<PAGE>
As filed with the Securities and Exchange Commission on April 18, 1996
Registration No. 2-86083
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Form N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. __ ( )
Post-Effective Amendment No. 15 ( X )
--
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 12 ( X )
NYLIAC MFA SEPARATE ACCOUNT-I
(Exact Name of Registrant)
NEW YORK LIFE INSURANCE AND
ANNUITY CORPORATION
(Name of Depositor)
51 Madison Avenue, New York, New York 10010
(Address of Depositor's Principal Office)
Depositor's Telephone Number: (212) 576-7000
Linda M. Reimer, Esq.
New York Life Insurance and Annuity Corporation
51 Madison Avenue
New York, New York 10010
(Name and Address of Agent for Service)
Copy to:
Michael Berenson, Esq. Michael J. McLaughlin, Esq.
Jorden Burt Berenson & Johnson, LLP Senior Vice President
1025 Thomas Jefferson St., N.W. and General Counsel
Suite 400 East New York Life Insurance Company
Washington, D.C. 20007 51 Madison Avenue
New York, New York 10010
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
It is proposed that this filing will become effective (check appropriate box)
__ immediately upon filing pursuant to paragraph (b) of Rule 485.
X on May 1, 1996 pursuant to paragraph (b) of Rule 485.
--
__ 60 days after filing pursuant to paragraph (a)(1) of Rule 485.
__ on ___________ pursuant to paragraph (a)(1) of Rule 485.
__ 75 days after filing pursuant to paragraph (a)(2) of Rule 485.
__ on ___________ pursuant to paragraph (a)(2) of Rule 485.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant
has registered an indefinite amount of the securities being offered pursuant to
this Registration Statement. On February 28, 1996, Registrant filed its Form
24F-2 for Registrant's most recent fiscal year.
<PAGE>
CROSS REFERENCE SHEET
INFORMATION REQUIRED IN A PROSPECTUS
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Item of Form N-4 Prospectus Caption
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1. Cover Page Cover Page
2. Definitions Definitions
3. Synopsis or Highlights Owner and Fund Expenses, Questions and
Answers About the Facilitator (R)
4. Condensed Financial Information Condensed Financial Information
5. General Description of Registrant, New York Life Insurance and
Depositor and Portfolio Companies Annuity Corporation;
The Separate Accounts;
New York Life MFA Series Fund, Inc.;
Voting Rights
6. Deductions & Expenses Charges and Deductions;
Owner and Fund Expenses
Taxes; Distributor of the Policies
7. General Description of Variable The Policies; Distributions Under
Annuity Contracts the Policies; Voting Rights;
Charges and Deductions;
The Fixed Account
8. Annuity Period Income Payments
9. Death Benefit Distributions Under the Policy
10. Purchases & Contract Value Policy Application and Premium Payments;
Accumulation Period
11. Redemptions Surrenders and Partial Withdrawals;
Income Payments;
Restriction Under the Texas
Optional Retirement Program;
Cancellations
12. Taxes Federal Tax Matters
13. Legal Proceedings Statement of Additional Information-
Legal Proceedings
14. Table of Contents of the Statement of Statement of Additional Information
Additional Information
</TABLE>
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INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
Statement of Additional
Item of Form N-4 Information Caption
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15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information & History New York Life MFA Series Fund, Inc.
18. Services Safekeeping of Separate Account
Assets
19. Purchase of Securities Being Offered Distributor of the Policies
20. Underwriters Distributor of The Policies
21. Calculation of Performation Data Investment Performance Calculations
22. Annuity Payments Valuation of Accumulation Units
23. Financial Statements Financial Statements
</TABLE>
<PAGE>
NYLIAC MFA SEPARATE ACCOUNT I
NYLIAC MFA SEPARATE ACCOUNT II
PROSPECTUS
FOR THE
FACILITATOR (R)*
MULTI-FUNDED RETIREMENT ANNUITY POLICIES
OFFERED BY
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
(A DELAWARE CORPORATION)
51 MADISON AVENUE, NEW YORK, NEW YORK 10010
This prospectus describes the Multi-Funded Retirement Annuity Policies
("Policies" or, individually, "Policy") offered by New York Life Insurance and
Annuity Corporation ("NYLIAC"). The Policies are primarily designed to assist
individuals in their retirement planning regardless of whether the individual
is covered under a plan which qualifies for special federal income tax
treatment.
Two types of Policies are described in this prospectus: A Single Premium
Policy and a Flexible Premium Policy. Sales of both types of Policies have
been discontinued, however, purchase payments are still being accepted under
outstanding Policies. For Policies issued under plans that qualify for special
federal income tax treatment for the participant, premium payments ("Purchase
Payments") under either type of Policy may be allocated in whole or in part to
the NYLIAC MFA Separate Account I ("Variable Account I"). For Policies that do
not qualify for special federal income tax treatment, Purchase Payments may be
allocated to the NYLIAC MFA Separate Account II ("Variable Account II").
Prior to the Retirement Date, the Policy Owner may direct that Purchase
Payments accumulate on a completely variable basis, a completely fixed basis,
or a combination variable and fixed basis. Annuity payments ("Income
Payments") for Qualified Policies may be elected to be received on a
completely variable basis, completely fixed basis, or a combined variable and
fixed basis; Income Payments for Non-Qualified Policies can be received on a
fixed basis and, subject to state filing and review, on a variable basis or on
a combined variable and fixed basis. The Policy Owner also has significant
flexibility in determining the frequency and amount of each Purchase Payment
and the Retirement Date on which Income Payments are scheduled to commence.
The Policy Value can be withdrawn in whole or in part before the Retirement
Date, although in certain circumstances withdrawals are subject to a surrender
charge and tax penalty. The Policy provides the flexibility necessary to
permit a Policy Owner to devise an annuity that best fits his or her needs.
Both Variable Account I and Variable Account II (collectively, the "Variable
Accounts") invest their assets in shares of the New York Life MFA Series Fund,
Inc. (the "Fund"), a mutual fund registered under the Investment Company Act
of 1940. The Fund has available to the Variable Accounts three investment
Portfolios: the Growth Equity Portfolio, the Bond Portfolio, and the Cash
Management Portfolio (the "Eligible Portfolios" or the "Portfolios"). The
Policy Value will vary in accordance with the investment performance of the
Portfolios selected by the Policy Owner, and the Policy Owner bears the entire
investment risk for any amounts allocated to the Variable Accounts.
This Prospectus sets forth the information that a prospective investor
should know before investing. A Statement of Additional Information about the
Policies and Variable Accounts is available free by writing NYLIAC at the
address above or by calling (212) 576-7243. The Statement of Additional
Information, which has the same date as this Prospectus, has been filed with
the Securities and Exchange Commission and is incorporated herein by
reference. The table of contents of the Statement of Additional Information is
included at the end of this Prospectus.
THIS PROSPECTUS MUST BE ATTACHED TO A CURRENT
PROSPECTUS FOR THE NEW YORK LIFE MFA SERIES FUND, INC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESMAN, OR OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON.
PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR FUTURE REFERENCE
THE DATE OF THIS PROSPECTUS IS MAY 1, 1996
*FACILITATOR (R) IS NYLIAC'S REGISTERED SERVICE MARK FOR THE POLICIES AND IS
NOT MEANT TO CONNOTE PERFORMANCE.
<PAGE>
TABLE OF CONTENTS
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DEFINITIONS................................................................ 3
POLICY OWNER AND FUND EXPENSES............................................. 5
QUESTIONS AND ANSWERS ABOUT THE FACILITATOR................................ 7
CONDENSED FINANCIAL INFORMATION............................................ 13
FINANCIAL STATEMENTS....................................................... 17
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION AND THE VARIABLE ACCOUNTS.. 18
New York Life Insurance and Annuity Corporation........................... 18
The Variable Accounts..................................................... 18
NEW YORK LIFE MFA SERIES FUND, INC. ....................................... 19
The Growth Equity Portfolio............................................... 19
The Bond Portfolio........................................................ 19
The Cash Management Portfolio............................................. 19
Additions, Deletions, or Substitutions of Investments..................... 20
Reinvestment.............................................................. 21
THE POLICIES............................................................... 21
Purpose of Policies....................................................... 21
Purchase Payments......................................................... 21
Total Disability Benefit Rider............................................ 22
Transfers................................................................. 22
Accumulation Period....................................................... 23
(a)Crediting of Net Purchase Payments.................................... 23
(b)Valuation of Accumulation Units....................................... 23
Policy Owner Inquiries.................................................... 23
CHARGES AND DEDUCTIONS..................................................... 23
Surrender Charges......................................................... 23
Exceptions to Surrender Charges........................................... 24
Other Charges............................................................. 25
Taxes..................................................................... 26
DISTRIBUTIONS UNDER THE POLICY............................................. 27
Surrenders and Withdrawals................................................ 27
(a)Surrenders............................................................ 28
(b)Partial Withdrawals................................................... 28
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(c)Periodic Partial Withdrawals.......................................... 28
(d)Hardship Withdrawals.................................................. 28
Cancellations............................................................. 28
Retirement Date........................................................... 29
Death Before Retirement................................................... 29
Income Payments........................................................... 30
(a)Election of Income Payment Options.................................... 30
(b)Fixed Income Payments................................................. 30
(c)Variable Income Payments.............................................. 31
(d)Value of Variable Income Payments..................................... 32
(e)Other Methods of Payment.............................................. 32
(f)Legal Developments Regarding Income Payments.......................... 32
(g)Proof of Survivorship................................................. 33
Delay of Payments......................................................... 33
Designation of Beneficiary................................................ 33
Restrictions Under the Texas Optional Retirement Program.................. 33
Restrictions Under Internal Revenue Code Section 403(b)(11)............... 33
THE FIXED ACCOUNT.......................................................... 34
(a) Interest Crediting................................................... 34
(b)Surrender Charges..................................................... 34
(c)Transfers to Investment Divisions..................................... 35
(d)General Matters....................................................... 35
FEDERAL TAX MATTERS........................................................ 36
Introduction.............................................................. 36
Taxation of Annuities in General.......................................... 36
Qualified Plans........................................................... 38
(a) Section 403(b) Plans................................................. 38
(b) Individual Retirement Annuities...................................... 38
(c) Corporate Pension and Profit-Sharing Plans and H.R. 10 Plans......... 38
(d) Deferred Compensation Plans.......................................... 38
DISTRIBUTOR OF THE POLICIES................................................ 39
VOTING RIGHTS.............................................................. 39
STATEMENT OF ADDITIONAL INFORMATION........................................ 40
</TABLE>
2
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DEFINITIONS
ACCUMULATION PERIOD--The period between the initial Purchase Date and the
Retirement Date.
ACCUMULATION UNIT--An accounting unit used to calculate the Policy Value prior
to the Retirement Date. Each Investment Division of each Variable Account has
a distinct Accumulation Unit value.
AGE--Age on the nearest birthday.
ALLOCATION ALTERNATIVES--The Investment Divisions of the applicable Variable
Account and the Fixed Account constitute the Allocation Alternatives.
ANNUITANT--A person whose life determines the duration of Income Payments
involving life contingencies, and upon whose death, prior to the Retirement
Date, benefits under the Policy are paid.
ANNUITY UNIT--An accounting unit used to calculate Variable Income Payments.
BENEFICIARY--The person to whom benefits may be paid upon the Policy Owner's
or the Annuitant's death. In the event a Beneficiary is not designated, the
Policy Owner or the estate of the Policy Owner is the Beneficiary.
BUSINESS DAY--Generally, any day on which the New York Stock Exchange is open
for trading except for the Friday after Thanksgiving and Christmas Eve. Our
Business Day ends at 4:00 p.m. Eastern Time or the closing of the New York
Stock Exchange, if earlier.
ELIGIBLE PORTFOLIOS ("PORTFOLIOS")--The available mutual fund Portfolios of
the New York Life MFA Series Fund, Inc. The New York Life MFA Series Fund,
Inc. currently has three separate Portfolios available to the Variable
Accounts: the Growth Equity Portfolio, the Bond Portfolio, and the Cash
Management Portfolio.
FIXED ACCOUNT--Assets of NYLIAC that are not segregated in any of the separate
accounts of NYLIAC.
FIXED INCOME PAYMENTS--Income Payments having a guaranteed amount.
FUND--New York Life MFA Series Fund, Inc., a diversified, open-end management
investment company which is advised by New York Life Insurance Company.
INCOME PAYMENTS--Periodic payments made by NYLIAC to the Payee.
INVESTMENT DIVISION ("DIVISION")--A division of each of the Variable Accounts.
There will be a separate Investment Division in each Variable Account for
Single and Flexible Premium Policies corresponding to each Eligible Portfolio.
Each Investment Division invests exclusively in shares of a specified Eligible
Portfolio.
NET PURCHASE PAYMENT--A Purchase Payment less any premiums for riders and less
any required state premium tax.
NON-QUALIFIED POLICIES--Policies that do not qualify for special federal
income tax treatment.
NYLIAC ("WE, US, OUR")--New York Life Insurance and Annuity Corporation, which
is a wholly-owned Delaware subsidiary of New York Life Insurance Company.
PAYEE--The person designated to receive payments under an Income Payment
option. The Payee may be the Policy Owner, the Annuitant, a Beneficiary or any
person designated by the Policy Owner.
3
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POLICY ANNIVERSARY--An anniversary of the Policy Date.
POLICY DATE--The date established when a Policy is issued, from which
subsequent Policy Years, months and anniversaries are measured, unless
otherwise indicated.
POLICY OWNER ("YOU, YOUR")--The person designated as the owner in the Policy
(or surviving spouse of the Policy Owner who is named as Beneficiary, or as
Beneficiary and Contingent Annuitant, and who becomes the new Policy Owner),
or as subsequently changed, and upon whose death prior to the Retirement Date
benefits under the Policy may be paid. Generally, NYLIAC will not issue a
Policy to joint owners. However, if NYLIAC makes an exception and issues a
jointly owned policy, ownership rights and privileges under the Policy must be
exercised jointly and benefits under the Policy will be paid upon the death of
any joint owner.
POLICY VALUE--The sum of the values on any day during the Accumulation Period
of the Accumulation Units, plus the amounts in the Fixed Account and interest
credited on such amounts.
POLICY YEAR--A year commencing on the Policy Date. Subsequent Policy Years
begin on each Policy Anniversary, unless otherwise indicated.
PURCHASE DATE--The Business Day on which a Purchase Payment is received by us
and credited under the Policy.
PURCHASE PAYMENTS--The premiums paid by the Policy Owner to NYLIAC.
QUALIFIED POLICIES--Policies issued under plans that qualify for special
federal income tax treatment.
RETIREMENT DATE--The date Income Payments are scheduled to begin under the
Policy.
SERVICE OFFICE--An office authorized by NYLIAC to receive applications and/or
Purchase Payments for the Policies.
VALUATION PERIOD--A period between two successive Business Days commencing at
the close of business on the first Business Day and ending at the close of
business of the following Business Day.
VARIABLE ACCOUNT I--NYLIAC MFA Separate Account I, a segregated asset account
established by NYLIAC to receive and invest Net Purchase Payments paid under
Qualified Policies.
VARIABLE ACCOUNT II--NYLIAC MFA Separate Account II, a segregated asset
account established by NYLIAC to receive and invest Net Purchase Payments paid
under Non-Qualified Policies.
VARIABLE INCOME PAYMENTS--Income Payments that have no predetermined or
guaranteed dollar amount. Variable Income Payments will vary in amount
depending upon the investment experience of the Growth Equity Portfolio. The
Policy Value you tell us to apply to provide Variable Income Payments under
either Single or Flexible Premium Policies will be used to purchase Annuity
Units in the Common Stock Investment Division for Single Premium Policies. The
amount of Variable Income Payments will increase or decrease according to the
value of the Annuity Units which reflects the investment experience of that
Common Stock Investment Division.
4
<PAGE>
NYLIAC MFA SEPARATE ACCOUNT I
NYLIAC MFA SEPARATE ACCOUNT II
STATEMENT OF ADDITIONAL INFORMATION
FACILITATOR(R)*
FOR THE
MULTI-FUNDED RETIREMENT ANNUITY POLICIES
OFFERED BY
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
(A DELAWARE CORPORATION)
MAY 1, 1996
This Statement of Additional Information is not a prospectus. Much of the
information contained in this Statement of Additional Information expands upon
subjects discussed in the current Facilitator Prospectus. Accordingly, this
Statement should be read in conjunction with the current Facilitator Prospec-
tus, dated May 1, 1996, which may be obtained by calling NYLIAC at (212) 576-
7243, or writing to New York Life Insurance and Annuity Corporation at 51 Mad-
ison Avenue, New York, New York 10010. Terms used in the current Facilitator
Prospectus are incorporated in this Statement.
TABLE OF CONTENTS
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THE POLICIES............................................................... 2
Total Disability Benefit Rider........................................... 2
Valuation of Accumulation Units.......................................... 2
Computation of Variable Income Payments.................................. 3
Contingent Annuitant..................................................... 4
INVESTMENT PERFORMANCE CALCULATIONS........................................ 4
Money Market Investment Division......................................... 4
Bond Investment Division Yields.......................................... 5
Bond and Common Stock Standard Total Return Calculations................. 6
Other Performance Data................................................... 7
NEW YORK LIFE MFA SERIES FUND, INC......................................... 8
GENERAL MATTERS............................................................ 8
FEDERAL TAX MATTERS........................................................ 9
Taxation of New York Life Insurance and Annuity Corporation.............. 9
Tax Status of the Policies............................................... 9
DISTRIBUTOR OF THE POLICIES................................................ 10
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS..................................... 10
STATE REGULATION........................................................... 10
RECORDS AND REPORTS........................................................ 11
LEGAL PROCEEDINGS.......................................................... 11
INDEPENDENT ACCOUNTANTS.................................................... 11
OTHER INFORMATION.......................................................... 11
FINANCIAL STATEMENTS....................................................... F-1
</TABLE>
* Facilitator(R) is NYLIAC's registered service mark for the Policies and is
not meant to connote performance.
<PAGE>
THE POLICIES
The following provides additional information about the Policies, to supple-
ment the description in the Prospectus, which may be of interest to some Pol-
icy Owners.
TOTAL DISABILITY BENEFIT RIDER
As described in the Prospectus, the Total Disability Benefit Rider credits
benefit amounts as Net Purchase Payments if the Annuitant is totally disabled
for at least six consecutive months. No benefit amounts will be credited to
the Policy after either the Retirement Date or, if earlier, the Policy Anni-
versary on which the Annuitant is Age 65. The Annuitant is considered to be
totally disabled if unable to perform his or her own occupation. The total
disability must be caused by an injury or sickness that first occurs after the
rider was issued. However, after total disability has lasted for two years,
the Annuitant will be deemed to be totally disabled only if unable to perform
any occupation for which he or she is reasonably suited based on education,
training and work experience. NYLIAC will not credit any benefit amounts in
connection with the following disabilities; (i) those that start prior to the
Annuitant's fifth birthday; (ii) those that are caused by an intentionally
self-inflicted injury; or (iii) those that are caused by act of war.
The benefit amount for each month during a period of total disability will
be determined as follows: (a) if total disability began 60 or more months af-
ter the rider is issued, the amount is one-sixtieth of the Basic Plan Premiums
(Purchase Payments less premium amounts paid for riders) paid or credited
within the 60 months before the disability began; (b) if total disability
starts more than 12 but within 60 months after the rider is issued, the amount
is the total of the Basis Plan Premiums paid or credited while the rider was
in effect divided by the number of full and partial months that the rider was
in effect; (c) if total disability began within 12 months after the rider was
issued, the amount will be the smaller of the total scheduled Basic Plan Pre-
miums for the first Policy Year divided by 12 or the total Basic Plan Premiums
paid while the rider was in effect divided by the number of full and partial
months that the rider was in effect. However, for a Flexible Premium Non-Qual-
ified Policy, the benefit amount will never be more than $1,250 in any policy
month. For a Flexible Premium Qualified Policy, the benefit amount will never
be more than the greater of $2,500 in any policy month or the pro rata monthly
amount permitted by law for the applicable tax qualified plan. (See "Federal
Tax Matters-Qualified Plans" at page 38 of the Prospectus.)
For Non-Qualified Policies, only total disabilities of the Primary Annuitant
(the person named as the Annuitant in the application for a Policy) are cov-
ered. However, previously, if the Contingent Annuitant became the Annuitant,
the Policy Owner could apply to NYLIAC to have a new rider included in the
Policy to cover the Contingent Annuitant. New sales of the Total Disability
Rider have been discontinued.
VALUATION OF ACCUMULATION UNITS
Accumulation Units are valued separately for each Investment Division of
each Variable Account. The method used for valuing Accumulation Units in each
Investment Division is the same. The value of each Accumulation Unit was arbi-
trarily set as of the date operations began for the Investment Division.
Thereafter, the value of an Accumulation Unit of an Investment Division for
any Valuation Period equals the value of an Accumulation Unit in that Invest-
ment Division as of the immediately preceding Valuation Period multiplied by
the "Net Investment Factor" for that Investment Division for the current Valu-
ation Period.
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<PAGE>
The Net Investment Factor for each Investment Division for any Valuation Pe-
riod is determined by dividing (a) by (b) and subtracting (c) from the result,
where:
(a) is the result of:
(1) the net asset value per share of the Eligible Portfolio shares
held in the Investment Division determined at the end of the current
Valuation Period, plus
(2) the per share amount of any dividend or capital gain distribution
made by the Eligible Portfolio for shares held in the Investment Divi-
sion if the "ex-dividend" date occurs during the current Valuation Pe-
riod, plus or minus (only in the case of Variable Account II Investment
Divisions),
(3) a charge or credit, if any, for taxes; and
(b) is the net result of:
(1) the net asset value per share of the Eligible Portfolio shares
held in the Investment Division determined as of the end of the immedi-
ately preceding Valuation Period, plus or minus (only in the case of
Variable Account II Investment Divisions),
(2) a charge or credit, if any, for taxes; and
(c) is a factor representing the charges deducted from the applicable In-
vestment Division on a daily basis. For Flexible Premium Policies the fac-
tor is equal, on an annual basis, to 1.75% of the daily net asset value of
Variable Accounts I and II, respectively. This factor represents a charge
of 1.25% for mortality and expense risks (of which .75% is attributable to
mortality risks and .50% to expense risks) and a charge of .50% for admin-
istrative services. For Single Premium Policies, such factor is equal, on
an annual basis, to 1.25% of the daily net asset value of Variable Accounts
I and II, respectively, and represents the charge for mortality and expense
risks (of which .75% is attributable to mortality risks and .50% to expense
risks). (See "Other Charges" at page 25 of the Prospectus.)
The Net Investment Factor may be greater or less than one. Therefore, the
value of an Accumulation Unit in an Investment Division may increase or de-
crease from Valuation Period to Valuation Period.
COMPUTATION OF VARIABLE INCOME PAYMENTS
Monthly Income Payments paid by NYLIAC on a variable basis are computed as
follows. The Policy Value (or portion of the Policy Value used to provide
Variable Income Payments) is applied under the table contained in the Policy
corresponding to the payment method elected by the Policy Owner. This will
produce a dollar amount which is the first monthly payment.
In order to determine subsequent monthly payments, the Policy is credited
with Variable Annuity Units in the Investment Divisions of the Variable Ac-
counts corresponding to the Growth Equity Portfolio. The Policy Value you tell
us to apply to provide Variable Income Payments under either Single or Flexi-
ble Premium Policies will be used to purchase Annuity Units in the Common
Stock Investment Division for Single Premium Policies. The amount of Variable
Income Payments will increase or decrease according to the value of the Annu-
ity Units which reflects the investment experience of that Common Stock In-
vestment Division. The number of Annuity Units credited is determined by di-
viding the first monthly payment by
3
<PAGE>
the value of one Annuity Unit on the Retirement Date. Thereafter, each monthly
payment is calculated by multiplying the number of Annuity Units so credited
by the value of an Annuity Unit on the last Business Day that is at least 10
calendar days prior to the date of that monthly payment.
For Variable Income Payment options, the value of Annuity Units in the Com-
mon Stock Investment Division is determined each Business Day by multiplying
the Annuity Unit Value for the immediately preceding Business Day by the prod-
uct of:
(i) the Net Investment Factor for the Common Stock Investment Division
adjusted to reflect a factor of 1.25% for the mortality and expense risk
charges deducted from the Variable Account on a daily basis, and
(ii) a discount factor of .99989255 (.99990575 if the Policy is issued
for delivery in Florida or Texas) to recognize the assumed investment re-
sult. Under these Policies, the assumed investment result is 4% (3 1/2% if
the Policy is issued for delivery in Florida or Texas). If the Net Invest-
ment Factor of the Common Stock Investment Division exceeds the assumed in-
vestment result on an annual basis, monthly payments will be increased. If
the Net Investment Factor is less, monthly payments will decrease.
CONTINGENT ANNUITANT
As described in the Prospectus, the Contingent Annuitant, who generally must
be the spouse of the Annuitant, is the person who becomes the Annuitant at the
death of the "Primary Annuitant" before the Retirement Date if the Policy
Owner is still living. The Primary Annuitant is the person named as the Annui-
tant in the application for a Non-Qualified Policy.
If prior to the Retirement Date, while the Policy Owner is still living, a
Contingent Annuitant is alive at the death of the Primary Annuitant, the pro-
ceeds of a Non-Qualified Policy will not become payable to the Beneficiary at
the death of the Primary Annuitant; instead, the Policy will continue in force
and the proceeds will become payable upon the death of the Contingent Annui-
tant, before the Retirement Date, or upon the death of the Policy Owner if
earlier. All Policy Owner rights and the benefits provided under the Policy
will continue in effect during the lifetime of the Contingent Annuitant, as
provided in the Policy, as if the Contingent Annuitant were the Annuitant, ex-
cept for the Total Disability Benefit Rider. (See "Total Disability Benefit
Rider" at page 22 of the Prospectus and at page 2 of this Statement of Addi-
tional Information.) After the Policy is issued, the Contingent Annuitant may
be deleted but not changed.
The named Contingent Annuitant will be considered deleted if a Policy would
not be treated as an annuity for federal income tax purposes should the Con-
tingent Annuitant become the Annuitant. Currently, the Policies do not provide
for the naming of Contingent Annuitants. (See "Federal Tax Matters" at page 36
of the Prospectus.)
INVESTMENT PERFORMANCE CALCULATIONS
MONEY MARKET INVESTMENT DIVISION
In accordance with regulations adopted by the Securities and Exchange Com-
mission, if NYLIAC discloses the Money Market Investment Division's current
annualized yield for a seven-day period, it is required to do so in a manner
which does not take into consideration
4
<PAGE>
any realized or unrealized gains or losses on shares of the Cash Management
Portfolio of the Fund or on its portfolio securities. This current annualized
yield is computed by determining the net change (exclusive of realized gains
or losses on the sale of securities and unrealized appreciation and deprecia-
tion) in the value of a hypothetical account having a balance of one unit of
the Money Market Investment Division at the beginning of such seven-day peri-
od, dividing such net change in account value by the value of the account at
the beginning of the period to determine the base period return and annu-
alizing this quotient on a 365-day basis. The net change in account value re-
flects the deductions for administrative services (for Flexible Premium Poli-
cies) and the mortality and expense risk charge and income and expenses ac-
crued during the period. Because of these deductions, the yield for the Money
Market Investment Division of a Variable Account will be lower than the yield
for the Cash Management Portfolio of the Fund.
The Securities and Exchange Commission also permits NYLIAC to disclose the
effective yield of the Money Market Investment Division for the same seven-day
period, determined on a compounded basis. The effective yield is calculated by
compounding the unannualized base period return by adding one to the base pe-
riod return, raising the sum to a power equal to 365 divided by 7, and sub-
tracting one from the result.
The yield on amounts held in a Money Market Investment Division normally
will fluctuate on a daily basis. Therefore, the disclosed yield for any given
past period is not an indication or representation of future yields or rates
of return. The Money Market Investment Division's actual yield is affected by
changes in interest rates on money market securities, average portfolio matu-
rity of the Cash Management Portfolio, the types and quality of portfolio se-
curities held by the Cash Management Portfolio, and its operating expenses.
For the seven-day period ending December 31, 1995, the Money Market Invest-
ment Divisions' annualized yields were 4.39% and 3.82% respectively, for Sin-
gle Premium and Flexible Premium Policies (both Variable Account I and Vari-
able Account II). For the same period, the effective yields were 4.48% and
3.90% respectively, for Single Premium and Flexible Premium Policies (both
Variable Account I and Variable Account II).
BOND INVESTMENT DIVISION YIELDS
NYLIAC may from time to time disclose the current annualized yield of the
Bond Investment Division for 30-day periods. The annualized yield of a Bond
Investment Division refers to the income generated by the Investment Division
over a specified 30-day period. Because the yield is annualized, the yield
generated by an Investment Division during the 30-day period is assumed to be
generated each 30-day period. The yield is computed by dividing the net in-
vestment income per accumulation unit earned during the period by the price
per unit on the last day of the period, according to the following formula:
YIELD = 2[(a-b+1)/6/-1]
---
cd
Where: a = net investment income earned during the period by the Portfolio at-
tributable to shares owned by the Bond Investment Division.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of accumulation units outstanding during
the period.
d = the maximum offering price per accumulation unit on the last day of
the period.
5
<PAGE>
Net Investment Income will be determined in accordance with rules estab-
lished by the Securities and Exchange Commission. Accrued expenses will in-
clude all recurring fees that are charged to all Policy Owner accounts. The
yield calculations do not reflect the effect of any surrender charges that may
be applicable to a particular Policy. Surrender charges range from 7% to 0% of
the amount of Policy Value withdrawn depending on the elapsed time since the
Policy was issued.
Because of the charges and deductions imposed by the Variable Account the
yield for the Investment Divisions will be lower than the yield for the corre-
sponding Portfolio of the Fund. The yield on amounts held in the Investment
Divisions normally will fluctuate over time. Therefore, the disclosed yield
for any given past period is not an indication or representation of future
yields or rates of return. The Bond Investment Division's actual yield will be
affected by the types and quality of portfolio securities held by the Bond
Portfolio of the Fund, and its operating expenses.
For the 30-day period ended December 31, 1995, the annualized yields for the
Bond Investment Divisions were 4.70% and 4.19% respectively, for Single Pre-
mium Policies and Flexible Premium Policies (both Variable Account I and Vari-
able Account II).
BOND AND COMMON STOCK STANDARD TOTAL RETURN CALCULATIONS
NYLIAC may from time to time also disclose average annual total returns for
one or more of the Bond or Common Stock Investment Divisions for various peri-
ods of time. Average annual total return quotations are computed by finding
the average annual compounded rates of return over one, five and ten year pe-
riods that would equate the initial amount invested to the ending redeemable
value, according to the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the one, five, or ten-year period, at the end of the
one, five, or ten-year period (or fractional portion thereof).
All recurring fees that are charged to all Policy Owner accounts are recog-
nized in the ending redeemable value. The average annual total return calcula-
tions will reflect the effect of surrender charges that may be applicable to a
particular period.
For the one, five, and ten year periods ending December 31, 1995, and the
period from January 23, 1984 to December 31, 1995, respectively, the average
annual total returns for the Single Premium Policies for the Bond Investment
Division were 8.88%, 7.88%, 7.80%, and 8.92%, respectively, for Variable Ac-
count I, and 8.88%, 7.88%, 7.80%, and 8.97%, respectively, for Variable Ac-
count II. For the same periods, the average annual total returns for Flexible
Premium Policies for the Bond Investment Division were 8.34%, 6.67%, 7.15%,
and 8.38%, respectively, for Variable Account I, and 8.34%, 6.67%, 7.15%, and
8.40%, respectively, for Variable Account II.
6
<PAGE>
For the one, five, and ten year periods ending December 31, 1995, and the
period from January 23, 1984 to December 31, 1995, respectively, the average
annual total returns for the Single Premium Policies for the Common Stock In-
vestment Division were 19.08%, 15.41%, 10.77%, and 10.65%, respectively, for
Variable Account I. For the same periods, the average annual total returns for
Flexible Premium Policies for the Common Stock Investment Division were
18.29%, 14.12%, 10.11%, and 10.10%, respectively, for Variable Account I.
For the one, five, and ten year periods ending December 31, 1995, and the
period from January 18, 1985 to December 31, 1995, respectively, the average
annual total returns for the Single Premium Policies for the Common Stock In-
vestment Division were 19.08%, 15.41%, 10.77%, and 10.60%, respectively, for
Variable Account II. For the same periods, the average annual total returns
for Flexible Premium Policies for the Common Stock Investment Division were
18.29%, 14.12%, 10.11%, and 9.96%, respectively, for Variable Account II.
OTHER PERFORMANCE DATA
NYLIAC may from time to time also disclose average annual total returns in a
non-standard format in conjunction with the standard format described above.
The nonstandard format will be identical to the standard format except that
the surrender charge percentage will be assumed to be 0%.
Using the nonstandard format, for the one, five, and ten year periods ending
December 31, 1995, and the period from January 23, 1984 to December 31, 1995,
respectively, the average annual total returns for the Single Premium Policies
for the Bond Investment Division were 17.07%, 8.54%, 7.80%, and 8.92%, respec-
tively, for Variable Account I, and 17.07%, 8.54%, 7.80%, and 8.97%, respec-
tively, for Variable Account II. For the same periods, the average annual to-
tal returns for Flexible Premium Policies for the Bond Investment Division
were 16.50%, 8.00%, 7.26%, and 8.38%, respectively, for Variable Account I,
and 16.50%, 8.00%, 7.26%, and 8.40%, respectively, for Variable Account II.
For the one, five, and ten year periods ending December 31, 1995, and the
period from January 23, 1984 to December 31, 1995, respectively, the average
annual total returns for the Single Premium Policies for the Common Stock In-
vestment Division were 28.04%, 16.12%, 10.77%, and 10.65%, respectively, for
Variable Account I. For the same periods, the average annual total returns for
Flexible Premium Policies for the Common Stock Investment Division were
27.41%, 15.54%, 10.22%, and 10.10%, respectively, for Variable Account I.
For the one, five, and ten year periods ending December 31, 1995, and the
period from January 18, 1985 to December 31, 1995, respectively, the average
annual total returns for the Single Premium Policies for the Common Stock In-
vestment Division were 28.04%, 16.12%, 10.77%, and 10.60%, respectively, for
Variable Account II. For the same periods, the average annual total returns
for Flexible Premium Policies for the Common Stock Investment Division were
27.41%, 15.54%, 10.22%, and 10.05%, respectively, for Variable Account II.
NYLIAC may from time to time also disclose cumulative total returns in con-
junction with the standard format described above. The cumulative returns will
be calculated using the following formula assuming that the surrender charge
percentage will be 0%.
7
<PAGE>
CTR = ERV/P-1
Where: CTR = the cumulative total return net of an Investment Division recur-
ring charges for the period
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the one, five, or ten-year period, at the end of
the one, five or ten-year period (or fractional portion thereof)
P = a hypothetical initial payment of $1,000.
All non-standard performance data will only be advertised if the standard per-
formance data for the same period, as well as for the required periods, is
also disclosed.
NEW YORK LIFE MFA SERIES FUND, INC.
The New York Life MFA Series Fund, Inc. (the Fund) is registered with the
Securities and Exchange Commission as a diversified open-end management in-
vestment company, but such registration does not signify that the Commission
supervises the management, or the investment practices or policies, of the
Fund.
The Fund currently issues its shares only to the Separate Accounts of
NYLIAC. Shares are sold and redeemed at the net asset value of the respective
Portfolio of the Fund.
GENERAL MATTERS
NON-PARTICIPATING. The Policies are non-participating; no dividends are pay-
able.
MISSTATEMENT OF AGE OR SEX. If the Annuitant's stated age, sex or both in
the Policy are incorrect, NYLIAC will change the benefits payable to those
which the Purchase Payments would have purchased for the correct age and sex.
Sex is not a factor when annuity benefits are based on unisex annuity payment
rate tables. (See "Income Payments--Legal Developments Regarding Income Pay-
ments" at page 32 of the Prospectus.)
ASSIGNMENTS. If permitted by the plan or by law for the plan indicated in
the application for the Policy, a Non-Qualified Policy or any interest in it,
may be assigned by the Policy Owner prior to the Retirement Date and during
the Annuitant's lifetime. NYLIAC will not be deemed to know of an assignment
unless it receives a copy of a duly executed instrument evidencing such as-
signment. Further, NYLIAC assumes no responsibility for the validity of any
assignment. (See "Federal Tax Matters--Taxation of Annuities in General" at
page 36 of the Prospectus.)
MODIFICATION. NYLIAC may not modify the Policy without the consent of the
Policy Owner except to make the Policy meet the requirements of the Investment
Company Act of 1940, or to make the Policy comply with any changes in the In-
ternal Revenue Code or as required by the Code or by any other applicable law
in order to continue treatment of the Policy as an annuity.
INCONTESTABILITY. The Policy will not be contested after it has been in
force during the lifetime of the Annuitant for 2 years from the Policy Date.
8
<PAGE>
FEDERAL TAX MATTERS
TAXATION OF NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
NYLIAC is taxed as a life insurance company under Part I of Subchapter L of
the Internal Revenue Code of 1986 (the "Code"). Since the Variable Accounts
are not entities separate from NYLIAC, and their operations form a part of
NYLIAC, they will not be taxed separately as "regulated investment companies"
under Sub-chapter M of the Code. Investment income and realized net capital
gains on the assets of the Variable Accounts are reinvested and are taken into
account in determining the Policy Value. As a result, such investment income
and realized net capital gains are automatically retained as part of the re-
serves under the Policy. Under existing federal income tax law, NYLIAC be-
lieves that Variable Account investment income and realized net capital gains
should not be taxed to the extent that such income and gains are retained as
part of the reserves under the policy.
TAX STATUS OF THE POLICIES
Section 817(h) of the Code requires that the investments of the Fund must be
"adequately diversified" in accordance with Treasury regulations in order for
the policies to qualify as annuity contracts under Section 72 of the Code. The
Variable Accounts, through the Fund, intend to comply with the diversification
requirements prescribed by the Treasury under Treasury Regulation Section
1.817-5, which affect how the Fund's assets may be invested. Although NYLIAC
is affiliated with the Fund's investment advisers, it does not control the
Fund or the Portfolios' investments.
Although the Treasury Department has issued regulations on the diversifica-
tion requirements such regulations do not provide guidance concerning the ex-
tent to which Policy Owners may direct their investments to particular sub-
accounts of a Variable Account, or the permitted number of such subaccounts.
It is unclear whether additional guidance in this regard will be issued in the
future. It is possible that if such guidance is issued, the Policy may need to
be modified to comply with such additional guidance. For these reasons, NYLIAC
reserves the right to modify the Policy as necessary to attempt to prevent the
Policy Owner from being considered the owner of the assets of the Variable Ac-
counts or otherwise to qualify the Policy for favorable tax treatment.
The Code also requires that non-qualified annuity contracts issued after
January 18, 1985, contain specific provisions for distribution of the policy
proceeds upon the death of any Policy Owner. In order to be treated as an an-
nuity contract for federal income tax purposes, the Code requires that such
Policies provide that (a) if any Policy Owner dies on or after the Retirement
Date and before the entire interest in the Policy has been distributed, the
remaining portion must be distributed at least as rapidly as under the method
in effect on the Policy Owner's death; and (b) if any Policy Owner dies before
the Retirement Date, the entire interest in the Policy must generally be dis-
tributed within 5 years after the Policy Owner's date of death. These require-
ments will be considered satisfied if the entire interest of the Policy is
used to purchase an immediate annuity under which payments will begin within
one year of the Policy Owner's death and will be made for the life of the Ben-
eficiary or for a period not extending beyond the life expectancy of the Bene-
ficiary. The Owner's Beneficiary is the person to whom ownership of the Policy
passes by reason of death and must be a natural person. If the Beneficiary is
the Policy Owner's surviving spouse, the Policy may be continued with the sur-
viving spouse as the new Policy Owner. Non-qualified Policies issued after
January 18, 1985, contain provisions intended to comply with these require-
ments of the Code. No regulations interpreting these requirements of the Code
have yet been issued and thus no
9
<PAGE>
assurance can be given that the provisions contained in such Policies issued
after January 18, 1985, satisfy all such Code requirements. The provisions
contained in non-qualified Policies issued after January 18, 1985, will be re-
viewed and modified if necessary to assure that they comply with the Code re-
quirements when clarified by regulation or otherwise.
Withholding of federal income taxes on the taxable portion of all distribu-
tions may be required unless the recipient elects not to have any such amounts
withheld and properly notifies NYLIAC of that election. Different rules may
apply to United States citizens or expatriates living abroad. In addition,
some states have enacted legislation requiring withholding.
Even if a recipient elects no withholding, special withholding rules may re-
quire NYLIAC to disregard the recipient's election if the recipient fails to
supply NYLIAC with a "TIN" or taxpayer identification number (social security
number for individuals) or if the Internal Revenue Service notifies NYLIAC
that the TIN provided by the recipient is incorrect.
DISTRIBUTOR OF THE POLICIES
NYLIFE Distributors Inc. ("NYLIFE Distributors"), the distributor of the
Policies, will offer the Policies on a continuous basis. NYLIFE Distributors
is registered with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the National Asso-
ciation of Securities Dealers, Inc. The maximum commission payable to regis-
tered representatives of broker-dealers who have entered into dealer agree-
ments with NYLIFE Distributors is set forth in the prospectus. From time to
time, NYLIFE Distributors may enter into a special arrangement with a broker-
dealer, which provides for the payment of higher commissions to such broker-
dealer in connection with sales of the Policies. Purchasers of Policies will
be informed prior to purchase of any applicable special arrangement.
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS
Title to assets of the Variable Accounts is held by NYLIAC. The assets are
kept physically segregated and held separate and apart from NYLIAC's general
corporate assets. Records are maintained of all purchases and redemptions of
Eligible Portfolio shares held by each of the Investment Divisions.
STATE REGULATION
NYLIAC is a stock life insurance company organized under the laws of Dela-
ware, and is subject to regulation by the Delaware State Insurance Department.
An annual statement is filed with the Delaware Commissioner of insurance on or
before March 1 of each year covering the operations and reporting on the fi-
nancial condition of NYLIAC as of December 31 of the preceding calendar year.
Periodically, the Delaware Commissioner of Insurance examines the financial
condition of NYLIAC, including the liabilities and reserves of the Variable
Accounts.
In addition NYLIAC is subject to the insurance laws and regulations of all
the states where it is licensed to operate. The availability of certain policy
rights and provisions depends
10
<PAGE>
on state approval and/or filing and review processes. Where required by state
law or regulation, the Policies will be modified accordingly.
RECORDS AND REPORTS
All records and accounts relating to the Variable Accounts will be main-
tained by NYLIAC. As presently required by the Investment Company Act of 1940
and regulations promulgated thereunder, NYLIAC will mail to all Policy Owners
at their last known address of record, at least semi-annually after the first
Policy Year, reports containing such information as may be required under that
Act or by any other applicable law or regulation.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Accounts are parties or
to which the assets of the Variable Accounts are subject. No litigation is
pending against NYLIAC which is likely to have a material adverse effect in
relation to its total assets.
INDEPENDENT ACCOUNTANTS
The annual financial statements of the Variable Accounts and NYLIAC are au-
dited by Price Waterhouse LLP, independent accountants, whose reports appear
herein. The financial statements included in this Statement of Additional In-
formation have been included in reliance on the reports of Price Waterhouse,
given on the authority of said firm as experts in auditing and accounting.
OTHER INFORMATION
A registration statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933 as amended, with respect to the
Policies discussed in this Statement of Additional Information. Not all of the
information set forth in the registration statement, amendments and exhibits
thereto has been included in this Statement of Additional Information. State-
ments contained in this Statement of Additional Information concerning the
content of the Policies and other legal instruments are intended to be summa-
ries. For a complete statement of the terms of these documents, reference
should be made to the instruments filed with the Securities and Exchange Com-
mission.
11
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 1995
<TABLE>
<CAPTION>
COMMON STOCK BOND MONEY MARKET
INVESTMENT INVESTMENT INVESTMENT
DIVISIONS DIVISIONS DIVISIONS
------------------------- ------------------------- -------------------------
SINGLE FLEXIBLE SINGLE FLEXIBLE SINGLE FLEXIBLE
PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM
POLICIES POLICIES POLICIES POLICIES POLICIES POLICIES
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in New York
Life MFA Series Fund,
Inc., at net asset
value (Identified
Cost: $79,132,373;
$133,779,764;
$43,152,432;
$70,428,380;
$8,266,224;
$11,192,743,
respectively)......... $ 88,039,139 $156,788,619 $ 44,793,075 $ 74,615,599 $ 8,265,840 $ 11,192,133
LIABILITIES:
Liability for mortality
and expense risk
charges............... 280,389 698,557 146,292 338,134 27,206 50,908
------------ ------------ ------------ ------------ ------------ ------------
Total equity......... $ 87,758,750 $156,090,062 $ 44,646,783 $ 74,277,465 $ 8,238,634 $ 11,141,225
============ ============ ============ ============ ============ ============
TOTAL EQUITY REPRESENTED BY:
Equity of Policyowners:
Variable accumulation
units outstanding:
2,674,820; 5,051,929;
1,570,132; 2,773,811;
443,723; 637,190,
respectively......... $ 87,758,750 $156,090,062 $ 44,646,783 $ 74,277,465 $ 8,238,634 $ 11,141,225
============ ============ ============ ============ ============ ============
Variable accumulation
unit value........... $ 32.81 $ 30.90 $ 28.44 $ 26.78 $ 18.57 $ 17.48
============ ============ ============ ============ ============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
F-1
<PAGE>
NEW YORK LIFE
INSURANCE AND
STATEMENT OF OPERATIONS ANNUITY CORPORATION
For the year ended December 31, 1995 MFA SEPARATE ACCOUNT I
TAX-QUALIFIED POLICIES
<TABLE>
<CAPTION>
COMMON STOCK BOND MONEY MARKET
INVESTMENT INVESTMENT INVESTMENT
DIVISIONS DIVISIONS DIVISIONS
------------------------ ------------------------ ------------------------
SINGLE FLEXIBLE SINGLE FLEXIBLE SINGLE FLEXIBLE
PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM
POLICIES POLICIES POLICIES POLICIES POLICIES POLICIES
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend income.............. $ 1,009,157 $ 1,798,671 $ 2,764,187 $ 4,602,511 $ 471,058 $ 631,218
Mortality and expense risk
charges..................... (1,012,449) (2,532,056) (560,679) (1,259,827) (107,929) (202,284)
----------- ----------- ----------- ----------- ----------- -----------
Net investment income
(loss)..................... (3,292) (733,385) 2,203,508 3,342,684 363,129 428,934
----------- ----------- ----------- ----------- ----------- -----------
REALIZED AND UNREALIZED
GAIN (LOSS):
Proceeds from sale of
investments................. 8,403,878 11,690,374 8,713,546 7,009,430 2,975,378 2,264,632
Cost of investments sold..... (6,854,105) (8,536,012) (8,129,168) (7,282,062) (2,975,544) (2,264,759)
----------- ----------- ----------- ----------- ----------- -----------
Net realized gain (loss)
on investments............. 1,549,773 3,154,362 584,378 (272,632) (166) (127)
Realized gain distribution
received.................... 7,100,263 12,654,150 -- -- -- --
Change in unrealized
appreciation/
depreciation on
investments................. 10,947,712 19,256,110 4,226,104 7,776,856 43 (32)
----------- ----------- ----------- ----------- ----------- -----------
Net gain (loss) on
investments................ 19,597,748 35,064,622 4,810,482 7,504,224 (123) (159)
----------- ----------- ----------- ----------- ----------- -----------
Decrease attributable to
funds of New York Life
Insurance and Annuity
Corporation retained by
Separate Account............ (44,474) (111,339) (14,183) (31,512) (1,080) (2,021)
----------- ----------- ----------- ----------- ----------- -----------
Net increase in total
equity
resulting from operations.. $19,549,982 $34,219,898 $ 6,999,807 $10,815,396 $ 361,926 $ 426,754
=========== =========== =========== =========== =========== ===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
F-2
<PAGE>
STATEMENT OF CHANGES IN TOTAL EQUITY
For the years ended December 31, 1995 and December 31, 1994
<TABLE>
<CAPTION>
COMMON STOCK
INVESTMENT DIVISIONS
------------------------------------------------------
SINGLE PREMIUM FLEXIBLE PREMIUM
POLICIES POLICIES
-------------------------- --------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
TOTAL EQUITY:
Operations:
Net investment income
(loss)................... $ (3,292) $ 92,864 $ (733,385) $ (474,146)
Net realized gain (loss)
on investments........... 1,549,773 817,779 3,154,362 1,020,935
Realized gain distribution
received................. 7,100,263 4,264,931 12,654,150 7,576,411
Change in unrealized
appreciation/depreciation
on investments........... 10,947,712 (5,189,696) 19,256,110 (8,829,255)
Increase (decrease)
attributable to funds of
New York
Life Insurance and
Annuity Corporation
retained by
Separate Account........ (44,474) 283 (111,339) 842
------------ ------------ ------------ ------------
Net increase (decrease)
in total equity
resulting
from operations......... 19,549,982 (13,839) 34,219,898 (705,213)
------------ ------------ ------------ ------------
Contributions and
withdrawals:
Policyowners' premium
payments................. 1,213,447 2,023,353 5,234,054 6,029,109
Policyowners' surrenders.. (6,756,440) (6,738,897) (12,469,978) (8,081,231)
Policyowners' annuity and
death benefits........... (534,923) (546,529) (678,373) (386,348)
Net transfers from (to)
Fixed Account............ 21,551 638,626 (615,468) (287,661)
Transfers between
Investment Divisions..... 887,552 3,048,639 117,970 2,187,478
------------ ------------ ------------ ------------
Total contributions and
withdrawals (net)...... (5,168,813) (1,574,808) (8,411,795) (538,653)
------------ ------------ ------------ ------------
Increase (decrease) in
total equity.......... 14,381,169 (1,588,647) 25,808,103 (1,243,866)
TOTAL EQUITY:
Beginning of year.......... 73,377,581 74,966,228 130,281,959 131,525,825
------------ ------------ ------------ ------------
End of year................ $ 87,758,750 $ 73,377,581 $156,090,062 $130,281,959
============ ============ ============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
F-3
<PAGE>
NEW YORK LIFE
INSURANCE AND
ANNUITY CORPORATION
MFA SEPARATE ACCOUNT I
TAX-QUALIFIED POLICIES
<TABLE>
<CAPTION>
BOND MONEY MARKET
INVESTMENT DIVISIONS INVESTMENT DIVISIONS
- ------------------------------------------------------ ------------------------------------------------------
SINGLE PREMIUM FLEXIBLE PREMIUM SINGLE PREMIUM FLEXIBLE PREMIUM
POLICIES POLICIES POLICIES POLICIES
- -------------------------- -------------------------- -------------------------- --------------------------
1995 1994 1995 1994 1995 1994 1995 1994
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 2,203,508 $ 2,462,660 $ 3,342,684 $ 3,442,645 $ 363,129 $ 248,621 $ 428,934 $ 255,039
584,378 306,618 (272,632) (35,527) (166) (281) (127) (228)
-- -- -- -- -- -- -- --
4,226,104 (5,232,040) 7,776,856 (7,293,567) 43 (422) (32) (571)
(14,183) 3,301 (31,512) 6,561 (1,080) (1,177) (2,021) (2,053)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
6,999,807 (2,459,461) 10,815,396 (3,879,888) 361,926 246,741 426,754 252,187
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
312,128 960,269 2,608,819 3,234,303 19,436 253,250 557,513 529,860
(4,577,494) (5,150,646) (6,561,741) (5,727,805) (1,151,937) (1,550,036) (1,650,793) (1,596,124)
(694,688) (785,608) (475,571) (238,326) (231,786) (162,855) (95,856) (80,717)
(823,395) (907,422) (437,499) (797,068) (103,637) (747,048) (151,317) (328,009)
(1,619,254) (1,869,279) (527,103) (1,383,708) 623,707 (1,200,268) 409,133 (803,770)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(7,402,703) (7,752,686) (5,393,095) (4,912,604) (844,217) (3,406,957) (931,320) (2,278,760)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(402,896) (10,212,147) 5,422,301 (8,792,492) (482,291) (3,160,216) (504,566) (2,026,573)
45,049,679 55,261,826 68,855,164 77,647,656 8,720,925 11,881,141 11,645,791 13,672,364
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 44,646,783 $ 45,049,679 $ 74,277,465 $ 68,855,164 $ 8,238,634 $ 8,720,925 $ 11,141,225 $ 11,645,791
============ ============ ============ ============ ============ ============ ============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
F-4
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 1995
<TABLE>
<CAPTION>
COMMON STOCK BOND MONEY MARKET
INVESTMENT INVESTMENT INVESTMENT
DIVISIONS DIVISIONS DIVISIONS
----------------------- ----------------------- -----------------------
SINGLE FLEXIBLE SINGLE FLEXIBLE SINGLE FLEXIBLE
PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM
POLICIES POLICIES POLICIES POLICIES POLICIES POLICIES
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in New York
Life MFA
Series Fund, Inc., at
net asset value
(Identified Cost:
$88,915,711;
$11,542,470;
$60,491,946;
$6,992,343;
$11,899,264;
$1,169,023,
respectively)......... $97,591,808 $13,297,085 $62,331,090 $ 7,440,363 $11,898,969 $ 1,168,965
LIABILITIES:
Liability for mortality
and expense risk
charges............... 308,936 58,776 202,242 33,863 38,996 5,501
----------- ----------- ----------- ----------- ----------- -----------
Total equity........ $97,282,872 $13,238,309 $62,128,848 $ 7,406,500 $11,859,973 $ 1,163,464
=========== =========== =========== =========== =========== ===========
TOTAL EQUITY REPRESENTED BY:
Equity of Policyowners:
Variable accumulation
units outstanding:
2,964,118; 428,464;
2,176,703; 276,158;
638,761; 66,541,
respectively......... $97,250,575 $13,238,309 $62,128,848 $ 7,406,500 $11,859,973 $ 1,163,464
Annuity reserve........ 32,297 -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total equity........ $97,282,872 $13,238,309 $62,128,848 $ 7,406,500 $11,859,973 $ 1,163,464
=========== =========== =========== =========== =========== ===========
Variable accumulation
unit value........... $ 32.81 $ 30.90 $ 28.54 $ 26.82 $ 18.57 $ 17.48
=========== =========== =========== =========== =========== ===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
F-5
<PAGE>
NEW YORK LIFE
INSURANCE AND
STATEMENT OF OPERATIONS ANNUITY CORPORATION
For the year ended December 31, 1995 MFA SEPARATE ACCOUNT II
NON-QUALIFIED POLICIES
<TABLE>
<CAPTION>
COMMON STOCK BOND MONEY MARKET
INVESTMENT INVESTMENT INVESTMENT
DIVISIONS DIVISIONS DIVISIONS
------------------------ ------------------------ ------------------------
SINGLE FLEXIBLE SINGLE FLEXIBLE SINGLE FLEXIBLE
PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM
POLICIES POLICIES POLICIES POLICIES POLICIES POLICIES
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend income........ $ 1,119,132 $ 152,436 $ 3,845,453 $ 458,997 $ 564,081 $ 67,382
Mortality and expense
risk charges.......... (1,129,181) (211,384) (776,337) (126,514) (129,469) (21,589)
----------- ----------- ----------- ----------- ----------- -----------
Net investment income
(loss)............... (10,049) (58,948) 3,069,116 332,483 434,612 45,793
----------- ----------- ----------- ----------- ----------- -----------
REALIZED AND UNREALIZED
GAIN (LOSS):
Proceeds from sale of
investments........... 10,151,090 1,001,073 11,389,924 938,419 4,965,420 357,864
Cost of investments
sold.................. (7,661,467) (862,645) (10,620,846) (885,515) (4,965,664) (357,884)
----------- ----------- ----------- ----------- ----------- -----------
Net realized gain
(loss)
on investments....... 2,489,623 138,428 769,078 52,904 (244) (20)
Realized gain
distribution received. 7,872,933 1,072,648 -- -- -- --
Change in unrealized
appreciation/
depreciation on
investments........... 11,564,609 1,711,806 5,816,926 703,884 90 3
----------- ----------- ----------- ----------- ----------- -----------
Net gain (loss) on
investments.......... 21,927,165 2,922,882 6,586,004 756,788 (154) (17)
----------- ----------- ----------- ----------- ----------- -----------
Decrease attributable
to funds of New York
Life Insurance and
Annuity Corporation
retained by Separate
Account............... (49,713) (9,270) (19,557) (3,167) (1,281) (217)
----------- ----------- ----------- ----------- ----------- -----------
Net increase in total
equity
resulting from
operations........... $21,867,403 $ 2,854,664 $ 9,635,563 $ 1,086,104 $ 433,177 $ 45,559
=========== =========== =========== =========== =========== ===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
F-6
<PAGE>
STATEMENT OF CHANGES IN TOTAL EQUITY
For the years ended December 31, 1995 and December 31, 1994
<TABLE>
<CAPTION>
COMMON STOCK
INVESTMENT DIVISIONS
--------------------------------------------------
SINGLE PREMIUM FLEXIBLE PREMIUM
POLICIES POLICIES
------------------------ ------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN TOTAL
EQUITY:
Operations:
Net investment income
(loss).................... $ (10,049) $ 103,708 $ (58,948) $ (40,978)
Net realized gain (loss)
on investments............ 2,489,623 749,142 138,428 91,321
Realized gain distribution
received.................. 7,872,933 4,761,829 1,072,648 628,248
Change in unrealized
appreciation/depreciation
on investments............ 11,564,609 (5,732,400) 1,711,806 (741,013)
Increase (decrease)
attributable to funds of
New York
Life Insurance and
Annuity Corporation
retained by
Separate Account.......... (49,713) 357 (9,270) 77
----------- ----------- ----------- -----------
Net increase (decrease)
in total equity
resulting
from operations.......... 21,867,403 (117,364) 2,854,664 (62,345)
----------- ----------- ----------- -----------
Contributions and
withdrawals:
Policyowners' premium
payments.................. 345,599 1,073,571 371,025 409,415
Policyowners' surrenders... (5,331,579) (6,124,267) (690,221) (674,167)
Policyowners' annuity and
death benefits............ (1,295,150) (612,290) (117,738) (68,288)
Net transfers from (to)
Fixed Account............. 311,136 1,140,643 (34,766) 1,457
Transfers between
Investment Divisions...... (568,982) 3,932,462 58,486 131,967
----------- ----------- ----------- -----------
Total contributions and
withdrawals (net)....... (6,538,976) (589,881) (413,214) (199,616)
----------- ----------- ----------- -----------
Increase (decrease) in
total equity........... 15,328,427 (707,245) 2,441,450 (261,961)
TOTAL EQUITY:
Beginning of year........... 81,954,445 82,661,690 10,796,859 11,058,820
----------- ----------- ----------- -----------
End of year................. $97,282,872 $81,954,445 $13,238,309 $10,796,859
=========== =========== =========== ===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
F-7
<PAGE>
NEW YORK LIFE
INSURANCE AND
ANNUITY CORPORATION
MFA SEPARATE ACCOUNT II
NON-QUALIFIED POLICIES
<TABLE>
<CAPTION>
BOND MONEY MARKET
INVESTMENT DIVISIONS INVESTMENT DIVISIONS
- -------------------------------------------------- --------------------------------------------------
SINGLE PREMIUM FLEXIBLE PREMIUM SINGLE PREMIUM FLEXIBLE PREMIUM
POLICIES POLICIES POLICIES POLICIES
- ------------------------ ------------------------ ------------------------ ------------------------
1995 1994 1995 1994 1995 1994 1995 1994
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 3,069,116 $ 3,367,352 $ 332,483 $ 348,088 $ 434,612 $ 291,453 $ 45,793 $ 27,125
769,078 23,325 52,904 (36,349) (244) (302) (20) (18)
-- -- -- -- -- -- -- --
5,816,926 (6,935,305) 703,884 (712,093) 90 (387) 3 (61)
(19,557) 4,808 (3,167) 675 (1,281) (1,328) (217) (217)
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
9,635,563 (3,539,820) 1,086,104 (399,679) 433,177 289,436 45,559 26,829
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
132,616 341,504 179,154 241,581 (56,872) 146,899 40,406 26,244
(5,471,413) (6,533,331) (596,836) (637,948) (1,529,749) (1,671,840) (175,538) (167,754)
(1,043,226) (606,580) (162,820) (52,313) (772,632) (72,668) (15,216) (9,099)
(114,572) (2,217,595) (34,305) (73,888) (427,125) (696,713) (9,527) (29,838)
(2,887,818) (4,570,224) (53,558) (96,250) 3,467,375 654,200 (4,928) (35,762)
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(9,384,413) (13,586,226) (668,365) (618,818) 680,997 (1,640,122) (164,803) (216,209)
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
251,150 (17,126,046) 417,739 (1,018,497) 1,114,174 (1,350,686) (119,244) (189,380)
61,877,698 79,003,744 6,988,761 8,007,258 10,745,799 12,096,485 1,282,708 1,472,088
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$62,128,848 $61,877,698 $ 7,406,500 $ 6,988,761 $11,859,973 $10,745,799 $ 1,163,464 $ 1,282,708
=========== =========== =========== =========== =========== =========== =========== ===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
F-8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Organization and Accounting Policies:
- -------------------------------------------------------------------------------
New York Life Insurance and Annuity Corporation MFA Separate Account I
("Separate Account I") and New York Life Insurance and Annuity Corporation MFA
Separate Account II ("Separate Account II") were established on May 27, 1983,
under Delaware law by New York Life Insurance and Annuity Corporation, a
wholly-owned subsidiary of New York Life Insurance Company. These accounts
were established to receive and invest net purchase payments under Qualified
Multi-Funded Retirement Annuity Policies ("Separate Account I") and Non-
Qualified Multi-Funded Retirement Annuity Policies ("Separate Account II")
issued by New York Life Insurance and Annuity Corporation. Separate Account I
and Separate Account II are registered under the Investment Company Act of
1940, as amended, as unit investment trusts. The assets of Separate Account I
and Separate Account II are invested exclusively in shares of the New York
Life MFA Series Fund, Inc. (the "MFA Fund"), a diversified open-end management
investment company, and are clearly identified and distinguished from the
other assets and liabilities of New York Life Insurance and Annuity
Corporation. Effective December 19, 1994, sales of all such Policies were
discontinued.
There are six Investment Divisions within both Separate Account I and
Separate Account II, three of which invest Single Premium Policy net purchase
payments and three of which invest Flexible Premium Policy net purchase
payments. The Common Stock Investment Divisions invest in the Growth Equity
Portfolio, the Bond Investment Divisions invest in the Bond Portfolio, and the
Money Market Investment Divisions invest in the Cash Management Portfolio. Net
purchase payments received are allocated to the Investment Divisions of
Separate Account I or Separate Account II according to Policyowner
instructions. In addition, the Policyowner has the option to transfer amounts
between the Investment Divisions of Separate Account I and Separate Account II
and the Fixed Account of New York Life Insurance and Annuity Corporation.
No Federal income tax is payable on investment income or capital gains of
Separate Account I or Separate Account II under current Federal income tax
law.
Security Valuation--The investment in the MFA Fund is valued at the net asset
value of shares of the respective fund portfolios.
Security Transactions--Realized gains and losses from security transactions
are reported on the identified cost basis. Security transactions are accounted
for as of the date the securities are purchased or sold (trade date).
Distributions Received--Dividend income and capital gain distributions are
recorded on the ex-dividend date and reinvested in the corresponding
portfolio.
Annuity Reserves--The reserves are computed for currently payable contracts
in accordance with rates taken from approved valuation mortality tables. The
assumed interest rate is 4%, unless issued in Florida or Texas where the rate
is 3 1/2%. Separate Account II Common Stock Investment Division for Single
Premium Policies had variable annuity unit values as of December 31, 1995 and
December 31, 1994 of $2.04 and $1.66, respectively.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates.
F-9
<PAGE>
NEW YORK LIFE
INSURANCE AND
ANNUITY CORPORATION
MFA SEPARATE ACCOUNTS I AND II
TAX-QUALIFIED AND
NON-QUALIFIED POLICIES
NOTE 2--Investments (in 000's):
- --------------------------------------------------------------------------------
At December 31, 1995, the investment in the MFA Fund by the respective Invest-
ment Divisions of Separate Account I and Separate Account II is as follows:
<TABLE>
<CAPTION>
GROWTH EQUITY CASH MANAGEMENT
PORTFOLIO BOND PORTFOLIO PORTFOLIO
--------------------- ---------------------- ----------------------
COMMON STOCK BOND MONEY MARKET
INVESTMENT DIVISIONS INVESTMENT DIVISIONS INVESTMENT DIVISIONS
--------------------- ---------------------- ----------------------
SINGLE FLEXIBLE SINGLE FLEXIBLE SINGLE FLEXIBLE
PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM
POLICIES POLICIES POLICIES POLICIES POLICIES POLICIES
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT I (TAX-QUALIFIED
POLICIES)
Number of Shares........ 5,112 9,104 3,338 5,560 8,266 11,192
Identified Cost*........ $79,132 $133,780 $43,152 $70,428 $ 8,266 $11,193
SEPARATE ACCOUNT II (NON-QUALIFIED
POLICIES)
Number of Shares........ 5,667 772 4,645 554 11,899 1,169
Identified Cost*........ $ 88,916 $ 11,542 $ 60,492 $ 6,992 $ 11,899 $ 1,169
* The cost stated also represents the aggregate cost for Federal income tax
purposes.
Transactions in MFA Fund shares for the year ended December 31, 1995, were as
follows:
<CAPTION>
GROWTH EQUITY CASH MANAGEMENT
PORTFOLIO BOND PORTFOLIO PORTFOLIO
--------------------- ---------------------- ----------------------
COMMON STOCK BOND MONEY MARKET
INVESTMENT DIVISIONS INVESTMENT DIVISIONS INVESTMENT DIVISIONS
--------------------- ---------------------- ----------------------
SINGLE FLEXIBLE SINGLE FLEXIBLE SINGLE FLEXIBLE
PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM
POLICIES POLICIES POLICIES POLICIES POLICIES POLICIES
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT I (TAX-QUALIFIED
POLICIES)
Purchases............... $ 10,336 $ 15,208 $ 3,501 $ 4,958 $ 2,491 $ 1,758
Proceeds from Sales..... 8,404 11,690 8,714 7,009 2,975 2,265
SEPARATE ACCOUNT II (NON-QUALIFIED
POLICIES)
Purchases............... $ 11,473 $ 1,603 $ 5,057 $ 602 $ 6,084 $ 238
Proceeds from Sales..... 10,151 1,001 11,390 938 4,965 358
</TABLE>
F-10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3--Mortality and Expense Risk Charges:
- -------------------------------------------------------------------------------
Separate Account I and Separate Account II are charged for administrative
services provided for Flexible Premium Policies, and Single and Flexible
Premium Policies are charged for the mortality and expense risks assumed by
New York Life Insurance and Annuity Corporation. These charges are made daily
at an annual rate of 1.25% of the daily net asset value for Single Premium
Policies and 1.75% of the daily net asset value for Flexible Premium Policies
of each Investment Division. The amounts of these charges retained in the
Investment Divisions represent funds of New York Life Insurance and Annuity
Corporation. Accordingly, New York Life Insurance and Annuity Corporation
participates in the results of each Investment Division ratably with the
Policyowners.
- -------------------------------------------------------------------------------
NOTE 4--Distribution of Net Income:
- -------------------------------------------------------------------------------
Separate Account I and Separate Account II do not expect to declare dividends
to Policyowners from accumulated net investment income and realized gains. The
income and gains are distributed to Policyowners as part of withdrawals of
amounts (in the form of surrenders, death benefits, transfers, or annuity
payments) in excess of the net purchase payments.
F-11
<PAGE>
NEW YORK LIFE
INSURANCE AND
ANNUITY CORPORATION
MFA SEPARATE ACCOUNTS I AND II
TAX-QUALIFIED AND
NON-QUALIFIED POLICIES
NOTE 5--Cost to Policyowners (in 000's):
- --------------------------------------------------------------------------------
At December 31, 1995, the cost to Policyowners for accumulation units outstand-
ing, with adjustments for net investment income, market
appreciation/depreciation and deduction for expenses is as follows:
<TABLE>
<CAPTION>
COMMON STOCK BOND MONEY MARKET
INVESTMENT DIVISIONS INVESTMENT DIVISIONS INVESTMENT DIVISIONS
---------------------- ---------------------- ----------------------
SINGLE FLEXIBLE SINGLE FLEXIBLE SINGLE FLEXIBLE
PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM
POLICIES POLICIES POLICIES POLICIES POLICIES POLICIES
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT I (TAX-QUALIFIED
POLICIES)
Cost to Policyowners (net
of withdrawals).......... $ 36,783 $ 60,207 $ 18,977 $ 34,858 $ 3,775 $ 5,930
Accumulated net investment
income................... 3,275 1,977 23,136 35,076 4,491 5,260
Accumulated net realized
gain on
investments and realized
gain distributions
received................. 38,965 71,336 1,045 459 -- --
Unrealized
appreciation/depreciation
on investments........... 8,907 23,009 1,641 4,187 -- (1)
Decrease attributable to
funds of New York
Life Insurance and
Annuity Corporation
retained by Separate
Account.................. (171) (439) (152) (303) (27) (48)
---------- ---------- ---------- ---------- ---------- ----------
Net amount applicable to
Policyowners............. $ 87,759 $ 156,090 $ 44,647 $ 74,277 $ 8,239 $ 11,141
========== ========== ========== ========== ========== ==========
SEPARATE ACCOUNT II (NON-QUALIFIED
POLICIES)
Cost to Policyowners (net
of withdrawals).......... $ 43,636 $ 4,912 $ 26,200 $ 2,711 $ 6,582 $ 498
Accumulated net investment
income................... 3,387 190 32,714 4,099 5,315 674
Accumulated net realized
gain (loss) on
investments and realized
gain
distributions received... 41,771 6,419 1,633 193 (1) --
Unrealized
appreciation/depreciation
on investments........... 8,676 1,755 1,839 448 -- --
Decrease attributable to
funds of New York
Life Insurance and
Annuity Corporation
retained by Separate
Account.................. (187) (38) (257) (44) (36) (9)
---------- ---------- ---------- ---------- ---------- ----------
Net amount applicable to
Policyowners............. $ 97,283 $ 13,238 $ 62,129 $ 7,407 $ 11,860 $ 1,163
========== ========== ========== ========== ========== ==========
</TABLE>
F-12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 6--Unit Transactions (in 000's):
- --------------------------------------------------------------------------------
Transactions in accumulation units were as follows:
<TABLE>
<CAPTION>
COMMON STOCK INVESTMENT DIVISIONS
-----------------------------------
SINGLE PREMIUM FLEXIBLE PREMIUM
POLICIES POLICIES
----------------- -----------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
SEPARATE ACCOUNT I (TAX-QUALIFIED POLI-
CIES)
Units issued on premium payments.......... 42 80 191 250
Units redeemed on surrenders.............. (246) (276) (464) (343)
Units redeemed on annuity and death
benefits................................. (4) (8) (9) (7)
Units issued (redeemed) on net transfers
to Fixed Account......................... -- 25 (22) (12)
Units issued (redeemed) on transfers
between
Investment Divisions..................... 30 119 4 91
----- ----- ----- -----
Net decrease............................. (178) (60) (300) (21)
Units outstanding, beginning of year...... 2,853 2,913 5,352 5,373
----- ----- ----- -----
Units outstanding, end of year............ 2,675 2,853 5,052 5,352
===== ===== ===== =====
SEPARATE ACCOUNT II (NON-QUALIFIED POLI-
CIES)
Units issued on premium payments.......... 12 42 14 17
Units redeemed on surrenders.............. (201) (241) (28) (28)
Units redeemed on annuity and death
benefits................................. (26) (23) (2) (3)
Units issued (redeemed) on net transfers
to Fixed Account......................... 9 45 (1) --
Units issued (redeemed) on transfers
between
Investment Divisions..................... (15) 151 1 6
----- ----- ----- -----
Net increase (decrease).................. (221) (26) (16) (8)
Units outstanding, beginning of year...... 3,186 3,212 444 452
----- ----- ----- -----
Units outstanding, end of year............ 2,965 3,186 428 444
===== ===== ===== =====
</TABLE>
F-13
<PAGE>
NEW YORK LIFE
INSURANCE AND
ANNUITY CORPORATION
MFA SEPARATE ACCOUNTS I AND II
TAX-QUALIFIED AND
NON-QUALIFIED POLICIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BOND INVESTMENT DIVISIONS MONEY MARKET INVESTMENT DIVISIONS
- ------------------------------------ -----------------------------------
SINGLE PREMIUM FLEXIBLE PREMIUM SINGLE PREMIUM FLEXIBLE PREMIUM
POLICIES POLICIES POLICIES POLICIES
- ------------------ ----------------- ----------------- -----------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1995 1994 1995 1994 1995 1994 1995 1994
- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
4 39 105 138 (5) 15 33 32
(192) (236) (274) (253) (69) (96) (100) (99)
(7) (5) (7) (3) (6) (2) (1) (2)
(25) (37) (18) (34) (6) (42) (9) (20)
(61) (76) (21) (59) 40 (69) 23 (48)
----- ----- ----- ----- ---- ---- ---- ----
(281) (315) (215) (211) (46) (194) (54) (137)
1,851 2,166 2,989 3,200 490 684 691 828
----- ----- ----- ----- ---- ---- ---- ----
1,570 1,851 2,774 2,989 444 490 637 691
===== ===== ===== ===== ==== ==== ==== ====
6 18 7 10 (3) 8 2 2
(224) (272) (28) (28) (110) (95) (11) (10)
(23) (22) (3) (2) (17) (4) -- (1)
(6) (92) (1) (3) (24) (39) -- (2)
(109) (185) (2) (4) 189 37 -- (2)
----- ----- ----- ----- ---- ---- ---- ----
(356) (553) (27) (27) 35 (93) (9) (13)
2,533 3,086 303 330 604 697 76 89
----- ----- ----- ----- ---- ---- ---- ----
2,177 2,533 276 303 639 604 67 76
===== ===== ===== ===== ==== ==== ==== ====
</TABLE>
F-14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 7--Selected Per Unit Data+:
- --------------------------------------------------------------------------------
The following table presents selected per accumulation unit income and capital
changes (for an accumulation unit outstanding throughout each year) with
respect to each Investment Division of Separate Account I and Separate Account
II:
<TABLE>
<CAPTION>
SINGLE PREMIUM POLICIES
-----------------------------------
YEAR ENDED DECEMBER 31,
COMMON STOCK INVESTMENT DIVISIONS -----------------------------------
1995 1994 1993 1992 1991
-------------------------------
<S> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT I (TAX-QUALIFIED POLICIES)
Unit value, beginning of year.............. $25.72 $25.73 $22.90 $20.61 $15.54
Net investment income (loss)............... -- 0.03 0.06 0.05 0.12
Net realized and unrealized gains (losses)
on security
transactions and realized capital gain
distributions
received (includes the effect of capital
share transactions)....................... 7.09 (0.04) 2.77 2.24 4.95
------ ------ ------ ------ ------
Unit value, end of year.................... $32.81 $25.72 $25.73 $22.90 $20.61
====== ====== ====== ====== ======
SEPARATE ACCOUNT II (NON-QUALIFIED POLI-
CIES)
Unit value, beginning of year.............. $25.72 $25.73 $22.90 $20.61 $15.54
Net investment income (loss)............... -- 0.03 0.07 0.06 0.12
Net realized and unrealized gains (losses)
on security
transactions and realized capital gain
distributions
received (includes the effect of capital
share transactions)....................... 7.09 (0.04) 2.76 2.23 4.95
------ ------ ------ ------ ------
Unit value, end of year.................... $32.81 $25.72 $25.73 $22.90 $20.61
====== ====== ====== ====== ======
</TABLE>
+ Per unit data based on average monthly units outstanding during each year.
F-15
<PAGE>
NEW YORK LIFE
INSURANCE AND
ANNUITY CORPORATION
MFA SEPARATE ACCOUNTS I AND II
TAX-QUALIFIED AND
NON-QUALIFIED POLICIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM POLICIES
- -----------------------------------------------------------
YEAR ENDED DECEMBER 31,
- -----------------------------------------------------------
1995 1994 1993 1992 1991
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
$24.34 $24.48 $21.90 $19.80 $15.01
(0.14) (0.09) (0.06) (0.08) 0.02
6.70 (0.05) 2.64 2.18 4.77
- ------ ------ ------ ------ ------
$30.90 $24.34 $24.48 $21.90 $19.80
====== ====== ====== ====== ======
$24.34 $24.48 $21.90 $19.80 $15.01
(0.14) (0.09) (0.06) (0.08) 0.02
6.70 (0.05) 2.64 2.18 4.77
- ------ ------ ------ ------ ------
$30.90 $24.34 $24.48 $21.90 $19.80
====== ====== ====== ====== ======
</TABLE>
F-16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 7--Selected Per Unit Data+ (Continued):
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINGLE PREMIUM POLICIES
-----------------------------------
YEAR ENDED DECEMBER 31,
BOND INVESTMENT DIVISIONS -----------------------------------
1995 1994 1993 1992 1991
-------------------------------
<S> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT I (TAX-QUALIFIED POLICIES)
Unit value, beginning of year.............. $24.34 $25.51 $23.19 $21.69 $18.87
Net investment income ..................... 1.30 1.22 1.39 1.40 1.42
Net realized and unrealized gains (losses)
on security
transactions and realized capital gain
distributions
received (includes the effect of capital
share transactions)....................... 2.80 (2.39) 0.93 0.10 1.40
------ ------ ------ ------ ------
Unit value, end of year.................... $28.44 $24.34 $25.51 $23.19 $21.69
====== ====== ====== ====== ======
SEPARATE ACCOUNT II (NON-QUALIFIED POLI-
CIES)
Unit value, beginning of year.............. $24.43 $25.60 $23.28 $21.77 $18.94
Net investment income ..................... 1.31 1.19 1.44 1.43 1.44
Net realized and unrealized gains (losses)
on security
transactions and realized capital gain
distributions
received (includes the effect of capital
share transactions)....................... 2.80 (2.36) 0.88 0.08 1.39
------ ------ ------ ------ ------
Unit value, end of year.................... $28.54 $24.43 $25.60 $23.28 $21.77
====== ====== ====== ====== ======
</TABLE>
+ Per unit data based on average monthly units outstanding during each year.
F-17
<PAGE>
NEW YORK LIFE
INSURANCE AND
ANNUITY CORPORATION
MFA SEPARATE ACCOUNTS I AND II
TAX-QUALIFIED AND
NON-QUALIFIED POLICIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM POLICIES
- ---------------------------------------------------------
YEAR ENDED DECEMBER 31,
- ---------------------------------------------------------
1995 1994 1993 1992 1991
- ---------------------------------------------------------
<S> <C> <C> <C> <C>
$23.03 $24.26 $22.17 $20.84 $18.22
1.16 1.11 1.20 1.10 1.21
2.59 (2.34) 0.89 0.23 1.41
- ------ ------ ------ ------ ------
$26.78 $23.03 $24.26 $22.17 $20.84
====== ====== ====== ====== ======
$23.07 $24.30 $22.20 $20.87 $18.25
1.15 1.10 1.13 1.09 1.20
2.60 (2.33) 0.97 0.24 1.42
- ------ ------ ------ ------ ------
$26.82 $23.07 $24.30 $22.20 $20.87
====== ====== ====== ====== ======
</TABLE>
F-18
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 7--Selected Per Unit Data+ (Continued):
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINGLE PREMIUM POLICIES
----------------------------------
YEAR ENDED DECEMBER 31,
MONEY MARKET INVESTMENT DIVISIONS ----------------------------------
1995 1994 1993 1992 1991
----------------------------------
<S> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT I (TAX-QUALIFIED POLICIES)
Unit value, beginning of year.............. $17.81 $17.36 $17.07 $16.70 $15.96
Net investment income...................... 0.76 0.45 0.29 0.37 0.74
------ ------ ------ ------ ------
Unit value, end of year.................... $18.57 $17.81 $17.36 $17.07 $16.70
====== ====== ====== ====== ======
SEPARATE ACCOUNT II (NON-QUALIFIED POLI-
CIES)
Unit value, beginning of year.............. $17.81 $17.36 $17.07 $16.70 $15.96
Net investment income...................... 0.76 0.45 0.29 0.37 0.74
------ ------ ------ ------ ------
Unit value, end of year.................... $18.57 $17.81 $17.36 $17.07 $16.70
====== ====== ====== ====== ======
</TABLE>
+ Per unit data based on average monthly units outstanding during each year.
F-19
<PAGE>
NEW YORK LIFE
INSURANCE AND
ANNUITY CORPORATION
MFA SEPARATE ACCOUNTS I AND II
TAX-QUALIFIED AND
NON-QUALIFIED POLICIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM POLICIES
- ---------------------------------------------------------------
YEAR ENDED DECEMBER 31,
- ---------------------------------------------------------------
1995 1994 1993 1992 1991
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
$16.85 $16.51 $16.32 $16.04 $15.41
0.63 0.34 0.19 0.28 0.63
- ------ ------ ------ ------ ------
$17.48 $16.85 $16.51 $16.32 $16.04
====== ====== ====== ====== ======
$16.85 $16.51 $16.32 $16.04 $15.41
0.63 0.34 0.19 0.28 0.63
- ------ ------ ------ ------ ------
$17.48 $16.85 $16.51 $16.32 $16.04
====== ====== ====== ====== ======
</TABLE>
F-20
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------------------------------
To the Board of Directors of New York Life Insurance
and Annuity Corporation and the MFA Policyowners:
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and of changes in total equity and the
selected per unit data present fairly, in all material respects, the financial
position of the New York Life Insurance and Annuity Corporation MFA Separate
Account I and New York Life Insurance and Annuity Corporation MFA Separate
Account II (which are comprised of the Single and Flexible Premium Policies
Common Stock Investment Divisions, the Single and Flexible Premium Policies
Bond Investment Divisions, and the Single and Flexible Premium Policies Money
Market Investment Divisions) at December 31, 1995, the results of each of
their operations for the year then ended, the changes in each of their total
equity for each of the two years in the period then ended and the selected per
unit data for each of the five years in the period then ended in conformity
with generally accepted accounting principles. These financial statements and
selected per unit data (hereafter referred to as "financial statements") are
the responsibility of management; our responsibility is to express an opinion
on these financial statements based on our audits. We conducted our audits of
these financial statements in accordance with generally accepted auditing
standards 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, which included confirmation of investments at December 31, 1995
with New York Life MFA Series Fund, Inc., provide a reasonable basis for the
opinion expressed above.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York
February 15, 1996
F-21
<PAGE>
STATEMENT OF FINANCIAL POSITION
(Prepared from the Annual Statement filed
with the Delaware Insurance Department)
<TABLE>
<CAPTION>
DECEMBER 31,
1995 1994
------------
(IN MILLIONS)
<S> <C> <C>
ASSETS:
Bonds..................................................... $12,262 $11,141
Mortgage loans............................................ 1,062 969
Preferred and common stocks............................... 64 69
Real estate............................................... 141 119
Policy loans.............................................. 445 420
Cash and short-term investments........................... 343 580
Investment income due and accrued......................... 181 175
Separate account assets................................... 1,444 971
Other assets.............................................. 35 55
------- -------
Total assets............................................. $15,977 $14,499
======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY:
LIABILITIES:
Policy reserves........................................... $12,821 $12,100
Deposit funds............................................. 7 --
Policy proceeds deposited with the Company................ 88 70
Policy claims............................................. 79 67
Payable to parent......................................... 202 41
Securities sold under agreements to repurchase............ 86 254
Separate account liabilities.............................. 1,396 905
Other liabilities......................................... 256 92
Interest maintenance reserve.............................. 26 20
Asset valuation reserve................................... 138 105
------- -------
Total liabilities....................................... 15,099 13,654
------- -------
STOCKHOLDER'S EQUITY:
Capital stock--par value $10,000 (20,000 shares autho-
rized, 2,500 issued and outstanding)..................... 25 25
Additional paid-in capital................................ 480 480
Surplus................................................... 373 340
------- -------
Total stockholder's equity............................... 878 845
------- -------
Total liabilities and stockholder's equity.............. $15,977 $14,499
======= =======
</TABLE>
See accompanying notes to financial statements.
F-22
<PAGE>
NEW YORK LIFE
INSURANCE AND
ANNUITY CORPORATION
(A WHOLLY OWNED
SUBSIDIARY OF
NEW YORK LIFE INSURANCE
COMPANY)
STATEMENT OF OPERATIONS
(Prepared from the Annual Statement filed
with the Delaware Insurance Department)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994 1993
---------------------
(IN MILLIONS)
<S> <C> <C> <C>
INCOME:
Premiums............................................. $ 1,348 $ 1,203 $ 1,321
Net investment income................................ 1,037 1,020 1,025
Policy proceeds deposited with the Company........... 121 118 97
Other income......................................... 41 39 16
------- ------- -------
Total income........................................ 2,547 2,380 2,459
------- ------- -------
BENEFITS AND EXPENSES:
Benefit payments:
Death benefits....................................... 117 117 88
Annuity benefits..................................... 324 276 194
Health and disability insurance benefits............. 23 20 18
Surrender benefits................................... 650 718 802
Payments of amounts previously deposited with the
Company............................................. 111 107 72
------- ------- -------
1,225 1,238 1,174
Additions to policy reserves......................... 522 442 603
Additions to other insurance reserves................ 369 183 172
Operating expenses................................... 276 250 215
------- ------- -------
Total benefits and expenses......................... 2,392 2,113 2,164
------- ------- -------
Gain from operations before federal income taxes...... 155 267 295
Federal income taxes.................................. 60 105 129
------- ------- -------
Net gain from operations.............................. 95 162 166
Net realized capital gains (losses), after transfer-
ring $23 million, ($25) million and $44 million of
net realized capital gains (losses) to the interest
maintenance reserve for 1995, 1994 and 1993,
respectively......................................... -- 4 (61)
------- ------- -------
Net income............................................ $ 95 $ 166 $ 105
======= ======= =======
</TABLE>
See accompanying notes to financial statements.
F-23
<PAGE>
STATEMENT OF CHANGES IN SURPLUS
(Prepared from the Annual Statement filed
with the Delaware Insurance Department)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994 1993
-------------------------
(IN MILLIONS)
<S> <C> <C> <C>
Surplus, beginning of year........................... $ 340 $ 275 $ 206
Net income........................................... 95 166 105
Net unrealized (losses) gains on investments......... (1) (1) 41
(Increase) decrease in asset valuation reserve....... (33) (27) 3
Dividend to stockholder.............................. -- (70) (71)
Other adjustments, net............................... (28) (3) (9)
------- ------- -------
Surplus, end of year................................. $ 373 $ 340 $ 275
======= ======= =======
</TABLE>
See accompanying notes to financial statements.
F-24
<PAGE>
NEW YORK LIFE
INSURANCE AND
ANNUITY CORPORATION
(A WHOLLY OWNED SUBSIDI-
ARY OF
NEW YORK LIFE INSURANCE
COMPANY)
STATEMENT OF CASH FLOWS
(Prepared from the Annual Statement filed
with the Delaware Insurance Department)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994 1993
----------------------
(IN MILLIONS)
<S> <C> <C> <C>
CASH FLOW FROM OPERATIONS:
Premiums received..................................... $1,339 $1,195 $1,338
Net investment income received........................ 978 959 950
Other................................................. 347 350 113
------ ------ ------
Total received....................................... 2,664 2,504 2,401
------ ------ ------
Benefits and other payments........................... 1,207 1,228 1,173
Operating expenses.................................... 279 249 206
Other................................................. 323 315 285
------ ------ ------
Total paid........................................... 1,809 1,792 1,664
------ ------ ------
Net cash provided from operations...................... 855 712 737
------ ------ ------
Proceeds from investments sold......................... 2,415 3,137 2,839
Proceeds from investments matured or repaid............ 1,307 1,579 2,669
Securities sold under agreements to repurchase......... 3,029 1,938 1,632
Securities repurchased................................. (3,196) (1,833) (1,483)
Cost of investments acquired........................... (4,846) (4,925) (6,320)
------ ------ ------
Net cash used for investments.......................... (1,291) (104) (663)
------ ------ ------
Dividend paid to stockholder........................... -- (70) (71)
------ ------ ------
Other, net............................................. 199 (151) (85)
------ ------ ------
Net change in cash and short-term investments.......... (237) 387 (82)
Cash and short-term investments, beginning of year..... 580 193 275
------ ------ ------
Cash and short-term investments, end of year........... $ 343 $ 580 $ 193
====== ====== ======
</TABLE>
See accompanying notes to financial statements.
F-25
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 and 1994
NOTE 1--Nature of Operations:
- -------------------------------------------------------------------------------
New York Life Insurance and Annuity Corporation ("NYLIAC"), a direct, wholly
owned subsidiary of New York Life Insurance Company ("New York Life"), is a
stock life insurance company. NYLIAC offers a wide variety of interest sensi-
tive insurance and annuity products to a large cross section of the total in-
surance market. NYLIAC markets its products in all 50 of the United States,
the District of Columbia and Taiwan, primarily through its agency force. In
addition, NYLIAC markets Corporate Owned Life Insurance through independent
brokers and brokerage general agents.
The following companies are also direct, wholly owned subsidiaries of New
York Life: New York Life and Health Insurance Company, NYLIFE Insurance Com-
pany of Arizona and NYLIFE Inc.
- -------------------------------------------------------------------------------
NOTE 2--Significant Accounting Policies:
- -------------------------------------------------------------------------------
Basis of Presentation--The accompanying financial statements have been prepared
on the basis of accounting practices prescribed or permitted by the Delaware
Insurance Department ("statutory accounting practices"). Statutory accounting
practices are currently considered generally accepted accounting principles
for mutual life insurance companies and their stock life subsidiaries, such as
NYLIAC. The Financial Accounting Standards Board has issued an Interpretation
which establishes a different definition of generally accepted accounting
principles for mutual life insurance companies. Under that Interpretation, fi-
nancial statements of mutual life insurance companies for periods beginning
after December 15, 1995 which are prepared on the basis of statutory account-
ing practices will no longer be characterized as in conformity with generally
accepted accounting principles. Financial statements prepared in conformity
with statutory accounting practices will continue to be required by insurance
regulatory authorities.
Management of NYLIAC has not yet determined the effect on its December 31,
1995 financial statements of applying the new Interpretation nor whether it
will continue to present its general purpose financial statements in confor-
mity with the statutory basis of accounting or adopt the accounting changes
required in order to continue to present its financial statements in confor-
mity with generally accepted accounting principles. If NYLIAC chooses to adopt
the accounting changes required, the effect of the changes would be reported
retroactively through restatement of all previously issued financial state-
ments presented for comparative purposes. The cumulative effect of adopting
these changes would be included in the earliest year restated.
Investments--Investments are carried in accordance with methods and values
prescribed by the National Association of Insurance Commissioners ("NAIC").
Bonds are generally stated at amortized cost. Preferred stocks are generally
stated at cost. Common stocks are stated at market value. Mortgage loans on
real estate are stated at cost or amortized cost, but at no time stated at
more than the appraised value of the underlying collateral. Real estate is
stated at the lower of cost less accumulated depreciation and encumbrances or
market value, except for real estate joint ventures which are stated on an eq-
uity basis. Depreciation of real estate (excluding foreclosed properties which
are not depreciated) is calculated using the straight-line method over the es-
timated lives of the assets (generally 30 years). Policy loans are stated at
the aggregate balance due (which approximates fair value). Limited partnership
investments (included in other assets) are stated on the equity basis. The
value of invested assets has been adjusted for impairments that are other than
temporary. Investment income is recorded on the accrual basis, except where
collection is 90 days past due or is considered uncertain.
F-26
<PAGE>
NEW YORK LIFE
INSURANCE AND
ANNUITY CORPORATION
(A WHOLLY OWNED SUBSIDI-
ARY OF
NEW YORK LIFE INSURANCE
COMPANY)
Prepayment assumptions for loan-backed bonds were developed internally using
a proprietary model; outside services were used for structured securities. The
prospective adjustment method is used to adjust the amortization of premiums
and discounts on such securities.
Derivative financial instruments used by NYLIAC to hedge exposure to inter-
est rate and foreign currency fluctuations are accounted for on an accrual ba-
sis. Gains and losses related to contracts that are effective hedges on spe-
cific assets are deferred and recognized in income in the same period as gains
and losses on the hedged asset.
The Asset Valuation Reserve ("AVR") is required by insurance regulators to
stabilize surplus from fluctuations in the market value of bonds, stocks,
mortgage loans, real estate and other invested assets. Changes in the reserve
are accounted for as direct increases or decreases in surplus. The Interest
Maintenance Reserve ("IMR"), also required by insurance regulators, captures
interest related realized gains and losses (net of taxes) on fixed income in-
vestments (bonds, preferred stocks and mortgage loans) which are amortized
into net investment income over the expected years to maturity of the invest-
ments sold using the seriatim method for bonds and the grouped method for
mortgage loans and preferred stock.
Amounts payable or receivable under interest rate swap, commodity swap and
interest rate floor agreements are recognized as investment income or expense
when earned. Premiums paid for interest rate floor agreements are amortized
into interest expense over the life of the agreement. Unamortized premiums are
included in other assets in the Statement of Financial Position.
Unrealized gains and losses on foreign exchange forward contracts are re-
ported as other assets or liabilities, as appropriate. Realized gains and
losses are recognized in net income upon termination of the contracts.
Premiums and Related Expenses--Premiums are taken into income over the pre-
mium-paying period of the policies. Commissions and other costs associated
with acquiring new business are charged to operations as incurred.
Policy Reserves--Policy reserves are based on mortality tables and valuation
interest rates which are consistent with statutory requirements and are de-
signed to be sufficient to provide for contractual benefits.
Federal Income Taxes--Provision is made for federal income taxes estimated
to be payable to New York Life under a tax allocation agreement, including an
allocation of the equity base tax. Adjustments to such estimates, including
those related to the true-up or true-down of the equity base tax, are recorded
in gain from operations when known. Realized gains and losses are reported af-
ter adjustment for the associated federal income tax.
Change in Accounting Policy for the Equity Base Tax--Each year, an estimated
Differential Earnings Rate (DER) is used to determine the equity base tax re-
ported in the annual statement as part of gain from operations for that year.
When the final DER is known, NYLIAC records a true-up or true-down adjustment
for the difference between the estimated and final DER.
Based on recent NAIC discussions of this item, NYLIAC changed that policy to
accelerate the recognition of the DER adjustment by one year and to record DER
adjustments through net gain. Previously, NYLIAC recorded such adjustments
F-27
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
directly to surplus. The effect of this change, including $18,000,000 for the
effect of adjusting for prior years, was an increase to net gain of
$12,000,000, and a decrease to surplus of $15,000,000.
Separate Accounts--NYLIAC has established separate accounts with varying in-
vestment objectives which are segregated from NYLIAC's general account and are
maintained for the benefit of separate account contractholders and NYLIAC.
Separate account assets are generally stated at market value. The liability
for separate accounts represents contractholders' interests in the separate
account assets, including accumulated net investment income and realized and
unrealized gains and losses on those assets. Separate account liabilities gen-
erally reflect market value.
Nonadmitted Assets--Under statutory accounting practices, certain assets are
designated as "nonadmitted assets" and are not included in the Statement of
Financial Position.
Fair Values of Financial Instruments--Fair values of various assets and lia-
bilities are included throughout the notes to financial statements. Specifi-
cally, fair value disclosure of bonds, mortgage loans, and cash and short-term
investments is reported in Note 3. Fair values for insurance liabilities (pol-
icy reserves) are reported in Note 7. Fair values for derivative financial in-
struments are included in Note 12.
Permitted Statutory Accounting Practices--NYLIAC prepares its statutory fi-
nancial statements in accordance with accounting principles and practices pre-
scribed or permitted by the Delaware Insurance Department. Prescribed statu-
tory accounting practices include state laws and regulations along with NAIC
regulations. Permitted statutory accounting practices encompass accounting
practices that are not prescribed; such practices differ from state to state,
may differ from company to company within a state, and may change in the fu-
ture. Furthermore, the NAIC has started a project to codify statutory account-
ing practices, the result of which is expected to constitute the only source
of "prescribed" statutory accounting practices. Accordingly, that project,
which is expected to be completed in 1997, will likely change the definition
of what comprises prescribed versus permitted statutory accounting practices,
and may result in changes to the accounting policies that insurance enter-
prises use to prepare their statutory financial statements. NYLIAC has no ma-
terial permitted statutory accounting practices.
Business Risks and Uncertainties--The preparation of financial statements of
life insurance enterprises requires management to make estimates and assump-
tions that affect the reported amounts of assets and liabilities at the date
of the financial statements. As a provider of life insurance and annuity prod-
ucts, NYLIAC's operating results in any given period depend on estimates of
policy reserves required to provide for future policyowner benefits.
The development of policy reserves for NYLIAC's products requires management
to make estimates and assumptions regarding mortality, morbidity, lapse, ex-
pense and investment experience. Such estimates are primarily based on histor-
ical experience and, in many cases, state insurance laws require specific mor-
tality, morbidity and investment assumptions to be used by NYLIAC. Actual re-
sults could differ materially from those estimates. Management monitors actual
experience, and where circumstances warrant, revises its assumptions and the
related reserve estimates.
NYLIAC regularly invests in mortgage backed securities and other securities
subject to prepayment and call risk. Significant changes in prevailing inter-
est rates may adversely affect the timing and amount of cash flows on such se-
curities.
F-28
<PAGE>
NEW YORK LIFE
INSURANCE AND
ANNUITY CORPORATION
(A WHOLLY OWNED SUBSIDI-
ARY OF
NEW YORK LIFE INSURANCE
COMPANY)
In addition, the amortization of market discount and accretion of market pre-
mium for mortgage backed securities is based on historical experience and es-
timates of future payment speeds on the underlying mortgage loans. Actual pre-
payment speeds will differ from original estimates and may result in material
adjustments to amortization or accretion recorded in future periods.
NYLIAC distributes a Corporate Owned Life Insurance product to targeted cor-
porate customers, primarily banks, through individual brokers and brokerage
general agents. Sales of this product by one broker generated $270,000,000 of
premium income in 1995, which represents 20% of NYLIAC's total premium income.
As a subsidiary of a mutual insurance company, NYLIAC is subject to a tax on
its equity base. The rates applied to NYLIAC's equity base are determined an-
nually by the Internal Revenue Service after comparison of mutual life insur-
ance company earnings for the year to the average earnings of the 50 largest
stock life insurance companies for the prior three years. Due to the timing of
earnings information, estimates of the current year's tax must be made by man-
agement. The ultimate amounts of equity base tax incurred may vary consider-
ably from the original estimates. (See Note 2--Federal Income Taxes and Change
in Accounting Policy for the Equity Base Tax).
- -------------------------------------------------------------------------------
NOTE 3--Investments
- -------------------------------------------------------------------------------
Bonds--Fair values of bonds as shown below are based on published market val-
ues, if available. For investments without readily ascertainable market val-
ues, fair value has been determined using one of the following sources: market
dealer quotations, a discounted cash flow approach, or a proprietary matrix
pricing model. Fair values do not necessarily represent the values for which
these securities could have been sold at December 31, 1995 or 1994; therefore,
care should be exercised in drawing any conclusions from these fair values.
The method for determining statement values is described in Note 2.
At December 31, 1995 and 1994, the maturity distribution of bonds was as
follows (in millions):
<TABLE>
<CAPTION>
1995 1994
------------------- -------------------
ESTIMATED ESTIMATED
STATEMENT FAIR STATEMENT FAIR
VALUE VALUE VALUE VALUE
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Due in one year or less... $ 756 $ 763 $ 218 $ 218
Due after one year through
five years............... 3,012 3,082 3,267 3,179
Due after five years
through ten years........ 1,853 1,957 1,901 1,801
Due after ten years....... 1,863 2,042 1,916 1,795
Asset-backed securities:
Government or government
agency.................. 4,089 4,233 3,310 3,128
Other.................... 689 720 529 523
------- ------- ------- -------
Total................... $12,262 $12,797 $11,141 $10,644
======= ======= ======= =======
</TABLE>
F-29
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
At December 31, 1995 and 1994, the distribution of unrealized gains and
losses on bonds was as follows (in millions):
<TABLE>
<CAPTION>
1995
--------------------------------
ESTIMATED
STATEMENT FAIR
VALUE GAINS LOSSES VALUE
--------- ----- ------ ---------
<S> <C> <C> <C> <C>
U.S. Treasury and U.S. Government corporations
and agencies................................. $ 1,840 $ 82 $ 2 $ 1,920
U.S. agencies, state and municipal............ 3,563 150 8 3,705
Foreign governments........................... 324 20 1 343
Corporate..................................... 5,846 274 11 6,109
Other......................................... 689 32 1 720
------- ---- ---- -------
Total....................................... $12,262 $558 $ 23 $12,797
======= ==== ==== =======
<CAPTION>
1994
--------------------------------
ESTIMATED
STATEMENT FAIR
VALUE GAINS LOSSES VALUE
--------- ----- ------ ---------
<S> <C> <C> <C> <C>
U.S. Treasury and U.S. Government corporations
and agencies................................. $ 1,679 $ 10 $ 96 $ 1,593
U.S. agencies, state and municipal............ 2,965 14 193 2,786
Foreign governments........................... 298 4 21 281
Corporate..................................... 5,670 60 269 5,461
Other......................................... 529 10 16 523
------- ---- ---- -------
Total....................................... $11,141 $ 98 $595 $10,644
======= ==== ==== =======
</TABLE>
Mortgage Loans--NYLIAC attempts to minimize the risk of investing in mort-
gage loans by diversification of geographic locations and types of properties,
collateralization of mortgage loans based on management's credit assessment of
the borrower, and by traditionally requiring loan-to-value ratios of 75% or
less on new loans. The maximum and minimum lending rates for mortgage loans
during 1995 were: commercial loans, 9.50% and 7.25% (9.50% and 6.80% for
1994); residential loans, 7.24% and 7.19% (no residential loans for 1994).
F-30
<PAGE>
NEW YORK LIFE
INSURANCE AND
ANNUITY CORPORATION
(A WHOLLY OWNED SUBSIDI-
ARY OF
NEW YORK LIFE INSURANCE
COMPANY)
At December 31, 1995 and 1994, the distribution of the mortgage loan portfo-
lio by geographic location and property type was as follows (in millions):
<TABLE>
<CAPTION>
1995 1994
--------------- ---------------
STATEMENT % OF STATEMENT % OF
VALUE TOTAL VALUE TOTAL
--------- ----- --------- -----
<S> <C> <C> <C> <C>
Geographic Distribution:
Middle Atlantic.............................. $ 421 39.7% $432 44.6%
South Atlantic............................... 275 25.9 202 20.8
Pacific...................................... 132 12.4 140 14.4
East North Central........................... 132 12.4 130 13.4
West South Central........................... 52 4.9 15 1.6
East South Central........................... 22 2.1 29 3.0
Mountain..................................... 15 1.4 13 1.4
New England.................................. 12 1.1 7 .7
West North Central........................... 1 .1 1 .1
------ ----- ---- -----
Total....................................... $1,062 100.0% $969 100.0%
====== ===== ==== =====
Property Type:
Office Building.............................. $ 696 65.5% $649 67.0%
Retail....................................... 185 17.4 166 17.1
Apartments................................... 152 14.3 125 12.9
Industrial................................... 21 2.0 29 3.0
Residential.................................. 8 .8 -- --
------ ----- ---- -----
Total....................................... $1,062 100.0% $969 100.0%
====== ===== ==== =====
</TABLE>
At December 31, 1995 and 1994, anticipated maturities in NYLIAC's mortgage
loan portfolio were as follows (in millions):
<TABLE>
<CAPTION>
1995 1994
------ ----
<S> <C> <C>
Due in one year or less..................................... $ 84 $142
Due after one year through five years....................... 398 345
Due after five years through ten years...................... 460 408
Due after ten years......................................... 120 74
------ ----
Total..................................................... $1,062 $969
====== ====
</TABLE>
Fair values for the mortgage loan portfolio at December 31, 1995 and 1994
were estimated to be $1,103,000,000 and $946,000,000, respectively, and were
determined by discounting the projected cash flow for each individual loan to
determine the current net present value. The discount rate used approximates
the current rate for new mortgages with comparable
F-31
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
characteristics and similar remaining maturities. As mortgage loans are gener-
ally intended to be held to maturity and fair values do not necessarily repre-
sent the values for which these loans could have been sold at December 31,
1995 or 1994, care should be exercised in drawing any conclusions from these
fair values. The method of determining statement values is described in Note
2.
Real Estate--At December 31, 1995 and 1994, NYLIAC's real estate portfolio,
at statement value, consisted of the following (in millions):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Commercial:
Investment................................................... $101 $ 90
Acquired through foreclosure................................. 40 29
---- ----
Total real estate........................................... $141 $119
==== ====
</TABLE>
Accumulated depreciation on real estate at December 31, 1995 amounted to
$5,033,000 ($2,379,000 for 1994). Depreciation expense for 1995 was $2,654,000
($1,729,000 for 1994 and $699,000 for 1993), and was recorded as an investment
expense.
Cash and Short-Term Investments--Short-term investments consist of securi-
ties that have maturities of one year or less at acquisition. The carrying
amount reported in the Statement of Financial Position for cash and short-term
investments approximates fair value.
- -------------------------------------------------------------------------------
NOTE 4--Investment Income and Capital Gains and Losses
- -------------------------------------------------------------------------------
The components of net investment income for the years ended December 31, 1995,
1994 and 1993 were as follows (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Bonds.............................................. $ 887 $ 877 $ 881
Mortgage loans..................................... 83 86 98
Preferred and common stocks........................ 3 5 7
Real estate........................................ 19 15 11
Policy loans....................................... 34 31 29
Short-term investments............................. 25 13 8
Amortization of IMR................................ 16 10 3
Other.............................................. 5 9 9
------ ------ ------
Gross investment income.......................... 1,072 1,046 1,046
Investment expenses................................ 35 26 21
------ ------ ------
Net investment income............................ $1,037 $1,020 $1,025
====== ====== ======
</TABLE>
F-32
<PAGE>
NEW YORK LIFE
INSURANCE AND
ANNUITY CORPORATION
(A WHOLLY OWNED SUBSIDI-
ARY OF
NEW YORK LIFE INSURANCE
COMPANY)
For the years ended December 31, 1995, 1994 and 1993 realized capital gains
and losses were as follows (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------- ------------
GAINS LOSSES GAINS LOSSES GAINS LOSSES
----- ------ ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
Bonds................................... $ 62 $ (31) $ 94 $(132) $ 99 $(115)
Mortgage loans.......................... 4 (8) 1 -- 2 --
Preferred and common stocks............. 16 (6) 6 (1) 7 --
Real estate............................. -- (1) -- (3) -- (3)
Derivative instruments.................. 102 (103) 4 (14) -- --
Other assets............................ 10 (3) 5 -- 3 (13)
---- ----- ---- ----- ---- -----
$194 $(152) $110 $(150) $111 $(131)
==== ===== ==== ===== ==== =====
Net realized capital gains (losses)
before capital gains tax and transfers
to the IMR............................. 42 (40) (20)
Less:
Capital gains tax (benefit)............ 19 (19) (3)
Gains (losses) transferred to the IMR.. 23 (25) 44
---- ---- -----
Net realized capital gains (losses)
after capital gains tax and transfers
to the IMR............................. $ 0 $ 4 $ (61)
==== ==== =====
</TABLE>
Proceeds from investments in bonds sold, matured or repaid were
$3,395,000,000, $4,520,000,000 and $5,197,000,000 for the years ended December
31, 1995, 1994 and 1993, respectively.
- -------------------------------------------------------------------------------
NOTE 5--Dividends to Stockholder
- -------------------------------------------------------------------------------
No dividends were declared or paid to New York Life in 1995. In 1994 and 1993,
NYLIAC declared and paid dividends of $70,000,000 and $71,000,000, respective-
ly, to New York Life. These dividends were paid from current year earnings, as
permitted by the Delaware Insurance Department.
- -------------------------------------------------------------------------------
NOTE 6--Service Agreement with New York Life
- -------------------------------------------------------------------------------
New York Life provides NYLIAC with services and facilities for the sale of in-
surance and other activities related to the business of insurance. NYLIAC re-
imburses New York Life for the identified costs associated with these services
and facilities under the terms of a Service Agreement between New York Life
and NYLIAC. Such costs, amounting to $166,000,000 for the year ended December
31, 1995 ($147,000,000 for 1994 and $124,000,000 for 1993) are reflected in
operating expenses and net investment income in the accompanying Statement of
Operations.
F-33
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
In 1993, the NAIC approved a new accounting treatment for postretirement
benefits other than pensions which requires the reporting of expected future
benefit costs (primarily life and health benefits) for retirees and fully eli-
gible active employees. The liabilities for postretirement benefits are held
by New York Life. However, NYLIAC was allocated $5,000,000 for its share of
the net periodic postretirement benefits expense in 1995 ($5,000,000 and
$6,000,000 in 1994 and 1993, respectively) under the provisions of the service
agreement.
- -------------------------------------------------------------------------------
NOTE 7--Insurance Liabilities
- -------------------------------------------------------------------------------
Policy Reserves and Deposit Funds--Reserves for life insurance policies are
maintained principally using the 1958 and 1980 Commissioners' Standard Ordi-
nary (CSO) Mortality Tables under the Commissioners' Reserve Valuation Method
(CRVM) with valuation interest rates ranging from 4% to 6.5%. Reserves for an-
nuities are based principally on 1971 Individual Annuity and 1983-a Mortality
Tables and the Commissioners' Annuity Reserve Valuation Method (CARVM), with
valuation interest rates ranging from 4% to 10%. Generally, owners of NYLIAC
deferred annuities are able, at their discretion, to withdraw funds from their
policies.
The following table reflects the withdrawal characteristics of annuity re-
serves and deposit funds (in millions):
<TABLE>
<CAPTION>
1995 1994
------------ ------------
% OF % OF
AMOUNT TOTAL AMOUNT TOTAL
------ ----- ------ -----
<S> <C> <C> <C> <C>
Subject to discretionary withdrawal:
With market value adjustment......................... $ -- --% $ -- --%
At book value less surrender charge of 5% or more.... 1,730 19 1,289 16
Market value......................................... 1,303 14 862 10
------ --- ------ ---
Total with adjustment or at market value.............. 3,033 33 2,151 26
At book value without adjustment (minimal or no
charge or adjustment)............................... 5,875 65 6,064 72
Not subject to discretionary withdrawal provisions... 189 2 184 2
------ --- ------ ---
Total annuity reserves and deposit fund liabilities. $9,097 100% $8,399 100%
====== === ====== ===
</TABLE>
NYLIAC's liabilities under investment-type contracts, primarily deferred an-
nuities, of $7,614,000,000 and $7,343,000,000 at December 31, 1995 and 1994,
respectively, are included in policy reserves on the Statement of Financial
Position. Fair value of these liabilities at December 31, 1995 is approxi-
mately $7,619,000,000 (statement value at December 31, 1994 generally reflects
fair value).
F-34
<PAGE>
NEW YORK LIFE
INSURANCE AND
ANNUITY CORPORATION
(A WHOLLY OWNED SUBSIDI-
ARY OF
NEW YORK LIFE INSURANCE
COMPANY)
Liability for Unpaid Accident and Health Claims and Claim Adjustment Ex-
penses--Activity in the liability for unpaid accident and health claims and
claim adjustment expenses is summarized as follows (in millions):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Net Balance at January 1.............................................. $20 $18
Incurred related to:
Current Year......................................................... 22 20
Prior Year........................................................... -- --
--- ---
Total Incurred....................................................... 22 20
--- ---
Paid related to:
Current Year......................................................... -- --
Prior Year........................................................... 20 18
--- ---
Total Paid........................................................... 20 18
--- ---
Net Balance at December 31............................................ $22 $20
</TABLE>
- -------------------------------------------------------------------------------
NOTE 8--Separate Accounts
- -------------------------------------------------------------------------------
NYLIAC maintains seven nonguaranteed separate accounts for its variable de-
ferred annuity and variable universal life products. The assets of the sepa-
rate accounts represent shares of New York Life sponsored MFA Series Fund and
Acacia Capital Corporation Calvert Socially Responsible Portfolio as follows
(in millions):
<TABLE>
<CAPTION>
1995 1994
----------------- -----------------
NO. OF STATEMENT NO. OF STATEMENT
PORTFOLIO SHARES VALUE SHARES VALUE
--------- ------- --------- ------- ---------
<S> <C> <C> <C> <C>
Growth Equity............................... 24.823 $ 428 22.479 $330
Bond........................................ 17.514 235 17.099 207
Capital Appreciation........................ 15.784 244 9.952 114
Indexed Equity.............................. 7.776 105 6.088 63
Total Return................................ 14.699 195 11.562 122
Government.................................. 6.477 65 6.691 62
Cash Management............................. 88.930 89 72.526 73
International Equity........................ 1.435 15 -- --
High Yield Corporate Bond................... 4.105 43 -- --
Value....................................... 2.109 24 -- --
Socially Responsible........................ .356 1 -- --
------- ------ ------- ----
Total..................................... 184.008 $1,444 146.397 $971
======= ====== ======= ====
</TABLE>
F-35
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
During the second quarter of 1996, NYLIAC is expected to offer for sale a
new variable product, Corporate Owned Life Insurance Variable Universal Life,
for the purpose of investing payments received under new variable universal
life contracts issued by NYLIAC.
NYLIAC's total investment in the separate accounts was $48,000,000 and
$64,000,000 at December 31, 1995 and 1994, respectively.
Variable separate accounts held by NYLIAC for Individual Life and Annuity
policies represent nonguaranteed funds. The assets of these accounts are car-
ried at market value.
The following is a reconciliation of net transfers from NYLIAC to the Sepa-
rate Accounts (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- ----
<S> <C> <C> <C>
Transfers as reported in Summary of Operations of
the Separate Accounts Statement:
Transfers to Separate Accounts................... $ 404 $ 312 $215
Transfers from Separate Accounts................. (174) (143) (69)
----- ----- ----
Net transfers to Separate Accounts................ $ 230 $ 169 $146
===== ===== ====
Transfers as reported in "additions to other
insurance reserves" on the Statement of Operations
of NYLIAC......................................... $ 230 $ 169 $146
===== ===== ====
</TABLE>
- -------------------------------------------------------------------------------
NOTE 9--Federal Income Taxes
- -------------------------------------------------------------------------------
NYLIAC is a member of an affiliated group which joins in the filing of a con-
solidated federal income tax return with New York Life. The consolidated in-
come tax liability is allocated among the members of the group in accordance
with a tax allocation agreement. The tax allocation agreement provides that
NYLIAC is allocated its share of the consolidated tax provision or benefit,
including the equity base tax, determined generally on a separate return ba-
sis, but may, where applicable, recognize the tax benefits of net operating
losses or capital losses utilizable in the consolidated group. Estimated pay-
ments for taxes are made between the members of the consolidated group during
the year.
At December 31, 1995 and 1994, federal income taxes payable to New York Life
were $62,000,000 and $19,000,000, respectively.
F-36
<PAGE>
NEW YORK LIFE
INSURANCE AND
ANNUITY CORPORATION
(A WHOLLY OWNED SUBSIDI-
ARY OF
NEW YORK LIFE INSURANCE
COMPANY)
Set forth below is a reconciliation of the statutory federal income tax rate
to the effective tax rate for 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Statutory federal income tax rate...................... 35.0% 35.0% 35.0%
Exempt interest........................................ (1.7) (2.8) (1.0)
Allocable share of equity base tax imposed on New York
Life:
Current year estimate................................. 5.0 2.7 2.3
Change in accounting policy........................... (8.0) -- --
Deferred acquisition costs............................. 8.3 6.0 5.6
Increase (decrease) in statutory reserves in excess of
increase in tax reserves.............................. 1.6 (1.5) 2.1
Other.................................................. (1.4) (.1) (.2)
---- ---- ----
Effective tax rate................................... 38.8% 39.3% 43.8%
==== ==== ====
</TABLE>
- -------------------------------------------------------------------------------
NOTE 10--Reinsurance
- -------------------------------------------------------------------------------
NYLIAC enters into reinsurance agreements in the normal course of its insurance
business to reduce overall risks. NYLIAC remains liable for reinsurance ceded
if the reinsurer fails to meet its obligations on the business it has assumed.
Life insurance reinsured was 11% and 9% of total life insurance in-force at
December 31, 1995 and 1994, respectively.
In 1994, NYLIAC entered into a coinsurance/modified coinsurance reinsurance
agreement, covering a specific block of NYLIAC's Single Premium Multi-Life
Corporate Owned Life Insurance business. In 1995, this treaty was amended to
cover 1995 and future years' business. In 1995, NYLIAC ceded $216,000,000 in
premiums ($220,000,000 in 1994) reduced by an experience refund of $8,000,000
($4,000,000 in 1994). In addition, in 1995 NYLIAC recorded a commission and
expense allowance of $22,000,000 ($22,000,000 in 1994), a modco reserve ad-
justment of $185,000,000 ($194,000,000 in 1994), and a reserve credit of
$43,000,000 ($22,000,000 in 1994), related to the coinsurance portion of the
agreement.
A group reinsurance agreement between NYLIAC and New York Life was approved
by the New York State Insurance Department in 1981 and was terminated effec-
tive December 31, 1995. Under the terms of the agreement, NYLIAC assumed the
liabilities for group health long-term disability policies issued by New York
Life. NYLIAC assumed premiums of $29,000,000, $26,000,000 and $25,000,000 for
the years 1995, 1994 and 1993, respectively. A settlement is made between the
companies in the subsequent year. In 1995, NYLIAC received $4,000,000 from New
York Life (NYLIAC paid $1,000,000 and received $24,000,000 from New York Life
in 1994 and 1993, respectively), consisting of premiums due to NYLIAC of
$32,000,000 ($33,000,000 in 1994 and $41,000,000 in 1993), reduced by a bene-
fit reimbursement of $20,000,000 ($18,000,000 in 1994 and $15,000,000 in 1993)
and an experience refund of $8,000,000 ($16,000,000 in 1994 and $2,000,000 in
1993).
F-37
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
As a result of the termination, NYLIAC will transfer an amount to New York
Life equal to the reserves held to support the claims of those disabled lives.
At December 31, 1995 NYLIAC established a liability to New York Life of
$119,000,000 for the transfer of such reserves.
- -------------------------------------------------------------------------------
NOTE 11--Other Adjustments to Surplus
- -------------------------------------------------------------------------------
Other adjustments in the Statement of Changes in Surplus include principally
the effects of the following:
For 1995: (1) $18,000,000 decrease due to a change in accounting policy for
the equity base tax (see Note 2); (2) $14,000,000 decrease due to a change in
valuation basis; (3) $10,000,000 increase due to the change in separate ac-
count surplus; (4) $3,000,000 decrease due to an increase in nonadmitted as-
sets; and (5) $3,000,000 decrease resulting from an increase in the liability
for federal income taxes of prior years.
For 1994: (1) $6,000,000 decrease due to an increase in nonadmitted assets;
(2) $5,000,000 increase resulting from a decrease in the liability for federal
income taxes of prior years; and (3) $2,000,000 decrease due to the change in
separate account surplus.
For 1993: (1) $18,000,000 decrease due to an adjustment to the Agents' Pro-
gress Sharing Plan liability; (2) $6,000,000 increase due to the change in
separate account surplus; (3) $5,000,000 increase resulting from a decrease in
the liability for federal income taxes of prior years; and (4) $1,000,000 de-
crease due to the funding of the New York Life Foundation.
- -------------------------------------------------------------------------------
NOTE 12--Derivative Financial Instruments and Risk Management
- -------------------------------------------------------------------------------
NYLIAC uses derivative financial instruments to manage interest rate, currency
and market risk. These derivative financial instruments include foreign ex-
change forward contracts, interest rate floors, and interest rate and commod-
ity swaps. NYLIAC does not engage in derivative financial instrument transac-
tions for the purpose of trading.
Notional or contractual amounts of derivative financial instruments provide
only a measure of involvement in these types of transactions and do not repre-
sent the amounts exchanged between the parties engaged in the transaction. The
amounts exchanged are determined by reference to the notional amounts and
other terms of the derivative financial instruments which relate to interest
rates, exchange rates, or other financial indices.
Interest Rate Risk Management--NYLIAC enters into various types of interest
rate contracts primarily to minimize exposure of specific assets held by
NYLIAC to fluctuations in interest rates.
F-38
<PAGE>
NEW YORK LIFE
INSURANCE AND
ANNUITY CORPORATION
(A WHOLLY OWNED SUBSIDI-
ARY OF
NEW YORK LIFE INSURANCE
COMPANY)
The following table summarizes the notional amounts and credit exposures of
interest rate related derivative transactions (in thousands):
<TABLE>
<CAPTION>
1995 1994
----------------- -----------------
NOTIONAL CREDIT NOTIONAL CREDIT
AMOUNT EXPOSURE AMOUNT EXPOSURE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest Rate Swaps......................... $ 50,000 -- $ 80,000 $2,636
Floors Purchased............................ $150,000 -- $150,000 $ 15
</TABLE>
Interest rate swaps are agreements with other parties to exchange, at speci-
fied intervals, the difference between fixed- rate and floating-rate interest
amounts calculated by reference to an agreed notional amount. Swap contracts
outstanding at December 31, 1995 are between ten months and eight years, seven
months in maturity. At December 31, 1994 such contracts are between seven
months and eight years, seven months in maturity. NYLIAC does not act as an
intermediary or broker in interest rate swaps.
The following table shows the type of swaps used by NYLIAC and the weighted
average interest rates. Average variable rates are based on the rates which
determine the last payment received or paid on each contract; those rates may
change significantly, affecting future cash flows.
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Receive--fixed swaps--
Notional amount (in
thousands)................. $15,000 $45,000
Average receive rate.... 7.93% 8.30%
Average pay rate........ 7.39% 5.85%
Pay--fixed swaps--Notional
amount (in thousands)...... $35,000 $35,000
Average pay rate........ 7.46% 7.46%
Average receive rate.... 6.02% 5.74%
</TABLE>
During the term of the swap, net settlement amounts are recorded as invest-
ment income or expense when earned. Fair values of interest rate swaps at De-
cember 31, 1995 and 1994 were $(2,298,000) and $1,760,000 respectively, based
on quoted market prices.
Interest rate floor agreements entitle NYLIAC to receive amounts from
counterparties based upon the difference between a strike price and current
interest rates. Such agreements serve as hedges against declining interest
rates on a portfolio of assets.
Premiums paid for interest rate floor agreements purchased are included in
other assets in the Statement of Financial Position and are amortized into in-
terest expense over the terms of the agreements. At December 31, 1995 and
1994, unamortized premiums amounted to $597,000 and $672,000, respectively.
Amounts received during the term of interest rate floor agreements are re-
corded as investment income. Fair values of interest rate floors at December
31, 1995 and 1994 were $395,000 and $15,000, respectively, based on quoted
market prices.
F-39
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NYLIAC is exposed to credit-related losses in the event that a counterparty
fails to perform its obligations under contractual terms. The credit exposure
of derivative financial instruments is represented by the sum of the fair val-
ues of contracts with each counterparty, if the net value is positive, at the
reporting date.
NYLIAC deals with highly rated counterparties and does not expect the
counterparties to fail to meet their obligations. NYLIAC has controls in place
to monitor credit exposures by limiting transactions with specific
counterparties within specified dollar limits and assessing the future credit-
worthiness of counterparties. NYLIAC uses master netting agreements and ad-
justs transaction levels, when appropriate, to minimize risk.
Foreign Exchange Risk Management--NYLIAC enters into foreign exchange for-
ward contracts primarily as a portfolio hedge against foreign currency fluctu-
ations. The purpose of NYLIAC's foreign currency hedging activities is to pro-
tect it from the risk that eventual dollar net cash inflows from investment
income, or the eventual sale, of a foreign currency denominated investment,
will be adversely affected by changes in exchange rates.
NYLIAC's foreign exchange forward contracts involve the exchange of two cur-
rencies at a specified future date and at a specified price. The average term
of the contracts is three to six months.
The table below summarizes, by major currency, the contractual amounts of
NYLIAC's foreign exchange forward contracts. The amounts represent the U.S.
dollar equivalent of commitments to sell foreign currencies, translated at De-
cember 31, 1995 and 1994 exchange rates (in thousands):
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Japanese Yen............................................... $ 49,000 $ 29,000
French Francs.............................................. 24,000 27,000
Italian Lire............................................... 21,000 14,000
Other...................................................... 107,000 92,000
-------- --------
Total.................................................... $201,000 $162,000
======== ========
</TABLE>
The fair value of foreign exchange forward contracts at December 31, 1995
and 1994 was $(2,746,000) and $(1,046,000), respectively, and was based on
current market rates.
NYLIAC is exposed to credit-related losses in the event of non-performance
by counterparties, which could result in an unhedged position. NYLIAC deals
with highly rated, investment grade counterparties and does not expect the
counterparties to fail to meet their obligations under the contracts. For con-
tracts with counterparties where no master netting arrangement exists in the
event of default on the part of the counterparty, credit exposure is defined
as the fair value of contracts in a gain position at the reporting date.
Credit exposure to counterparties where a master netting arrangement is in
place in the event of default is defined as the net fair value, if positive,
of all outstanding contracts with each specific counterparty. The credit expo-
sure of NYLIAC's foreign exchange forward contracts at December 31, 1995 and
1994 was $137,000 and $26,000, respectively.
F-40
<PAGE>
NEW YORK LIFE
INSURANCE AND
ANNUITY CORPORATION
(A WHOLLY OWNED SUBSIDI-
ARY OF
NEW YORK LIFE INSURANCE
COMPANY)
Commodity Management--In 1994, NYLIAC entered into a $10,145,000 notional
gold swap in order to hedge variable interest payments on a gold denominated
Eurobond. The bond pays interest in U.S. dollars based upon the prevailing
price of gold. Under the terms of the agreement, NYLIAC pays to the
counterparty the variable interest payments on the bond in exchange for a
fixed payment in U.S. dollars at 8.46%. The counter party is highly rated and
NYLIAC does not expect the counterparty to fail to meet its obligation. The
fair value of the swap at December 31, 1995 and 1994 was $1,244,000 and
$51,000, respectively, based on current market quotes.
- -------------------------------------------------------------------------------
NOTE 13--Commitments and Contingencies
- -------------------------------------------------------------------------------
Litigation--The New York State Supreme Court on January 31, 1996 approved the
settlement of a consolidated nationwide class action lawsuit alleging certain
sales practice claims against NYLIAC and New York Life. In entering into the
settlement, NYLIAC specifically denied any wrongdoing. The class consists of
approximately three million policyowners who purchased whole life or universal
life policies from January 1, 1982 through December 31, 1994. Appeals from the
order may be filed within the prescribed statutory period. Under the terms of
the settlement, the class members receive benefits intended to address the is-
sues presented in the case or an opportunity to redress individual claims in
an alternative dispute resolution process. The settlement (including awards
made in an alternative dispute resolution process) will not have a material
adverse effect upon NYLIAC's financial position, and NYLIAC believes that, af-
ter consideration of provisions made, the settlement will not have a material
adverse effect on operating results. NYLIAC, its affiliates and its agents
have been released from liability to class members for transactions during the
class period relating to the sales practice claims in the lawsuits.
There are also actions in various jurisdictions by individual policyowners,
many of whom excluded themselves from the settlement of the nationwide class
action. Most of the these actions seek substantial or unspecified compensatory
and punitive damages.
NYLIAC is also a defendant in other actions arising from its insurance and
investment operations, including actions involving retail sales practices.
Most of these actions also seek substantial or unspecified compensatory and
punitive damages. NYLIAC is also from time to time involved as a party in var-
ious governmental, administrative and investigative proceedings and inquiries.
Given the uncertain nature of litigation and regulatory inquiries, the out-
come of the above and other actions pending against NYLIAC cannot be predict-
ed. NYLIAC nevertheless believes that the ultimate outcome of all pending lit-
igation should not have a material adverse effect on NYLIAC's financial posi-
tion; however, it is possible that settlements or adverse determinations in
one or more actions or other proceedings in the future could have a material
adverse effect on NYLIAC's operating results for a given year.
Loaned Securities and Repurchase Agreements--NYLIAC participates in a secu-
rities lending program for the purpose of enhancing income on securities held.
At December 31, 1995, $1,222,000,000 ($1,143,000,000 at December 31, 1994) of
NYLIAC's bonds were on loan to others, but were fully collateralized in an ac-
count held in trust for NYLIAC. Such assets reflect the extent of NYLIAC's in-
volvement in securities lending, not its risk of loss.
F-41
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NYLIAC has entered into agreements to sell and repurchase securities for the
purpose of enhancing income on securities held. Under these agreements, NYLIAC
obtains the use of funds from a broker for approximately one month. The lia-
bility reported in the Statement of Financial Position at December 31, 1995 of
$86,000,000 ($254,000,000 at December 31, 1994) is considered to be fair val-
ue. The investments acquired with the funds received from the securities sold
are generally included in short-term investments.
F-42
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------------------------------
To the Board of Directors and Stockholder of
New York Life Insurance and Annuity Corporation
In our opinion, the accompanying statement of financial position and the re-
lated statements of operations, of changes in surplus and of cash flows pres-
ent fairly, in all material respects, the financial position of New York Life
Insurance and Annuity Corporation at December 31, 1995 and 1994, and the re-
sults of its operations and its cash flows for each of the three years in the
period ended December 31, 1995 in conformity with generally accepted account-
ing principles (practices prescribed or permitted by insurance regulatory au-
thorities, see Note 2). These financial statements are the responsibility of
the Corporation'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 generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assur-
ance 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 princi-
ples 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.
As described in Note 2, in 1995 the Corporation changed its accounting policy
for reporting the effect of changes in the Differential Earnings Rate on its
equity base tax.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
February 16, 1996
F-43
<PAGE>
PART C
------
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
a. Financial Statements
All Required financial statements are included in Part B of this
Registration Statement.
b. Exhibits.
(1)- Resolutions of the Board of Directors of New York Life Insurance and
Annuity Corporation ("NYLIAC") authorizing establishment of the
Separate Accounts - previously filed as Exhibit 1.A(1) to Form N-8B-2.
(2)- Not applicable.
(3)- (a) Distribution Agreement between NYLIFE Securities, Inc. and
NYLIAC - previously filed as Exhibit 1.A(3)(a) to Post-Effective
Amendment No.1. to Form N-4.
(b) Distribution Agreement between NYLIFE Distributors, Inc. and
NYLIAC - previously filed as Exhibit 3(b) to Post-Effective
Amendment No.5 to Form N-4 for NYLIAC Variable Annuity Separate
Account-I (File No. 33-53342).
(c) Form of Agreement among New York Life Insurance Company, NYLIFE
Securities Inc., NYLIAC and its agent (and referenced Agent's
Contract)-Previously filed as Exhibit 1.(3)(a) to Pre-Effective
Amendment No. 1.
(4)- (a) Specimen Non-Qualified Flexible Premium Policy- Previously filed
as Exhibit 1.A(5)(a) to Form N-8B-2.
(b) Specimen Non-Qualified Single Premium Policy- Previously filed as
Exhibit 1.A(5)(b) to Form N-8B-2.
(5)- Forms of Application for a Policy- previously filed as Exhibit 1(10)
to Pre-Effective Amendment No. 1.
(6)- (a) Certificate of Incorporation of NYLIAC- previously filed as
Exhibit 1.A.(6)(a) to Form N-8B-1.
(b) By-Laws of NYLIAC- previously filed as Exhibit 1.A(6)(b) to
Form N-8B-2.
(7)- Not applicable.
(8)- Service Agreement between New York Life Insurance Company and NYLIAC
(including Amendments)-Previously filed as Exhibit 1.8 to Post-
Effective Amendment No. 1.
(9)- Opinion and Consent of Robert J. Hebron, Esq.- filed herewith.
(10)- (a) Consent of Price Waterhouse, LLP - filed herewith
C-1
<PAGE>
(b) Powers of Attorney for the Directors and Officers of NYLIAC -
previously filed as Exhibit 10(b) to Post-Effective Amendment No.
5 to Form N-4 for NYLIAC Variable Annuity Separate Account-I (File
No.33-53342).
(c) Power of Attorney for Maryann L. Ingenito - previously filed as
exhibit 10(c) to Post-Effective Amendment No. 4 for NYLIAC
Variable Annuity Separate Account I (File No.33-53342).
(11)- Not applicable.
(12)- Not applicable.
(13)- Not applicable.
(14)- Financial Data Schedule - filed herewith.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR.
The business address of each director and officer of NYLIAC is 51 Madison
Avenue, New York, NY 10010.
Directors:
---------
Jay S. Calhoun Vice President and Treasurer
Richard M. Kernan, Jr.
Lee M. Gammill, Jr.
Gary R. McPhail Executive Vice President
Robert D. Rock Senior Vice President
Frederick J. Sievert Executive Vice President
Stephen N. Steinig Senior Vice President and Chief Actuary
Seymour Sternberg President
Officers:
--------
Seymour Sternberg President
Gary R. McPhail Executive Vice President
Frederick J. Sievert Executive Vice President
Walter W. Brady Senior Vice President
Marc J. Chalfin Senior Vice President
Michael Gallo Senior Vice President
Solomon Goldfinger Senior Vice President
Jean E. Hoysradt Senior Vice President
Robert Hynes Senior Vice President
Gerald Kaplan Senior Vice President and Tax Counsel
Paul Morris Senior Vice President
Frank J. Ollari Senior Vice President
Robert D. Rock Senior Vice President
Stephen N. Steinig Senior Vice President and Chief Actuary
Ralph P. Casale Vice President
William Y. Cheng Vice President
Henry Ciapas Vice President
John A. Cullen Vice President and Assistant Controller
Jay S. Calhoun Vice President and Treasurer
Melvin J. Feinberg Vice President
Jane L. Hamrick Vice President and Actuary
C-2
<PAGE>
<TABLE>
<S> <C>
Celia M. Holtzberg Vice President
Maryann L. Ingenito Vice President and Controller
Himi L. Kittner Vice President
David J. Krystel Vice President
Thomas S. McArdle Vice President
Daniel J. McKillop Vice President
John R. Meyer Vice President
Michael M. Oleske Vice President and Associate Tax Counsel
Thomas J. Warga Vice President and General Auditor
Richard W. Zuccaro Vice President and Assistant Controller
George J. Trapp Secretary
</TABLE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH DEPOSITOR OR
REGISTRANT
The Depositor, NYLIAC, is a wholly-owned subsidiary of New York Life
Insurance Company ("New York Life"). The Registrant is a segregated asset
account of NYLIAC.
The following chart indicates the persons presumed to be controlled by New
York Life:/+/
NYLIFE Inc. is the parent company of those companies marked with an
asterisk"*" below. Subsidiaries of other subsidiaries are indented accordingly.
<TABLE>
<CAPTION>
Jurisdiction of Percent of Voting
Name Organization Securities Owned
- ---- --------------- -----------------
<S> <C> <C>
*Aegis Technologies, Inc. Delaware 94.15%
Personal Financial Centers, Inc. Delaware
*Eagle Strategies Corp. Arizona 100%
*Greystone Realty Corporation, which owns Delaware 100%
100% of:
Greystone Realty Advisers, Inc. Delaware
Greystone Realty Finance, Inc. Delaware
Greystone Realty Investors, Inc. Delaware
Greystone Realty Management, Inc. Delaware
Greystone Realty Partners, Inc. Delaware
*MacKay-Shields Financial Corporation Delaware 100%
The MainStay Funds Massachussetts ***
MainStay Institutional Funds, Inc. Maryland ***
*Monitor Capital Advisors, Inc. Delaware 100%
*MSC Holding, Inc. (formerly Magnus Software Georgia 83.8%
Corporation)
*NAFCO Inc., Delaware 100%
which owns 83.33% of the shares of:
NYLIFE Structured Asset Management Company, Ltd. Texas
(the remaining 16.67% is owned by NYLIFE
Depositary Corp.)
*New York Life Capital Corporation Delaware 100%
New York Life Foundation New York **
New York Life Fund, Inc. New York ****
</TABLE>
C-3
<PAGE>
<TABLE>
<S> <C> <C>
New York Life Insurance and Annuity Corporation Delaware 100%
*New York Life International Investment Inc., Delaware 100%
which owns 100% of the shares of:
Monetary Research Ltd. and Bermuda
Quorum Capital Management Limited, United Kingdom
which owns 33.345% of the shares of
Japan Gamma Asset Management Limited Japan
New York Life MFA Series Fund, Inc. Maryland ****
*New York Life Settlement Corporation Delaware 100%
*New York Life Worldwide Holding, Inc., Delaware 100%
which owns 100% of the shares of:
New York Life Insurance Worldwide, Ltd., Bermuda
New York Life Worldwide (Bermuda) Ltd., Bermuda
New York Life Worldwide Capital Inc., Delaware
New York Life Worldwide Development Inc., Delaware
and 99.97% of the shares of
New York Life U.K., Ltd., which owns United Kingdom
100% of the shares of:
Windsor Insurance Services Limited
Life Assurance Management Corporation
Windsor Broking Services Limited
Windsor Home Loans Limited
Windsor Pension Trust Managers Limited
Windsor Trust Managers Limited
Windsor Investment Management Limited,
which owns 100% of the shares of:
WIM (Nominees) Limited
Windsor Estate Agency Limited
Windsor Starter Homes Limited
Windsor Commercial Loans Limited
Windsor Life Limited
Gresham Unit Trust Managers Limited
Gresham Mortgage Limited
Gresham Trustees Limited
Gresham Financial Services Limited
Windsor (U.K.) Holding Co. Ltd.
which owns 100% of the shares of:
Windsor Financial Management International, Ltd.
Windsor Unit Trust Nominees, Ltd.
Windsor Unit Trust, Ltd.
Windsor Investment Management, Ltd.
Windsor Life Insurance Co., Ltd.
which owns 100% of the shares of:
Aetna Pension Trustees, Ltd.
and owns 51% of the shares of:
KOHAP New York Life Insurance Ltd. South Korea
and owns 50.2% of the shares of:
P.T. Asuransi Jiwa Sewu-New York Life Indonesia
and owns 35% of the shares of:
GEO New York Life, S.A. Mexico
and 17% of the shares of:
Maxima, S.A. ASJP Argentina
and 26% of the shares of:
</TABLE>
C-4
<PAGE>
<TABLE>
<S> <C> <C>
La Buenos Aires-New York Life Vida, S.A. Argentina
and 26% of the shares of:
La Buenos Aires-New York Life Retiro, S.A. Argentina
and owns 31.25% of
Life Assurance Holding Corporation
which owns 100% of the shares of:
Windsor Life Assurance Company Limited
Gresham Life Assurance Society Limited
*NYL Benefit Services Company, Inc. Massachussetts 100%
which owns 100% of the shares of:
ADQ Insurance Agency, Inc. Massachussetts
*NYL Trust Company New York 100%
*NYLCO, Inc. New York 100%
*NYLICO Inc. (Formerly New Life York Capital Corp.) New York 100%
*NYLIFE Administration Corp. (doing business as Texas 80%
NYLACOR)
*NYLIFE Depositary Corporation, Delaware 100%
which owns 16.67% of the shares of
NYLIFE Structured Asset Management Texas
Company Ltd. (the remainder 83.33% is owned by
NAFCO Inc.)
*NYLIFE Distributors Inc. Delaware 100%
*NYLIFE Equity Inc. Delaware 100%
*NYLIFE Funding Inc. Delaware 100%
*NYLIFE Healthcare Management, Inc., Delaware 100%
which owns 100% of the shares of:
NYLCare Health Plans, Inc. (formerly Sanus Corp. Delaware 100%
Health Systems).
Avanti Health Systems, Inc. Texas
which owns 100% of the shares of:
Avanti of the District, Inc. Maryland
Avanti of Illinois, Inc. Illinois
Avanti of New York, Inc. New York
Avanti of New Jersey, Inc. New Jersey
New York Life and Health Insurance Company Delaware
NYLCare Health Plans of the Mid - Atlantic,Inc. Maryland
(80%; Physicians Health Services Foundation,Inc.
owns 20%)
which owns 100% of the shares of:
Physicians Health Services foundation, Inc. Maryland
HealthPlus - D.C, Inc. District of Columbia
</TABLE>
C-5
<PAGE>
<TABLE>
<S> <C>
Lonestar Holding co. Delaware
Lone Star Health Plan, Inc. Texas
NYLCare Health Plans of the Gulf Coast, Inc. Texas
NYLCare Health plans of Connecticut, Inc. Connecticut
NYLCare Health Plans of Louisiana, Inc. (99.98%; Louisiana
Patrick D. Seiter and E.L. Henry each own .02%
of the remaining stock)
NYLCare Health Plans of Maine, Inc. Maine
NYLCare Health Plans of the Midwest, Inc. Illinois
NYLCare Health Plans of New Jersey, Inc. New Jersey
NYLCare Health Plans of New York, Inc. New York
NYLCare Health Plans of the Southwest, Inc. Texas
NYLCare NC Holdings, Inc. Delaware
Wellpath Community Health Plans Holdings, North Carolina
LLC
NYLCare of Maine, L.P. Maine
Prime Provider Corp. New York
Prime Provider Corp. of Texas Texas
Sanus Dental Plan of New Jersey, Inc. New Jersey
Sanus Dental Plan of Texas, Inc. Texas
Sanus - New England, Inc. Delaware
Sanus - Northeast, Inc. Delaware
Sanus of Connecticut, Inc. Connecticut
Sanus of Maine, Inc. Delaware
Sanus of New York and New Jersey, Inc. New York
Sanus of Texas, Inc. Texas
Sanus Preferred Physicians, Inc. Texas
Sanus Preferred Providers West, Inc. California
Sanus Preferred Services, Inc. Maryland
Sanus Preferred Services of Illinois, Inc. Illinois
Sanus Reinsurance Company Arizona
Wellpath of Carolina, Inc. Delaware
Wellpath Community Health Plans, Inc. North Carolina
The ETHIX Corporation Delaware
ETHIX Assist, Inc. Oregon
ETHIX Great Lakes, Inc. Michigan
ETHIX Mid-Atlantic, Inc. Pennsylvania
PriMed, Inc. New Jersey
ETHIX Midlands, Inc. Delaware
ETHIX Mid-Rivers, Inc. Missouri
ETHIX National, Inc. Oregon
ETHIX Northwest Public Services, Inc. Washington
NYLCare Health Plans of the Northwest, Inc. Washington
NYLCare Plus, Inc. Washington
ETHIX Pacific, Inc. Oregon
ETHIX Risk Management, Inc. Oregon
ETHIX Southeast, Inc. North Carolina
ETHIX Southwest, Inc. (80%; Santa Rosa
Health Care corporation owns the remaining 20%)
Express Scripts, Inc. (71.4% of the total combined Delaware
Common stock and 96.2% of the voting rights)
Great Plains Reinsurance Company Arizona
</TABLE>
C-6
<PAGE>
<TABLE>
<S> <C> <C>
Practice Patterns Science, Inc. Delaware
ESI Canada Holdings, Inc. Canada
ESI Canada, Inc. Canada
IVTx of Houston, Inc. Texas
IVTx of Dallas, Inc. Texas
NYLIFE Inc. New York 100%
*(Companies marked with an asterisk herein are
subsidiaries of NYLIFE Inc.)
NYLIFE Insurance Company of Arizona Arizona 100%
*NYLIFE Realty Inc., Delaware 100%
CNP Realty Investments, Inc. Delaware
*NYLIFE Refinery Inc. Delaware 100%
*NYLIFE Resources Inc. Delaware 100%
*NYLIFE Securities Inc. New York 100%
*NYLTEMPS Inc. Delaware 100%
</TABLE>
- -------------------------
* Companies that are subsidiaries of NYLIFE Inc.
** New York Life Foundation does not issue voting securities.
*** New York Life, MacKay-Shields Financial Corporation and/or Monitor
Capital Advisor, Inc. serve as investment advisers to these entities.
**** New York Life serves as investment adviser to these entities, the shares of
which are held of record by separate accounts of New York Life (for the New
York Life Fund, Inc.) and NYLIAC (for the New York Life MFA Series Fund,
Inc.). New York Life disclaims any beneficial ownership and control of
these entities.
+ By including the indicated corporations in this list, New York Life is not
stating or admitting that said corporations are under its actual control;
rather, these corporations are listed here to ensure full compliance with the
requirements of this Form N-4.
ITEM 27. NUMBER OF CONTRACTOWNERS.
As of January 31, 1996, there were 41,516 owners of Qualified Policies
offered under NYLIAC MFA Separate Account-I
ITEM 28. INDEMNIFICATION
Reference is made to Article VIII of the Depositor's By-Laws.
New York Life maintains Directors and Officers Liability/Company
Reimbursement ("D&O") insurance which covers directors, officers and trustees of
New York Life, its subsidiaries, and its subsidiaries and certain affiliates
including the Depositor while acting in their capacity as such. The total
annual aggregate of D&O coverage is $100
C-7
<PAGE>
million applicable to all insureds under the D&O policies. There is no
assurance that such coverage will be maintained by New York Life or for the
Depositor in the future as, in the past, there have been large variances in the
availability of D&O insurance for financial institutions.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Depositor pursuant to the foregoing provisions, or otherwise, the Depositor
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Depositor of expenses incurred
or paid by a director, officer or controlling person of the Depositor in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Depositor will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 29 PRINCIPAL UNDERWRITER
(a) Investment companies (other than the Registrant) for which NYLIFE
Distributors Inc. is currently acting as underwriter:
NYLIAC Lifestages Annuity Separate Account
NYLIAC MFA Separate Account-II
NYLIAC Variable Annuity Separate Account-I
NYLIAC Variable Annuity Separate Account-II
NYLIAC Variable Universal Life Separate Account-I
NYLIAC Variable Universal Life Separate Account-II
NYLIAC VLI Separate Account
(b) Directors and Officers.
The business address of each director and officer of NYLIFE Distributors Inc. is
51 Madison Avenue, New York, New York 10010.
<TABLE>
<CAPTION>
Names of Directors and Officers Positions and Offices with Underwriter
------------------------------- --------------------------------------
<C> <C>
Richard A. Topp Director, President and Chief Executive Officer
Jefferson C. Boyce Director
Patrick G. Boyle Director
Alice T. Kane Director
Richard Wecker Director
Walter W. Ubl Director and Vice President
Thomas J. Warga Senior Vice President and General Auditor
Anthony Polis Vice President and Chief Financial Officer
Richard W. Zuccaro Tax Vice President
Jay S. Calhoun Vice President and Treasurer
Linda M. Livornese Vice President
John O'Byrne Vice President and Chief Compliance Officer
Frank Mistero Vice President
Robert E. Brady Vice President
Louis H. Adasse Corporate Vice President
Paul C. Miller Corporate Vice President
Arphielia Arizmendi Assistant Vice President
Antoinette B. Cirillo Assistant Vice President
George R. Daoust Assistant Vice President
Geraldine Lorito Assistant Vice President
Nancy Brenner Secretary
</TABLE>
C-8
<PAGE>
Sheila J. Kearney Assistant Secretary
(c) Commissions and Other Compensation
<TABLE>
<CAPTION>
Name of New Underwriting Compensation on
Principal Discounts and Redemption or Brokerage
Underwriter Commissions Annuitization Commission Compensation
- -------------------- ---------------- --------------- ---------- ------------
<S> <C> <C> <C> <C>
NYLIFE
Distributors Inc. -0- -0- -0- -0-
</TABLE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts and records required to be maintained by Section 31(a) of
the 1940 Act and the rules under it are maintained by NYLIAC at its home office,
51 Madison Avenue, New York, New York 10010, and at Cokesbury Road, Lebanon, New
Jersey 08833.
ITEM 31. MANAGEMENT SERVICES - Not applicable.
ITEM 32. UNDERTAKINGS
(a) Registrant undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than 16 months
old for so long as payments under the variable annuity contracts may be
accepted.
(b) Registrant undertakes to include a post card or similar written
communication affixed to or included in the prospectus that the applicant can
remove to send for a Statement of Additional Information.
(c) Registrant undertakes to deliver any Statement of Additional
Information and financial statements required to be made available under this
Form promptly upon written or oral request to NYLIAC at the address or phone
number listed in the prospectus.
SECTION 403(b) REPRESENTATIONS
Registrant represents that it is relying on a no-action letter dated
November 28, 1988, to the American Council of Life Insurance (Ref. No. IP-6-88)
regarding Sections 22(e), 27(c)(1), and 27(d) of the Investment Company Act of
1940, in connection with redeemability restrictions on Section 403(b) Policies,
and that paragraphs numbered (1) through (4) of that letter will be complied
with.
TEXAS OPTIONAL RETIREMENT PROGRAM: STATEMENT PURSUANT TO RULE 6c-7
Registrant relies on Rule 6c-7 under the Investment Company Act of
1940, and represents that the provisions of that Rule have been or will be
complied with.
C-9
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities Act
Rule 485(b) for effectiveness of this Amendment to the Registration Statement
and has caused this Amendment to the Registration Statement to be signed on its
behalf, in the City and State of New York on this 18th day of April, 1996.
NYLIAC MFA SEPARATE ACCOUNT-I
(Registrant)
By /s/David J. Krystel
--------------------
David J. Krystel
Vice President
NEW YORK LIFE INSURANCE AND
ANNUITY CORPORATION
(Depositor)
By /s/David J. Krystel
---------------------
David J. Krystel
Vice President
As required by the Securities Act of 1933, this Amendment to the Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
Jay S. Calhoun* Vice President, Treasurer and Director (Principal
Financial Officer)
Lee M. Gammill, Jr.* Director
Maryann L. Ingenito* Vice President and Controller (Principal
Accounting Officer)
Richard M. Kernan, Jr.* Director
Gary R. McPhail* Executive Vice President and Director
Robert D. Rock* Senior Vice President and Director
Frederick J. Sievert* Executive Vice President and Director
Stephen N. Steinig* Senior Vice President, Chief Actuary and Director
Seymour Sternberg* President and Director (Principal Executive Officer)
*By /s/ David J. Krystel
------------------------------------------
David J. Krystel
Attorney-in-Fact
April 18, 1996
S-1
<PAGE>
EXHIBITS:
EXHIBIT 9 - OPINION AND CONSENT OF ROBERT J. HEBRON, ESQ.
EXHIBIT 10(a) - CONSENT OF PRICE WATERHOUSE, LLP
EXHIBIT 14 - FINANCIAL DATA SCHEDULE
<PAGE>
EXHIBIT 9
OPINION AND CONSENT OF
ROBERT J. HEBRON, ESQ.
<PAGE>
[NEW YORK LIFE] The Company You Keep
NEW YORK LIFE INSURANCE COMPANY
51 Madison Avenue, New York, NY 10010
(212) 576-7000
April 16, 1996
New York Life Insurance
and Annuity Corporation
51 Madison Avenue
New York, NY 10010
RE: NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
MFA SEPARATE ACCOUNT-I
-----------------------------------------------
Ladies and Gentlemen:
This opinion is furnished in connection with the filing by New York Life
Insurance and Annuity Corporation ("NYLIAC") of Post-Effective Amendment No. 15
to the registration statement on Form N-4 ("Registration Statement") under the
Securities Act of 1933, as amended, of NYLIAC MFA Separate Account-I ("Separate
Account-I"). Separate Account I receives and invests premiums allocated to it
under a flexible premium multi-funded variable retirement annuity policy
("Annuity Contract"). The Annuity Contract is offered in the manner described
in the Registration Statement.
In my capacity as Vice President and Associate General Counsel for New York
Life Insurance Company, I have authority to assist the General Counsel in
supervising and administering the general business affairs of the Office of the
General Counsel, including authority to act with respect to any matter within
his authority or responsibility relating to legal affairs. This would include
general supervision of NYLIAC's legal affairs. In this capacity, I am familiar
with Separate Account-I, which was established as of May 27,1983, pursuant to a
resolution adopted by the Board of Directors of NYLIAC for a separate account
for assets applicable to the Annuity Contract, pursuant to the provisions of
Section 2932 of the Delaware Insurance Code. In addition, I have made such
examination of the law and have examined such corporate records and such other
documents as I consider appropriate as a basis for the opinion hereinafter
expressed. On the basis of such examination, it is my professional opinion
that:
<PAGE>
New York Life Insurance
and Annuity Company
April 16, 1996
Page 2
1. NYLIAC is a corporation duly organized and validly existing under the
laws of the State of Delaware.
2. Separate Account-I is an account established and maintained by NYLIAC
pursuant to the laws of the State of Delaware, under which income,
capital gains and capital losses incurred on the assets of Separate
Account-I are credited to or charged against the assets of Separate
Account-I without regard to the income, capital gains or capital losses
arising out of any other business which NYLIAC may conduct.
3. The Annuity Contracts have been duly authorized by NYLIAC and, when sold
in jurisdictions authorizing such sales, in accordance with the
Registration Statement, will constitute validly issued and binding
obligations of NYLIAC in accordance with their terms.
4. Each owner of an Annuity Contract will not be subject to any deductions,
charges, or assessments imposed by NYLIAC other than those provided in
the Annuity Contract.
I consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Robert J. Hebron
--------------------
Robert J. Hebron
Vice President and
Associate General Counsel
<PAGE>
EXHIBIT 10(a)
CONSENT OF PRICE WATERHOUSE, LLP
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 15 to the registration
statement on Form N-4 (the "Registration Statement") of our report dated
February 16, 1996, relating to the financial statements of New York Life
Insurance and Annuity Corporation, and of our report dated February 15, 1996,
relating to the financial statements and selected per unit data of New York Life
Insurance and Annuity Corporation MFA Separate Accounts I & II, which appear in
such Statement of Additional Information, and to the incorporation by reference
of our reports into the Prospectus which constitutes part of this Registration
Statement. We also consent to the reference to us under the heading
"Independent Accountants" in such Statement of Additional Information and to the
reference to us under the heading "Condensed Financial Information" in such
Prospectus.
PRICE WATERHOUSE, LLP
1177 Avenue of the Americas
New York, New York
April 12, 1996
<PAGE>
EXHIBIT 14
FINANCIAL DATA SCHEDULE
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NYLIAC MFA
SEPARATE ACCOUNT I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NAME> SINGLE QUALIFIED COMMON STOCK
<NUMBER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 79,132,373
<INVESTMENTS-AT-VALUE> 88,039,139
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 88,039,139
<TOTAL-ASSETS> 88,039,139
<PAYABLE-FOR-SECURITIES> 280,389
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 280,389
<TOTAL-LIABILITIES> 280,389
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 36,783,468
<SHARES-COMMON-STOCK> 2,674,820
<SHARES-COMMON-PRIOR> 2,852,828
<ACCUMULATED-NII-CURRENT> 3,274,710
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 38,965,236
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,906,766
<NET-ASSETS> 87,758,750
<DIVIDEND-INCOME> 8,109,420
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,056,923
<NET-INVESTMENT-INCOME> (3,292)
<REALIZED-GAINS-CURRENT> 1,549,773
<APPREC-INCREASE-CURRENT> 10,947,712
<NET-CHANGE-FROM-OPS> 19,549,981
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (178,008)
<ACCUMULATED-NII-PRIOR> 3,278,002
<ACCUMULATED-GAINS-PRIOR> 30,315,200
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NYLIAC MFA
SEPARATE ACCOUNT I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NAME> FLEXIBLE QUALIFIED COMMON STOCK
<NUMBER> 2
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 133,779,764
<INVESTMENTS-AT-VALUE> 156,788,619
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 156,788,619
<TOTAL-ASSETS> 156,788,619
<PAYABLE-FOR-SECURITIES> 698,557
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 698,557
<TOTAL-LIABILITIES> 698,557
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 60,207,504
<SHARES-COMMON-STOCK> 5,051,929
<SHARES-COMMON-PRIOR> 5,351,888
<ACCUMULATED-NII-CURRENT> 1,976,568
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 71,336,229
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23,008,855
<NET-ASSETS> 156,090,062
<DIVIDEND-INCOME> 14,452,822
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 2,643,396
<NET-INVESTMENT-INCOME> (733,385)
<REALIZED-GAINS-CURRENT> 3,154,362
<APPREC-INCREASE-CURRENT> 19,256,110
<NET-CHANGE-FROM-OPS> 34,219,898
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (299,959)
<ACCUMULATED-NII-PRIOR> 2,709,954
<ACCUMULATED-GAINS-PRIOR> 55,527,717
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NYLIAC MFA
SEPARATE ACCOUNT I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NAME> SINGLE QUALIFIED BOND
<NUMBER> 3
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 43,152,432
<INVESTMENTS-AT-VALUE> 44,793,075
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 44,793,075
<TOTAL-ASSETS> 44,793,075
<PAYABLE-FOR-SECURITIES> 146,292
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 146,292
<TOTAL-LIABILITIES> 146,292
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 18,977,255
<SHARES-COMMON-STOCK> 1,570,132
<SHARES-COMMON-PRIOR> 1,851,148
<ACCUMULATED-NII-CURRENT> 23,135,707
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,045,207
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,640,644
<NET-ASSETS> 44,646,783
<DIVIDEND-INCOME> 2,764,187
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 574,862
<NET-INVESTMENT-INCOME> 2,203,508
<REALIZED-GAINS-CURRENT> 584,378
<APPREC-INCREASE-CURRENT> 4,226,104
<NET-CHANGE-FROM-OPS> 6,999,806
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (281,016)
<ACCUMULATED-NII-PRIOR> 20,932,198
<ACCUMULATED-GAINS-PRIOR> 460,829
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NYLIAC MFA
SEPARATE ACCOUNT I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NAME> FLEXIBLE QUALIFIED BOND
<NUMBER> 4
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 70,428,380
<INVESTMENTS-AT-VALUE> 74,615,600
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 74,615,600
<TOTAL-ASSETS> 74,615,600
<PAYABLE-FOR-SECURITIES> 338,134
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 338,134
<TOTAL-LIABILITIES> 338,134
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 34,859,053
<SHARES-COMMON-STOCK> 2,773,811
<SHARES-COMMON-PRIOR> 2,989,443
<ACCUMULATED-NII-CURRENT> 35,075,777
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 458,795
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,187,220
<NET-ASSETS> 74,277,465
<DIVIDEND-INCOME> 4,602,511
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,291,338
<NET-INVESTMENT-INCOME> 3,342,684
<REALIZED-GAINS-CURRENT> (272,632)
<APPREC-INCREASE-CURRENT> 7,776,856
<NET-CHANGE-FROM-OPS> 10,815,396
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (215,632)
<ACCUMULATED-NII-PRIOR> 31,733,093
<ACCUMULATED-GAINS-PRIOR> 731,427
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NYLIAC MFA
SEPARATE ACCOUNT I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NAME> SINGLE QUALIFIED MONEY MARKET
<NUMBER> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 8,266,224
<INVESTMENTS-AT-VALUE> 8,265,840
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 8,265,840
<TOTAL-ASSETS> 8,265,840
<PAYABLE-FOR-SECURITIES> 27,206
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 27,206
<TOTAL-LIABILITIES> 27,206
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,776,177
<SHARES-COMMON-STOCK> 443,723
<SHARES-COMMON-PRIOR> 489,793
<ACCUMULATED-NII-CURRENT> 4,490,670
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (451)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (385)
<NET-ASSETS> 8,238,634
<DIVIDEND-INCOME> 471,058
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 109,009
<NET-INVESTMENT-INCOME> 363,129
<REALIZED-GAINS-CURRENT> (165)
<APPREC-INCREASE-CURRENT> 43
<NET-CHANGE-FROM-OPS> 361,927
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (46,070)
<ACCUMULATED-NII-PRIOR> 4,127,540
<ACCUMULATED-GAINS-PRIOR> (286)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NYLIAC MFA
SEPARATE ACCOUNT I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NAME> FLEXIBLE QUALIFIED MONEY MARKET
<NUMBER> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 11,192,743
<INVESTMENTS-AT-VALUE> 11,192,133
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 11,192,133
<TOTAL-ASSETS> 11,192,133
<PAYABLE-FOR-SECURITIES> 50,908
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 50,908
<TOTAL-LIABILITIES> 50,908
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,930,731
<SHARES-COMMON-STOCK> 637,190
<SHARES-COMMON-PRIOR> 691,078
<ACCUMULATED-NII-CURRENT> 5,259,823
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (360)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (609)
<NET-ASSETS> 11,141,225
<DIVIDEND-INCOME> 631,218
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 204,305
<NET-INVESTMENT-INCOME> 428,934
<REALIZED-GAINS-CURRENT> (127)
<APPREC-INCREASE-CURRENT> (32)
<NET-CHANGE-FROM-OPS> 426,754
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (53,888)
<ACCUMULATED-NII-PRIOR> 4,830,890
<ACCUMULATED-GAINS-PRIOR> (233)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
