem"

50
<PAGE> 52

loans. Loans with valuation allowances, but which are not currently delinquent,
and loans which are on watchlist are categorized by the Company as "potential
problem" loans. Loans for which the original terms of the mortgages have been
modified or for which interest or principal payments have been deferred are
categorized by the Company as "restructured" loans.

The carrying value of commercial mortgage loans at December 31, 1999 was
$1,141.4 million, which amount is net of valuation allowances aggregating $57.1
million which represents management's best estimate of cumulative impairments at
such date. However, there can be no assurance that increases in valuation
allowances will not be necessary. Any such increases may have a material adverse
effect on the Company's financial position and results of operations.

At December 31, 1999, the carrying value of problem, potential problem and
restructured loans was $0.0 million, $72.1 million and $134.8 million,
respectively, net of valuation allowances of $0.0 million, $16.2 million and
$26.0 million, respectively.

Gross interest income on restructured commercial mortgage loan balances
that would have been recorded in accordance with the loans' original terms was
approximately $16.1 million, $17.8 million and $25.0 million at December 31,
1999, 1998 and 1997, respectively. As a result of the restructurings, the gross
interest income recognized in net income at December 31, 1999, 1998 and 1997,
respectively, was $10.8 million, $12.6 million and $18.6 million.

The following table presents the carrying amounts of problem, potential
problem and restructured commercial mortgages relative to the carrying value of
all commercial mortgages as of the dates indicated. The table also presents the
valuation allowances and writedowns recorded by the Company relative to
commercial mortgages defined as problem, potential problem and restructured as
of each of the aforementioned dates.

PROBLEM, POTENTIAL PROBLEM AND RESTRUCTURED COMMERCIAL MORTGAGES AT CARRYING
VALUE

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------
1999 1998
-------- ------
($ IN MILLIONS)
<S> <C> <C>
Total commercial mortgages.................................. $1,141.4 $886.9
======== ======
Problem commercial mortgages(1)............................. $ -- $ 11.6
Potential problem commercial mortgages...................... 72.1 86.1
Restructured commercial mortgages........................... 134.8 153.6
-------- ------
Total problem, potential problem & restructured commercial
mortgages................................................. $ 206.9 $251.3
======== ======
Total problem, potential problem and restructured commercial
mortgages as a percent of total commercial mortgages...... 18.1% 28.3%
======== ======
Valuation allowances/writedowns(2):
Problem loans............................................... $ -- $ 1.8
Potential problem loans..................................... 16.2 26.7
Restructured loans.......................................... 26.0 25.8
-------- ------
Total valuation allowances/writedowns(2).................... $ 42.2 $ 54.3
======== ======
Total valuation allowances/writedowns as a percent of
problem, potential problem and restructured commercial
mortgages at carrying value before valuation allowances
and writedowns............................................ 16.9% 17.8%
======== ======
</TABLE>

- ---------------
(1) Problem commercial mortgages included mortgage loans in foreclosure of $0.0
million and $11.6 million at December 31, 1999 and 1998, respectively.
(2) Includes impairment writedowns recorded prior to the adoption of SFAS No.
114, Accounting by Creditors for Impairment of a Loan, of $26.3 million at
both December 31, 1999 and 1998.

In addition to valuation allowances and impairment writedowns recorded on
specific commercial mortgage loans classified as problem, potential problem, and
restructured mortgage loans, the Company records a non-specific estimate of
expected losses on all other such mortgage loans based on its historical loss
experience for such investments. As of December 31, 1999 and 1998, such reserves
were $15.9 million and $13.2 million, respectively.

As of December 31, 1999, the Company had no problem commercial mortgages.
As of December 31, 1998, the Company had two problem commercial mortgages
aggregating $11.6 million which were New York state retail mortgages.

51
<PAGE> 53

The following tables present the distribution of potential problem and
restructured commercial mortgages by property type and by state as of December
31, 1999 and 1998.

POTENTIAL PROBLEM COMMERCIAL MORTGAGES BY PROPERTY TYPE AND BY STATE

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------------------------------------------------------
1999 1998
---------------------------------- ----------------------------------
NUMBER CARRYING % OF NUMBER CARRYING % OF
OF LOANS VALUE TOTAL OF LOANS VALUE TOTAL
-------- -------- ----- -------- -------- -----
($ IN MILLIONS) ($ IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
PROPERTY TYPE:
Office..................................... 5 $62.5 86.7% 5 $82.1 95.4%
Apartment.................................. 1 5.6 7.8 0 -- --
Retail..................................... 1 4.0 5.5 1 4.0 4.6
-- ----- ----- -- ----- -----
Total............................ 7 $72.1 100.0% 6 $86.1 100.0%
== ===== ===== == ===== =====
STATE:
District of Columbia....................... 1 $33.0 45.8% 1 $33.9 39.4%
New York................................... 2 17.1 23.7 2 17.2 20.0
California................................. 1 7.3 10.1 0 -- --
Mississippi................................ 1 5.6 7.8 0 -- --
New Jersey................................. 1 5.1 7.1 1 5.0 5.8
Wisconsin.................................. 1 4.0 5.5 1 4.0 4.6
Virginia................................... 0 -- -- 1 26.0 30.2
-- ----- ----- -- ----- -----
Total............................ 7 $72.1 100.0% 6 $86.1 100.0%
== ===== ===== == ===== =====
</TABLE>

RESTRUCTURED COMMERCIAL MORTGAGES BY PROPERTY TYPE AND BY STATE

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------------------------------------------------------
1999 1998
---------------------------------- ----------------------------------
NUMBER CARRYING % OF NUMBER CARRYING % OF
OF LOANS VALUE TOTAL OF LOANS VALUE TOTAL
-------- -------- ----- -------- -------- -----
($ IN MILLIONS) ($ IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
PROPERTY TYPE:
Office..................................... 13 $115.7 85.8% 15 $123.2 80.2%
Retail..................................... 2 10.0 7.4 4 20.9 13.6
Industrial................................. 1 9.1 6.8 1 9.5 6.2
-- ------ ----- -- ------ -----
Total............................ 16 $134.8 100.0% 20 $153.6 100.0%
== ====== ===== == ====== =====
STATE:
New York................................... 9 $ 94.7 70.3% 10 $ 94.7 61.7%
District of Columbia....................... 2 14.6 10.8 2 15.2 9.9
California................................. 1 9.1 6.7 1 9.5 6.2
Texas...................................... 2 7.8 5.8 2 7.8 5.1
Arizona.................................... 1 7.7 5.7 1 7.7 5.0
Louisiana.................................. 1 0.9 0.7 1 0.9 0.5
Colorado................................... 0 -- -- 1 7.1 4.6
South Carolina............................. 0 -- -- 1 6.3 4.1
Maryland................................... 0 -- -- 1 4.4 2.9
-- ------ ----- -- ------ -----
Total............................ 16 $134.8 100.0% 20 $153.6 100.0%
== ====== ===== == ====== =====
</TABLE>

52
<PAGE> 54

Agricultural Mortgage Loans

The carrying value of the Company's agricultural mortgage loans was $570.7
million and $531.2 million at December 31, 1999 and 1998, respectively,
representing 33.3% and 37.4% of total mortgage assets and 5.3% and 4.8% of
general account invested assets at such dates, respectively. The agricultural
mortgage portfolio is diversified both geographically and by type of product.
The security for these loans includes row crops, permanent plantings, dairies,
ranches and timber tracts. Due to strong agricultural markets and advantageous
yields, the Company expects to continue to invest in agricultural mortgage
investments. Less than 1.3% and 0.9% of total agricultural loans outstanding at
December 31, 1999 and 1998, respectively, were delinquent or in process of
foreclosure. Following is a summary of agricultural mortgage loans by state
which were held by the Company at the dates indicated.

AGRICULTURAL MORTGAGE LOANS BY STATE

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
----------------------------------------------------------------------------
1999 1998
------------------------------------ ------------------------------------
NUMBER CARRYING % OF NUMBER CARRYING % OF
OF LOANS VALUE TOTAL OF LOANS VALUE TOTAL
-------- -------- ----- -------- -------- -----
($ IN MILLIONS) ($ IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
STATE:
California............................ 139 $105.5 18.5% 134 $100.6 18.9%
Washington............................ 197 65.5 11.5 202 69.0 13.0
Texas................................. 104 53.9 9.4 103 52.3 9.8
Oregon................................ 124 53.4 9.4 118 50.2 9.5
Idaho................................. 133 47.9 8.4 127 45.6 8.6
Missouri.............................. 140 43.8 7.7 124 36.3 6.8
Georgia............................... 58 34.3 6.0 59 35.1 6.6
Arizona............................... 46 31.7 5.6 48 30.5 5.7
Arkansas.............................. 53 28.6 5.0 31 15.4 2.9
All others (no other state more than
5.0%)............................... 240 106.1 18.5 239 96.2 18.2
----- ------ ----- ----- ------ -----
Total....................... 1,234 $570.7 100.0% 1,185 $531.2 100.0%
===== ====== ===== ===== ====== =====
</TABLE>

PROBLEM, POTENTIAL PROBLEM AND RESTRUCTURED AGRICULTURAL MORTGAGES. The
Company defines problem, potential problem and restructured agricultural
mortgages in the same manner as it does for commercial mortgages. The following
table presents the carrying amounts of problem, potential problem and
restructured agricultural mortgages relative to the carrying value of all
agricultural mortgages as of the dates indicated. The table also presents the
valuation allowances established by the Company relative to agricultural
mortgages defined as problem, potential problem and restructured as of each of
the aforementioned dates indicated.

PROBLEM, POTENTIAL PROBLEM AND RESTRUCTURED AGRICULTURAL
MORTGAGES AT CARRYING VALUE

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------
1999 1998
------- -------
($ IN MILLIONS)
<S> <C> <C>
Total agricultural mortgages................................ $570.7 $531.2
====== ======
Problem agricultural mortgages(1)........................... $ 7.4 $ 2.1
Potential problem agricultural mortgages.................... 1.4 1.7
Restructured agricultural mortgages......................... 9.3 11.7
------ ------
Total problem, potential problem & restructured agricultural
mortgages................................................. $ 18.1 $ 15.5
====== ======
Total problem, potential problem and restructured
agricultural mortgages as a percent of total agricultural
mortgages................................................. 3.2% 2.9%
====== ======
Valuation allowances/writedowns: problem loans.............. $ 0.2 $ --
Potential problem loans..................................... 0.1 0.1
Restructured loans.......................................... 0.5 0.3
------ ------
Total valuation allowances/writedowns....................... $ 0.8 $ 0.4
====== ======
Total valuation allowances as a percent of problem,
potential problem and restructured agricultural mortgages
at carrying value before valuation allowances and
writedowns................................................ 4.2% 2.5%
====== ======
</TABLE>

- ---------------
(1) Problem agricultural mortgages included delinquent mortgage loans of $3.1
million and $2.1 million at December 31, 1999 and 1998, respectively, and
mortgage loans in the process of foreclosure of $4.3 million and $0.0
million, at such dates, respectively.

53
<PAGE> 55

In addition to valuation allowances and impairment writedowns recorded on
specific agricultural mortgage loans classified as problem, potential problem,
and restructured mortgage loans, the Company records a non-specific estimate of
expected losses on all other agricultural mortgage loans based on its historical
loss experience for such investments. As of December 31, 1999 and 1998, such
reserves were $5.6 million and $5.2 million, respectively.

As illustrated in the table above, at December 31, 1999 and 1998 problem
agricultural mortgage loans totaled $7.4 million and $2.1 million, or 1.3% and
0.4% of the total carrying value of agricultural mortgages at such dates.
Potential problems (not currently in a delinquent status, but with collateral
impairment) totaled $1.4 million and $1.7 million or 0.2% and 0.3% of the total
carrying value of agricultural mortgages at such dates, respectively, and
restructured mortgages totaled $9.3 million and $11.7 million or 1.6% and 2.2%
of the total carrying value of agricultural mortgages at such dates,
respectively. Total problem, potential problem and restructured mortgages were
$18.1 million and $15.5 million at December 31, 1999 and 1998, respectively, or
3.2% and 2.9% of the total carrying value of agricultural mortgages at such
dates, respectively. Total specific asset valuation allowances of $0.8 million
and $0.4 million for agricultural mortgages were 4.2% and 2.5% of the carrying
value before valuation allowances and writedowns of these total problem
agricultural mortgages of $18.9 million and $15.9 million for December 31, 1999
and 1998, respectively.

MONY Life has, from time to time, pooled certain of its agricultural
mortgage loans and sold beneficial interests in each of the individual
agricultural mortgage loans in such pools (referred to as "participation
interests") to third parties. Under such arrangements, MONY Life retains a
specified equity interest in the loans in such pools and sells the remaining
participation interest. MONY Life is responsible for servicing the individual
agricultural mortgage loans in each pool, for which it receives a servicing fee
from the third party participants. As of December 31, 1999, the aggregate amount
of agricultural mortgage loans in such pools being serviced by MONY Life was
approximately $252.1 million.

EQUITY REAL ESTATE

The Company holds real estate as part of its general account investment
portfolio. The Company has adopted a policy of not investing new funds in equity
real estate except to safeguard values in existing investments or to honor
outstanding commitments. As of December 31, 1999 and 1998 the carrying value of
the Company's equity real estate investments was $369.1 million and $634.2
million, respectively, or 3.4% and 5.7%, respectively, of general account
invested assets. The Company owns real estate, interests in real estate joint
ventures (both majority owned and minority owned), and real estate acquired upon
foreclosure of commercial and agricultural mortgage loans. The following table
presents the carrying value of the Company's equity real estate investments by
such classifications as of the dates indicated.

EQUITY REAL ESTATE

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------
1999 1998
------- -------
($ IN MILLIONS)
<S> <C> <C>
Real estate................................................. $140.3 $271.1
Joint ventures.............................................. 107.8 219.9
------ ------
Subtotal.......................................... 248.1 491.0
Foreclosed.................................................. 121.0 143.2
------ ------
Total............................................. $369.1 $634.2
====== ======
</TABLE>

Equity real estate is categorized as either "Real estate held for
investment" or "Real Estate to be disposed of". Real estate to be disposed of
consists of properties for which the Company has commenced marketing efforts.
The carrying value of real estate held for investment totaled $46.2 million and
$321.3 million as of December 31, 1999 and 1998, respectively. The carrying
value of real estate to be disposed of aggregated $322.9 million and $312.9
million as of December 31, 1999 and 1998, respectively.

54
<PAGE> 56

The following tables present information concerning the geographic and
property type breakdown of the equity real estate portfolio as of December 31,
1999 and 1998.

EQUITY REAL ESTATE BY REGION AND PROPERTY TYPE

AS OF DECEMBER 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
TOTAL PORTFOLIO BY REGION
- -----------------------------------------------------
CARRYING
NUMBER VALUE PERCENTAGE
------ -------- ----------
($ IN MILLIONS)
<S> <C> <C> <C>
Mountain............. 10 $145.1 39.3%
Midwest.............. 16 88.6 24.0
Southeast............ 10 84.5 22.9
Southwest............ 3 25.6 6.9
West................. 6 23.2 6.3
Northeast............ 1 2.1 0.6
-- ------ -----
Total......... 46 $369.1 100.0%
== ====== =====
</TABLE>

<TABLE>
<CAPTION>
TOTAL PORTFOLIO BY TYPE
- -----------------------------------------------------
CARRYING
NUMBER VALUE PERCENTAGE
------ -------- ----------
($ IN MILLIONS)
<S> <C> <C> <C>
Office............... 18 $180.8 49.0%
Hotel................ 4 129.6 35.1
Retail............... 5 31.4 8.5
Other................ 9 15.1 4.1
Industrial........... 1 10.9 3.0
Agriculture.......... 8 1.2 0.3
Apartments........... 1 0.1 0.0
-- ------ -----
Total......... 46 $369.1 100.0%
== ====== =====
</TABLE>

AS OF DECEMBER 31, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
TOTAL PORTFOLIO BY REGION
- -----------------------------------------------------
CARRYING
NUMBER VALUE PERCENTAGE
------ -------- ----------
($ IN MILLIONS)
<S> <C> <C> <C>
Mountain............. 15 $240.1 37.9%
Midwest.............. 23 115.1 18.1
Southeast............ 16 106.9 16.9
Northeast............ 9 81.5 12.8
West................. 10 50.3 7.9
Southwest............ 7 40.3 6.4
-- ------ -----
Total......... 80 $634.2 100.0%
== ====== =====
</TABLE>

<TABLE>
<CAPTION>
TOTAL PORTFOLIO BY TYPE
- -----------------------------------------------------
CARRYING
NUMBER VALUE PERCENTAGE
------ -------- ----------
($ IN MILLIONS)
<S> <C> <C> <C>
Office............... 36 $278.0 43.8%
Hotel................ 6 215.4 34.0
Retail............... 13 95.5 15.1
Industrial........... 3 25.3 4.0
Other................ 10 18.2 2.9
Agriculture.......... 10 1.5 0.2
Apartments........... 2 0.3 --
-- ------ -----
Total......... 80 $634.2 100.0%
== ====== =====
</TABLE>

Equity real estate is evenly distributed across geographic regions of the
country with a slightly larger concentration in the mountain region of the
United States at December 31, 1999. By property type, there is a concentration
in office buildings which represented approximately 49.0% of the equity real
estate portfolio at December 31, 1999. The Company's largest equity real estate
holding at December 31, 1999 consisted of a hotel property located in Arizona
with a carrying value of approximately $107.8 million and representing less than
approximately 1.0% of general account invested assets. The ten largest real
estate properties as of December 31, 1999 comprise 63.3% of total real estate
assets and less than 2.2% of total invested assets.

EQUITY SECURITIES

The Company's equity securities are comprised of investments in common
stocks and limited partnership interests of investment partnerships. The
following table presents the carrying values of the Company's equity securities
at the dates indicated.

INVESTMENTS IN EQUITY SECURITIES

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------
1999 1998
------- -------
($ IN MILLIONS)
<S> <C> <C>
Common stocks............................................... $277.2 $294.6
Limited partnership interests............................... 242.6 162.6
------ ------
Total............................................. $519.8 $457.2
====== ======
</TABLE>

55
<PAGE> 57

Common Stocks --

The Company's investments in common stocks are classified as
available-for-sale and are reported at estimated fair value. Unrealized gains
and losses on the Company's common stocks are reported as a separate component
of other comprehensive income, net of deferred income taxes and an adjustment
for the effect on deferred policy acquisition costs that would have occurred if
such gains and losses had been realized. Substantially all the common stocks
owned by the Company are publicly traded on national securities exchanges. The
Company's investments in commons stocks represented 2.6% and 2.7% of invested
assets at December 31, 1999 and 1998, respectively. The Company achieved a total
return on its investments in common stocks of 27.7%, 16.7% and 20.5% for the
years ended December 31, 1999, 1998 and 1997, respectively. The Company defines
total return as the percentage obtained by dividing the summation of realized
and unrealized gains and losses and dividends by the average market value of the
portfolio during the period. Proceeds on the sale of common stocks totaled
$302.7 million, $165.0 million and $234.1 million which resulted in net realized
gains of $77.6 million, $7.2 million, and $39.7 million for the years ended
December 31, 1999, 1998 and 1997, respectively.

Limited partnership interests --

The Company accounts for its investments in the limited partnership
interests of investment partnerships in accordance with the Equity Method of
accounting or the Cost Method of accounting depending upon the Company's
percentage of ownership of the partnership and the date it was acquired. In
general, partnership interests acquired after May 18, 1995 are accounted for in
accordance with the Equity Method of accounting if the Company's ownership
interest exceeds 3 percent, whereas, if the partnership was acquired prior to
May 18, 1995, the Equity Method would be applied only if the Company's ownership
interest exceeded 20 percent. In all other circumstances the Company accounts
for its investments in limited partnership interests in accordance with the Cost
Method.

Under the Equity Method of accounting for investments, an investor is
required to record in its income its share of the income or loss reported by an
investee and, correspondingly, increase or decrease the carrying of such
investment in its balance sheet. Distributions of income or dividends from the
investor are recorded as a reduction in the carrying value of the investment. In
applying the Equity Method, an investor is not permitted to adjust the income
reported by an investee to conform the investee's accounting policies to that
followed by the investor.

Under the Cost Method of accounting the investment is carried at its
original cost and income is recognized when distributed as dividends from the
partnership. The carrying amount of the investment is reduced only upon receipt
of a dividend characterized by the partnership as a return of capital or
liquidating dividend or when management has determined that the investment or
portion thereof may not be recovered.

In accordance with GAAP, investment partnerships report their investments
at fair value and changes in the fair value of such investments are reflected in
the income of such partnerships. Accordingly, a significant portion of the
income reported by the Company from partnerships accounted for under the equity
method results from unrealized appreciation in the investments of the
partnerships. See discussion regarding "Equity Price Risk" on page 60.

The limited partnerships in which the Company has invested are investment
partnerships which invest in the equity of private companies (generally in the
form of common stock). These partnerships will generally hold such equity until
the underlying company issues its securities to the public through an initial
public offering. At that time or thereafter, at the general partners'
discretion, the partnership will generally distribute the underlying common
stock to its partners. Upon distribution, the Company will record the common
stock received at fair value, reverse the carrying value of the corresponding
limited partnership investment, and record as investment income any excess of
the fair value of the common stock distributed over the carrying value of the
limited partnership investment. Accordingly, certain of the common stocks owned
by the Company at December 31, 1999 and 1998 were acquired through distributions
from the Company's investments in limited partnership interests. However, it has
been the Company's practice to sell such positions shortly after such
distributions.

56
<PAGE> 58

The following table sets forth the carrying value of the Company's
investments in limited partnership interests sorted by the basis upon which the
Company accounts for such investments, as well as the amount of such investments
attributable to the partnerships' ownership of public and private common stock
at December 31, 1999 and 1998:

<TABLE>
<CAPTION>
CARRYING VALUE
DECEMBER 31,
----------------
1999 1998
------ ------
($ IN MILLIONS)
<S> <C> <C>
EQUITY METHOD
Public common stock....................................... $ 57.6 $ 2.9
Private common stock...................................... 69.3 40.7
Subtotal............................................... 126.9 43.6
------ ------
COST METHOD
Public common stock....................................... 40.8 40.0
Private common stock...................................... 74.9 79.0
Subtotal............................................... 115.7 119.0
------ ------
Total............................................. $242.6 $162.6
====== ======
</TABLE>

At December 31, 1999 and 1998, the Company had investments in approximately
50 and 43 different limited partnerships which represented 2.2% and 1.5%,
respectively, of the Company's general account invested assets. Investment
results for the portfolio are dependent upon, among other things, general market
conditions for initial and secondary offerings of common stock. For the years
ended December 31, 1999, 1998, and 1997, investment income from investments in
limited partnership interests (which is comprised primarily of the Company's pro
rata share of income reported by partnerships accounted for under the equity
method and income recognized upon distribution for partnership investments
accounted for under the cost method) was approximately $188.9 million, $49.5
million and $49.0 million, respectively, representing 20.9%, 6.7% and 6.7%,
respectively, of the net investment income for such periods. For the same
periods, the Company achieved total returns on its investments in limited
partnership interests of 81.9%, 28.4% and 37.5%, respectively. There can be no
assurance that the recent level of investment returns achieved on limited
partnership investments can be sustained in the future, and the failure to do so
could have a material adverse effect on the Company's financial position and
results of operations.

INVESTMENT IMPAIRMENTS AND VALUATION ALLOWANCES

The cumulative asset specific impairment adjustments and provisions for
valuation allowances that were recorded as of December 31, 1999 and 1998 are
shown in the table below.

CUMULATIVE IMPAIRMENT ADJUSTMENTS ON INVESTMENTS

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------
1999 1998
------- -------
($ IN MILLIONS)
<S> <C> <C>
Fixed maturities............................................ $ 19.2 $ 15.1
Equity securities........................................... 4.7 5.8
Mortgages................................................... 26.3 26.3
Real estate(1).............................................. 73.2 166.6
------ ------
Total............................................. $123.4 $213.8
====== ======
</TABLE>

- ---------------
(1) Includes $48.0 million and $55.8 million at December 31, 1999, and 1998,
respectively, relating to impairments taken upon foreclosure of mortgage
loans.

57
<PAGE> 59

CUMULATIVE PROVISIONS FOR VALUATION ALLOWANCES ON INVESTMENTS

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------
1999 1998
------- --------
($ IN MILLIONS)
<S> <C> <C>
Mortgages................................................... $37.3 $ 46.8
Real estate................................................. 22.0 30.6
----- ------
Total............................................. $59.3 $ 77.4
===== ======
</TABLE>

TOTAL CUMULATIVE IMPAIRMENT ADJUSTMENTS AND PROVISIONS
FOR VALUATION ALLOWANCES ON INVESTMENTS

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------
1999 1998
------- -------
($ IN MILLIONS)
<S> <C> <C>
Fixed maturities............................................ $ 19.2 $ 15.1
Equity securities........................................... 4.7 5.8
Mortgages................................................... 63.6 73.1
Real estate................................................. 95.2 197.2
------ ------
Total............................................. $182.7 $291.2
====== ======
</TABLE>

All of the Company's fixed maturity and equity securities are classified as
available for sale and, accordingly, are marked to market, with unrealized gains
and losses excluded from earnings and reported as a separate component of
accumulated other comprehensive income. Securities whose value is deemed other
than temporarily impaired are written down to fair value. The writedowns are
recorded as realized losses and included in earnings. The cost basis of such
securities is adjusted to fair value. The new cost basis is not changed for
subsequent recoveries in value. For the years ended December 31, 1999, 1998 and
1997, such writedowns aggregated $8.3 million, $15.7 million and $10.2 million,
respectively.

At December 31, 1999 and 1998, 10.5% ($1,141.4 million) and 8.1% ($886.9
million), respectively, of the Company's general account invested assets
consisted of commercial mortgage loans. Commercial mortgage loans are stated at
their unpaid principal balances, net of valuation allowances for impairment. The
Company provides valuation allowances for commercial mortgage loans when it is
probable that the Company will be unable to collect all amounts due according to
the contractual terms of the loan agreement. Increases in such valuation
allowances are recorded as realized investment losses and, accordingly, are
reflected in the Company's results of operations. For the years ended December
31, 1999, 1998 and 1997, such increases (decreases) in valuation allowances
aggregated $2.7 million, $11.7 million and $0.4 million, respectively. The
carrying value of commercial mortgage loans at December 31, 1999 was $1,141.4
million, which amount is net of $57.2 million representing management's best
estimate of cumulative impairment losses at such date. However, there can be no
assurance that additional provisions for impairment adjustments with respect to
the real estate held for investment will not need to be made. Any such
adjustments may have a material adverse effect on the Company's financial
position and results of operations.

The carrying value of real estate held for investment is generally adjusted
for impairment whenever events or changes in circumstances indicate that the
carrying amount of the asset may not be recoverable. Such impairment adjustments
are recorded as realized investment losses and, accordingly, are reflected in
the Company's results of operations. For the years ended December 31, 1999, 1998
and 1997, such impairment adjustments aggregated $0.0 million, $5.9 million, and
$0.0 million, respectively. At December 31, 1999 and 1998, the carrying value of
real estate held for investment was $46.2 million and $321.3 million, or 0.4%
and 2.9% of invested assets at such dates, respectively. The aforementioned
carrying values are net of cumulative impairments of $10.8 million and $87.4
million, respectively, and net of accumulated depreciation of $22.8 million and
$153.9 million, respectively. However, there can be no assurance that additional
provisions for impairment adjustments with respect to real estate held for
investment will not need to be made.

The carrying value of real estate to be disposed of at December 31, 1999
and 1998 was $322.9 million and $312.9 million, net of impairment adjustments of
$62.3 million and $79.1 million, valuation allowances of $22.0 million and $30.6
million and accumulated depreciation of $116.1 million and $136.2 million,
respectively. Once management identifies a real estate property to be sold and
commences a plan for marketing the property, the property is classified as to be
disposed of and a valuation allowance is established and periodically revised,
if necessary, to adjust the carrying value of the property to reflect the lower
of its current carrying value or the fair value, less associated selling costs
(See Note 4 to the Consolidated Financial Statements). Increases in such
valuation allowances are recorded as realized investment losses and,
accordingly, are reflected in the Company's results of operations. For the years
ended December 31, 1999, 1998 and 1997, such increases in valuation allowances
aggregated $12.1 million, $6.8 million and $63.8 million, respectively. See
"-- Equity Real Estate -- Real Estate Sales".

58
<PAGE> 60

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's exposure to market risk relates to the market price and/or
cash flow variability associated with changes in market interest rates and
prices of equity securities. Set forth below is an overview of the Company's
primary exposure to market risk, and its objectives and strategies relating to
such risk. The following is a more detailed discussion of: (i) the Company's
exposure to interest rate and equity price risks, (ii) liability characteristics
of the Company's business, and (iii) asset/liability management techniques used
by the Company to manage market risks:

OVERVIEW --

The Company's results of operations significantly depend on profit margins
between general account invested assets and interest credited on insurance and
annuity products. Changes in interest rates can potentially impact the Company's
profitability. Management believes the Company's liabilities should be supported
by a portfolio principally composed of fixed rate investments that can generate
predictable, steady rates of return. Although these assets are purchased for
long-term investment, the portfolio management strategy considers them available
for sale in response to changes in market interest rates, changes in prepayment
risk, changes in relative values of asset sectors and individual securities and
loans, changes in credit quality outlook and other relevant factors. The
objective of portfolio management is to maximize returns, taking into
consideration the aforementioned factors. The Company's asset/liability
management discipline includes strategies to minimize exposure to loss as
interest rates and economic and market conditions change. As a result, the
Company's fixed maturity portfolio has modest exposure to call and prepayment
risk and the vast majority of mortgage loan investments are fixed rate mortgages
that carry yield maintenance and prepayment provisions.

INTEREST RATE RISK --

The Company's exposure to interest rate risk primarily relates to its
investments in fixed maturity securities and mortgage loans outside the Closed
Block, and fixed maturity securities and mortgage loans included in the assets
transferred in the Group Pension Transaction (for a discussion of the Group
Pension. See Transaction Note 10 to the Consolidated Financial Statements. For a
discussion of the Closed Block see Note 3 to the Consolidated Financial
Statements). The risk with respect to assets transferred in the Group Pension
Transaction is limited, as discussed in "Policyholder Liability
Characteristics." The carrying value of investments in fixed maturity securities
and mortgage loans outside the Closed Block (including such general account
assets in the balance sheet line item entitled, "Assets Transferred in Group
Pension Transaction") represent 82.3%, at December 31, 1999, of the aggregate
carrying value of the Company's consolidated invested assets outside the Closed
Block (including the general account invested assets included in the balance
sheet line item entitled, "Assets Transferred in Group Pension Transaction").
Substantially all of the Company's fixed maturity securities are U.S.
dollar-denominated securities. As part of its asset/liability management
discipline, quantitative analyses are conducted that model the assets with
interest rate risk assuming various changes in interest rates (see
"Investments -- General" for a more detailed discussion of these analyses). The
table below shows the Company's potential exposure, measured in terms of fair
value, to an immediate 100 basis point increase in interest rates from levels
prevailing at December 31, 1999. A 100 basis point fluctuation in interest rates
is a hypothetical interest rate scenario used to calibrate potential risk and
does not represent management's view of future market changes. While these fair
value measurements provide a representation of interest rate sensitivity of
fixed maturities and mortgage loans, they are based on the Company's portfolio
exposures at a particular point in time and may not be representative of future
market results. These exposures will change as a result of ongoing portfolio
activities in response to management's assessment of changing market conditions
and available investment opportunities.

ASSETS WITH INTEREST RATE RISK -- FAIR VALUE

<TABLE>
<CAPTION>
AT
DECEMBER 31, +100 BASIS
1999 POINT CHANGE
------------ ------------
($ IN MILLIONS)
CHANGE IN FAIR VALUE
<S> <C> <C>
ASSETS OUTSIDE THE CLOSED BLOCK
Fixed Maturities............................................ $3,066.7 $(137.3)
Mortgage Loans.............................................. 1,236.5 (50.3)
-------- -------
Total..................................................... $4,303.2 $(187.6)
======== =======

ASSETS TRANSFERRED IN THE GROUP PENSION TRANSACTION
Fixed Maturities............................................ $1,510.0 $ (42.1)
Mortgage Loans.............................................. 100.3 (0.6)
-------- -------
Total..................................................... $1,610.3 $ (42.7)
======== =======
</TABLE>

59
<PAGE> 61

<TABLE>
<CAPTION>
AT
DECEMBER 31, +100 BASIS
1999 POINT CHANGE
------------ ------------
($ IN MILLIONS)
CHANGE IN FAIR VALUE
<S> <C> <C>
TOTAL FIXED INCOME SECURITIES OUTSIDE THE CLOSED BLOCK
Fixed Maturities............................................ $4,576.7 $(179.4)
Mortgage Loans.............................................. 1,336.8 (50.9)
-------- -------
Total..................................................... $5,913.5 $(230.3)
======== =======
</TABLE>

In addition to its interest rate risk relating to fixed maturity securities
and mortgage loans, the Company has interest rate exposure relating to its
issuance of long-term debt obligations. Set forth below is a discussion of these
items.

At December 31, 1999, the aggregate fair value of long-term debt issued by
the Company was $251.7 million. The table below shows the potential fair value
exposure to an immediate + 100 basis point change in interest rates from those
prevailing at December 31, 1999.

LONG TERM DEBT -- FAIR VALUE

<TABLE>
<CAPTION>
AT
DECEMBER 31, +100 BASIS
1999 POINT CHANGE
------------ ------------
($ IN MILLIONS)
<S> <C> <C>
Fixed rate debt............................................. $251.7 $(19.0)
</TABLE>

EQUITY PRICE RISK --

The Company's investment portfolio also contains investments in equity
securities, which are comprised of investments in common stocks and limited
partnership interests of investment partnerships. See Management's Discussion
and Analysis of Financial Condition and Results of
Operations -- Investments -- Equity Securities. The aforementioned investment
partnerships principally invest in technology companies and other industries
whose market prices have experienced significant volatility. The following table
shows the Company's potential exposure from those equity security investments,
measured in terms of fair value, to an immediate 10% drop in equity prices from
those prevailing at December 31, 1999. A 10% decrease in equity prices is a
hypothetical scenario used to calibrate potential risk and does not represent
management's view of future market changes, nor does it reflect the volatility
that has been experienced by some of the sectors in which the Company has common
stock investments. In addition, the fair value measurements shown are based on
the equity securities portfolio exposures at a particular point in time and
these exposures will change as a result of ongoing portfolio activities in
response to management's assessment of changing market conditions and available
investment opportunities. Also, since a significant portion of the Company's
investments in limited partnerships are accounted for under the Equity Method,
changes in the value of such partnership investments will directly affect the
earnings reported by the Company. See Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Investments -- Equity
Securities.

ASSET WITH EQUITY PRICE RATE RISK -- FAIR VALUE

<TABLE>
<CAPTION>
AT
DECEMBER 31, -10%
1999 CHANGE
------------ ------
($ IN MILLIONS)
<S> <C> <C>
Equity securities........................................... $519.8 $(52.0)
</TABLE>

POLICYHOLDERS' LIABILITY CHARACTERISTICS --

Due to the manner in which the Closed Block was funded and the ability of
management to adjust dividends paid on Closed Block policies, as more fully
explained in Note 3 to the Consolidated Financial Statements, management
believes that the Company's exposure to market risk with respect to liabilities
and assets allocated to the Closed Block is deminimus. In addition, the
Company's exposure to loss relating to both the assets and liabilities
transferred in the Group Pension Transaction is contractually limited to the
principal amount of the Series A Notes outstanding, as more fully explained in
Note 10 to the Consolidated Financial Statements. Furthermore, management does
not expect to incur any material loss from the assets and liabilities
transferred in the Group Pension Transaction, however, there can be no assurance
that such a loss will not ultimately be incurred.

Policyholders' liabilities outside the Closed Block (and excluding such
liabilities transferred in the Group Pension Transaction) at December 31, 1999
consisted of future policy benefits, policyholders' account balances, and other
policyholder liabilities of $954.3 million, $1,942.9 million, $120.4 million,
respectively. These liabilities were backed, at
60
<PAGE> 62

such date, by approximately $7.1 billion of assets (total consolidated assets
excluding "Assets transferred in Group Pension Transaction", "Closed Block
assets" and "Separate account assets"), including invested assets of
approximately $5.6 billion. Ensuring that the expected cash flows generated by
the assets are sufficient, given the policyholder obligations, is an explicit
objective of the Company's asset/liability management strategy. Following is a
discussion of the Company's policyholders' policy and annuity liabilities at
December 31, 1999.

Future Policy Benefits

Products in this category contain significant actuarial (including
mortality and morbidity) pricing and cash flow risks. The cash flows associated
with these policy liabilities are not interest rate sensitive but do vary based
on the timing and amount of benefit payments. The primary risks associated with
these products are that the benefits will exceed expected actuarial pricing
and/or that the actual timing of the cash flows will differ from those
anticipated resulting in an investment return lower than that assumed in
pricing. Products comprising this category include single premium whole life,
yearly renewable term, level term policies, group pensions, group life and
health insurance, supplementary contracts with life contingencies, and immediate
annuities. Future policy benefit liabilities on such business aggregated
approximately $0.5 billion at December 31, 1999. The guaranteed rate on single
premium whole life business, which represents policyholder liabilities of
approximately $0.1 billion at December 31, 1999, is 6.0%. Also, included in this
category are disability income future policy benefit liabilities of
approximately $0.4 billion at December 31, 1999. All such business was reinsured
effective December 31, 1997.

Policyholders' Account Balances and Other Policyholders' Liabilities

Products in this category credit interest to policyholders, subject to
market conditions and minimum guarantees. Interest crediting on the products in
this category may be reset periodically. Policyholders may surrender at book
value, but under the terms of certain of the products in this category may be
subject to surrender charges for an initial period. Product examples include,
single premium deferred annuities, universal life contracts, and the general
account portion of the Company's variable annuity products. In general, the
Company's investment strategy is designed to manage a portfolio of assets with
appropriate duration and convexity consistent with the characteristics and risk
elements of the products comprising the policyholder account balance
liabilities. Liability durations are short to intermediate term for annuities
and intermediate term for life insurance products.

ASSET/LIABILITY MANAGEMENT TECHNIQUES --

Asset/liability management is integrated into many aspects of the Company's
operations, including investment decisions, product development and
determination of interest crediting rates. As part of the risk management
process, numerous scenarios are modeled, including cash flow testing required
for insurance regulatory purposes, to determine if existing assets would be
sufficient to meet projected liability cash flows. See
"Investments" -- "General". Key variables include policy terms and policyholder
behavior, such as persistency, under differing crediting rate strategies. See
"Life Insurance Liability Characteristics". On the basis of these analyses,
management believes there is no material solvency risk to the Company with
respect to interest rate movements up or down 100 basis points from rate levels
at December 31, 1999 or with respect to a 10 percent drop in equity prices from
December 31, 1999.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See the Consolidated Financial Statements and Supplementary Data beginning
at page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

61
<PAGE> 63

PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Certain of the information called for by Item 10 is set forth in the
definitive proxy statement for the 2000 annual meeting of shareholders
(the "Proxy Statement") filed or to be filed by the Company with the
Securities and Exchange Commission within 120 days after the end of the
last fiscal year covered by this Form 10-K under the caption "Proposal 1.
Election of Directors" and is incorporated herein by reference.
Additional information called for by Item 10 is set forth in Item 1A
hereof under the caption "Executive Officers" and is incorporated herein
by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information called for by Item 11 is set forth in the Proxy Statement
under the captions "Executive Officer Compensation" and "Compensation of
Directors" and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information called for by Item 12 is set forth in the Proxy Statement
under the caption "Ownership of Common Stock by Certain Beneficial
Owners" and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information called for by Item 13 is set forth in the Proxy Statement
under the caption "Certain Relationships and Related Transactions" and is
incorporated herein by reference.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this Report:

(1) Financial Statements.
See Index to Consolidated Financial Statements included at page F-1
hereto.

(2) Exhibits
See Exhibit Index at page E-1.

(b) Reports on Form 8-K.

No report on Form 8-K was filed during the period covered by this report.

62
<PAGE> 64

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

THE MONY GROUP INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Report of independent accountants........................... F-2
Consolidated balance sheets as of December 31, 1999 and
1998...................................................... F-3
Consolidated statements of income and comprehensive income
for the years ended December 31, 1999, 1998 and 1997...... F-4
Consolidated statements of changes in shareholders' equity
for the years ended December 31, 1999, 1998 and 1997...... F-5
Consolidated statements of cash flows for the years ended
December 31, 1999, 1998 and 1997.......................... F-6
Notes to consolidated financial statements.................. F-8
</TABLE>

F-1
<PAGE> 65

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
The MONY Group Inc.

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income and comprehensive income, changes in
shareholders' equity and cash flows present fairly, in all material respects,
the financial position of The MONY Group Inc. and Subsidiaries (the "Company"),
formerly known as The Mutual Life Insurance Company of New York and
subsidiaries, at December 31, 1999 and 1998, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1999, in conformity with accounting principles generally accepted in the
United States. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP

New York, New York
February 10, 2000

F-2
<PAGE> 66

THE MONY GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
1999 1998
--------- ---------
($ IN MILLIONS)
<S> <C> <C>
ASSETS
INVESTMENTS:
Fixed maturity securities available-for-sale, at fair
value.................................................. $ 3,066.7 $ 3,132.0
Equity securities available-for-sale, at fair value....... 519.8 457.2
Mortgage loans on real estate (Note 13)................... 1,270.4 988.3
Policy loans.............................................. 69.1 61.1
Real estate to be disposed of (Note 13)................... 300.9 312.9
Real estate held for investment (Note 13)................. 46.2 321.3
Other invested assets..................................... 37.9 40.7
--------- ---------
5,311.0 5,313.5
========= =========
Cash and cash equivalents................................... 265.9 329.1
Accrued investment income................................... 74.6 68.9
Amounts due from reinsurers................................. 488.0 478.1
Deferred policy acquisition costs........................... 558.3 439.7
Other assets................................................ 365.4 325.6
Assets transferred in Group Pension Transaction (Note 10)... 5,109.8 5,751.8
Separate account assets..................................... 6,398.3 6,090.3
Closed Block assets (Note 20)............................... 6,182.1 6,161.2
--------- ---------
Total assets...................................... $24,753.4 $24,958.2
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Future policy benefits...................................... $ 954.3 $ 960.0
Policyholders' account balances............................. 1,942.9 1,991.7
Other policyholders' liabilities............................ 120.4 104.8
Amounts due to reinsurers................................... 83.8 95.6
Accounts payable and other liabilities...................... 581.1 526.7
Short term debt (Note 16)................................... 53.4 --
Long term debt (Note 16).................................... 245.4 375.4
Current federal income taxes payable........................ 148.0 79.1
Liabilities transferred in Group Pension Transaction (Note
10)....................................................... 5,099.1 5,678.5
Separate account liabilities................................ 6,396.2 6,078.1
Closed Block liabilities (Note 20).......................... 7,303.3 7,290.7
--------- ---------
Total liabilities................................. $22,927.9 $23,180.6
========= =========
Commitments and contingencies (Notes 9 and 18)
Common stock, $0.01 par value; 400 million shares
authorized; 47.2 million shares issued and outstanding.... $ 0.5 $ 0.5
Capital in excess of par.................................... 1,615.9 1,615.9
Retained earnings........................................... 238.5 8.8
Accumulated other comprehensive income...................... (29.4) 152.4
--------- ---------
Total shareholders' equity........................ 1,825.5 1,777.6
--------- ---------
Total liabilities and shareholders' equity........ $24,753.4 $24,958.2
========= =========
</TABLE>

See accompanying notes to consolidated financial statements.
F-3
<PAGE> 67

THE MONY GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997

<TABLE>
<CAPTION>
1998
PRO FORMA*
1999 1998 1997 (UNAUDITED)
-------- -------- -------- -----------
($ IN MILLIONS)
<S> <C> <C> <C> <C>
REVENUES:
Premiums.................................................. $ 96.3 $ 621.7 $ 838.6 $ 77.9
Universal life and investment-type product policy fees.... 196.3 151.6 127.3 151.6
Net Investment income (Note 11)........................... 527.2 689.1 733.0 361.9
Net realized gains on investments (Note 11)............... 122.2 168.7 72.1 160.9
Group Pension Profits (Note 10)........................... 63.0 56.8 60.0 56.8
Other income.............................................. 195.8 162.6 145.4 161.3
Contribution from the Closed Block........................ 44.8 5.7 -- 52.2
-------- -------- -------- --------
1,245.6 1,856.2 1,976.4 1,022.6
-------- -------- -------- --------
BENEFITS AND EXPENSES:
Benefits to policyholders................................. 147.0 679.8 840.1 124.4
Interest credited to policyholders' account balances...... 106.6 112.7 125.9 105.0
Amortization of deferred policy acquisition costs......... 70.3 122.0 181.2 52.2
Dividends to policyholders................................ 1.9 195.8 224.3 3.3
Other operating costs and expenses........................ 537.2 451.7 417.2 443.5
-------- -------- -------- --------
863.0 1,562.0 1,788.7 728.4
-------- -------- -------- --------
Income before income taxes & extraordinary item........... 382.6 294.2 187.7 294.2
Income tax expense........................................ 132.0 103.0 57.3 103.0
-------- -------- -------- --------
Income before extraordinary items......................... 250.6 191.2 130.4 191.2
-------- -------- -------- --------
Extraordinary items (Note 4).............................. 2.0 27.2 13.3 --
-------- -------- -------- --------
Net income................................................ 248.6 164.0 117.1 191.2
-------- -------- -------- --------
Other comprehensive income, net (Note 11)................. (181.8) 34.3 33.0
-------- -------- --------
Comprehensive income...................................... $ 66.8 $ 198.3 $ 150.1
======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
FOR THE PERIOD YEAR ENDED
NOVEMBER 16, 1998 DECEMBER 31, 1998
YEAR ENDED THROUGH PRO FORMA*
DECEMBER 31, 1999 DECEMBER 31, 1998 (UNAUDITED)
----------------- ----------------- -----------------
($ IN MILLIONS, EXCEPT SHARE DATA AND PER SHARE AMOUNTS)
<S> <C> <C> <C>
Income before extraordinary item........................ $ 250.6 $ 8.8 $ 191.2
========== ========== ==========
Basic earnings per share................................ $ 5.31 $ 0.19 $ 4.05
========== ========== ==========
Diluted earnings per share.............................. $ 5.24 $ 0.18 $ 3.99
========== ========== ==========

Net income.............................................. $ 248.6 $ 8.8 $ 191.2
========== ========== ==========
Basic earnings per share................................ $ 5.26 $ 0.19 $ 4.05
========== ========== ==========
Diluted earnings per share.............................. $ 5.20 $ 0.18 $ 3.99
========== ========== ==========
SHARE DATA:
Weighted-average shares used in basic per share
calculations.......................................... 47,238,328 47,241,084 47,241,084
Plus: incremental shares from assumed conversion of
warrants (Notes 2 and 4).............................. 574,625 643,731 643,731
---------- ---------- ----------
Weighted-average shares used in diluted per share
calculations.......................................... 47,812,953 47,884,815 47,884,815
========== ========== ==========
</TABLE>

- ---------------
* The pro forma information gives effect to the transactions referred to in
Notes 1 and 22.

See accompanying notes to consolidated financial statements.
F-4
<PAGE> 68

THE MONY GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997

<TABLE>
<CAPTION>
ACCUMULATED
CAPITAL OTHER TOTAL
COMMON IN EXCESS RETAINED COMPREHENSIVE SHAREHOLDERS'
STOCK OF PAR EARNINGS INCOME EQUITY
------ --------- --------- ------------- -------------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996..................... $ $ $ 1,085.4 $ 85.1 $1,170.5
Comprehensive income:
Net income................................... 117.1 117.1
Other comprehensive income:
Unrealized gains on investments, net of
unrealized losses, reclassification
adjustments, and taxes (Note 11)........ 35.9 35.9
Minimum pension liability adjustment...... (2.9) (2.9)
------- --------
Other comprehensive income................... 33.0 33.0
------- --------
Comprehensive income........................... 150.1
---- -------- --------- --------
Balance, December 31, 1997..................... 1,202.5 118.1 1,320.6
Demutualization Transaction.................... 0.4 1,323.9 (1,357.7) (33.4)
Initial Public Offering........................ 0.1 282.0 282.1
Warrants....................................... 10.0 10.0
Comprehensive income:
Net income before demutualization............ 155.2 155.2
Net income after demutualization............. 8.8 8.8
---- -------- --------- ------- --------
Net income for the year................... 164.0 164.0
Other comprehensive income:
Unrealized losses on investments, net of
unrealized gains, reclassification
adjustments, and taxes (Note 11)........ 31.4 31.4
Minimum pension liability adjustment...... 2.9 2.9
------- --------
Other comprehensive income................... 34.3 34.3
---- -------- --------- ------- --------
Comprehensive income........................... 198.3
--------
Balance, December 31, 1998..................... 0.5 1,615.9 8.8 152.4 1,777.6
Dividends Declared............................. (18.9) (18.9)
Comprehensive income/(loss)....................
Net income................................... 248.6 248.6
Other comprehensive income: unrealized gains
on investments, net of unrealized losses,
reclassification adjustments, and taxes
(Note 11)................................. (181.8) (181.8)
---- -------- --------- ------- --------
Comprehensive income/(loss).................... 66.8
------- --------
Balance, December 31, 1999..................... $0.5 $1,615.9 $ 238.5 $ (29.4) $1,825.5
==== ======== ========= ======= ========
</TABLE>

See accompanying notes to consolidated financial statements.
F-5
<PAGE> 69

THE MONY GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997

<TABLE>
<CAPTION>
1999 1998 1997
------- --------- ---------
($ IN MILLIONS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES (SEE NOTE 4):
Net income.................................................. $ 248.6 $ 164.0 $ 117.1
Adjustments to reconcile net income to net cash provided by
operating activities:
Interest credited to policyholders' account balances...... 105.0 110.6 122.3
Universal life and investment-type product policy fee
income................................................. (143.5) (123.6) (112.9)
Capitalization of deferred policy acquisition costs....... (148.8) (124.5) (141.0)
Amortization of deferred policy acquisition costs......... 70.3 122.0 181.2
Provision for depreciation and amortization............... 31.5 41.4 55.0
Provision for deferred federal income taxes............... 57.4 11.4 (50.2)
Net realized gains on investments......................... (122.2) (168.7) (72.1)
Non-cash distributions from investments................... (172.8) (35.1) (31.1)
Change in other assets and accounts payable and other
liabilities............................................ (26.4) (22.7) (177.5)
Change in future policy benefits.......................... (3.7) 136.2 206.9
Change in other policyholders' liabilities................ 15.6 32.9 (17.4)
Change in current federal income taxes payable............ 103.8 (14.6) (11.2)
Initial cash transferred to the Closed Block.............. -- (46.9) --
Contribution from the Closed Block........................ (44.8) (5.7) --
------- --------- ---------
Net cash (used in)/provided by operating activities......... (30.0) 76.7 69.1
------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales, maturities or repayments of:
Fixed maturities.......................................... 689.4 887.3 952.0
Equity securities......................................... 328.1 177.4 246.7
Mortgage loans on real estate............................. 132.9 424.4 334.4
Real estate............................................... 350.7 578.3 430.8
Other invested assets..................................... 18.7 46.0 5.0
Acquisitions of investments:
Fixed maturities.......................................... (830.0) (1,479.7) (1,336.2)
Equity securities......................................... (152.0) (230.5) (211.5)
Mortgage loans on real estate............................. (412.0) (422.4) (183.1)
Real estate............................................... (44.5) (39.5) (52.7)
Other invested assets..................................... (20.6) (2.1) (1.7)
Policy loans, net......................................... (7.8) (17.8) (15.9)
Other, net................................................ 60.3 8.8 10.1
Property & equipment, net................................. (22.5) (30.9) (35.8)
Acquisition of subsidiaries, net of cash acquired......... -- (46.0) --
------- --------- ---------
Net cash provided by/(used in) investing activities......... $ 90.7 $ (146.7) $ 142.1
------- --------- ---------
</TABLE>

See accompanying notes to consolidated financial statements.
F-6
<PAGE> 70
THE MONY GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997

<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
($ IN MILLIONS)
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of debt....................................... $ -- $ -- $ 115.0
Repayments of debt..................................... (84.8) (61.3) (126.0)
Receipts from annuity and universal life policies
credited to policyholders' account balances........... 1,851.5 1,254.0 1,226.4
Return of policyholders' account balances on annuity
policies and universal life policies.................. (1,863.6) (1,377.0) (1,435.2)
Other.................................................. -- -- 6.6
Issuance of common stock............................... -- 282.5 --
Dividends paid to shareholders......................... (18.9) -- --
Payments to eligible policyholders..................... (8.1) (12.5) --
--------- --------- ---------
Net cash (used in)/provided by financing activities......... (123.9) 85.7 (213.2)
--------- --------- ---------
Net (decrease)/increase in cash and cash equivalents........ (63.2) 15.7 (2.0)
Cash and cash equivalents, beginning of year................ 329.1 313.4 315.4
--------- --------- ---------
Cash and cash equivalents, end of year...................... $ 265.9 $ 329.1 $ 313.4
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:
Income taxes................................................ $ 20.1 $ 97.4 $ 114.6
Interest.................................................... $ 20.3 $ 20.3 $ 20.8
</TABLE>

See accompanying notes to consolidated financial statements.
F-7
<PAGE> 71

THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND DESCRIPTION OF BUSINESS:

On November 16, 1998, pursuant to its Plan of Reorganization (the "Plan")
which was approved by the New York Superintendent of Insurance on the same day
(the "Plan Effective Date"), The Mutual Life Insurance Company of New York
("MONY") converted from a mutual life insurance company to a stock life
insurance company (the "Demutualization") and became a wholly owned subsidiary
of The MONY Group Inc., (the "MONY Group" or the "Holding Company"), a Delaware
corporation organized on June 24, 1997 for the purpose of becoming the parent
holding company of MONY. The MONY Group has no other operations or subsidiaries.
In connection with the Plan, MONY established a closed block, as more fully
discussed in Note 3, to fund the guaranteed benefits and dividends of certain
participating insurance policies and eligible policyholders received cash policy
credits, or shares of common stock of the MONY Group in exchange for their
membership interests in MONY (see Note 4). Also, on November 16, 1998, the MONY
Group consummated an initial public offering (the "Offerings") of approximately
12.9 million shares of its common stock (see Note 4) and MONY changed its name
to MONY Life Insurance Company (MONY Life Insurance Company and its subsidiaries
are hereafter collectively referred to as "MONY Life"). The shares of common
stock issued in the Offerings are in addition to approximately 34.3 million
shares of common stock of the MONY Group distributed to the aforementioned
eligible policyholders. The Plan and the Offerings are hereafter collectively
referred to as the "Transaction".

The MONY Group, through MONY Life and its subsidiaries (hereafter
collectively referred to as the "Company"), is primarily engaged in the business
of providing a wide range of life insurance, annuity, and investment products to
higher income individuals, particularly family builders, pre-retirees, and small
business owners (see Note 5). The Company distributes its products primarily
through its career agency sales force and various complementary distribution
channels. These include sales of mutual funds sold by Enterprise Capital
Management through third-party broker dealers, sales of protection products
through brokerage general agencies, sales of corporate-owned life insurance
("COLI") products by the Company's corporate marketing team and sales of a
variety of financial products and services through the Company's Trusted
Securities Advisors Corp. subsidiary. The Company primarily sells its products
in all 50 of the United States, the District of Columbia, the U.S. Virgin
Islands, Guam and the Commonwealth of Puerto Rico.

On December 31, 1998, MONY Life acquired Sagamore Financial Corporation,
the holding Company parent of U.S. Financial Life Insurance Company ("USFL") for
a purchase price of $48 million. USFL is a special-risk carrier based in Ohio,
which distributes its products in 41 states through brokerage general agencies.
The acquisition was accounted for as a purchase. In conjunction therewith, MONY
Life recorded $18.8 million of goodwill which will be amortized over 20 years.

2. INVESTMENT AGREEMENT:

On December 30, 1997, affiliates of Goldman, Sachs & Co. (the "Investors"),
one of the underwriters for the Offerings, entered into an investment agreement
with MONY (the "Investment Agreement"), pursuant to which: (i) the Investors
purchased, for $115.0 million (the "Consideration"), Surplus Notes issued by
MONY (the "MONY Notes") with an aggregate principal amount equal to the
Consideration (see Note 16), and (ii) the Investors purchased, for $10.0
million, warrants (the "Warrants") to purchase from the Holding Company (after
giving effect to the initial public offering) in the aggregate 7.0% of the fully
diluted Common Stock as of the first date following such effectiveness on which
shares of Common Stock were first issued to Eligible Policyholders (December 24,
1998).

The purchase price payable for each share of the Common Stock issuable upon
exercise of Warrants (the "Exercise Price") is the initial public offering price
of the Common Stock, unless the average of the daily closing prices of the
Common Stock for the 40 trading days following the first 20 trading days after
December 24, 1998 is greater than 115% of the initial public offering price, in
which case such exercise price shall be equal to the sum of the initial public
offering price plus an amount equal to one half of the excess of such 40 day
average over 115% of the initial public offering price. The Warrants contain
standard anti-dilution provisions, providing for adjustment to the exercise
price in the event of, among other things, a dividend or other distribution of
capital stock, evidences of indebtedness or other property, issuances of rights,
options or warrants, certain cash dividends and certain tender offers.

3. THE CLOSED BLOCK:

On November 16, 1998, the Company established a closed block (the "Closed
Block") of certain participating insurance policies as defined in the Plan (the
"Closed Block Business"). In conjunction therewith, the Company allocated assets
to the Closed Block expected to produce cash flows which, together with
anticipated revenues from the Closed Block Business, are reasonably expected to
be sufficient to support the Closed Block Business, including but not limited
to, provision for payment of claims and surrender benefits, certain expenses and
taxes, and for continuation of current payable dividend scales in effect at the
date of Demutualization, assuming the experience underlying such dividend scales
continues, and for appropriate adjustments in such scales if the experience
changes. The assets allocated to the Closed Block and the aforementioned
revenues inure solely to the benefit of the owners of policies included in the
Closed Block.

F-8
<PAGE> 72
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The assets and liabilities allocated to the Closed Block are recorded in
the Company's financial statements at their historical carrying values. The
carrying value of the assets allocated to the Closed Block are less than the
carrying value of the Closed Block liabilities at the Plan Effective Date. The
excess of the Closed Block liabilities over the Closed Block assets at the Plan
Effective Date represents the total estimated future post-tax contribution
expected to emerge from the operation of the Closed Block, which will be
recognized in the Company's income over the period the policies and the
contracts in the Closed Block remain in force.

To the extent that the actual cash flows, subsequent to the Plan Effective
Date, from the assets allocated to the Closed Block and the Closed Block
Business are, in the aggregate, more favorable than assumed in establishing the
Closed Block, total dividends paid to the Closed Block policyholders in future
years will be greater than the total dividends that would have been paid to such
policyholders if the current payable dividend scales had been continued.
Conversely, to the extent that the actual cash flows, subsequent to the Plan
Effective Date, from the assets allocated to the Closed Block and the Closed
Block Business are, in the aggregate, less favorable than assumed in
establishing the Closed Block, total dividends paid to the Closed Block
policyholders in future years will be less than the total dividends that would
have been paid to such policyholders if the current payable dividend scales had
been continued. Accordingly, the recognition of the aforementioned estimated
future post-tax contribution expected to emerge from the operation of the Closed
Block is not affected by the aggregate actual experience of the Closed Block
assets and the Closed Block Business subsequent to the Plan Effective Date,
except in the unlikely event that the Closed Block assets and the actual
experience of the Closed Block Business subsequent to the Plan Effective Date
are not sufficient to pay the guaranteed benefits on the Closed Block Policies,
in which case the Company will be required to fund any such deficiency from its
general account assets outside of the Closed Block.

In addition, MONY has undertaken to reimburse the Closed Block from its
general account assets outside the Closed Block for any reduction in principal
payments due on the Series A Notes (which have been allocated to the Closed
Block) pursuant to the terms thereof, as described in Note 10. Since the Closed
Block has been funded to provide for payment of guaranteed benefits and the
continuation of current payable dividends on the policies included therein, it
will not be necessary to use general funds to pay guaranteed benefits unless the
Closed Block Business experiences very substantial ongoing adverse experience in
investment, mortality, persistency or other experience factors. The Company
regularly (at least quarterly) monitors the experience from the Closed Block and
may make changes to the dividend scale, when appropriate, to ensure that the
profits are distributed to the Closed Block policyholders in a fair and
equitable manner. In addition, periodically the New York Insurance Department
requires the filing of an independent auditor's report on the operations of the
Closed Block.

The results of the Closed Block are presented as a single line item in the
Company's statements of income entitled, "Contribution from the Closed Block".
Prior to the establishment of the Closed Block the results of the assets and
policies comprising the Closed Block were reported in various line items in the
Company's income statements, including: premiums, investment income, net
realized gains and losses on investments, benefits, amortization of deferred
policy acquisition costs, etc. In addition, all assets and liabilities allocated
to the Closed Block will be reported in the Company's balance sheet separately
under the captions "Closed Block assets" and "Closed Block liabilities",
respectively. Accordingly, certain line items in the Company's financial
statements subsequent to the establishment of the Closed Block reflect material
reductions in reported amounts, as compared to years prior to the establishment
of the Closed Block, while having no effect on net income.

The pre-tax Contribution from the Closed Block includes only those
revenues, benefit payments, dividends, premium taxes, state guaranty fund
assessments, and investment expenses considered in funding the Closed Block.
However, many expenses associated with operating the Closed Block and
administering the policies included therein were excluded from and, accordingly,
are not funded in the Closed Block. These expenses are reported in the Company's
statement of operations, outside of the Contribution from the Closed Block,
consistent with how they are funded. Such expenses are reported in the separate
line items to which they apply based on the nature of such expenses. Federal
income taxes applicable to the Closed Block, which are funded in the Closed
Block, are reflected as a component of federal income tax expense in the
Company's statement of operations. Since many expenses related to the Closed
Block are funded outside the Closed Block, operating costs and expenses outside
the Closed Block are disproportionate to the level of business outside the
Closed Block.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Presentation

The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP"). The
preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses

F-9
<PAGE> 73
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

during the reporting period. In the opinion of management these statements
include all normal recurring adjustments necessary to present fairly the
financial position, results of operations and cash flows of the Company for the
periods presented. Actual results could differ significantly from those
estimates. The most significant estimates made in conjunction with the
preparation of the Company's financial statements include those used in
determining (i) deferred policy acquisition costs, (ii) the liability for future
policy benefits, and (iii) valuation allowances for mortgage loans and real
estate to be disposed of, and impairment writedowns for real estate held for
investment. Certain reclassifications have been made in the amounts presented
for prior periods to conform those periods to the current presentation.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
the Company and those partnerships in which the Company has a majority voting
interest. All significant intercompany accounts and transactions have been
eliminated.

Minority interest related to partnerships that are consolidated, which is
included in Accounts Payable and Other Liabilities, amounted to $17.4 million
and $33.5 million at December 31, 1999 and 1998, respectively.

Transaction

Net proceeds from the Offerings totalled $282.5 million. Approximately
$60.6 million of the net proceeds were retained by the MONY Group and the
balance of approximately $221.9 million was contributed to MONY Life.

Of the net proceeds retained by the MONY Group, approximately $2.5 million
was used to pay cash to Eligible Policyholders who received cash as described in
the Plan (other than pursuant to an expression of a preference to receive cash),
$10.0 million is for working capital for the MONY Group, $30.0 million is to be
used to pay dividends on the MONY Group's common stock and $18.1 million was
used by the MONY Group to pay cash to eligible policyholders pursuant to an
expression of a preference to receive cash in accordance with the Plan.

In connection with the Demutualization on the Plan Effective Date, eligible
policyholders received, in the aggregate, approximately $20.6 million of cash,
$13.2 million of policy credits and 34.3 million shares of common stock of the
MONY Group in exchange for their membership interests in MONY. In conjunction
with the Offerings, approximately 12.9 million shares of the common stock of
MONY Group were issued at an initial public offering of $23.50 per share. The
Demutualization was accounted for as a reorganization. Accordingly, the
Company's retained earnings at the Plan Effective Date (net of the
aforementioned cash payments and policy credits which were charged directly to
retained earnings) were reclassified to "Common stock" and "Capital in excess of
par".

In addition, the capital of the MONY Group includes $10.0 million relating
to the Warrants (see Note 2), which as a subsidiary of MONY prior to the Plan
Effective Date, was recorded in MONY's consolidated financial statements as
minority interest.

Valuation of Investments and Realized Gains and Losses

All of the Company's fixed maturity securities are classified as
available-for-sale and are reported at estimated fair value. The Company's
equity securities are comprised of investments in common stocks and limited
partnership interests. The Company's investments in common stocks are classified
as available-for-sale and are reported at estimated fair value. The Company
accounts for its investments in limited partnership interests in accordance with
the equity method of accounting or the cost method of accounting depending upon
the Company's percentage of ownership of the partnership and the date it was
acquired. In general, partnership interests acquired after May 18, 1995 are
accounted for in accordance with the equity method of accounting if the
Company's ownership interest exceeds 3 percent, whereas, if the partnership was
acquired prior to May 18, 1995, the equity method would be applied only if the
Company's ownership interest exceeded 20 percent. In all other circumstances the
Company accounts for its investment in limited partnership interests in
accordance with the cost method. Unrealized gains and losses on fixed maturity
securities and common stocks are reported as a separate component of other
comprehensive income, net of deferred income taxes and an adjustment for the
effect on deferred policy acquisition costs that would have occurred if such
gains and losses had been realized. The cost of fixed maturity securities and
common stock is adjusted for impairments in value deemed to be other than
temporary. These adjustments are reflected as realized losses on investments.
Realized gains and losses on sales of investments are determined on the basis of
specific identification.

F-10
<PAGE> 74
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Mortgage loans on real estate are stated at their unpaid principal
balances, net of valuation allowances. Valuation allowances are established for
the excess of the carrying value of a mortgage loan over its estimated fair
value when the loan is considered to be impaired. Mortgage loans are considered
to be impaired when, based on current information and events, it is probable
that the Company will be unable to collect all amounts due according to the
contractual terms of the loan agreement. Estimated fair value is based on either
the present value of expected future cash flows discounted at the loan's
original effective interest rate, or the loan's observable market price (if
considered to be a practical expedient), or the fair value of the collateral if
the loan is collateral dependent and if foreclosure of the loan is considered
probable. The provision for loss is reported as a realized loss on investment.
Loans in foreclosure and loans considered to be impaired, other than
restructured loans, are placed on non-accrual status. Interest received on
non-accrual status mortgage loans is included in investment income in the period
received. Interest income on restructured mortgage loans is accrued at the
restructured loans' interest rate.

Real estate held for investment, as well as related improvements, are
generally stated at cost less depreciation. Depreciation is determined using the
straight-line method over the estimated useful life of the asset (which may
range from 5 to 40 years). Cost is adjusted for impairment whenever events or
changes in circumstances indicate that the carrying amount of the asset may not
be recoverable. In performing the review for recoverability, management
estimates the future cash flows expected from real estate investments, including
the proceeds on disposition. If the sum of the expected undiscounted future cash
flows is less than the carrying amount of the real estate, an impairment loss is
recognized. Impairment losses are based on the estimated fair value of the real
estate, which is generally computed using the present value of expected future
cash flows from the real estate discounted at a rate commensurate with the
underlying risks. Real estate acquired in satisfaction of debt is recorded at
estimated fair value at the date of foreclosure. Real estate that management
intends to sell is classified as "to be disposed of". Real estate to be disposed
of is reported at the lower of its current carrying value or estimated fair
value less estimated sales costs. Changes in reported values relating to real
estate to be disposed of and impairments of real estate held for investment are
reported as realized gains or losses on investments.

Policy loans are carried at their unpaid principal balances. Cash and cash
equivalents include cash on hand, amounts due from banks and highly liquid debt
instruments with an original maturity of three months or less.

Recognition of Insurance Revenue and Related Benefits

Premiums from participating and non-participating traditional life, health
and annuity policies with life contingencies are recognized as premium income
when due. Benefits and expenses are matched with such income so as to result in
the recognition of profits over the life of the contracts. This match is
accomplished by means of the provision for liabilities for future policy
benefits and the deferral and subsequent amortization of policy acquisition
costs.

Premiums from universal life and investment-type contracts are reported as
deposits to policyholders' account balances. Revenue from these types of
products consist of amounts assessed during the period against policyholders'
account balances for policy administration charges, cost of insurance and
surrender charges. Policy benefits charged to expense include benefit claims
incurred in the period in excess of the related policyholders' account balance.

Deferred Policy Acquisition Costs ("DAC")

The costs of acquiring new business, principally commissions, underwriting,
agency, and policy issue expenses, all of which vary with and are primarily
related to the production of new business, are deferred.

For participating traditional life policies, DAC is amortized over the
expected life of the contracts (30 years) as a constant percentage based on the
present value of estimated gross margins expected to be realized over the life
of the contracts using the expected investment yield. At December 31, 1999, the
expected investment yield was 7.31%, for the year 2000 with subsequent years
grading down to an ultimate aggregate yield of 7.12% in year 2013. Estimated
gross margins include anticipated premiums and investment results less claims
and administrative expenses, changes in the net level premium reserve and
expected annual policyholder dividends.

For universal life products and investment-type products, DAC is amortized
over the expected life of the contracts (ranging from 15 to 30 years) as a
constant percentage based on the present value of estimated gross profits
expected to be realized over the life of the contracts using the initial locked
in discount rate. The discount rate for all products is 8%. Estimated gross
profits arise principally from investment results, mortality and expense margins
and surrender charges.

DAC is subject to recoverability testing at the time of policy issuance and
loss recognition testing at the end of each accounting period. The effect on the
amortization of DAC of revisions in estimated experience is reflected in
earnings in the period such estimates are revised. In addition, the effect on
the DAC asset that would result from the realization of unrealized gains
(losses) is recognized through an offset to Other Comprehensive Income as of the
balance sheet date.

F-11
<PAGE> 75
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Future Policy Benefits and Policyholders' Account Balances

Future policy benefit liabilities for participating traditional life
policies are calculated using a net level premium method on the basis of
actuarial assumptions equal to guaranteed mortality and dividend fund interest
rates. The liability for annual dividends represents the accrual of annual
dividends earned. Dividend fund interest assumptions range from 2.0 percent to
5.5 percent.

Policyholders' account balances for universal life and investment-type
contracts represent an accumulation of gross premium payments plus credited
interest less expense and mortality charges and withdrawals. The weighted
average interest crediting rate for universal life products was approximately
5.8%, 5.7% and 5.8% for the years ended December 31, 1999, 1998, and 1997,
respectively. The weighted average interest crediting rate for investment-type
products was approximately 5.1%, 5.2% and 5.4% for the years ended December 31,
1999, 1998, and 1997, respectively.

Dividends to Policyholders

Dividends to policyholders, which are substantially all on the Closed Block
Business (see Note 3) are determined annually by the Board of Directors of MONY
Life. The aggregate amount of policyholders' dividends is related to actual
interest, mortality, morbidity and expense experience for the year.

Participating Business

At December 31, 1999 and 1998, participating business, substantially all of
which is in the Closed Block, represented approximately 63.5% and 72.6% of the
Company's life insurance in force, and 81.2% and 84.2% of the number of life
insurance policies in force, respectively. For each of the years ended December
31, 1999 and 1998, participating business, represented approximately 95.9% and
99.7%, respectively, of life insurance premiums.

Property, Equipment, and Leasehold Improvements

Property, equipment and leasehold improvements, which are reported in Other
Assets, are stated at cost less accumulated depreciation and amortization.
Depreciation is determined using the straight-line method over the estimated
useful lives of the related assets which generally range from 3 to 40 years.
Amortization of leasehold improvements is determined using the straight-line
method over the lesser of the unexpired lease term or the estimated useful life
of the improvement.

Accumulated depreciation of property and equipment and amortization of
leasehold improvements was $38.3 million and $71.0 million at December 31, 1999
and 1998, respectively. Related depreciation and amortization expense was $16.6
million, $11.4 million, and $8.8 million for the years ended December 31, 1999,
1998, and 1997, respectively.

Federal Income Taxes

The Company files a consolidated federal income tax return with its life
and non-life affiliates except Sagamore Financial Corporation and its
subsidiaries. Deferred income tax assets and liabilities are recognized based on
the difference between financial statement carrying amounts and income tax bases
of assets and liabilities using enacted income tax rates and laws.

Reinsurance

The Company has reinsured certain of its life insurance and investment
contracts with other insurance companies under various agreements. Amounts due
from reinsurers are estimated based on assumptions consistent with those used in
establishing the liabilities related to the underlying reinsured contracts.
Policy and contract liabilities are reported gross of reserve credits. Gains on
reinsurance are deferred and amortized into income over the remaining life of
the underlying reinsured contracts.

In determining whether a reinsurance contract qualifies for reinsurance
accounting, Statement of Financial Accounting Standards ("SFAS") No. 113
requires that there be a "reasonable possibility" that the reinsurer may realize
a "significant loss" from assuming insurance risk under the contract. In making
this assessment, the Company projects the results of the policies reinsured
under the contract under various scenarios and assesses the probability of such
results actually occurring. The projected results represent the present value of
all the cash flows under the reinsurance contract. The Company generally defines
a "reasonable possibility" as having a probability of at least 10%. In assessing
whether the projected results of the reinsured business constitute a
"significant loss", the Company considers: (i) the ratio of the aggregate
projected loss, discounted at an appropriate rate of interest (the "aggregate
projected loss"), to an estimate of the reinsurer's investment in the contract,
as hereafter defined, and (ii) the ratio of the aggregate projected loss to an
estimate of the total premiums to be received by the reinsurer under the
contract discounted at an appropriate rate of interest.

The reinsurer's investment in a reinsurance contract consists of amounts
paid to the ceding company at the inception of the contract (e.g. expense
allowances and the excess of liabilities assumed by the reinsurer over the
assets transferred to

F-12
<PAGE> 76
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the reinsurer under the contract) plus the amount of capital required to support
such business consistent with prudent business practices, regulatory
requirements, and the reinsurer's credit rating. The Company estimates the
capital required to support such business based on what it considers to be an
appropriate level of risk-based capital in light of regulatory requirements and
prudent business practices.

Separate Accounts

Separate accounts are established in conformity with insurance laws and are
generally not chargeable with liabilities that arise from any other business of
the Company. Separate account assets are subject to general account claims only
to the extent that the value of such assets exceeds the separate account
liabilities. Investments held in separate accounts and liabilities of the
separate accounts are reported separately as assets and liabilities.
Substantially all separate account assets are reported at estimated fair value.
Investment income and gains or losses on the investments of separate accounts
accrue directly to contractholders and, accordingly, are not reflected in the
Company's consolidated statements of income and cash flows. Fees charged to the
separate accounts by the Company (including mortality charges, policy
administration fees and surrender charges) are reflected in the Company's
revenues.

Consolidated Statements of Cash Flows -- Non-cash Transactions

For the years ended December 31, 1999, 1998, and 1997, respectively, real
estate of $27.0 million, $5.0 million, and $14.4 million was acquired in
satisfaction of debt (including the Closed Block of $22.0 million). At December
31, 1999 and 1998, the Company owned real estate acquired in satisfaction of
debt of $121.0 million and $143.2 million, respectively. Other non-cash
transactions, which are reflected in the statement of cash flows as a
reconciling item from net income to net cash provided by operating activities,
consisted primarily of stock distributions from the Company's partnership
investments and payment-in-kind for interest due on certain fixed maturity
securities.

Extraordinary Item -- Demutualization Expenses

The accompanying consolidated statements of income and comprehensive income
reflect extraordinary charges (net of taxes) of $2.0 million and $27.2 million
for the year ended December 31, 1999 and 1998, respectively. Costs incurred in
1998 primarily include the fees of financial, legal, actuarial and accounting
advisors to the Company and to the New York Insurance Department as well as
printing and postage for communication with policyholders. Costs incurred in
1999 primarily relate to expenses incurred in connection with a commission-free
sale and purchase program (the "Program") offered to shareholders pursuant to
the Plan. Under the Program, shareholders who own fewer than 100 shares were
able to sell their shares or purchase additional shares to round up to 100
shares without incurring commissions.

Earnings Per Share

Under GAAP, earnings per share is presented only for periods since the
effective date of the Transaction (November 16, 1998). In addition, on a pro
forma basis, earnings per share is presented as if the Transaction had occurred
as of January 1, 1998.

Basic earnings per share for the period from November 16, 1998 through
December 31, 1998 is based on the weighted average number of shares outstanding
during such period. The unaudited basic pro forma earnings per share for the
year ended December 31, 1998 is based on the weighted average number of shares
that would have been outstanding during the year had the Transaction occurred as
of January 1, 1998. Diluted earnings per share and unaudited diluted pro forma
earnings per share amounts are computed the same as in the respective
calculations of basic and pro forma basic earnings per share amounts,
respectively, except that such calculations assume the exercise of the Warrants
at the beginning of the periods presented. For purposes of this calculation at
December 31, 1998, the exercise price of the Warrants was determined by assuming
that the average daily closing prices of the common stock of MONY Group for the
40 trading days following the first 20 trading days after December 24, 1998 was
equal to the closing price of such common stock at December 31, 1998 (see Note
2). The aforementioned 40 trading day period ended on March 24, 1999.
Accordingly, the actual exercise price of the Warrants, which is used in diluted
earnings per share calculations for periods subsequent to December 31, 1998, is
$23.50 per share.

New Accounting Pronouncements

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS 133 requires all derivatives to be
recognized in the statement of financial position as either assets or
liabilities and measured at fair value. The corresponding derivative gains and
losses should be reported based on the hedge relationship that exists, if there
is one. Changes in the fair value of derivatives that are not designated as
hedges or that do not meet the hedge accounting criteria in SFAS 133, are
required to be reported in earnings. SFAS 133, as amended by SFAS 137, is
effective for all fiscal quarters of the fiscal years beginning after June 15,
2000. SFAS 137 delayed the effective date of SFAS 133 by one year. Adoption of
SFAS 133 is not expected to have a material effect on the Company's financial
condition or results of operations.

F-13
<PAGE> 77
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. SEGMENT INFORMATION:

The Company's business activities consist of the following: protection
product operations, accumulation product operations, mutual fund operations,
securities broker-dealer operations, insurance brokerage operations, and certain
insurance lines of business no longer written by the Company (the "run-off
businesses"). These business activities represent the Company's operating
segments. Except as discussed below, these segments are managed separately
because they either provide different products or services, are subject to
different regulation, require different strategies, or have different technology
requirements.

Management considers the Company's mutual fund operations to be an integral
part of the products offered by the Company's accumulation products segment,
since substantially all the mutual funds sold by the Company are offered
through, and in conjunction with, the products marketed by the accumulation
products segment. Accordingly, for management purposes (including, performance
assessment and making decisions regarding the allocation of resources), the
Company aggregates its mutual fund operations with its accumulation products
segment.

Of the aforementioned segments, only the protection products segment and
the accumulation products segment qualify as reportable segments in accordance
with FASB Statement No. 131. All of the Company's other segments are combined
and reported in an other products segment.

Products comprising the protection products segment primarily include a
wide range of insurance products, including: whole life, term life, universal
life, variable universal life, corporate-owned life insurance, last survivor
variable universal life, last survivor universal life, group universal life and
special-risk products. In addition, included in the protection products segment
are: (i) the assets and liabilities transferred pursuant to the Group Pension
Transaction, as well as the Group Pension Profits (see Note 10), (ii) the Closed
Block assets and liabilities, as well as the Contribution from the Closed Block,
and (iii) the Company's disability income insurance business. Products
comprising the accumulation products segment primarily include flexible premium
variable annuities, single premium deferred annuities, immediate annuities,
proprietary mutual funds, investment management services, and certain other
financial services products. The Company's other products segment primarily
consists of the securities broker-dealer operation, the insurance brokerage
operation, and the run-off businesses. The securities broker-dealer operation
markets the Company's proprietary investment products and, in addition, provides
customers of the Company's protection and accumulation products access to other
non-proprietary investment products (including stocks, bonds, limited
partnership interests, tax-exempt unit investment trusts and other investment
securities). The insurance brokerage operation provides the Company's field
agency force with access to life, annuity, small group health and specialty
insurance products written by other carriers to meet the insurance and
investment needs of its customers. The run-off businesses primarily consist of
group life and health business, as well as group pension business that was not
included in the Group Pension Transaction (see Note 10).

Set forth in the table below is certain financial information with respect
to the Company's operating segments as of and for each of the years ended
December 31, 1999, 1998 and 1997, as well as amounts not allocated to the
segments. Except for various allocations discussed below, the accounting
policies of the segments are the same as those described in the summary of
significant accounting policies. The Company evaluates the performance of each
operating segment based on profit or loss from operations before income taxes
and nonrecurring items (e.g. items of an unusual or infrequent nature). The
Company does not allocate certain non-recurring items to the segments. In
addition, all segment revenues are from external customers.

Assets have been allocated to the segments in amounts sufficient to support
the associated liabilities of each segment. In addition, capital is allocated to
each segment in amounts sufficient to maintain a targeted regulatory risk-based
capital ("RBC") level for each segment (see Note 19). Allocations of net
investment income and net realized gains on investments were based on the amount
of assets allocated to each segment. Other costs and operating expenses were
allocated to each of the segments based on: (i) a review of the nature of such
costs, (ii) time studies analyzing the amount of employee compensation costs
incurred by each segment, and (iii) cost estimates included in the Company's
product pricing. Substantially all non-cash transactions and impaired real
estate (including real estate acquired in satisfaction of debt) have been
allocated to the Protection Products segment (see Note 4).

F-14
<PAGE> 78
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Amounts reported as "unallocated amounts" in the table below primarily
relate to: (i) contracts issued by MONY Life relating to its employee benefit
plans, (ii) assets, liabilities, revenues and expenses of the MONY Group and
(iii) a one-time restructuring charge in 1999 of $59.7 million pre-tax relating
to the Company's early retirement program (see Note 24).

SEGMENT SUMMARY FINANCIAL INFORMATION

<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
($ IN MILLIONS)
<S> <C> <C> <C>
PREMIUMS:
Protection Products......................................... $ 82.0 $ 602.2 $ 817.0
Accumulation Products....................................... 0.9 2.6 5.0
Other Products.............................................. 13.4 16.9 16.6
--------- --------- ---------
$ 96.3 $ 621.7 $ 838.6
========= ========= =========
UNIVERSAL LIFE AND INVESTMENT-TYPE PRODUCT POLICY FEES:
Protection Products......................................... $ 122.3 $ 86.2 $ 74.9
Accumulation Products....................................... 73.3 64.1 50.9
Other Products.............................................. 0.7 1.3 1.5
--------- --------- ---------
$ 196.3 $ 151.6 $ 127.3
========= ========= =========
NET INVESTMENT INCOME AND NET REALIZED GAINS (LOSSES) ON
INVESTMENTS:
Protection Products......................................... $ 445.1 $ 655.5 $ 611.9
Accumulation Products....................................... 132.4 136.3 131.4
Other Products.............................................. 69.6 63.8 59.9
Unallocated amounts......................................... 2.3 2.2 1.9
--------- --------- ---------
$ 649.4 $ 857.8 $ 805.1
========= ========= =========
OTHER INCOME:
Protection Products(1)(7)................................... $ 123.0 $ 85.5 $ 94.9
Accumulation Products....................................... 95.1 72.8 52.1
Other Products.............................................. 80.7 61.1 53.1
Unallocated amounts......................................... 4.8 5.7 5.3
--------- --------- ---------
$ 303.6 $ 225.1 $ 205.4
========= ========= =========
AMORTIZATION OF DEFERRED POLICY ACQUISITION COSTS:
Protection Products......................................... $ 39.6 $ 92.4 $ 146.8
Accumulation Products....................................... 30.7 29.6 34.4
--------- --------- ---------
$ 70.3 $ 122.0 $ 181.2
========= ========= =========
BENEFITS TO POLICYHOLDERS:(2)
Protection Products......................................... $ 141.7 $ 663.4 $ 821.1
Accumulation Products....................................... 73.7 79.6 92.5
Other Products.............................................. 33.7 41.6 45.2
Unallocated amounts......................................... 4.5 7.9 7.2
--------- --------- ---------
$ 253.6 $ 792.5 $ 966.0
========= ========= =========
</TABLE>

F-15
<PAGE> 79
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
($ IN MILLIONS)
<S> <C> <C> <C>
OTHER OPERATING COSTS AND EXPENSES:
Protection Products......................................... $ 277.4 $ 287.1 $ 281.0
Accumulation Products....................................... 105.7 84.4 66.3
Other Products.............................................. 93.7 80.2 66.2
Unallocated amounts......................................... 60.4 -- 3.7
--------- --------- ---------
$ 537.2 $ 451.7 $ 417.2
========= ========= =========
INCOME BEFORE INCOME TAXES:
Protection Products......................................... $ 315.0 $ 193.7 $ 129.0
Accumulation Products....................................... 89.6 80.5 44.1
Other Products.............................................. 35.8 20.0 18.3
Unallocated amounts......................................... (57.8) -- (3.7)
--------- --------- ---------
$ 382.6 $ 294.2 $ 187.7
========= ========= =========
ASSETS:
Protection Products(3)(8)................................... $16,181.4 $16,580.9 $15,776.5
Accumulation Products....................................... 6,175.0 6,171.3 5,757.9
Other Products.............................................. 1,187.6 1,256.2 1,234.2
Unallocated amounts......................................... 1,209.4 949.8 842.7
--------- --------- ---------
$24,753.4 $24,958.2 $23,611.3
========= ========= =========
DEFERRED POLICY ACQUISITION COSTS:
Protection Products(9)...................................... $ 1,094.9 $ 857.6 $ 874.1
Accumulation Products....................................... 153.3 136.7 133.0
--------- --------- ---------
$ 1,248.2 $ 994.3 $ 1,007.1
========= ========= =========
POLICYHOLDERS' LIABILITIES:
Protection Products(4)(10).................................. $10,231.7 $10,267.0 $10,105.7
Accumulation Products....................................... 1,236.3 1,318.6 1,416.1
Other Products.............................................. 418.9 455.6 513.4
Unallocated amounts......................................... 17.4 17.4 16.5
--------- --------- ---------
$11,904.3 $12,058.6 $12,051.7
========= ========= =========
SEPARATE ACCOUNT LIABILITIES:(5)
Protection Products(6)...................................... $ 3,843.5 $ 4,056.8 $ 3,720.1
Accumulation Products....................................... 4,548.9 4,452.6 4,002.6
Other Products.............................................. 604.2 621.9 547.7
Unallocated amounts......................................... 832.3 776.4 736.0
--------- --------- ---------
$ 9,828.9 $ 9,907.7 $ 9,006.4
========= ========= =========
</TABLE>

- ---------------
(1) Includes Group Pension Profits of $63.0 million, $56.8 million and $60.0
million for the years ended December 31, 1999, 1998 and 1997, respectively.
(See Note 10).
(2) Includes interest credited to policyholders' account balances.
(3) Includes assets transferred in the Group Pension Transaction of $5,109.8
million, $5,751.8 million and $5,714.9 million as of December 31, 1999,
1998 and 1997, respectively.
(4) Includes policyholder liabilities transferred in the Group Pension
Transaction of $1,645.7 million, $1,824.9 million and $1,991.0 million as
of December 31, 1999, 1998 and 1997 respectively.
(5) Each segment includes separate account assets in an amount not less than
the corresponding liability reported.
(6) Includes separate account liabilities transferred in the Group Pension
Transaction of $3,432.7 million, $3,829.6 million and $3,614.0 million as
of December 31, 1999, 1998 and 1997, respectively.
(7) Includes $44.8 million and $5.7 million relating to the Contribution from
the Closed Block for the year ended December 31, 1999 and for period from
November 16, 1998 through December 31, 1998 and the year ended December 31,
1999, respectively (see Note 3 and Note 20).
(8) Includes Closed Block assets of $6,182.1 million and $6,161.2 million as of
December 31, 1999 and 1998, respectively (see Note 3 and Note 20).

F-16
<PAGE> 80
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(9) Includes deferred policy acquisition costs allocated to the Closed Block of
$689.9 million and $554.6 million as of December 31, 1999 and 1998,
respectively (see Note 3 and Note 20).
(10) Includes Closed Block policyholders' liabilities of $7,241.0 million and
$7,177.1 million as of December 31, 1999 and 1998, respectively (see Note 3
and Note 20).

Substantially all of the Company's revenues are derived in the United
States. Revenue derived from outside the United States is not material and
revenue derived from any single customer does not exceed 10 percent of total
consolidated revenues.

Following is a summary of revenues by product for the years ended December
31, 1999, 1998 and 1997:

<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
($ IN MILLIONS)
<S> <C> <C> <C>
PREMIUMS:
Individual life(1).......................................... $ 81.9 $602.5 $742.4
Disability income insurance................................. 0.6 0.2 74.6
Group insurance............................................. 13.4 16.9 16.6
Other....................................................... 0.4 2.1 5.0
------ ------ ------
Total............................................. $ 96.3 $621.7 $838.6
====== ====== ======
UNIVERSAL LIFE AND INVESTMENT-TYPE PRODUCT POLICY FEES:
Universal life.............................................. $ 73.2 $ 55.4 $ 48.3
Variable universal life..................................... 37.6 20.4 17.8
Group universal life........................................ 11.5 10.4 8.7
Individual variable annuities............................... 72.8 63.4 50.0
Individual fixed annuities.................................. 1.2 2.0 2.5
------ ------ ------
Total............................................. $196.3 $151.6 $127.3
====== ====== ======
</TABLE>

- ---------------
(1) Excludes revenues from individual life in the Closed Block of $620.8 million
and $100.1 million, for the year ended December 31, 1999 and for the period
from November 16, 1998 through December 31, 1998.

6. DEFERRED POLICY ACQUISITION COSTS:

Policy acquisition costs deferred and amortized in 1999, 1998 and 1997 are
as follows:

<TABLE>
<CAPTION>
1999 1998 1997
------ -------- --------
($ IN MILLIONS)
<S> <C> <C> <C>
Balance, beginning of year.................................. $439.7 $1,007.1 $1,095.2
Balance transferred to the Closed Block at November 16,
1998...................................................... -- (562.3) --
------ -------- --------
439.7 444.8 1,095.2
------ -------- --------
Cost deferred during the year............................... 148.7 124.7 141.0
Amortized to expense during the year........................ (70.3) (122.0) (181.2)
Effect on DAC from unrealized gains (losses) (see Note 4)... 40.2 (7.8) (47.9)
------ -------- --------
Balance, end of the year.................................... $558.3 $ 439.7 $1,007.1
====== ======== ========
</TABLE>

7. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS:

Pension Plans --

The Company has a qualified pension plan covering substantially all of its
salaried employees. The provisions of the plan provide both (a) defined benefit
accruals based on (i) years of service, (ii) the employee's final average annual
compensation and (iii) wage bases or benefits under Social Security and (b)
defined contribution accruals based on a Company matching contribution equal to
100% of the employee's elective deferrals under the incentive savings plan for
employees up to 3% of the employee's eligible compensation and an additional 2%
of eligible compensation for each active participant. Effective June 15, 1999,
prospective defined contribution accruals in the defined benefit plan ceased and
were redirected to the Investment Plan Supplement for Employees. The Company did
not make any contribution in the current year or prior year under Section 404 of
the Internal Revenue Code ("IRC") because the plan was fully funded under
Section 412 of the IRC.

F-17
<PAGE> 81
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

During 1999, the Company amended its Qualified Pension plan which reduced
certain benefit liabilities payable thereunder. The amendment resulted in a
decrease of $27.0 million in the plan's projected benefit obligation.

In July 1999, the Company offered special benefits to its employees who
elected by August 15, 1999, voluntary termination of employment (special
termination benefits). The special termination benefits represented benefits in
excess of that which would normally be due to employees electing to retire
early. These excess benefits were calculated based on grants of additional years
of service and age used in the benefit calculation. All of the special
termination benefits relating to the Company's qualified plan, which aggregated
$30.6 million, will be paid from the Plan's assets. All the benefits paid
relating to the Company's non-qualified plan, which aggregated $19.4 million,
will be paid directly from the Company's assets. As a result of the
aforementioned early retirement offer, the Company recorded a charge of $59.7
million in 1999 which included the aforementioned expenses in addition to
severence and other related expenses and reflected this amount in Other
Operating Costs and Expenses.

The assets of the qualified pension plan are primarily invested in MONY
Pooled Accounts which include common stock, real estate, private placement debt
securities and bonds. At December 31, 1999 and 1998, $495.7 million and $457.3
million were invested in the MONY Pooled Accounts. Benefits of $40.4 million,
$26.3 million and $24.2 million were paid by this plan for the years ended
December 31, 1999, 1998, and 1997, respectively.

The Company also sponsors a non-qualified employee excess pension plan,
which provides both defined benefits and defined contribution accruals in excess
of Internal Revenue Service limits to certain employees. The benefits are based
on years of service and the employees final average annual compensation. Pension
benefits are paid from Company's general accounts.

Postretirement Benefits --

The Company provides certain health care and life insurance benefits for
retired employees and field underwriters. The Company amortizes its unamortized
postretirement transition obligation over a period of twenty years.

Assumed health care cost trend rates typically have a significant effect on
the amounts reported for health care plans. However, under the Company's
postretirement healthcare plan, there is a per capita limit on the Company's
healthcare costs, as a result, a one-percentage point change in the assumed
healthcare cost trend rates would have an immaterial affect on amounts reported.

The following presents the change in the benefit obligation, change in plan
assets and other information with respect to the Company's qualified and
non-qualified defined benefit pension plans and other benefits which represents
the Company's postretirement benefit obligation:

<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
---------------- -----------------
1999 1998 1999 1998
------ ------ ------ -------
($ IN MILLIONS)
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year..................... $398.3 $390.1 $100.0 $ 101.1
Service cost................................................ 11.7 14.4 2.0 1.3
Interest cost............................................... 27.3 26.3 7.2 6.4
Curtailment gain............................................ (3.8) -- -- --
Terminated benefits......................................... 50.0 -- -- --
Plan amendment.............................................. (27.0) -- -- --
Actuarial (gain)/loss....................................... (38.8) 2.0 (4.0) (3.0)
Benefits paid............................................... (44.4) (34.5) (7.5) (5.8)
------ ------ ------ -------
Benefit obligation at end of year........................... 373.3 398.3 97.7 100.0
------ ------ ------ -------
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year.............. $459.8 $432.5 $ -- $ --
Actual return on plan assets................................ 77.4 56.7 -- --
Employer contribution....................................... 6.7 5.1 7.5 5.8
</TABLE>

F-18
<PAGE> 82
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
---------------- -----------------
1999 1998 1999 1998
------ ------ ------ -------
($ IN MILLIONS)
<S> <C> <C> <C> <C>
Benefits and expenses paid.................................. (45.9) (34.5) (7.5) (5.8)
------ ------ ------ -------
Fair value of plan assets at end of year.................... 498.0 459.8 -- --
------ ------ ------ -------
Funded status............................................... 124.7 61.5 (97.7) (100.0)
Unrecognized actuarial loss/(gain).......................... (57.2) 16.4 7.4 11.1
Unamortized transition obligation........................... (13.0) (19.8) 39.4 42.7
Unrecognized prior service cost............................. (15.6) 9.7 (1.0) --
------ ------ ------ -------
Net amount recognized....................................... $ 38.9 $ 67.8 $(51.9) $ (46.2)
====== ====== ====== =======
Amounts recognized in the statement of financial position
consist of:
Prepaid benefit cost........................................ $ 93.8 $103.0 $ -- $ --
Accrued benefit liability................................... (55.0) (39.5) (51.9) (46.2)
Intangible asset............................................ 0.1 1.4 -- --
Accumulated other comprehensive income...................... -- 2.9 -- --
------ ------ ------ -------
Net amount recognized....................................... $ 38.9 $ 67.8 $(51.9) $ (46.2)
====== ====== ====== =======
</TABLE>

The Company's qualified plan had assets of $498.0 million and $459.8
million at December 31, 1999 and 1998, respectively. The projected benefit
obligation and accumulated benefit obligation for the qualified plan were $311.0
million and $285.4 million at December 31, 1999 and $350.8 million and $311.5
million at December 31, 1998, respectively.

The projected benefit obligation and accumulated benefit obligation for the
non-qualified defined benefit pension plan, which is unfunded, were $62.3
million and $55.0 million at December 31, 1999 and $47.5 million and $39.5
million at December 31, 1998, respectively.

<TABLE>
<CAPTION>
PENSION
BENEFITS OTHER BENEFITS
------------ ---------------
1999 1998 1999 1998
---- ---- ----- ------
<S> <C> <C> <C> <C>
WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER 31:
Discount rate............................................... 8.0% 6.75% 8.0% 6.75%
Expected return on plan assets.............................. 10.0% 10.0% -- --
Rate of compensation increase............................... 5.0% 5.0% 5.0% 5.0%
</TABLE>

For measurements purposes, a 11% percent annual rate of increase in the per
capita cost of covered health care benefits was assumed for 1999. The rate was
assumed to decrease gradually to 6% percent for 2010 and remain at that level
thereafter.

Components of net periodic benefit cost for the pension and other
post-retirement plans are as follows:

<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
-------------------------- -----------------------
1999 1998 1997 1999 1998 1997
------ ------ ------ ----- ----- -----
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
COMPONENTS OF NET PERIODIC BENEFIT COST
Service cost..................................... $ 11.7 $ 14.4 $ 12.9 $ 2.0 $ 1.3 $ 1.0
Interest cost.................................... 27.3 26.3 27.5 7.2 6.4 6.7
Expected return on plan assets................... (44.2) (41.8) (38.0) -- -- --
Amortization of prior service cost............... (0.8) 1.0 1.0 (0.1) -- --
Curtailment gain................................. (3.8) -- -- -- -- --
Special Termination Benefits..................... 50.0 -- -- -- -- --
Recognized net actuarial loss.................... -- -- 0.1 1.1 0.1 --
Amortization of Transition Items................. (7.5) (7.5) (7.5) 3.1 3.1 3.1
------ ------ ------ ----- ----- -----
Net periodic benefit cost........................ $ 32.7 $ (7.6) $ (4.0) $13.3 $10.9 $10.8
====== ====== ====== ===== ===== =====
</TABLE>

F-19
<PAGE> 83
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company also has a qualified money purchase pension plan covering
substantially all career field underwriters. Company contributions of 5% of
earnings plus an additional 2% of such earnings in excess of the social security
wage base are made each year. In addition, after-tax voluntary field underwriter
contribution of up to 10% of earnings are allowed. At December 31, 1999 and
1998, the fair value of plan assets was $250.3 million and $222.2 million,
respectively. For the years ended December 31, 1999, 1998, and 1997, the Company
contributed $3.1 million, $3.2 million and $3.3 million to the plan,
respectively, which amounts are reflected in Other Operating Costs and Expenses.

The Company has a non-qualified defined contribution plan, which is
unfunded. The non-qualified defined contribution plan projected benefit
obligation which equaled the accumulated benefit obligation was $62.2 million
and $48.4 million as of December 31, 1999 and 1998, respectively. The
non-qualified defined contribution plan's net periodic expense was $9.3 million,
$6.6 million and $9.4 million for the years ended December 31, 1999, 1998 and
1997, respectively.

The Company also has incentive savings plans in which substantially all
employees and career field underwriters are eligible to participate. The Company
matches field underwriter contributions up to 2% of eligible compensation and
may also make an additional profit sharing contribution for non-officer
employees. As with the Employee Excess Plan, the Company also sponsors
non-qualified excess defined contribution plans for both the field underwriter
retirement plan and the incentive savings plan for field underwriters.

8. FEDERAL INCOME TAXES:

The Company files a consolidated federal income tax return with its life
and non-life affiliates, except Sagamore Financial Corporation and its
subsidiaries.

Federal income taxes have been calculated in accordance with the provisions
of the Internal Revenue Code of 1986, as amended. A summary of the Federal
income tax expense (benefit) is presented below:

<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
($ IN MILLIONS)
<S> <C> <C> <C>
Federal income tax (benefit) expense:
Current................................................... $ 74.5 $ 84.9 $104.1
Deferred.................................................. 57.5 18.1 (46.8)
------ ------ ------
Total............................................. $132.0 $103.0 $ 57.3
====== ====== ======
</TABLE>

Federal income taxes reported in the consolidated statements of income are
different from the amounts determined by multiplying the earnings before federal
income taxes by the statutory federal income tax rate of 35%. The sources of the
difference and the tax effects of each are as follows:

<TABLE>
<CAPTION>
1999 1998 1997
------ ------ -----
($ IN MILLIONS)
<S> <C> <C> <C>
Tax at statutory rate....................................... $133.9 $103.0 $65.7
Differential earnings amount................................ -- -- (5.8)
Dividends received deduction................................ (1.7) (1.4) (0.5)
Other....................................................... (0.2) 1.4 (2.1)
------ ------ -----
Provision for income taxes.................................. $132.0 $103.0 $57.3
====== ====== =====
</TABLE>

The Company's federal income tax returns for years through 1993 have been
examined by the Internal Revenue Service ("IRS"). No material adjustments were
proposed by the IRS as a result of these examinations. In the opinion of
management, adequate provision has been made for any additional taxes which may
become due with respect to open years.

F-20
<PAGE> 84
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The components of deferred tax liabilities and assets at December 31, 1999
and 1998 are as follows:

<TABLE>
<CAPTION>
1999 1998
------ ------
($ IN MILLIONS)
<S> <C> <C>
Deferred policy acquisition costs........................... $145.0 $127.9
Fixed maturities and equity securities...................... 34.5 68.2
Other, net(1)............................................... 56.4 71.3
Nonlife subsidiaries........................................ 17.2 8.3
------ ------
Total deferred tax liabilities.............................. 253.1 275.7
------ ------
Policyholder and separate account liabilities............... 155.6 113.8
Accrued expenses............................................ 50.8 70.4
Deferred compensation and benefits.......................... 38.3 24.0
Policyholder dividends...................................... -- 39.8
Real estate and mortgages................................... 25.3 29.4
------ ------
Total deferred tax assets................................... 270.0 277.4
------ ------
Net deferred tax asset...................................... $ 16.9 $ 1.7
====== ======
</TABLE>

- ---------------
(1) Includes $3.8 million and $25.7 million at December 31, 1999 and 1998 of
deferred taxes relating to net unrealized gains on fixed maturity securities
in the AEGON Portfolio (see Note 10).

The Company is required to establish a valuation allowance for any portion
of the deferred tax asset that management believes will not be realized. In the
opinion of management, it is more likely than not that it will realize the
benefit of the deferred tax assets and, therefore, no such valuation allowance
has been established.

9. LEASES:

The Company has entered into various operating lease agreements for office
space, furniture and equipment. These leases have remaining non-cancelable lease
terms in excess of one year. Total rental expense for these operating leases
amounted to $29.6 million in 1999, $24.5 million in 1998 and $25.6 million in
1997. The future minimum rental obligations for the next five years and
thereafter under these leases are: $30.6 million for 2000, $28.2 million for
2001, $27.0 million for 2002, $25.4 million for 2003, $22.6 million for 2004,
and $154.4 for the years thereafter.

10. THE GROUP PENSION TRANSACTION:

On December 31, 1993 (the "Group Pension Transaction Date"), the Company
entered into an agreement (the "Agreement") with AEGON USA, Inc. ("AEGON") under
which the Company transferred a substantial portion of its group pension
business (hereafter referred to as the "Group Pension Transaction"), including
its full service group pension contracts, consisting primarily of tax-deferred
annuity, 401(k) and managed funds lines of business, to AEGON's wholly-owned
subsidiary, AUSA Life Insurance Company, Inc. ("AUSA"). The Company also
transferred to AUSA the corporate infrastructure supporting the group pension
business, including data processing systems, facilities and regional offices.
AUSA was newly formed by AEGON solely for the purpose of facilitating this
transaction. In connection with the transaction, the Company and AEGON have
entered into certain service agreements. These agreements, among other things,
provide that the Company will continue to manage the transferred assets, and
that AUSA will continue to provide certain administrative services to the
Company's remaining group pension contracts not included in the transfer.

Pursuant to the Agreement, MONY agreed to make a $200 million capital
investment in AEGON by purchasing $150 million face amount of Series A Notes and
$50 million face amount of Series B Notes (hereinafter referred to as the
"Notes"). The Series A Notes pay interest at 6.44 percent per annum and the
Series B Notes pay interest at 6.24 percent per annum. Both the Series A Notes
and the Series B Notes mature on December 31, 2002. MONY's investment in the
Series A Notes was intended to provide AEGON with the funding necessary to
capitalize AUSA.

In accordance with GAAP, the transaction did not constitute a sale because
the Company retained substantially all the risks and rewards associated with the
Existing Deposits. Accordingly, the Company continues to reflect the transferred
assets and liabilities on its balance sheet under separate captions entitled
"Assets transferred in Group Pension Transaction" and "Liabilities transferred
in Group Pension Transaction". In addition, the Company reports in its GAAP
earnings the profits from the Existing Deposits as discussed below.

F-21
<PAGE> 85
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Pursuant to the Agreement, MONY receives from AUSA (i) payments on an
annual basis through December 31, 2002 (the "Group Pension Payments") equal to
all of the earnings from the Existing Deposits, (ii) a final payment (the "Final
Value Payment") at December 31, 2002 based on the remaining fair value of the
Existing Deposits, and (iii) a contingent payment (the "New Business Growth
Payment") at December 31, 2002 based on new business growth subsequent to the
Transaction Date. However, the level of new business growth necessary for MONY
to receive the New Business Growth Payment makes it unlikely that MONY will ever
receive any such payment.

With respect to the Group Pension Payments, the annual results from the
Existing Deposits are measured on a basis in accordance with the Agreement (such
basis hereafter referred to as the "Earnings Formula") which is substantially
the same as GAAP, except that: (i) asset impairments on fixed maturity
securities are only recognized when such securities are designated with an NAIC
rating of "6", and (ii) no impairment losses are recognized on mortgage loans
until such loans are disposed of or at the time, and in the calculation, of the
Final Value Payment.

Earnings which emerge from the Existing Deposits pursuant to the
application of the Earnings Formula are recorded in the Company's financial
statements only after adjustments (primarily to recognize asset impairments in
accordance with SFAS Nos. 114 and 115) to reflect such earnings on a basis
entirely in accordance with GAAP (such earnings hereafter referred to as the
"Group Pension Profits"). Losses which arise from the application of the
Earnings Formula for any annual period will be reflected in the Company's
results of operations (after adjustments to reflect such losses in accordance
with GAAP) only up to the amount for which the Company is at risk (as described
below), which at any time is equal to the then outstanding principal amount of
the Series A Notes.

Operating losses reported in any annual period pursuant to the Earnings
Formula are carried forward to reduce any earnings in subsequent years reported
pursuant to the Earnings Formula. Any resultant deficit remaining at December
31, 2002 will be deducted from the Final Value Payment and New Business Growth
Payment, if any, due to the Company. If a deficit still remains, it will be
applied (as provided for in the Agreement) as an offset against the principal
payment due to the Company upon maturity of the Series A Notes.

For the years ended December 31, 1999, 1998 and 1997, AUSA reported
earnings to the Company pursuant to the application of the Earnings Formula of
$35.7 million, $49.8 million, and $55.7 million, respectively, and the Company
recorded Group Pension Profits of $63.0 million, $56.8 million and $60.0
million, respectively. In addition, the Company earned $12.8 million, $12.8
million, and $17.7 million of interest income on the Notes during the
aforementioned years. From 1994 through 1996, the Company reinvested an
aggregate of $169 million of the aforementioned profits and interest in
additional Series A notes (the "Additional Notes") with a face amount equal to
the amount reinvested. The Additional Notes paid interest at 1% above the
two-year U.S. Treasury rate in effect at the time of their issuance. All of the
Additional Notes were redeemed at face value by AEGON during 1997. At December
31, 1999, the remaining Series A notes held by the Company consisted of the
$150.0 million face amount of Series A Notes it acquired on December 31, 1993.

The following sets forth certain summarized financial information relating
to the Group Pension Transaction as of and for the periods indicated, including
information regarding: (i) the general account assets transferred to support the
Existing Deposits in the Group Pension Transaction (such assets hereafter
referred to as the "AEGON Portfolio"), (ii) the transferred separate account
assets and liabilities, and (iii) the components of revenue and expense
comprising the Group Pension Profits:

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
--------------------
1999 1998
-------- --------
($ IN MILLIONS)
<S> <C> <C>
ASSETS:
General Account
Fixed maturities: available for sale, at estimated fair
value (amortized cost; $1,532.4 and $1,564.6,
respectively)......................................... $1,510.0 $1,620.2
Mortgage loans on real estate.......................... 98.5 214.8
Real estate held for investment........................ -- 37.9
Real estate to be disposed of.......................... 16.8 --
Cash and cash equivalents.............................. 25.3 21.7
Accrued investment income.............................. 26.5 27.6
-------- --------
Total general account assets........................... 1,677.1 1,922.2
Separate account assets................................... 3,432.7 3,829.6
-------- --------
Total assets...................................... $5,109.8 $5,751.8
</TABLE>

F-22
<PAGE> 86
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
--------------------
1999 1998
-------- --------
($ IN MILLIONS)
<S> <C> <C>
======== ========
LIABILITIES:
General Account(1)
Policyholders' account balances........................ $1,645.7 $1,824.9
Other liabilities...................................... 20.7 24.0
-------- --------
Total general account liabilities................. 1,666.4 1,848.9
Separate account liabilities(2)........................... 3,432.7 3,829.6
-------- --------
Total liabilities................................. $5,099.1 $5,678.5
======== ========
</TABLE>

- ---------------
(1) Includes general account liabilities transferred in connection with the
Group Pension Transaction pursuant to indemnity reinsurance of $88.9 million
and $121.7 million as of December 31, 1999 and 1998, respectively.
(2) Includes separate account liabilities transferred in connection with the
Group Pension Transaction pursuant to indemnity reinsurance of $20.3 million
and $33.3 million as of December 31, 1999 and 1998, respectively.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------
1999 1998 1997
-------- -------- --------
($ IN MILLIONS)
<S> <C> <C> <C>
REVENUES:
Product policy fees......................................... $ 24.0 $ 23.3 $ 23.7
Net investment income....................................... 128.4 154.7 169.3
Net realized gains on investments........................... 18.9 7.2 7.1
------ ------ ------
Total revenues.................................... 171.3 185.2 200.1
BENEFITS AND EXPENSES:
Interest credited to policyholders' account balances........ 88.4 108.7 117.3
Other operating costs and expenses.......................... 19.9 19.7 22.8
------ ------ ------
Total benefits and expenses....................... 108.3 128.4 140.1
------ ------ ------
Group Pension Profits............................. $ 63.0 $ 56.8 $ 60.0
====== ====== ======
</TABLE>

Fixed Maturity Securities

At December 31, 1999 and 1998, there were no fixed maturity securities in
the AEGON Portfolio deemed to have other than temporary impairments in value. In
addition, there were no fixed maturity securities at such dates which have been
non-income producing for the preceding twelve months.

At December 31, 1999 and 1998, there were no problem fixed maturities (as
hereafter defined -- see Note 12) held in the AEGON Portfolio. In addition, at
such dates the carrying value of potential problem fixed maturities held in the
AEGON Portfolio was $3.7 million. Also, none of the fixed maturity securities
held in the AEGON Portfolio at December 31, 1999 and 1998 or prior thereto had
been restructured.

The amortized cost and estimated fair value of fixed maturity securities
held in the AEGON Portfolio, by contractual maturity dates, (excluding scheduled
sinking funds), as of December 31, 1999 are as follows:

<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
COST FAIR VALUE
--------- ----------
($ IN MILLIONS)
<S> <C> <C>
Due in one year or less..................................... $ 91.5 $ 92.5
Due after one year through five years....................... 872.0 856.1
Due after five years through ten years...................... 269.7 262.8
Due after ten years......................................... 30.9 29.7
-------- --------
Subtotal.................................................... 1,264.1 1,241.1
Mortgage and asset backed securities........................ 268.3 268.9
-------- --------
Total............................................. $1,532.4 $1,510.0
======== ========
</TABLE>

F-23
<PAGE> 87
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Fixed maturity securities that are not due at a single maturity date have
been included in the preceding table in the year of final maturity. Actual
maturities may differ from contractual maturities because borrowers may have the
right to call or prepay obligations with or without call or prepayment
penalties.

The percentage of fixed maturities with a credit quality of Aaa, Aa or A
was 73.0% and 66.8% at December 31, 1999 and 1998, respectively. The percentage
of fixed maturities rated Baa was 24.6% and 29.3% at December 31, 1999 and 1998,
respectively. There were no fixed maturities in or near default.

The net change in unrealized investment gains (losses) represents the only
component of other comprehensive income generated by the AEGON Portfolio for the
years ended December 31, 1999, 1998, 1997 and prior thereto. The net change in
unrealized investment gains (losses) was $(77.9) million, $(4.0) million and
$(1.5) million for the years ended December 31, 1999, 1998 and 1997,
respectively (see Note 11):

Mortgage Loans on Real Estate

Mortgage loans on real estate in the AEGON Portfolio at December 31, 1999
and 1998 consist of the following:

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------
1999 1998
------- -------
($ IN MILLIONS)
<S> <C> <C>
Mortgage loans.............................................. $102.8 $230.8
Valuation allowances........................................ (4.3) (16.0)
------ ------
Mortgage loans, net of valuation allowance.................. $ 98.5 $214.8
====== ======
</TABLE>

An analysis of the valuation allowances with respect to the AEGON Portfolio
for 1999, 1998 and 1997 is as follows:

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
-----------------------
1999 1998 1997
----- ----- -----
($ IN MILLIONS)
<S> <C> <C> <C>
Balance, beginning of year.................................. $16.0 $13.6 $22.2
Increase (decrease) in allowance............................ (6.7) 2.9 (5.1)
Reduction due to pay downs and pay offs..................... (1.0) (0.5) (1.6)
Transfers to real estate.................................... (4.0) -- (1.9)
----- ----- -----
Balance, end of year........................................ $ 4.3 $16.0 $13.6
===== ===== =====
</TABLE>

Impaired mortgage loans along with related valuation allowances with
respect to the AEGON Portfolio at December 31, 1999, 1998 and 1997 are as
follows:

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------
1999 1998 1997
----- ------ ------
($ IN MILLIONS)
<S> <C> <C> <C>
Investment in impaired mortgage loans (before valuation
allowances):
Loans that have valuation allowances...................... $34.3 $ 71.1 $ 56.6
Loans that do not have valuation allowances............... 4.4 4.4 45.8
----- ------ ------
Subtotal.......................................... 38.7 75.5 102.4
Valuation allowances........................................ (2.7) (11.4) (5.8)
----- ------ ------
Impaired mortgage loans, net of valuation allowances........ $36.0 $ 64.1 $ 96.6
===== ====== ======
</TABLE>

During the years ended December 31, 1999, 1998, and 1997, the average
recorded investment in impaired mortgage loans with respect to the AEGON
Portfolio was approximately $50.0 million, $80.4 million, and $116.3 million,
respectively. For the years ended December 31, 1999, 1998, and 1997
approximately $2.9 million, $4.5 million, and $6.5 million, respectively, of
interest income on impaired loans with respect to the AEGON Portfolio was
earned.

At December 31, 1999 and 1998, there were no mortgage loans which were
non-income producing for the twelve months preceding such dates with respect to
the AEGON Portfolio.

F-24
<PAGE> 88
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

At December 31, 1999 and 1998 the AEGON Portfolio held restructured
mortgage loans of $36.0 million and $59.7 million, respectively. Interest income
of $2.9 million, $4.0 million, and $6.6 million was recognized on restructured
mortgage loans for the years ended December 31, 1999, 1998, and 1997,
respectively. Gross interest income on these loans that would have been recorded
in accordance with the original terms of such loans amounted to approximately
$3.9 million, $6.9 million, and $9.2 million for the years ended December 31,
1999, 1998, and 1997, respectively.

The following table presents the maturity distribution of mortgage loans
held in the AEGON Portfolio as of December 31, 1999 ($ in millions):

<TABLE>
<CAPTION>
DECEMBER 31, 1999
-----------------
CARRYING % OF
VALUE TOTAL
-------- -----
<S> <C> <C>
Due in one year or less..................................... $27.9 28.3%
Due after one year through five years....................... 37.0 37.6
Due after five years through ten years...................... 33.6 34.1
----- -----
Total............................................. $98.5 100.0%
===== =====
</TABLE>

Total problem, potential problem and restructured commercial mortgages as a
percentage of commercial mortgages were 36.6%, 29.9% and 27.8% at December 31,
1999, 1998 and 1997, respectively. Total valuation allowances as a percentage of
problem, potential problem and restructured commercial mortgages at carrying
value before valuation allowances were 7.0%, 15.1% and 5.7% as of December 31,
1999, 1998 and 1997, respectively.

Real Estate

As of December 31, 1999 and 1998, the AEGON Portfolio had real estate of
$16.8 million and $37.9 million, respectively, which are net of $2.4 million and
$18.2 million, respectively, of impairments taken upon foreclosure of mortgage
loans. Losses recorded during the years ended December 31, 1999, 1998 and 1997
related to impairments taken upon foreclosure were $0.0 million, $0.0 million,
and $4.3 million, respectively. For the year ended December 31, 1999, the real
estate balance of $16.8 million was classified as real estate to be disposed of.
For the year ended December 31, 1998, the balance of $37.9 million was
classified as real estate held for investment. During 1999, there was $0.4
million of losses recorded for valuation allowances on real estate to be
disposed of.

Real estate is net of accumulated depreciation of $1.0 million, and $2.5
million and valuation allowances of $0.4 million and $0.0 million at December
31, 1999 and 1998, respectively. Depreciation expense of $0.7 million, $1.1
million, and $1.4 million, was recorded for the years ended December 31, 1999,
1998, and 1997, respectively.

There was no real estate included in the AEGON Portfolio which was
non-income producing for the twelve months preceding December 31, 1999, 1998,
and 1997, respectively.

11. INVESTMENT INCOME, REALIZED AND UNREALIZED INVESTMENT GAINS (LOSSES), AND
COMPREHENSIVE INCOME:

Net investment income for the years ended December 31, 1999, 1998 and 1997
was derived from the following sources:

<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
($ IN MILLIONS)
<S> <C> <C> <C>
NET INVESTMENT INCOME
Fixed maturities............................................ $226.1 $418.1 $422.5
Equity securities........................................... 194.2 53.6 53.5
Mortgage loans.............................................. 87.1 118.7 137.1
Real estate................................................. 34.1 44.4 56.2
Policy loans................................................ 4.4 72.5 82.2
Other investments (including cash and short-term)........... 16.7 23.9 22.4
------ ------ ------
Total investment income..................................... 562.6 731.2 773.9
Investment expenses......................................... 35.4 42.1 40.9
------ ------ ------
Net investment income....................................... $527.2 $689.1 $733.0
====== ====== ======
</TABLE>

F-25
<PAGE> 89
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Net realized gains (losses) on investments for the years ended December 31,
1999, 1998 and 1997 are summarized as follows:

<TABLE>
<CAPTION>
1999 1998 1997
------ ------ -----
($ IN MILLIONS)
<S> <C> <C> <C>
NET REALIZED GAINS (LOSSES) ON INVESTMENTS
Fixed maturities............................................ $ (8.5) $ 8.3 $ 7.3
Equity securities........................................... 76.0 6.9 35.8
Mortgage loans.............................................. (2.2) 5.4 10.4
Real estate................................................. 52.1 127.6 20.1
Other investments assets.................................... 4.8 20.5 (1.5)
------ ------ -----
Net realized gains on investments........................... $122.2 $168.7 $72.1
====== ====== =====
</TABLE>

Following is a summary of the change in unrealized investment gains
(losses), net of related deferred income taxes and adjustment for deferred
policy acquisition costs (see Note 4), which are reflected in Accumulated Other
Comprehensive Income for the periods presented. The net change in unrealized
investment gains (losses) and the change in the Company's minimum pension
liability represent the only components of other comprehensive income for the
years ended December 31, 1999, 1998 and 1997 as presented below:

<TABLE>
<CAPTION>
1999 1998 1997
------- ------ ------
($ IN MILLIONS)
<S> <C> <C> <C>
OTHER COMPREHENSIVE INCOME
Change in unrealized gains (losses):
Fixed maturities............................................ $(458.9) $ 66.8 $ 98.7
Equity securities........................................... (25.3) 24.2 0.6
Other....................................................... (3.6) (1.8) 3.7
------- ------ ------
Subtotal.................................................... (487.8) 89.2 103.0
AEGON Portfolio (See Note 10)............................... (77.9) (4.0) (1.5)
------- ------ ------
Subtotal.................................................... (565.7) 85.2 101.5
Effect on unrealized gains (losses) on investments
attributable to:
DAC....................................................... 241.6 (6.7) (47.9)
Deferred federal income taxes............................. 114.1 (28.4) (17.7)
Net unrealized gains and DAC transferred to the Closed
Block..................................................... 28.2 (18.7) --
------- ------ ------
Change in unrealized gains (losses) on investments, net..... (181.8) 31.4 35.9
Minimum pension liability adjustment (See Note 7)........... -- 2.9 (2.9)
------- ------ ------
Other comprehensive income................................ $(181.8) $ 34.3 $ 33.0
======= ====== ======
</TABLE>

The following table sets forth the reclassification adjustments required
for the years ended December 31, 1999, 1998, and 1997 to avoid double-counting
in comprehensive income items that are included as part of net income for a
period that also had been part of other comprehensive income in earlier periods:

<TABLE>
<CAPTION>
1999 1998 1997
------- ----- ------
($ IN MILLIONS)
<S> <C> <C> <C>
RECLASSIFICATION ADJUSTMENTS
Unrealized gains (losses) on Investments arising during
period.................................................... $(135.3) $39.3 $ 53.5
Reclassification adjustment for gains included in net
income.................................................... (46.5) (7.9) (17.6)
------- ----- ------
Unrealized gains (losses) on Investments, net of
reclassification adjustments.............................. $(181.8) $31.4 $ 35.9
======= ===== ======
</TABLE>

Unrealized gains (losses) on investments, (excluding net unrealized gains
(losses) and DAC on assets allocated to the Closed Block), reported in the above
table for the years ended December 31, 1999, 1998 and 1997 are net of income tax
expense (benefit) of ($139.2) million, $24.1 million, and $8.2 million,
respectively, and $242.0 million, $0.8 million, and $(30.2) million,
respectively, relating to the effect of such unrealized gains (losses) on DAC.

Reclassification adjustments, (excluding net unrealized gains (losses) and
DAC on assets allocated to the Closed Block), reported in the above table for
the years ended December 31, 1999, 1998 and 1997 are net of income tax expense
of $25.1 million, $4.3 million and $9.5 million, respectively, and $(0.4)
million, $(7.5) million and $(17.7) million, respectively, relating to the
effect of such amounts on DAC.
F-26
<PAGE> 90
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. INVESTMENTS:

Fixed Maturity Securities Available-for-Sale:

The amortized cost, gross unrealized gains and losses, and estimated fair
value of fixed maturity securities available-for-sale as of December 31, 1999
and 1998 are as follows:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
------------------- -------------- -------------- -------------------
1999 1998 1999 1998 1999 1998 1999 1998
-------- -------- ----- ------ ------ ----- -------- --------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
US Treasury securities and Obligations of US
Government agencies.......................... $ 110.1 $ 63.8 $ -- $ 3.2 $ 3.2 $ -- $ 106.9 $ 67.0
Collateralized mortgage obligations:
Government agency-backed..................... 147.2 180.2 0.5 3.3 2.1 -- 145.6 183.5
Non-agency backed............................ 101.0 85.7 0.9 3.4 2.0 -- 99.9 89.1
Other asset-backed securities:
Government agency-backed..................... 16.4 20.0 0.3 1.0 0.2 -- 16.5 21.0
Non-agency backed............................ 402.2 347.5 1.5 12.2 13.0 0.9 390.7 358.8
Foreign governments............................ 20.9 16.6 3.7 1.2 0.2 0.6 24.4 17.2
Utilities...................................... 347.3 339.4 2.6 13.2 14.4 5.1 335.5 347.5
Corporate bonds................................ 1,995.5 1,953.8 9.4 79.3 78.4 9.0 1,926.5 2,024.1
-------- -------- ----- ------ ------ ----- -------- --------
Total bonds........................... 3,140.6 3,007.0 18.9 116.8 113.5 15.6 3,046.0 3,108.2
Redeemable preferred stocks.................... 22.4 23.5 -- 0.6 1.7 0.3 20.7 23.8
-------- -------- ----- ------ ------ ----- -------- --------
Total................................. $3,163.0 $3,030.5 $18.9 $117.4 $115.2 $15.9 $3,066.7 $3,132.0
======== ======== ===== ====== ====== ===== ======== ========
</TABLE>

The carrying value of the Company's fixed maturity securities at December
31, 1999 and 1998 is net of adjustments for impairments in value deemed to be
other than temporary of $16.2 million and $15.1 million, respectively.

At December 31, 1999 and 1998, there was $1.6 million and $0.0 million,
respectively of fixed maturity securities which had been non-income producing
for the twelve months preceding such dates.

The Company classifies fixed maturity securities which (i) are in default
as to principal or interest payments, or (ii) are to be restructured pursuant to
commenced negotiations, (iii) went into bankruptcy subsequent to acquisition, or
(iv) are deemed to have other than temporary impairments to value as "problem
fixed maturity securities". At December 31, 1999 and 1998, the carrying value of
problem fixed maturities held by the Company was $33.9 million. In addition, at
December 31, 1999 and 1998, the Company held $0.0 million and $8.6 million of
fixed maturity securities which had been restructured. Gross interest income
that would have been recorded in accordance with the original terms of
restructured fixed maturity securities amounted to $0.0 million and $0.9 million
for the years ended December 31, 1999 and 1998, respectively. Gross interest
income on these fixed maturity securities included in net investment income
aggregated $0.0 million and $1.3 million for the years ended December 31, 1999
and 1998, respectively.

The amortized cost and estimated fair value of fixed maturity securities,
by contractual maturity dates (excluding scheduled sinking funds) as of December
31, 1999, are as follows:

<TABLE>
<CAPTION>
1999
-----------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
--------- ----------
($ IN MILLIONS)
<S> <C> <C>
Due in one year or less..................................... $ 138.6 $ 139.7
Due after one year through five years....................... 553.2 547.0
Due after five years through ten years...................... 1,243.3 1,193.4
Due after ten years......................................... 561.1 533.9
-------- --------
Subtotal.......................................... 2,496.2 2,414.0
Mortgage- and asset-backed securities....................... 666.8 652.7
-------- --------
Total............................................. $3,163.0 $3,066.7
======== ========
</TABLE>

F-27
<PAGE> 91
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Proceeds from sales of fixed maturity securities including those in the
Closed Block during 1999, 1998 and 1997 were $632.8 million, $396.9 million and
$225.0 million, respectively. Gross gains of $6.9 million, $10.6 million, and
$5.2 million and gross losses of $19.4 million, $2.9 million, and $2.6 million
were realized on these sales, respectively.

Equity Securities

The cost, gross unrealized gains and losses, and estimated fair value of
marketable and nonmarketable equity securities at December 31, 1999 and 1998 are
as follows:

<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------------- --------------- ------------- ---------------
1999 1998 1999 1998 1999 1998 1999 1998
------ ------ ------ ------ ----- ----- ------ ------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Marketable equity Securities............... $217.5 $233.6 $ 63.3 $ 48.7 $ 9.3 $ 6.7 $271.5 $275.6
Nonmarketable equity Securities............ 178.5 128.2 84.4 65.7 14.6 12.3 248.3 181.6
------ ------ ------ ------ ----- ----- ------ ------
$396.0 $361.8 $147.7 $114.4 $23.9 $19.0 $519.8 $457.2
====== ====== ====== ====== ===== ===== ====== ======
</TABLE>

Proceeds from sales of equity securities during 1999, 1998 and 1997 were
$302.7 million, $165.0 million and $234.1 million, respectively. Gross gains of
$90.0 million, $24.4 million, and $44.4 million and gross losses of $12.4
million, $17.2 million, and $4.7 million were realized on these sales,
respectively.

13. MORTGAGE LOANS ON REAL ESTATE AND REAL ESTATE:

Mortgage loans on real estate at December 31, 1999 and 1998 consist of the
following:

<TABLE>
<CAPTION>
1999 1998
-------- --------
($ IN MILLIONS)
<S> <C> <C>
Commercial mortgage loans................................... $ 777.8 $ 546.1
Agricultural and other loans................................ 515.6 465.4
-------- --------
Total loans................................................. 1,293.4 1,011.5
Less: valuation allowances.................................. (23.0) (23.2)
-------- --------
Mortgage loans, net of valuation allowances................. $1,270.4 $ 988.3
======== ========
</TABLE>

An analysis of the valuation allowances for 1999, 1998 and 1997 is as
follows:

<TABLE>
<CAPTION>
1999 1998 1997
----- ----- -----
($ IN MILLIONS)
<S> <C> <C> <C>
Balance, beginning of year.................................. $23.2 $54.9 $67.0
Increase in allowance....................................... 3.2 11.9 1.4
Reduction due to pay downs and pay offs..................... (1.2) (16.0) (12.7)
Transfers to real estate.................................... (2.2) (4.0) (0.8)
Transfers to the Closed Block............................... -- (23.6) --
----- ----- -----
Balance, end of year........................................ $23.0 $23.2 $54.9
===== ===== =====
</TABLE>

F-28
<PAGE> 92
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Impaired mortgage loans along with related valuation allowances as of
December 31, 1999 and 1998 were as follows:

<TABLE>
<CAPTION>
1999 1998
------ ------
($ IN MILLIONS)
<S> <C> <C>
Investment in impaired mortgage loans (before valuation
allowances):
Loans that have valuation allowances........................ $109.1 $116.7
Loans that do not have valuation allowances................. 30.1 29.5
------ ------
Subtotal.......................................... 139.2 146.2
Valuation allowances........................................ (17.5) (10.9)
------ ------
Impaired mortgage loans, net of valuation
allowances........................................ $121.7 $135.3
====== ======
</TABLE>

Impaired mortgage loans that do not have valuation allowances are loans
where the net present value of the expected future cash flows related to the
loan or the fair value of the collateral equals or exceeds the recorded
investment in the loan. Such loans primarily consist of restructured loans or
loans on which impairment writedowns were taken prior to the adoption of SFAS
No. 114, "Accounting by Creditors for Impairment of a Loan".

During 1999 and 1998, the average recorded investment in impaired mortgage
loans was approximately $262.6 million and $300.1 million, respectively
including Closed Block mortgages. During 1999, 1998, and 1997, the Company
recognized $19.8 million, $24.2 million, and $28.5 million, respectively, of
interest income on impaired loans (see Note 20.)

At December 31, 1999 and 1998, the carrying values of mortgage loans which
were non-income producing for the twelve months preceding such dates were $21.0
million and $12.9 million, respectively.

At December 31, 1999 and 1998, the Company had restructured mortgage loans
of $100.1 million (excluding the Closed Block) and $110.6 million, respectively.
Interest income of $6.3 million, $13.0 million and $20.3 million was recognized
on restructured mortgage loans in 1999, 1998, and 1997, respectively. Gross
interest income on these loans that would have been recorded in accordance with
the original terms of such loans amounted to approximately $11.6 million, $18.1
million, and $26.7 million in 1999, 1998 and 1997, respectively.

The following table summarizes the Company's real estate at December 31,
1999 and 1998:

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------
1999 1998
------- -------
($ IN MILLIONS)
<S> <C> <C>
Real estate to be disposed of(1)............................ $375.6 $393.7
Impairment writedowns....................................... (52.7) (50.2)
Valuation allowance......................................... (22.0) (30.6)
------ ------
Carrying value of real estate to be disposed of............. $300.9 $312.9
------ ------
Real estate held for investment(2).......................... $ 57.0 $381.9
Impairment writedowns....................................... (10.8) (60.6)
------ ------
Carrying value of real estate held for investment........... $ 46.2 $321.3
====== ======
</TABLE>

- ---------------
(1) Amounts presented as of December 31, 1999 and 1998 are net of $42.1 million
and $29.0 million, respectively, relating to impairments taken upon
foreclosure of mortgage loans.
(2) Amounts presented as of December 31, 1999 and 1998 are net of $5.9 million
and $26.8 million, respectively, relating to impairments taken upon
foreclosure of mortgage loans.

F-29
<PAGE> 93
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

An analysis of the valuation allowances relating to real estate classified
as to be disposed of for the years ended December 31, 1999, 1998 and 1997 is as
follows:

<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
($ IN MILLIONS)
<S> <C> <C> <C>
Balance, beginning of year.................................. $ 30.6 $ 82.7 $ 46.0
Increase due to transfers of properties to real estate to be
disposed of during the year............................... 11.0 1.7 66.1
Increases (decreases) in valuation allowances from the end
of the prior period on properties to be disposed of....... 1.1 5.0 (2.3)
Decrease as a result of transfers of valuation allowances to
held for investment....................................... -- (13.5) --
Decrease as a result of sale................................ (20.7) (45.3) (27.1)
------ ------ ------
Balance, end of year........................................ $ 22.0 $ 30.6 $ 82.7
====== ====== ======
</TABLE>

Real estate is net of accumulated depreciation of $138.6 million and $290.1
million for 1999 and 1998, respectively, and depreciation expense recorded was
$8.5 million, $26.6 million and $45.1 million for the years ended December 31,
1999, 1998 and 1997, respectively.

At December 31, 1999 and 1998, the carrying value of real estate which was
non-income producing for the twelve months preceding such dates was $16.9
million and $12.5 million, respectively. Approximately 69.4% of such real estate
at December 31, 1999 consisted of land and the balance consisted of vacant
buildings.

The carrying value of impaired real estate as of December 31, 1999 and 1998
was $84.2 million and $78.4 million, respectively. The depreciated cost of such
real estate as of December 31, 1999 and 1998 was $147.7 million and $189.1
million before impairment writedowns of $63.5 million and $110.7 million,
respectively. The aforementioned impairments occurred primarily as a result of
low occupancy levels and other market related factors. Losses recorded during
1999, 1998, and 1997 related to impaired real estate aggregated $0.0 million,
$5.9 million, and $0.0 million, respectively, and are included as a component of
net realized gains on investments. Substantially all impaired real estate is
allocated to the Protection Products segment.

14. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS:

The estimated fair values of the Company's financial instruments
approximate their carrying amounts except for long-term debt as described below.
The methods and assumptions utilized in estimating the fair values of the
Company's financial instruments are summarized as follows:

Fixed Maturities and Equity Securities

The estimated fair values of fixed maturity securities are based upon
quoted market prices, where available. The fair values of fixed maturity
securities not actively traded and other non-publicly traded securities are
estimated using values obtained from independent pricing services or, in the
case of private placements, by discounting expected future cash flows using a
current market interest rate commensurate with the credit quality and term of
the investments. Equity securities primarily consist of investments in common
stocks and limited partnership interests. The fair values of the Company's
investment in common stocks are determined based on quoted market prices, where
available. The fair value of the Company's investments in limited partnership
interests are based on amounts reported by such partnerships to the Company.

Mortgage Loans

The fair values of mortgage loans are estimated by discounting expected
future cash flows, using current interest rates for similar loans to borrowers
with similar credit risk. Loans with similar characteristics are aggregated for
purposes of the calculations. The fair value of mortgages in process of
foreclosure is the estimated fair value of the underlying collateral.

Policy Loans

Policy loans are an integral component of insurance contracts and have no
maturity dates. Management has determined that it is not practicable to estimate
the fair value of policy loans.

Long-term Debt

The fair value of long-term debt at December 31, 1999 was $251.7 million
and is determined based on contractual cash flows discounted at market rates.
The estimated fair values for non-recourse mortgage debt are determined by
discounting contractual cash flows at a rate which takes into account the level
of current market interest rates and collateral risk.

F-30
<PAGE> 94
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Separate Account Assets and Liabilities

The estimated fair value of assets held in Separate Accounts is based on
quoted market prices. The fair value of liabilities related to Separate Accounts
is the amount payable on demand, which includes surrender charges.

Investment-Type Contracts

The fair values of annuities are based on estimates of the value of
payments available upon full surrender. The fair values of the Company's
liabilities under guaranteed investment contracts are estimated by discounting
expected cash outflows using interest rates currently offered for similar
contracts with maturities consistent with those remaining for the contracts
being valued.

15. REINSURANCE:

The Company has entered into coinsurance agreements with other insurers
related to a portion of its extended term insurance, guaranteed interest
contract and long-term disability claim liabilities and reinsures approximately
50% of its block of paid-up life insurance policies.

The following table summarizes the effect of reinsurance for the years
indicated:

<TABLE>
<CAPTION>
1999 1998 1997
------ ------- ------
($ IN MILLIONS)
<S> <C> <C> <C>
Direct premiums (includes $74.4, $78.4 and $78.1 of accident
and health premiums for 1999, 1998, and 1997,
respectively)............................................. $181.6 $ 728.7 $871.0
Reinsurance assumed......................................... 5.0 5.3 6.2
Reinsurance ceded (includes $(73.8), $(78.2), and $(3.5) of
accident and health premiums for 1999, 1998, and 1997,
respectively)............................................. (90.3) (112.3) (38.6)
------ ------- ------
Net premiums(1)........................................ $ 96.3 $ 621.7 $838.6
====== ======= ======
Universal life and investment type product policy fee income
ceded..................................................... $ 14.4 $ 8.9 $ 8.8
====== ======= ======
Policyholders' benefits ceded(2)............................ $ 38.2 $ 107.3 $ 69.0
====== ======= ======
Interest credited to policyholders' account balances
ceded..................................................... $ 4.5 $ 6.5 $ 9.9
====== ======= ======
</TABLE>

- ---------------
(1) Excludes Closed Block direct premiums of $639.9 and $103.3 and reinsurance
ceded of $19.0 and $3.2 at December 31, 1999 and 1998, respectively.

(2) Excludes $21.8 million of Closed Block benefits ceded at December 31, 1999.

The Company is contingently liable with respect to ceded insurance should
any reinsurer be unable to meet its obligations under these agreements. To limit
the possibility of such losses, the Company evaluates the financial condition of
its reinsurers and monitors concentration of credit risk.

Effective December 31, 1997, the Company transferred all of its existing in
force disability income insurance business to a third party reinsurer under an
indemnity reinsurance contract and ceased writing new disability income
insurance business. As a result of this transaction, the Company recorded a loss
before tax of approximately $9.1 million for the year ended December 31, 1997.

F-31
<PAGE> 95
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

16. DEBT:

The Company's debt at December 31, 1999 and 1998 consists of the following:

<TABLE>
<CAPTION>
1999 1998
------ ------
($ IN MILLIONS)
<S> <C> <C>
Surplus notes............................................... $240.0 $231.7
Real estate mortgage encumbrances........................... 58.8 94.6
Other....................................................... -- 49.1
------ ------
$298.8 $375.4
====== ======
</TABLE>

Surplus Notes

On December 31, 1997, the Company issued the MONY Notes in connection with
the Investment Agreement (see Note 2). The MONY Notes have a face amount of
$115.0 million, a coupon rate of interest of 9.5% per annum, and mature on
December 30, 2012. Interest on the MONY Notes is payable semi-annually and
principal is payable at maturity. Payment of interest on the MONY Notes may only
be made upon the prior approval of the New York State Superintendent of
Insurance. For each of the years in the period ended December 31, 1999 and 1998,
the Company recorded interest expense of $10.9 million related the MONY Notes.

On August 15, 1994, the Company issued Surplus Notes due August 15, 2024
with a face amount of $125.0 million. The notes were issued at a discount of
approximately 42.1% from the principal amount payable at maturity, resulting in
net proceeds after issuance expenses of approximately $70.0 million. The amount
of such original issue discount represents a yield of 11.25% per annum for the
period from August 15, 1994 until August 15, 1999. Interest on the notes did not
accrue until August 15, 1999; thereafter, interest on the notes is scheduled to
be paid on February 15 and August 15 of each year, commencing February 15, 2000,
at a rate of 11.25% per annum.

Payment of interest on the Surplus Notes may only be made upon the prior
approval of the New York State Superintendent of Insurance. The Company
amortizes the discount using the interest method. For the years ended December
31, 1999, 1998, and 1997, the Company recorded interest expense of $13.5
million, $12.1 million, and $10.8 million, respectively, related to these notes.

Real Estate Mortgage Encumbrances

The Company has mortgage loans on certain of its real estate properties.
The interest rates on these loans range from 6.7% to 7.7%. Maturities range from
June 2000 to February 2002. For the years ended December 31, 1999, 1998 and
1997, interest expense on such mortgage loans aggregated $5.0 million, $9.0
million, and $12.3 million, respectively.

Other

During 1989, the Company entered into a transaction which is accounted for
as a financing arrangement involving certain real estate properties held for
investment. Pursuant to the terms of the agreement, the Company effectively
pledged the real estate properties as collateral for a loan of approximately
$35.0 million bearing simple interest at a rate of 8% per annum. The remaining
obligation of $44.1 was paid in full on December 1, 1999. At December 31, 1998,
the outstanding balance of the obligation including accrued interest was $42.4
million. Interest expense on the obligation of $3.4 million, $3.1 million, and
$3.0 million is reflected in Other Operating Costs and Expenses on the
statements of income for the years ended December 31, 1999, 1998 and 1997,
respectively.

In 1988, the Company financed one of its real estate properties under a
sales/leaseback arrangement. The facility was sold for $66.0 million, $56.0
million of which was in the form of an interest bearing note receivable and
$10.0 million in cash. The note was originally due January 1, 2009, however, on
December 1, 1999, the remaining balance of the interest bearing note of $44.2
was paid in full as part of the sale of the property to a third party. The
transaction continues to be accounted for as a sale/leaseback arrangement, with
the proceeds received from the sale, amortized into income over the life of the
lease. The lease has a term of 20 years beginning December 21, 1988 and requires
minimum annual rental payments of $7.3 million in 2000, $7.4 million in 2001,
$7.6 million in 2002, $7.7 million in 2003, $7.9 million in 2004 and $33.1
million thereafter. The Company has the option to renew the lease at the end of
the lease term.

Prior to December 31, 1997, the Company had outstanding debt which
represented floating rate notes that were issued by a trust that qualified as a
Real Estate Mortgage Investment Conduit (REMIC) under Section 860 of the
Internal Revenue Code. For the year ended December 31, 1997, the Company
recorded interest expense of $0.8 million, related to the REMIC. The weighted
average interest rate on the notes for the year ended December 31, 1997 was
5.9%.

F-32
<PAGE> 96
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Prior to December 31, 1997, the Company had outstanding Eurobond debt. For
the year ended December 31, 1997 interest expense on the Eurobonds outstanding
aggregated $2.1 million. The weighted average interest rate on such debt for the
year ended December 31, 1997 was 8.13%.

At December 31, 1999, aggregate maturities of long-term debt based on
required principal payments for 2000 and the succeeding four years are $0.0
million, $0.0 million, $5.4 million, $0.0 million, and $0.0 million,
respectively, and $240.0 million thereafter.

17. OFF-BALANCE SHEET RISK AND CONCENTRATION OF CREDIT RISK:

Financial Instruments with Off-Balance Sheet Risk:

Pursuant to a securities lending agreement with a major financial
institution, the Company from time to time lends securities to approved
borrowers. At December 31, 1999 and 1998, securities loaned by the Company under
this agreement had a fair value of approximately $42.6 million and $98.9
million, respectively. The minimum collateral on securities loaned is 102
percent of the market value of the loaned securities. Such securities are marked
to market on a daily basis and the collateral is correspondingly increased or
decreased.

Concentration of Credit Risk:

At December 31, 1999 and 1998, the Company had no single investment or
series of investments with a single issuer (excluding U.S. Treasury securities
and obligations of U.S. government agencies) exceeding 0.5% and 3.5%,
respectively, of total cash and invested assets.

The Company's fixed maturity securities are diversified by industry type.
The industries that comprise 10% or more of the carrying value of the fixed
maturity securities at December 31, 1999 are Non-Government
Asset/Mortgage-Backed of $490.6 million (16.0%), Consumer Goods and Services of
$462.0 million (15.1%), Public Utilities of $335.5 million (10.9%), Other
Manufacturing of $305.4 million (10.0%).

At December 31, 1998 the industries that comprise 10% or more of the
carrying value of the fixed maturity securities were Non-Government
Asset/Mortgage-Backed of $448.0 million (14.3%), Other Manufacturing of $391.3
million (12.5%), Consumer Goods and Services of $408.5 million (13.1%), and
Public Utilities of $347.5 million (11.1%).

The Company holds below investment grade fixed maturity securities with a
carrying value of $308.3 million at December 31, 1999. These investments consist
mostly of privately issued bonds which are monitored by the Company through
extensive internal analysis of the financial condition of the issuers and which
generally include protective debt covenants. At December 31, 1998, the carrying
value of the Company's investments in below investment grade fixed maturity
securities amounted to $252.0 million.

The Company has significant investments in commercial and agricultural
mortgage loans and real estate (including joint ventures and partnerships). The
locations of property collateralizing mortgage loans and real estate investment
carrying values at December 31, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
1999 1998
----------------- -----------------
($ IN MILLIONS)
<S> <C> <C> <C> <C>
GEOGRAPHIC REGION
West........................................................ $ 323.3 20.0% $ 315.8 19.5%
Mountain.................................................... 319.7 19.8 392.5 24.2
Southeast................................................... 307.3 19.0 292.2 18.0
Midwest..................................................... 290.4 17.9 220.7 13.6
Northeast................................................... 234.7 14.5 261.5 16.1
Southwest................................................... 142.1 8.8 139.8 8.6
-------- ----- -------- -----
Total.................................................. $1,617.5 100.0% $1,622.5 100.0%
======== ===== ======== =====
</TABLE>

The states with the largest concentrations of mortgage loans and real
estate investments at December 31, 1999 are: California, $179.2 million (11.1%);
New York $158.7 million (9.8%); Arizona, $157.8 million (9.8%); Illinois, $97.1
million (6.0%); Texas, $92.0 million (5.7%); Georgia, $83.0 million (5.1%); and
Washington, $75.9 million (4.7%).

F-33
<PAGE> 97
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

As of December 31, 1999 and 1998, the real estate and mortgage loan
portfolio was also diversified as follows:

<TABLE>
<CAPTION>
1999 1998
----------------- -----------------
($ IN MILLIONS)
<S> <C> <C> <C> <C>
PROPERTY TYPE:
Office buildings............................................ $ 610.2 37.7% $ 585.4 36.1%
Agricultural................................................ 510.1 31.5 459.7 28.4
Hotel....................................................... 182.4 11.3 264.9 16.3
Retail...................................................... 112.6 7.0 164.1 10.1
Other....................................................... 95.6 5.9 72.7 4.5
Industrial.................................................. 77.0 4.8 51.0 3.1
Apartment buildings......................................... 29.6 1.8 24.7 1.5
-------- ----- -------- -----
Total.................................................. $1,617.5 100.0% $1,622.5 100.0%
======== ===== ======== =====
</TABLE>

18. COMMITMENTS AND CONTINGENCIES:

Since late 1995 a number of purported class actions were commenced in
various state and federal courts against the Company alleging that the Company
engaged in deceptive sales practices in connection with the sale of whole and
universal life insurance policies from the early 1980s through the mid 1990s.
Although the claims asserted in each case are not identical, they seek
substantially the same relief under essentially the same theories of recovery
(i.e., breach of contract, fraud, negligent misrepresentation, negligent
supervision and training, breach of fiduciary duty, unjust enrichment and
violation of state insurance and/or deceptive business practice laws).
Plaintiffs in these cases (including the Goshen case discussed below) seek
primarily equitable relief (e.g., reformation, specific performance, mandatory
injunctive relief prohibiting the Company from canceling policies for failure to
make required premium payments, imposition of a constructive trust and creation
of a claims resolution facility to adjudicate any individual issues remaining
after resolution of all class-wide issues) as opposed to compensatory damages,
although they also seek compensatory damages in unspecified amounts. The Company
has answered the complaints in each action, (except for one being voluntarily
held in abeyance), has denied any wrongdoing and has asserted numerous
affirmative defenses.

On June 7, 1996, the New York State Supreme Court certified one of those
cases the Goshen v. The Mutual Life Insurance Company of New York and MONY Life
Insurance Company of America, the Goshen case, being the first of the
aforementioned class actions filed, as a nationwide class consisting of all
persons or entities who have, or at the time of the policy's termination had, an
ownership interest in a whole or universal life insurance policy issued by the
Company and sold on an alleged "vanishing premium" basis during the period
January 1, 1982 to December 31, 1995. On March 27, 1997, the Company filed a
motion to dismiss or, alternatively, for summary judgment on all counts of the
complaint. All of the other putative class actions have been consolidated and
transferred by the Judicial Panel on Multidistrict Litigation to the United
States District Court for the District of Massachusetts, or are being
voluntarily held in abeyance pending the outcome of the Goshen case.

On October 21, 1997, the New York State Supreme Court granted the Company's
motion for summary judgment and dismissed all claims filed in the Goshen case
against the Company on the merits. On December 20, 1999, the New York State
Court of Appeals affirmed the dismissal of all but one of the claims in the
Goshen case (a claim under New York's General Business Law), which has been
remanded back to the New York State Supreme Court for further proceedings
consistent with the opinion. The Company intends to defend itself vigorously
against the sole remaining claim. There can be no assurance that the present
litigation relating to sales practices will not have a material adverse effect
on the Company.

On November 16, 1999, the MONY Group, Inc. and MONY Life Insurance Company
were served with a complaint in an action entitled Calvin Chatlos, M.D., and
Alvin H. Clement, On Behalf of Themselves And All Others Similarly Situated v.
The MONY Life Insurance Company, The MONY Group Inc., and Neil D. Levin,
Superintendent, New York Department of Insurance, filed in the United States
District Court for the Southern District of New York. The action purports to be
brought as a class action on behalf of all individuals who had an ownership
interest in one or more in-force life insurance policies issued by MONY Life
Insurance Company as of November 16, 1998. The complaint alleges that (i) the
New York Superintendent of Insurance Neil D. Levin, violated Section 7312 of the
New York Insurance Law by approving the plan of demutualization, which
plaintiffs claim was not fair and adequate, primarily because it allegedly
failed to provide for sufficient assets for the mechanism established under the
plan to preserve reasonable policyholder dividend expectations of the closed
block, and (ii) the Company violated Section 7312 by failing to develop and
submit to the Superintendent a plan of demutualization that was fair and
adequate. The plaintiffs seek equitable relief in the form of an order vacating
and/or modifying the Superintendent's order approving the plan of
demutualization and/or directing the

F-34
<PAGE> 98
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Superintendent to order the Company to increase the assets in the closed block,
as well as unspecified monetary damages, attorneys' fees and other relief.

In addition to the matters discussed above, the Company is involved in
various other legal actions and proceedings in connection with its businesses.
The claimants in certain of these actions and proceedings seek damages of
unspecified amounts.

With respect to all of the other aforementioned pending litigation, the
Company recorded a provision, which is reflected in Other Operating Costs and
Expenses, of $1.7 million, $13.1 million, and $0.0 million during the years
ended December 31, 1999, 1998 and 1997, respectively. While the outcome of such
matters cannot be predicted with certainty, in the opinion of management, any
additional liability beyond that recorded in the consolidated financial
statements at December 31, 1999, resulting from the resolution of these matters
will not have a material adverse effect on the Company's consolidated financial
position or results of operations.

Insurance companies are subject to assessments, up to statutory limits, by
state guaranty funds for losses of policyholders of insolvent insurance
companies. In the opinion of management, such assessments will not have a
material adverse effect on the consolidated financial position and the results
of operations of the Company.

The Company maintains two lines of credit with domestic banks totaling
$150.0 million with scheduled renewal dates in September 2000 and September
2003. Under these lines of credit, the Company is required to maintain a certain
statutory tangible net worth and debt to capitalization ratio. The Company has
not borrowed against these lines of credit since their inception.

At December 31, 1999, the Company had commitments to issue $8.7 million of
fixed rate agricultural loans with periodic interest rate reset dates. The
initial interest rates on such loans range from approximately 7.25% to 8.75%. In
addition, the Company had commitments to issue $70.2 million of fixed rate
commercial mortgage loans with interest rates ranging from 7.00% to 8.92%. The
Company had commitments outstanding to purchase private fixed maturity
securities as of December 31, 1999 of $15.0 million with an interest rate of
9.0%. At December 31, 1999, the Company had commitments to contribute capital to
its equity partnership investments of $118.1 million.

19. STATUTORY FINANCIAL INFORMATION AND REGULATORY RISK-BASED CAPITAL

The combined statutory net income reported by the Company for the years
ended December 31, 1999, 1998, and 1997 was $131.0 million, $9.7 million, and
$88.5 million, respectively. The combined statutory surplus of the Company as of
December 31, 1999 and 1998 was $1,067.1 million and $1,015.8 million
respectively.

In March 1998, the National Association of Insurance Commissioners ("NAIC")
voted to adopt its Codification of Statutory Accounting Principles project
(referred to hereafter as "codification"). Codification is a modified form of
statutory accounting principles that will result in changes to the current NAIC
Accounting Practices and Procedures Manual applicable to insurance enterprises.
Although adoption of codification by all states is not a certainty, the NAIC has
recommended that all states enact codification as soon as practicable with an
effective date of January 1, 2001. It is currently anticipated that codification
will become an NAIC state accreditation requirement starting in 2002. In
addition, the American Institute of Certified Public Accountants and the NAIC
have agreed to continue to allow the use of certain permitted accounting
practices when codification becomes effective in 2001. Any accounting
differences from codification principles, however, must be disclosed and
quantified in the footnotes to the audited financial statements. Therefore,
codification will likely result in changes to what are currently considered
prescribed statutory insurance accounting practices.

Each insurance company's state of domicile imposes minimum risk-based
capital requirements. The formulas for determining the amount of risk-based
capital specify various weighting factors that are applied to financial balances
or various levels of activity based on the perceived degree of risk. Regulatory
compliance is determined by a ratio of the

F-35
<PAGE> 99
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Company's regulatory total adjusted capital, as defined by the NAIC, to its
authorized control level risk-based capital, as defined by the NAIC. Companies
below specific trigger points or ratios are classified within certain levels,
each of which requires specified corrective action. Each of the Company's
insurance subsidiaries exceed the minimum risk based capital requirements.

As part of their routine regulatory oversight, the Department recently
completed an examination of MONY for each of the five years in the period ended
December 31, 1996, and the Arizona State Insurance Department recently completed
an examination of MONY's wholly owned life insurance subsidiary, MONY Life
Insurance Company of America, for each of the three years in the period ended
December 31, 1996. The reports did not cite any matter which would result in a
material effect on the Company's financial condition or results of operations.

20. CLOSED BLOCK -- SUMMARY FINANCIAL INFORMATION

Summarized financial information of the Closed Block as of December 31,
1999 and December 31, 1998 and for the year ended December 31, 1999 and for the
period from November 16, 1998 (date of establishment of the Closed Block)
through December 31, 1998 is presented below:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1999 1998
------------ ------------
($ IN MILLIONS)
<S> <C> <C>
ASSETS:
Fixed Maturities:
Available for sale, at estimated fair value (amortized
cost, $3,423.0 and $3,433.9)........................... $3,479.5 $3,574.0
Mortgage loans on real estate............................... 443.0 431.7
Policy loans................................................ 1,199.1 1,208.4
Real estate to be disposed of............................... 22.1
Cash and cash equivalents................................... 111.3 134.4
Premiums receivable......................................... 14.2 16.8
Deferred policy acquisition costs........................... 689.9 554.6
Other assets................................................ 223.0 241.3
-------- --------
Total Closed Block assets......................... $6,182.1 $6,161.2
======== ========

LIABILITIES:
Future policy benefits...................................... $6,781.5 $6,715.6
Policyholders' account balances............................. 294.6 298.0
Other policyholders' liabilities............................ 164.9 163.5
Other liabilities........................................... 62.3 113.6
-------- --------
Total Closed Block liabilities.................... $7,303.3 $7,290.7
======== ========
</TABLE>

F-36
<PAGE> 100
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
FOR THE NOVEMBER 16,
YEAR ENDED 1998 THROUGH
DECEMBER 31, DECEMBER 31,
1999 1998
------------ ------------
($ IN MILLIONS)
<S> <C> <C>
REVENUES:
Premiums.................................................... $ 620.8 $100.1
Net investment income....................................... 375.1 46.6
Net realized gains (losses) on investments.................. 2.9 2.4
Other Income................................................ 1.4 0.6
-------- ------
Total revenues.................................... 1,000.2 149.7
-------- ------
BENEFITS AND EXPENSES:
Benefits to policyholders................................... 640.1 110.0
Interest credited to policyholders' account balances........ 8.9 1.0
Amortization of deferred policy acquisition costs........... 67.5 9.0
Dividends to policyholders.................................. 228.8 22.4
Other operating costs and expenses.......................... 10.1 1.6
-------- ------
Total benefits and expenses....................... 955.4 144.0
-------- ------
Contribution from the Closed Block.......................... $ 44.8 $ 5.7
======== ======
</TABLE>

The carrying value of the Closed Block fixed maturity securities at
December 31, 1999 and 1998 is net of adjustments for impairment of $3.0 million
and $0.0 million, respectively.

At December 31, 1999 and December 31, 1998, there were no fixed maturities
which have been non-income producing for the twelve months preceding such dates.

At December 31, 1999 and December 31, 1998, there were problem fixed
maturities of $12.0 million and $0.0 million, respectively. There were no fixed
maturities which were restructured at December 31, 1999 and 1998.

The amortized cost and estimated fair value of fixed maturity securities in
the Closed Block, by contractual maturity dates, (excluding scheduled sinking
funds) as of December 31, 1999 are as follows:

<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
COST FAIR VALUE
--------- ----------
($ IN MILLIONS)
<S> <C> <C>
Due in one year or less..................................... $ 67.9 $ 68.7
Due after one year through five years....................... 953.5 941.0
Due after five years through ten years...................... 1,468.7 1,419.5
Due after ten years......................................... 592.7 564.5
-------- --------
Subtotal.......................................... 3,082.8 2,993.7
Mortgage and asset-backed-securities........................ 506.8 485.8
-------- --------
$3,589.6 $3,479.5
======== ========
</TABLE>

F-37
<PAGE> 101
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Mortgage loans on real estate in the Closed Block at December 31, 1999 and
December 31, 1998 consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1999 1998
------------ ------------
($ IN MILLIONS)
<S> <C> <C>
Commercial mortgage loans................................... $394.9 $382.0
Agricultural and other loans................................ 62.4 73.3
------ ------
Subtotal.......................................... 457.3 455.3
Less: valuation allowances.................................. 14.3 23.6
------ ------
Mortgage loans, net of valuation allowances................. $443.0 $431.7
====== ======
</TABLE>

An analysis of the valuation allowances for the year ended December 31,
1999 and for the period from November 16, 1998 through December 31, 1998 is as
follows:

<TABLE>
<CAPTION>
1999 1998
------ ------
($ IN MILLIONS)
<S> <C> <C>
Beginning balance........................................... $23.6 $24.7
Increase (decrease) in allowance............................ 0.4 (0.8)
Reduction due to pay downs and pay offs..................... -- (0.3)
Transfer to real estate..................................... (9.7) --
----- -----
Balance, December 31........................................ $14.3 $23.6
===== =====
</TABLE>

Impaired mortgage loans along with related valuation allowances were as
follows as of December 31, 1999 and December 31, 1998:

<TABLE>
<CAPTION>
1999 1998
------ ------
($ IN MILLIONS)
<S> <C> <C>
Investment in impaired mortgage loans (before valuation
allowances):
Loans that have valuation allowances........................ $108.7 $117.9
------ ------
Loans that do not have valuation allowances................. 20.1 31.1
Subtotal.......................................... 128.8 149.0
------ ------
Valuation allowances........................................ (25.6) (17.5)
Impaired mortgage loans, net of valuation allowances........ $103.2 $131.5
====== ======
</TABLE>

For the year ended December 31, 1999, the Closed Block's average recorded
investment in impaired mortgage loans was $117.4 million and the Closed Block
recognized $11.6 million on impaired loans. During the period from November 16,
1998 through December 31, 1998, the Closed Block's average recorded investment
in impaired mortgage loans was approximately $138.3 million and the Closed Block
recognized $1.8 million of interest income on impaired loans.

At December 31, 1999 and December 31, 1998 the carrying values of mortgage
loans in the Closed Block which were non-income producing for the twelve months
preceding such date was $0.0 million and $0.5 million.

At December 31, 1999 and December 31, 1998, the Closed Block had
restructured mortgage loans of $43.5 million and $54.8 million. Interest income
of $5.0 million and $0.7 million was recognized on such loans for the year ended
December 31, 1999 and during the period from November 16, 1998 through December
31, 1998, respectively. Gross interest income on these loans that would have
been recorded in accordance with the original terms of such loans amounted to
approximately $5.4 million and $0.8 million for the respective periods.

F-38
<PAGE> 102
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

21. STOCK INCENTIVE PLAN

In November 1998, the Company adopted a stock incentive plan (the "SIP")
for employees of the Company and its subsidiaries and certain career sales
agents to enable those employees and agents to acquire shares of common stock of
the Company. Pursuant to the SIP, the Company, upon approval of the New York
State Insurance Department, may grant 2,361,908 options to acquire common stock,
which represents 5 percent of the number of shares of common stock outstanding
as of the date of the Company's initial public offering. Options granted will
either be Incentive Stock Options (ISOs) qualifying under Section 422(a) of the
Internal Revenue Code, or Non-Qualified Stock Options (NQSOs).

Pursuant to the SIP, ISOs and NQSOs may be granted at a price not less than
100 percent of the fair value of the Company's common stock as determined on the
date of grant. One-third of each ISO and NQSO granted pursuant to the SIP shall
become exercisable on each of the first three anniversaries of the date such
option is granted and will remain exercisable for a period not to exceed 10
years from the date of grant.

On November 17, 1999, the Board of Directors of the Company made the
initial grants of options under the SIP to certain key employees of the Company
and its subsidiaries and certain career sales agents to acquire 1,438,500 and
147,900 shares of the Company's common stock, respectively, at an exercise price
of $30.50 per share. No other grant of options has been made under the plan.

A summary of the SIP at December 31, 1999 and the changes therein since
November 17, 1999 (the date of the initial grants under the SIP) is presented
below:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF EXERCISE PRICE
SHARES PER SHARE
--------- --------------
<S> <C> <C>
Outstanding, beginning of the year.......................... 0
Granted..................................................... 1,586,400 $30.50
Exercised................................................... 0
Forfeited, expired or cancelled............................. (5,100) 30.50
--------- ------
Outstanding, end of year.................................... 1,581,300 $30.50
Exercisable at end of year.................................. 0
</TABLE>

SFAS 123 "Accounting for Stock-Based Compensation", issued in October 1995,
prescribes accounting and reporting standards for employee stock-based
compensation plans, as well as transactions in which an entity issues equity
instruments to acquire goods or services from non-employees. However, for
employee stock based compensation plans, SFAS 123 permits companies, at their
election, to continue to apply the accounting prescribed by Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB
25), which was issued and effective since 1972. SFAS 123 provides no similar
election with respect to transactions in which an entity issues equity
instruments to acquire goods or services from non-employees. For companies
electing to apply the accounting prescribed by APB 25 to their employee
stock-based compensation plans, however, SFAS 123 requires that pro forma
disclosure be made of net income and earnings per share as if the accounting
prescribed by SFAS 123 had been adopted. Based on definition of an "employee"
prescribed in the Internal Revenue Code, career sales agents do not qualify as
employees.

At the effective date of the initial grants of options pursuant to the SIP,
the Company elected to apply the accounting prescribed by APB 25 to option
grants to employees and, accordingly, make the aforementioned pro forma
disclosures. Pursuant to the requirements of APB 25, the options granted by the
Company under the SIP to employees qualify as non-compensatory. Accordingly, the
Company is not required to recognize any compensation expense with respect to
such option grants. With respect to grants of options under the SIP to career
sales agents, the Company adopted the accounting provisions of SFAS 123.
Pursuant to the guidance in SFAS No. 123 and related interpretations, vesting
provisions attached to stock based compensation issued to non-employees
constitute a performance based condition which requires variable plan
accounting. Under variable plan accounting, the fair value of the option grant
must be re-measured at the end of each accounting period, until the options are
100 percent vested. Accordingly, the compensation cost charged to expense during
any particular accounting period represents the difference between the vested
percentage of the fair value of the options at the end of the accounting period
and the cumulative compensation cost charged to expense in prior periods.
Compensation cost is determined based on the fair value of such options using a
Black-Scholes option pricing model (see below for further discussion regarding
how fair value is determined). Such compensation cost is required to be
recognized over the vesting period. Compensation expense related to the option
grants to career sales agents grants in 1999 was immaterial.

F-39
<PAGE> 103
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table presents the net income and net income per share of the
Company for 1999 on a pro forma basis as if the accounting prescribed by SFAS
123 had been applied to the options granted to employees under the SIP and
outstanding at December 31, 1999:

<TABLE>
<CAPTION>
DECEMBER 31,
1999
------------
<S> <C>
Net income.................................................. $248.2
Net income per share:
Basic..................................................... $ 5.25
Diluted................................................... $ 5.19
</TABLE>

The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 1999: exercise price of $30.50, dividend yields
of 1.4%, expected volatility of 33.36%, interest rate of 6.19%, and expected
option terms of 6.88 years for both the employee and career sales agent grants.
The fair value of options granted during the year determined using the
Black-Scholes pricing model was $10.53 per share.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee and career sales agent options have
characteristics different than those of traded options, and because changes in
the subjective input assumptions can materially affect the fair value estimate,
in management's opinion, the existing models do not necessarily provide a
reliable single measure of the fair value of its stock options.

22. PRO FORMA INFORMATION (UNAUDITED)

The unaudited pro forma earnings information reported in the statements of
income and comprehensive income give effect to the Transaction as if it occurred
January 1, 1998. Accordingly, pro forma earnings reflect the elimination of
demutualization expenses, which were assumed to have been fully incurred prior
to January 1, 1998, and the elimination of the differential earnings (surplus)
tax applicable to mutual life insurance companies. MONY Life is no longer
subject to the differential earnings (surplus) tax as a stock life insurance
company.

The unaudited pro forma information is provided for informational purposes
only and should not be construed to be indicative of the Company's consolidated
results of operations had the Transaction been consummated on the date assumed,
and does not in any way represent a projection or forecast of the Company's
consolidated results of operations as of any future date or for any future
period.

The pro forma revenues and expenses of the Closed Block for the year ended
December 31, 1998, based on certain estimates and assumptions that management
believes are reasonable, as if the Closed Block had been established on January
1, 1998, are summarized below ($ in millions):

<TABLE>
<S> <C>
Premiums.................................................... $ 643.9
Net investment income....................................... 373.8
Net realized gains on investments........................... 10.2
Other income................................................ 1.9
--------
Total revenues............................................ 1,029.8
--------
Benefits to policyholders................................... 665.4
Interest credited to policyholders' account balances........ 8.7
Amortization of deferred policy acquisition costs........... 78.8
Dividends to policyholders.................................. 214.9
Other operating costs and expenses.......................... 9.8
--------
Total benefits and expenses............................... 977.6
--------
Contribution from the Closed Block..................... $ 52.2
========
</TABLE>

23. MONY GROUP INC. CONDENSED FINANCIAL INFORMATION

Set forth below are unconsolidated condensed financial statements of the
Holding Company. The significant accounting policies used in preparing these
financial statements are substantially the same as those used in the preparation
of consolidated financial statements of the Company except that the Holding
Company's subsidiary's are carried under the equity method.

F-40
<PAGE> 104
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table presents the condensed balance sheet of the MONY Group
as of December 31, 1999 and 1998:

<TABLE>
<CAPTION>
1999 1998
-------- --------
($ IN MILLIONS)
<S> <C> <C>
ASSETS
Cash and cash equivalents................................... $ 33.4 $ 58.9
Investment in subsidiary.................................... 1,792.7 1,727.0
Other assets................................................ -- --
-------- --------
Total assets...................................... $1,826.1 $1,785.9
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable............................................ 0.6 8.3
Total shareholders' equity.................................. 1,825.5 1,777.6
-------- --------
Total liabilities and shareholders' equity........ $1,826.1 $1,785.9
======== ========
</TABLE>

The following table presents the condensed statements of income for the
years ended December 31, 1999 and 1998:

<TABLE>
<CAPTION>
1999 1998(1)
------ -------
($ IN MILLIONS)
<S> <C> <C>
REVENUES:
Net investment income....................................... $ 2.3 $ 0.9
------ ------
Total revenues.................................... 2.3 0.9
EXPENSES:
Other operating expenses.................................... 0.6 --
------ ------
Total expenses.................................... 0.6 --
------ ------
Equity in net income of subsidiary.......................... 247.5 163.4
------ ------
Income before income taxes.................................. 249.2 164.3
------ ------
Income tax expense.......................................... 0.6 0.3
------ ------
Net income.................................................. $248.6 $164.0
====== ======
</TABLE>

- ---------------
(1) The Holding Company effectively commenced operations during 1998 -- see Note
1.

The following table presents the condensed statements of cash flows for the
years ended December 31, 1999 and 1998:

<TABLE>
<CAPTION>
1999 1998(1)
------- -------
($ IN MILLIONS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................. $ 248.6 $ 164.0
Adjustments to reconcile net income to net cash provided by
operating activities
Equity in net income of subsidiary........................ (247.5) (163.4)
Change in other assets and accounts payable............... -- 9.9
Change in current taxes payable........................... 0.3 0.3
------- -------
Net cash provided by operating activities................... 1.4 10.8
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital contribution to subsidiary........................ -- (221.9)
------- -------
Net cash used in investing activities....................... -- (221.9)
</TABLE>

F-41
<PAGE> 105
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
1999 1998(1)
------- -------
($ IN MILLIONS)
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds for initial public offering.................. -- 282.5
Dividends paid............................................ (18.9) --
Payment to eligible policyholders......................... (8.0) (12.5)
------- -------
Net cash (used in)/provided by financing activities......... (26.9) 270.0
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS........ (25.5) 58.9
Cash and cash equivalents, beginning of year................ 58.9 --
------- -------
Cash and cash equivalents, end of year...................... $ 33.4 $ 58.9
======= =======
</TABLE>

- ---------------
(1) The Holding Company effectively commenced operations during 1998 -- see Note
1.

The Holding Company's cash flows consist of dividends from MONY Life, if
declared and paid, and investment income on assets held by the Holding Company,
offset by expenses incurred for salaries and other expenses. As a holding
company, the Holding Company's ability to meet cash requirements and pay
dividends depends upon the receipt of dividends and other payments from MONY
Life. The payment of dividends by MONY Life to the Holding Company is regulated
under state insurance law. The New York Superintendent has broad discretion to
determine whether the financial condition of a stock life insurance company
would support the payment of dividends to its shareholders. The New York
Insurance Department has established informal guidelines for the
Superintendent's determinations which focus upon, among other things, the
overall financial condition and profitability of the insurer under statutory
accounting practices. MONY Life will be permitted to pay shareholder dividends
to the Holding Company only if it files notice of its intention to declare such
a dividend and the amount thereof with the New York Superintendent and the New
York Superintendent does not disapprove the distribution. In addition, the state
insurance laws contain similar restrictions on the ability of MONY Life's
insurance subsidiaries to pay dividends to MONY Life.

24. EARLY RETIREMENT PROGRAM

On June 30, 1999, the Company announced a voluntary early retirement
program for approximately 500 eligible employees of which 300 employees elected
to participate. The program is part of an overall companywide realignment of
staff and resources, which may also include the elimination and/or shifting of
certain job functions and the addition of employees with new skill sets. The
Company has recorded a one-time restructuring charge of $59.7 million pre-tax in
the third quarter of 1999.

25. SUBSEQUENT EVENTS

a) On January 12, 2000, the Company announced a plan to repurchase up to 5%
of the outstanding common shares of the Company or approximately 2.4 million
shares. Under the plan, the Company may repurchase such shares from time to
time, as market conditions and other factors warrant. The plan may be
discontinued at any time.

b) In January 2000, the New York Insurance Department approved, and MONY
Life paid, a dividend to MONY Group in the amount of $75 million.

c) On January 12, 2000, the Holding Company filed a registration statement
on Form S-3 with the Securities and Exchange Commission (the "SEC") to register
certain securities. This registration, known as a "Shelf Registration", provides
the Company with the ability to offer various securities to the public, when it
deems appropriate, to raise proceeds up to an amount not to exceed $1.0 billion
in the aggregate for all issuances of securities thereunder. It is the intention
of the Company to use this facility to raise proceeds for mergers and
acquisitions and for other general corporate matters, as it considers necessary.

d) On March 8, 2000, the Holding Company issued $300.0 million principal
amount of senior notes (the "Senior Notes") pursuant to the aforementioned Shelf
Registration. The Senior Notes mature on March 15, 2010 and bear interest at
8.35% per annum. The principal amount of the Senior Notes is payable at maturity
and interest is payable semi-annually. The net proceeds to the Company from the
issuance of the Senior Notes, after deducting underwriting commissions and other
expenses (primarily legal and accounting fees), were approximately $297.0
million. Approximately $267.6 million of the net proceeds from the issuance of
the Senior Notes was used by the Holding Company to finance the repurchase, on
March 8, 2000, by MONY Life of all of its outstanding $115.0 million face amount
9.5% coupon surplus notes, and a $116.5 million face amount of its $125.0
million face amount 11.25% coupon surplus notes (hereafter referred to as the
"9.5% Notes" and "11.25% Notes", respectively), which were outstanding at
December 31, 1999. See Note 16 to the Consolidated Financial Statements. The
balance of the net proceeds from the issuance of the Senior Notes will be used
by the Holding Company for general corporate purposes.

F-42
<PAGE> 106
THE MONY GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

26. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The quarterly results of operations for the years ended December 31, 1999
and 1998 are summarized in the table below:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
--------- -------- ------------- ------------
($ IN MILLIONS)
<S> <C> <C> <C> <C>
1999
Total revenues......................................... $259.2 $291.4 $293.8 $401.2
Income before extraordinary item....................... 46.0 61.4 29.5 113.7
Extraordinary item -- demutualization expenses, net.... -- -- (1.9) (0.1)
Net income............................................. 46.0 61.4 27.6 113.6
Dividends declared per share........................... $ 0.10 $ 0.10 $ 0.10 $ 0.10
1998
Total revenues......................................... $498.0 $546.5 $463.4 $348.3
Income before extraordinary item....................... 53.4 74.7 41.2 21.9
Extraordinary item -- demutualization expenses, net.... (5.1) (4.6) (5.8) (11.7)
Net income............................................. 48.3 70.1 35.4 10.2
</TABLE>

F-43
<PAGE> 107

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTIONS
------- ------------------------------------------------------------
<C> <S> <C>
2.1 Plan of Demutualization, as amended*
3.1 Form of Amended and Restated Certificate of Incorporation of
the Company*
3.2 Form of By-laws of the Company, as amended*
3.3 Amendments to By-laws of the Company
4.1 Form of Certificate for the Common Stock, par value $0.01
per share*
4.2 Form of MONY Note*
4.3 Form of Warrant*
10.1 Investment Agreement, dated as of December 30, 1997, among
MONY, the Holding Company and GS Mezzanine Partners, GS
Mezzanine Partners Offshore, L.P., Stone Street Fund 1997,
L.P. and Bridge Street Fund 1997, L.P.*
10.2 Registration Rights Agreement dated as of December 30, 1997,
by and among MONY, the Holding Company and the Investors*
10.3 Fiscal Agency Agreement dated as of December 30, 1997, by
and among MONY and Citibank, N.A.*
10.4 Amended and Restated Reinsurance Agreement, effective as of
January 1, 1994, between MONY and Life Reassurance
Corporation of America*
10.5 Portfolio Indemnity Reinsurance Agreement, effective as of
December 30, 1995, between MONY and The Guardian Life
Insurance Company of America, and all amendments thereto*
10.6 Amendment Eight to the Amended and Restated Portfolio
Indemnity Reinsurance Agreement, effective as of December
31, 1995, between MONY and The Guardian Life Insurance
Company of America*
10.7 Amendment Nine to the Amended and Restated Portfolio
Indemnity Reinsurance Agreement, dated as of December 31,
1995, between MONY and The Guardian Life Insurance Company
of America*
10.8 Amended and Restated Reinsurance Agreement (Amendment
Eleven), effective as of December 31, 1995, between MONY and
Lyndon Life Insurance Company*
10.9 Assignment and Novation Agreement, effective January 1,
1996, by and among MONY, Lyndon Life Insurance Company and
RGA Reinsurance Company*
10.10 Amendment Twelve to the Amended and Restated Reinsurance
Agreement, effective as of January 1, 1996, between MONY and
RGA Reinsurance Company*
10.11 Amendment Thirteen to the Amended and Restated Reinsurance
Agreement, effective as of January 1, 1996, between MONY and
RGA Reinsurance Company*
10.12 Agreement of Lease, dated as of December 17, 1990, between
1740 Broadway Associates L.P. and MONY, and all amendments
thereto*
10.13 Amendment to Agreement of Lease, dated as of April 26, 1996,
between 1740 Broadway Associates L.P. and MONY*
10.14 Second Amendment to Agreement of Lease, date as of August 6,
1996, between 1740 Broadway Associates L.P. and MONY*
10.15 Third Amendment to Agreement of Lease, dated as of December
18, 1996, between 1740 Broadway Associates L.P. and MONY*
10.16 Fourth Amendment to Agreement of Lease, dated as of January
14, 1997, between 1740 Broadway Associates L.P. and MONY*
10.17 Fifth Amendment to Agreement of Lease, dated as of May 30,
1997, between 1740 Broadway Associates L.P. and MONY*
10.18 Letter Agreement, dated as of April 26, 1996, to accompany
Amendment to Agreement of Lease, dated as of April 26, 1996,
between 1740 Broadway Associates L.P. and MONY*
10.19 Letter, dated as of December 18, 1996, amending Letter
Agreement, dated as of April 26, 1996, to accompany First
Amendment to Agreement of Lease, dated as of April 26, 1996,
between 1740 Broadway Associates L.P. and MONY*
10.20 Letter, dated as of January 14, 1997, amending Letter
Agreement, dated as of April 26, 1996, to accompany
Amendment to Agreement of Lease, dated as of April 26, 1996,
between 1740 Broadway Associates L.P. and MONY*
10.21 Agreement of Lease, dated as of December 21, 1988, between
Continental Towers and MONY, and all amendments thereto*
10.22 First Amendment to Agreement of Lease, dated as of January
14, 1994, between Continental Towers and MONY*
</TABLE>

E-1
<PAGE> 108

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTIONS
------- ------------------------------------------------------------
<C> <S> <C>
10.23 Second Amendment to Agreement of Lease, dated as of October
15, 1997, between Continental Towers and MONY*
10.24 1998 Stock Incentive Plan*
10.25 Asset Transfer and Acquisition Agreement, dated as of
December 31, 1993, by and among MONY, AEGON USA, Inc. and
AUSA Life Insurance Company, Inc.*
10.26 Series A Note Purchase Agreement, dated as of December 31,
1993, by and between AEGON USA, Inc. and MONY*
10.27 Series B Note Purchase Agreement, dated as of December 31,
1993, by and between AEGON USA, Inc. and MONY*
10.28 Fiscal Agency Agreement, dated as of August 15, 1994,
between MONY and The Chase Manhattan Bank, N.A.*
10.29 Excess Benefit Plan for MONY Employees*
10.30 Form of MONY Deferred Compensation Plan Agreement for Key
Employees*
10.31 Form of MONY Deferred Compensation Plan Agreement for MONY
Trustees*
10.32 1988 Equity Share Plan*
10.33 Form of Equity Share Plan Deferred Compensation Agreement*
10.34 Split Dollar Life Insurance Plan*
10.35 Form of Employment Agreement applicable to Messrs. Roth,
Levine and Foti*
10.36 Form of Employment Agreement applicable to Messrs. Conklin,
Connors, Mulroy, Waldron, Hall and Daddario*
10.37 Form of Shareholder Rights Agreement*
10.38 Letter Agreement, dated June 25, 1997, between MONY and The
Chase Manhattan Bank*
10.39 Letter Agreement, dated June 19, 1997, between MONY and
Fleet Bank*
10.40 Letter Agreement, dated June 30, 1997, between MONY and
Citibank, N.A.*
10.41 Letter Agreement, dated June 30, 1997, between MONY and
Mellon Bank*
10.42 Letter Agreement, dated August 6, 1997, between MONY and
State Street Bank and Trust Company*
10.43 The MONY Group Inc. Annual Incentive Compensation Plan*
10.44 Form of Change in Control Employment Agreements*
10.45 Senior Note Indenture between The MONY Group Inc., and The
Chase Manhattan Bank, as Trustee**
10.46 The MONY Group Inc. 1998 Stock Incentive Plan***
10.47 The Mutual Life Insurance Company of New York Plan of
Reorganization Under Section 7312 of the New York Insurance
Law, as Adopted on August 14, 1998, and Amended on September
9, 1998****
21.1 Subsidiaries of the registrant
27.1 Financial Data Schedule
</TABLE>

- ---------------

* Incorporated herein by reference to the corresponding Exhibit Number
to the Company's Registration Statement on Form S-1, Registration
Number 333-63835.

** Incorporated herein by reference to Exhibit Number 4.1 to the
Company's Registration Statement on Form S-3, Registration Number
333-94487

*** Incorporated herein by reference to Exhibit Number 4.1 to the
Company's Registration Statement on Form S-8, Registration Number
333-30898

**** Incorporated herein by reference to Exhibit Number 4.1 to the
Company's Registration Statement on Form S-8, Registration Number
333-30892

E-2
<PAGE> 109

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New
York, New York on March 20, 2000.

THE MONY GROUP INC.

By: /s/ MICHAEL ISOR ROTH
----------------------------------------
Name: Michael Isor Roth
Title: Chairman of the Board and Chief
Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed on March 20, 2000 by the following persons on behalf of
the Registrant and in the capacities indicated.

<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>

/s/ MICHAEL ISOR ROTH Chairman of the Board and Chief Executive Officer;
- ----------------------------------------------------- Director (Principal Executive Officer)
Michael Isor Roth

/s/ RICHARD DADDARIO Executive Vice President and Chief Financial Officer
- ----------------------------------------------------- (Principal Financial Officer)
Richard Daddario

/s/ LARRY COHEN Vice President and Controller (Principal Accounting
- ----------------------------------------------------- Officer)
Larry Cohen

/s/ TOM HANS BARRETT Director
- -----------------------------------------------------
Tom Hans Barrett

/s/ DAVID LINCOLN CALL Director
- -----------------------------------------------------
David Lincoln Call

/s/ GLEN ROBERT DURHAM Director
- -----------------------------------------------------
Glen Robert Durham

/s/ JAMES BERNARD FARLEY Director
- -----------------------------------------------------
James Bernard Farley

/s/ SAMUEL JOSEPH FOTI President and Chief Operating Officer and Director
- -----------------------------------------------------
Samuel Joseph Foti

/s/ ROBERT HOLLAND, JR. Director
- -----------------------------------------------------
Robert Holland, Jr.

/s/ JAMES LAWRENCE JOHNSON Director
- -----------------------------------------------------
James Lawrence Johnson

/s/ FREDERICK WILKINSON KANNER Director
- -----------------------------------------------------
Frederick Wilkinson Kanner

/s/ ROBERT RAYMOND KILEY Director
- -----------------------------------------------------
Robert Raymond Kiley
</TABLE>

S-1
<PAGE> 110

<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
/s/ KENNETH MARC LEVINE Executive Vice President and Chief Investment Officer
- ----------------------------------------------------- and Director
Kenneth Marc Levine

/s/ JOHN ROBERT MEYER Director
- -----------------------------------------------------
John Robert Meyer

/s/ JANE CAHILL PFEIFFER Director
- -----------------------------------------------------
Jane Cahill Pfeiffer

/s/ THOMAS CHARLES THEOBALD Director
- -----------------------------------------------------
Thomas Charles Theobald
</TABLE>

S-2

<PAGE> 1
Exhibit 3.3

AMENDMENTS TO BY-LAWS

Section 1.04, Quorum. A stockholders' meeting duly called shall not be
organized for the transaction of business unless a quorum is present. Except as
otherwise expressly provided by law, the Amended and Restated Certificate of
Incorporation, these By-laws, as amended (the "By-laws"), or any certificate
filed under Section 151(g) of the Delaware General Corporation Law (the
""DGCL") (or its successor statute as in effect from time to time) or in
instances of a separate class vote, the presence in person or by proxy of
holders of record entitled to exercise at least one-third of the voting power
of the Corporation shall constitute a quorum for such meeting. The stockholders
present at a duly organized meeting can continue to do business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave
less than a quorum. If a meeting cannot be organized because a quorum has not
attended, stockholders representing a majority of the voting power of the
stockholders present may adjourn or, in the absence of a decision by the
majority, any officer entitled to preside at such meeting may adjourn, the
meeting from time to time to such time (not more than 30 days after the
previously adjourned meeting) and place as such stockholders or officer may
determine, without notice other than by announcement at the meeting of the time
and place of the adjourned meeting.

* * * *

Section 1.08. Proxies. Any stockholder entitled to vote at any meeting of the
stockholders may, by (a) a written instrument signed by such stockholder or his
or her attorney-in-fact, or (b) transmitting or authorizing the transmission of
a telegram, cablegram, or other means of electronic transmission (which may
include telephone, datagram, or communication through the internet) to the
person who will be the holder of the proxy or to an agent duly authorized by
the person who will be the holder of the proxy, together with authenticating
information deemed appropriate by the inspectors or other persons determining
that such transmission was authorized by the stockholder, authorize another
person or persons to vote at any such meeting for him or her by proxy. No such
proxy shall be voted after the expiration of three years from the date of such
proxy, unless such proxy provides for a longer period. Every proxy shall be
revocable at the pleasure of the stockholder executing it, except in those
cases where applicable law provides that a proxy shall be irrevocable. A
stockholder may revoke any proxy which is not irrevocable by attending the
meeting and voting in person, by filing an instrument in writing revoking the
proxy, by transmitting or authorizing the transmission of a telegram,
cablegram, or other means of electronic transmission (which may include
telephone, datagram, or communication through the internet) revoking the proxy,
together with authenticating information deemed appropriate by the inspectors
or other persons determining that such transmission was authorized by the
stockholder or by filing another duly executed proxy bearing a later date with
the Secretary.

<PAGE> 1

EXHIBIT 21.1

THE MONY GROUP INC.

<TABLE>
<CAPTION>
NAME OF SUBSIDIARY STATE OF DOMICILE
------------------ -----------------
<S> <C>
MONY Life Insurance Company New York
MONY Life Insurance Company of America Arizona
Enterprise Capital Management, Inc. Georgia
Enterprise Fund Distributors, Inc. Delaware
MONY Brokerage, Inc. Delaware
MBI Insurance Agency of Alabama, Inc. Alabama
MBI Insurance Agency of Massachusetts, Inc. Massachusetts
MBI Insurance Agency of New Mexico, Inc. New Mexico
MBI Insurance Agency of Ohio, Inc. Ohio
MBI Insurance Agency of Texas, Inc. Texas
MBI Insurance Agency of Washington, Inc. Washington
MONY Assets Corp.(1) New York
MONY Benefits Management Corp.(2) Delaware
MONY International Holdings, Inc. Delaware
MONY Life Insurance Company of the Americas, Ltd. Cayman Islands
MONY Bank & Trust Company of the Americas, Ltd. Cayman Islands
MONY International Life Insurance Co. Seguros de Vida S.A. Argentina
MONY Consultoria e Corretagem de Seguros Ltda. Brazil
MONY Realty Partners, Inc. Delaware
MONY Securities Corporation(3) New York
Trusted Securities Advisors Corp.(4) Minnesota
Trusted Advisors Insurance Agency, Inc. Massachusetts
Trusted Investment Advisors Corp. Minnesota
Trusted Investment Advisors General Agency Corp. Minnesota
Sagamore Financial Corporation Ohio
U.S. Financial Life Insurance Company Ohio
Financial Marketing Agency, Inc. Ohio
1740 Advisers, Inc. New York
1740 Ventures, Inc. New York
- ---------------
(1) Formerly known as MONY Credit Corporation
(2) Formerly known as MONY Funding, Inc.
(3) Formerly known as MONY Securities Corp.
(4) Formerly known as CFS Brokerage Corp.
MONY CS, Inc.* Georgia
* Dissolved November 24, 1998
</TABLE>

<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED
INTERIM CONSOLIDATED BALANCE SHEET AND STATEMENTS OF INCOME AND COMPREHENSIVE
SUBSIDIARIES FORM 10-K FOR YEAR ENDED 12-31-99.
</LEGEND>
<MULTIPLIER> 1,000,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<DEBT-HELD-FOR-SALE> 3,067
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 520
<MORTGAGE> 1,270
<REAL-ESTATE> 347
<TOTAL-INVEST> 5,311
<CASH> 266
<RECOVER-REINSURE> 488<F1>
<DEFERRED-ACQUISITION> 558
<TOTAL-ASSETS> 24,753
<POLICY-LOSSES> 954
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 120
<POLICY-HOLDER-FUNDS> 1,943
<NOTES-PAYABLE> 245<F3>
0
0
<COMMON> 0
<OTHER-SE> 1,826
<TOTAL-LIABILITY-AND-EQUITY> 24,753
293<F4>
<INVESTMENT-INCOME> 527
<INVESTMENT-GAINS> 122
<OTHER-INCOME> 304
<BENEFITS> 147
<UNDERWRITING-AMORTIZATION> 70
<UNDERWRITING-OTHER> 537<F2>
<INCOME-PRETAX> 383
<INCOME-TAX> 132
<INCOME-CONTINUING> 251
<DISCONTINUED> 0
<EXTRAORDINARY> 2
<CHANGES> 0
<NET-INCOME> 249
<EPS-BASIC> 5.26
<EPS-DILUTED> 5.20
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>consists of amounts due from reinsures on paid and unpaid losses
<F2>consists of other operating cost and expenses
<F3>consists of long-term debt only
<F4>includes premiums and universal life and investment-type product policy fees.
</FN>

</TABLE>