<PAGE> 1
SUPPLEMENT DATED JANUARY 1, 2001
to
PROSPECTUS DATED MAY 1, 2000
for
Last Survivor Flexible Premium Variable Universal Life Insurance Policy
MONY Life Insurance Company
MONY Variable Account L
Effective January 1, 2001 this Supplement updates certain information contained
in your Prospectus. Please read it and keep it with your prospectus for future
reference.
1. THE DESCRIPTION OF THE MANAGED PORTFOLIO ON PAGE 19 IS AMENDED TO READ
AS FOLLOWS:
<TABLE>
<S> <C> <C>
--------------------------------------------------------------------------------------------
PORTFOLIO AND INVESTMENT
SUB-ADVISER INVESTMENT ADVISER FEE SUB-INVESTMENT ADVISER FEE
--------------------------------------------------------------------------------------------
MANAGED PORTFOLIO Annual rate of 0.80% of the Wellington Management
Wellington Management first $400 million, 0.75% of Company's fee for the assets
Company, LLP and Sanford C. the next $400 million and of the portfolio it manages
Bernstein & Co., LLC 0.70% in excess of $800 is an annual rate of 0.40%
million of the average daily up to $500 million, 0.35% of
net assets the next $500 million, 0.30%
of the next $1 billion and
0.25% in excess of $2
billion of the portfolio's
average daily net assets.
Sanford C. Bernstein & Co.'s
fee for the assets of the
portfolio it manages is an
annual rate of 0.40% up to
$10 million, 0.30% from $10
million to $50 million,
0.20% from $50 million to
$100 million, and 0.10% in
excess of $100 million of
the portfolio's average
daily net assets.
--------------------------------------------------------------------------------------------
</TABLE>
Form No. 14431 SL (Supp 1/01/01) Registration No. 333-71677
<PAGE> 2
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 3
FINANCIAL STATEMENTS AND NOTES TO FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
With respect to MONY Variable Account L:
Statement of Assets and Liabilities as of September 30,
2000 (unaudited)....................................... F-2
Statement of Changes in Net Assets for the periods ended
September 30, 2000 (unaudited)......................... F-4
Statement of Operations for the periods ended September
30, 2000 (unaudited)................................... F-6
Notes to Financial Statements (unaudited)................. F-8
With respect to MONY Life Insurance Company:
Unaudited interim condensed consolidated balance sheets as
of September 30, 2000 and December 31, 1999............ F-11
Unaudited interim condensed consolidated statements of
income and comprehensive income for the three-month
periods ended September 30, 2000 and 1999.............. F-12
Unaudited interim condensed consolidated statements of
income and comprehensive income for the nine-month
periods ended September 30, 2000 and 1999.............. F-13
Unaudited interim condensed consolidated statement of
changes in shareholders' equity for the nine-month
period ended September 30, 2000........................ F-14
Unaudited interim condensed consolidated statements of
cash flows for the nine-month periods ended September
30, 2000 and 1999...................................... F-15
Notes to unaudited interim condensed consolidated
financial statements................................... F-16
</TABLE>
F-1
<PAGE> 4
MONY
VARIABLE ACCOUNT L
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
MONY CUSTOM ESTATE MASTER
----------------------------------------------------------------------------------------------
MONY SERIES FUND, INC. ENTERPRISE ACCUMULATION TRUST
----------------------- --------------------------------------------------------------------
MONEY LONG TERM SMALL COMPANY INTERNATIONAL
MARKET BOND EQUITY VALUE MANAGED GROWTH GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- ------------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Shares held in respective
Funds......................... 60,801 337 269 417 83 775 4,412
======= ====== ======= ======= ====== ====== =======
Investments at cost............. $60,801 $4,205 $11,270 $13,354 $2,658 $6,255 $27,778
======= ====== ======= ======= ====== ====== =======
Investments in respective Funds,
at net asset value............ $60,801 $4,212 $ 9,214 $10,904 $1,972 $5,509 $25,416
Amount due from MONY............ 0 0 0 0 0 0 0
Amount due from respective
Funds......................... 0 0 74 74 0 0 0
------- ------ ------- ------- ------ ------ -------
Total assets............ 60,801 4,212 9,288 10,978 1,972 5,509 25,416
------- ------ ------- ------- ------ ------ -------
LIABILITIES
Amount due to MONY.............. 51 2 77 77 1 4 25
Amount due to respective
Funds......................... 0 0 0 0 0 0 0
------- ------ ------- ------- ------ ------ -------
Total liabilities....... 51 2 77 77 1 4 25
------- ------ ------- ------- ------ ------ -------
Net assets...................... $60,750 $4,210 $ 9,211 $10,901 $1,971 $5,505 $25,391
======= ====== ======= ======= ====== ====== =======
Net assets consist of:
Contractholders' net
payments.................... $59,040 $4,204 $ 9,007 $11,316 $1,993 $5,770 $27,553
Undistributed net investment
income (loss)............... 1,710 (2) 2,224 2,045 679 526 219
Accumulated net realized gain
(loss) on investments....... 0 1 36 (10) (15) (45) (19)
Net unrealized appreciation
(depreciation) of
investments................. 0 7 (2,056) (2,450) (686) (746) (2,362)
------- ------ ------- ------- ------ ------ -------
Net assets...................... $60,750 $4,210 $ 9,211 $10,901 $1,971 $5,505 $25,391
======= ====== ======= ======= ====== ====== =======
Number of units outstanding*.... 5,864 421 748 1,085 200 637 2,736
------- ------ ------- ------- ------ ------ -------
Net asset value per unit
outstanding*.................. $ 10.36 $10.00 $ 12.31 $ 10.05 $ 9.86 $ 8.64 $ 9.28
======= ====== ======= ======= ====== ====== =======
<CAPTION>
MONY CUSTOM ESTATE MASTER
---------------------------------------------------------
ENTERPRISE ACCUMULATION TRUST
---------------------------------------------------------
SMALL COMPANY EQUITY EQUITY HIGH
GROWTH INCOME GROWTH & INCOME YIELD
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------- ---------- --------------- ----------
<S> <C> <C> <C> <C>
ASSETS
Shares held in respective
Funds......................... 793 1,437 1,371 879
====== ====== ====== ======
Investments at cost............. $6,735 $7,722 $8,693 $4,262
====== ====== ====== ======
Investments in respective Funds,
at net asset value............ $7,457 $7,805 $8,695 $4,201
Amount due from MONY............ 0 0 0 0
Amount due from respective
Funds......................... 0 0 0 0
------ ------ ------ ------
Total assets............ 7,457 7,805 8,695 4,201
------ ------ ------ ------
LIABILITIES
Amount due to MONY.............. 7 4 7 2
Amount due to respective
Funds......................... 0 0 0 0
------ ------ ------ ------
Total liabilities....... 7 4 7 2
------ ------ ------ ------
Net assets...................... $7,450 $7,801 $8,688 $4,199
====== ====== ====== ======
Net assets consist of:
Contractholders' net
payments.................... $6,666 $7,676 $8,661 $4,204
Undistributed net investment
income (loss)............... 43 30 15 56
Accumulated net realized gain
(loss) on investments....... 19 12 10 0
Net unrealized appreciation
(depreciation) of
investments................. 722 83 2 (61)
------ ------ ------ ------
Net assets...................... $7,450 $7,801 $8,688 $4,199
====== ====== ====== ======
Number of units outstanding*.... 670 748 858 420
------ ------ ------ ------
Net asset value per unit
outstanding*.................. $11.12 $10.43 $10.13 $10.00
====== ====== ====== ======
</TABLE>
---------------
* Units outstanding have been rounded for presentation purposes.
See notes to financial statements.
F-2
<PAGE> 5
MONY
VARIABLE ACCOUNT L
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
MONY CUSTOM ESTATE MASTER
------------------------------------------------------------------------------------------------
ENTERPRISE ACCUMULATION
TRUST FIDELITY VARIABLE INSURANCE DREYFUS FUND JANUS ASPEN SERIES
------------------------- ------------------------------------------ -----------------------
VIP III
CAPITAL MULTI-CAP VIP VIP II GROWTH AGGRESSIVE
APPRECIATION GROWTH GROWTH CONTRAFUND OPPORTUNITIES GROWTH BALANCED
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------ ---------- ----------- ----------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Shares held in respective
Funds.......................... 1,280 1,242 135 437 78 281 78
======= ======= ====== ======= ====== ======= ======
Investments at cost.............. $10,260 $16,455 $6,907 $11,051 $1,669 $15,557 $2,087
======= ======= ====== ======= ====== ======= ======
Investments in respective Funds,
at net asset value............. $10,100 $16,171 $6,674 $11,066 $1,545 $14,845 $1,962
Amount due from MONY............. 0 0 0 0 0 0 0
Amount due from respective
Funds.......................... 0 0 0 74 0 0 0
------- ------- ------ ------- ------ ------- ------
Total assets............. 10,100 16,171 6,674 11,140 1,545 14,845 1,962
------- ------- ------ ------- ------ ------- ------
LIABILITIES
Amount due to MONY............... 9 13 6 78 1 13 2
Amount due to respective Funds... 0 0 0 0 0 0 0
------- ------- ------ ------- ------ ------- ------
Total liabilities........ 9 13 6 78 1 13 2
------- ------- ------ ------- ------ ------- ------
Net assets....................... $10,091 $16,158 $6,668 $11,062 $1,544 $14,832 $1,960
======= ======= ====== ======= ====== ======= ======
Net assets consist of:
Contractholders' net
payments..................... $ 9,775 $16,520 $6,754 $11,050 $1,576 $14,760 $1,921
Undistributed net investment
income (loss)................ 484 (9) 152 (4) 104 920 166
Accumulated net realized gain
(loss) on investments........ (8) (69) (5) 1 (12) (136) (2)
Net unrealized appreciation
(depreciation) of
investments.................. (160) (284) (233) 15 (124) (712) (125)
------- ------- ------ ------- ------ ------- ------
Net assets....................... $10,091 $16,158 $6,668 $11,062 $1,544 $14,832 $1,960
======= ======= ====== ======= ====== ======= ======
Number of units outstanding*..... 999 1,804 630 1,100 158 1,667 190
------- ------- ------ ------- ------ ------- ------
Net asset value per unit
outstanding*................... $ 10.10 $ 8.96 $10.58 $ 10.06 $ 9.77 $ 8.90 $10.32
======= ======= ====== ======= ====== ======= ======
<CAPTION>
MONY CUSTOM ESTATE MASTER
----------------------------------------------------
JANUS ASPEN SERIES
------------------------- DREYFUS
DREYFUS SOCIALLY
CAPITAL WORLDWIDE STOCK RESPONSIBLE
APPRECIATION GROWTH INDEX GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------ ---------- ---------- -----------
<S> <C> <C> <C> <C>
ASSETS
Shares held in respective
Funds.......................... 403 436 521 169
======= ======= ======= ======
Investments at cost.............. $12,890 $20,200 $19,961 $6,946
======= ======= ======= ======
Investments in respective Funds,
at net asset value............. $13,144 $18,529 $19,580 $6,734
Amount due from MONY............. 0 0 0 0
Amount due from respective
Funds.......................... 0 74 0 74
------- ------- ------- ------
Total assets............. 13,144 18,603 19,580 6,808
------- ------- ------- ------
LIABILITIES
Amount due to MONY............... 11 86 18 75
Amount due to respective Funds... 0 0 0 0
------- ------- ------- ------
Total liabilities........ 11 86 18 75
------- ------- ------- ------
Net assets....................... $13,133 $18,517 $19,562 $6,733
======= ======= ======= ======
Net assets consist of:
Contractholders' net
payments..................... $12,896 $19,372 $19,862 $6,948
Undistributed net investment
income (loss)................ 50 818 50 (1)
Accumulated net realized gain
(loss) on investments........ (67) (2) 31 (2)
Net unrealized appreciation
(depreciation) of
investments.................. 254 (1,671) (381) (212)
------- ------- ------- ------
Net assets....................... $13,133 $18,517 $19,562 $6,733
======= ======= ======= ======
Number of units outstanding*..... 1,463 1,863 1,923 695
------- ------- ------- ------
Net asset value per unit
outstanding*................... $ 8.98 $ 9.94 $ 10.17 $ 9.69
======= ======= ======= ======
</TABLE>
---------------
* Units outstanding have been rounded for presentation purposes.
See notes to financial statements.
F-3
<PAGE> 6
MONY
VARIABLE ACCOUNT L
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MONY CUSTOM ESTATE MASTER
----------------------------------------------------------------------------------
MONY SERIES FUND, INC. ENTERPRISE ACCUMULATION TRUST
------------------------------- ------------------------------------------------
SMALL
MONEY LONG TERM COMPANY
MARKET BOND EQUITY VALUE MANAGED
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT* SUBACCOUNT
-------------- -------------- -------------- -------------- --------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
FEBRUARY 11, AUGUST 8, JANUARY 4, APRIL 10, APRIL 10,
2000** 2000** 2000** 2000*** 2000**
THROUGH THROUGH THROUGH THROUGH THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2000 2000 2000 2000 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
From operations:
Net investment income (loss)........ $ 1,710 $ (2) $ 2,224 $ 2,045 $ 679
Net realized gain (loss) on
investments....................... 0 1 36 (10) (15)
Net change in unrealized
appreciation (depreciation) of
investments....................... 0 7 (2,056) (2,450) (686)
------- ------ ------- ------- ------
Net increase (decrease) in net assets
resulting from operations........... 1,710 6 204 (415) (22)
------- ------ ------- ------- ------
From unit transactions:
Net proceeds from the issuance of
units............................. 62,533 4,416 9,330 11,621 2,139
Net asset value of units redeemed or
used to meet contract
obligations....................... (3,493) (212) (323) (305) (146)
------- ------ ------- ------- ------
Net increase from unit transactions... 59,040 4,204 9,007 11,316 1,993
------- ------ ------- ------- ------
Net increase in net assets............ 60,750 4,210 9,211 10,901 1,971
Net assets beginning of period........ 0 0 0 0 0
------- ------ ------- ------- ------
Net assets end of period*............. $60,750 $4,210 $ 9,211 $10,901 $1,971
======= ====== ======= ======= ======
Unit transactions:
Units outstanding beginning of
period............................ 0 0 0 0 0
Units issued during the period...... 6,207 442 775 1,115 215
Units redeemed during the period.... (343) (21) (27) (30) (15)
------- ------ ------- ------- ------
Units outstanding end of period....... 5,864 421 748 1,085 200
======= ====== ======= ======= ======
---------------
* Includes undistributed net
investment income (loss) of: $ 1,710 $ (2) $ 2,224 $ 2,045 $ 679
======= ====== ======= ======= ======
** Commencement of operations
<CAPTION>
MONY CUSTOM ESTATE MASTER
----------------------------------------------------------------------------------
ENTERPRISE ACCUMULATION TRUST
----------------------------------------------------------------------------------
SMALL EQUITY
INTERNATIONAL COMPANY EQUITY GROWTH &
GROWTH GROWTH GROWTH INCOME INCOME
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------- -------------- -------------- -------------- --------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
JANUARY 4, JANUARY 4, JANUARY 4, APRIL 10, MAY 30,
2000** 2000** 2000** 2000** 2000**
THROUGH THROUGH THROUGH THROUGH THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2000 2000 2000 2000 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
From operations:
Net investment income (loss)........ $ 526 $ 219 $ 43 $ 30 $ 15
Net realized gain (loss) on
investments....................... (45) (19) 19 12 10
Net change in unrealized
appreciation (depreciation) of
investments....................... (746) (2,362) 722 83 2
------ ------- ------ ------ ------
Net increase (decrease) in net assets
resulting from operations........... (265) (2,162) 784 125 27
------ ------- ------ ------ ------
From unit transactions:
Net proceeds from the issuance of
units............................. 6,204 29,108 7,085 8,147 9,117
Net asset value of units redeemed or
used to meet contract
obligations....................... (434) (1,555) (419) (471) (456)
------ ------- ------ ------ ------
Net increase from unit transactions... 5,770 27,553 6,666 7,676 8,661
------ ------- ------ ------ ------
Net increase in net assets............ 5,505 25,391 7,450 7,801 8,688
Net assets beginning of period........ 0 0 0 0 0
------ ------- ------ ------ ------
Net assets end of period*............. $5,505 $25,391 $7,450 $7,801 $8,688
====== ======= ====== ====== ======
Unit transactions:
Units outstanding beginning of
period............................ 0 0 0 0 0
Units issued during the period...... 685 2,893 710 794 903
Units redeemed during the period.... (48) (157) (40) (46) (45)
------ ------- ------ ------ ------
Units outstanding end of period....... 637 2,736 670 748 858
====== ======= ====== ====== ======
---------------
* Includes undistributed net
investment income (loss) of: $ 526 $ 219 $ 43 $ 30 $ 15
====== ======= ====== ====== ======
** Commencement of operations
<CAPTION>
MONY CUSTOM ESTATE MASTER
--------------
ENTERPRISE ACCUMULATION TRUST
--------------
HIGH
YIELD
SUBACCOUNT
--------------
FOR THE PERIOD
AUGUST 8,
2000**
THROUGH
SEPTEMBER 30,
2000
(UNAUDITED)
--------------
<S> <C>
From operations:
Net investment income (loss)........ $ 56
Net realized gain (loss) on
investments....................... 0
Net change in unrealized
appreciation (depreciation) of
investments....................... (61)
------
Net increase (decrease) in net assets
resulting from operations........... (5)
------
From unit transactions:
Net proceeds from the issuance of
units............................. 4,416
Net asset value of units redeemed or
used to meet contract
obligations....................... (212)
------
Net increase from unit transactions... 4,204
------
Net increase in net assets............ 4,199
Net assets beginning of period........ 0
------
Net assets end of period*............. $4,199
======
Unit transactions:
Units outstanding beginning of
period............................ 0
Units issued during the period...... 441
Units redeemed during the period.... (21)
------
Units outstanding end of period....... 420
======
---------------
* Includes undistributed net
investment income (loss) of: $ 56
======
** Commencement of operations
</TABLE>
See notes to financial statements.
F-4
<PAGE> 7
MONY
VARIABLE ACCOUNT L
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
MONY CUSTOM ESTATE MASTER
----------------------------------------------------------------------------------
ENTERPRISE ACCUMULATION
TRUST FIDELITY VARIABLE INSURANCE PRODUCTS FUND
------------------------------- ------------------------------------------------
VIP III
CAPITAL MULTI-CAP VIP VIP II GROWTH
APPRECIATION GROWTH GROWTH CONTRAFUND OPPORTUNITIES
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------- -------------- -------------- -------------- -------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
JANUARY 14, JANUARY 14, JANUARY 4, JULY 6, JANUARY 4,
2000** 2000** 2000** 2000*** 2000**
THROUGH THROUGH THROUGH THROUGH THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2000 2000 2000 2000 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
From operations:
Net investment income (loss)........ $ 484 $ (9) $ 152 $ (4) $ 104
Net realized gain (loss) on
investments....................... (8) (69) (5) 1 (12)
Net change in unrealized
appreciation (depreciation) of
investments....................... (160) (284) (233) 15 (124)
------- ------- ------ ------- ------
Net increase (decrease) in net assets
resulting from operations........... 316 (362) (86) 12 (32)
------- ------- ------ ------- ------
From unit transactions:
Net proceeds from the issuance of
units............................. 10,418 17,345 7,149 11,261 1,790
Net asset value of units redeemed or
used to meet contract
obligations....................... (643) (825) (395) (211) (214)
------- ------- ------ ------- ------
Net increase from unit transactions... 9,775 16,520 6,754 11,050 1,576
------- ------- ------ ------- ------
Net increase in net assets............ 10,091 16,158 6,668 11,062 1,544
Net assets beginning of period........ 0 0 0 0 0
------- ------- ------ ------- ------
Net assets end of period*............. $10,091 $16,158 $6,668 $11,062 $1,544
======= ======= ====== ======= ======
Unit transactions:
Units outstanding beginning of
period............................ 0 0 0 0 0
Units issued during the period...... 1,064 1,893 666 1,121 179
Units redeemed during the period.... (65) (89) (36) (21) (21)
------- ------- ------ ------- ------
Units outstanding end of period....... 999 1,804 630 1,100 158
======= ======= ====== ======= ======
---------------
* Includes undistributed net
investment income (loss) of: $ 484 $ (9) $ 152 $ (4) $ 104
======= ======= ====== ======= ======
** Commencement of operations
<CAPTION>
MONY CUSTOM ESTATE MASTER
-----------------------------------------------------------------
JANUS ASPEN SERIES
-----------------------------------------------------------------
AGGRESSIVE CAPITAL WORLDWIDE
GROWTH BALANCED APPRECIATION GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------- -------------- -------------- --------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
APRIL 7, JANUARY 4, APRIL 7, JANUARY 4,
2000** 2000** 2000** 2000**
THROUGH THROUGH THROUGH THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2000 2000 2000 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
From operations:
Net investment income (loss)........ $ 920 $ 166 $ 50 $ 818
Net realized gain (loss) on
investments....................... (136) (2) (67) (2)
Net change in unrealized
appreciation (depreciation) of
investments....................... (712) (125) 254 (1,671)
------- ------ ------- -------
Net increase (decrease) in net assets
resulting from operations........... 72 39 237 (855)
------- ------ ------- -------
From unit transactions:
Net proceeds from the issuance of
units............................. 15,471 2,174 13,472 20,100
Net asset value of units redeemed or
used to meet contract
obligations....................... (711) (253) (576) (728)
------- ------ ------- -------
Net increase from unit transactions... 14,760 1,921 12,896 19,372
------- ------ ------- -------
Net increase in net assets............ 14,832 1,960 13,133 18,517
Net assets beginning of period........ 0 0 0 0
------- ------ ------- -------
Net assets end of period*............. $14,832 $1,960 $13,133 $18,517
======= ====== ======= =======
Unit transactions:
Units outstanding beginning of
period............................ 0 0 0 0
Units issued during the period...... 1,745 214 1,527 1,932
Units redeemed during the period.... (78) (24) (64) (69)
------- ------ ------- -------
Units outstanding end of period....... 1,667 190 1,463 1,863
======= ====== ======= =======
---------------
* Includes undistributed net
investment income (loss) of: $ 920 $ 166 $ 50 $ 818
======= ====== ======= =======
** Commencement of operations
<CAPTION>
MONY CUSTOM ESTATE MASTER
-------------------------------
DREYFUS
-------------------------------
SOCIALLY
RESPONSIBLE
STOCK INDEX GROWTH FUND,
FUND INC.
SUBACCOUNT SUBACCOUNT
-------------- --------------
FOR THE PERIOD FOR THE PERIOD
MAY 3, SEPTEMBER 13,
2000** 2000**
THROUGH THROUGH
SEPTEMBER 30, SEPTEMBER 30,
2000 2000
(UNAUDITED) (UNAUDITED)
-------------- --------------
<S> <C> <C>
From operations:
Net investment income (loss)........ $ 50 $ (1)
Net realized gain (loss) on
investments....................... 31 (2)
Net change in unrealized
appreciation (depreciation) of
investments....................... (381) (212)
------- ------
Net increase (decrease) in net assets
resulting from operations........... (300) (215)
------- ------
From unit transactions:
Net proceeds from the issuance of
units............................. 20,742 7,022
Net asset value of units redeemed or
used to meet contract
obligations....................... (880) (74)
------- ------
Net increase from unit transactions... 19,862 6,948
------- ------
Net increase in net assets............ 19,562 6,733
Net assets beginning of period........ 0 0
------- ------
Net assets end of period*............. $19,562 $6,733
======= ======
Unit transactions:
Units outstanding beginning of
period............................ 0 0
Units issued during the period...... 2,007 702
Units redeemed during the period.... (84) (7)
------- ------
Units outstanding end of period....... 1,923 695
======= ======
---------------
* Includes undistributed net
investment income (loss) of: $ 50 $ (1)
======= ======
** Commencement of operations
</TABLE>
See notes to financial statements.
F-5
<PAGE> 8
MONY
VARIABLE ACCOUNT L
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
MONY CUSTOM ESTATE MASTER
----------------------------------------------------------------------------------
MONY SERIES FUND, INC. ENTERPRISE ACCUMULATION TRUST
------------------------------- ------------------------------------------------
SMALL
MONEY LONG TERM COMPANY
MARKET BOND EQUITY VALUE MANAGED
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------- -------------- -------------- -------------- --------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
FEBRUARY 11, AUGUST 8, JANUARY 4, APRIL 10, APRIL 10,
2000** 2000** 2000** 2000** 2000**
THROUGH THROUGH THROUGH THROUGH THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2000 2000 2000 2000 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Dividend Income.................. $1,817 $0 $ 60 $ 16 $ 41
Distribution from capital gain... 0 0 2,170 2,034 639
Mortality and expense risk
charges........................ (107) (2) (6) (5) (1)
------ -- ------- ------- -----
Net investment income (loss)..... 1,710 (2) 2,224 2,045 679
------ -- ------- ------- -----
Realized and unrealized gain
(loss) on investments:
Net realized gain (loss) on
investments.................. 0 1 36 (10) (15)
Net change in unrealized
appreciation (depreciation)
of investments............... 0 7 (2,056) (2,450) (686)
------ -- ------- ------- -----
Net realized and unrealized gain
(loss) on investments.......... 0 8 (2,020) (2,460) (701)
------ -- ------- ------- -----
Net increase (decrease) in net
assets resulting from
operations..................... $1,710 $6 $ 204 $ (415) $ (22)
====== == ======= ======= =====
<CAPTION>
MONY CUSTOM ESTATE MASTER
------------------------------------------------
ENTERPRISE ACCUMULATION TRUST
------------------------------------------------
SMALL
INTERNATIONAL COMPANY
GROWTH GROWTH GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------- -------------- --------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
JANUARY 4, JANUARY 4, JANUARY 14,
2000** 2000** 2000**
THROUGH THROUGH THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2000 2000 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED)
-------------- -------------- --------------
<S> <C> <C> <C>
Dividend Income.................. $ 11 $ 26 $ 0
Distribution from capital gain... 522 224 52
Mortality and expense risk
charges........................ (7) (31) (9)
----- ------- ----
Net investment income (loss)..... 526 219 43
----- ------- ----
Realized and unrealized gain
(loss) on investments:
Net realized gain (loss) on
investments.................. (45) (19) 19
Net change in unrealized
appreciation (depreciation)
of investments............... (746) (2,362) 722
----- ------- ----
Net realized and unrealized gain
(loss) on investments.......... (791) (2,381) 741
----- ------- ----
Net increase (decrease) in net
assets resulting from
operations..................... $(265) $(2,162) $784
===== ======= ====
<CAPTION>
MONY CUSTOM ESTATE MASTER
------------------------------------------------
ENTERPRISE ACCUMULATION TRUST
------------------------------------------------
EQUITY
EQUITY GROWTH & HIGH
INCOME INCOME YIELD
SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------- -------------- --------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
APRIL 10, MAY 30, AUGUST 8,
2000** 2000** 2000**
THROUGH THROUGH THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2000 2000 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED)
-------------- -------------- --------------
<S> <C> <C> <C>
Dividend Income.................. $ 35 $23 $58
Distribution from capital gain... 0 0 0
Mortality and expense risk
charges........................ (5) (8) (2)
---- --- ---
Net investment income (loss)..... 30 15 56
---- --- ---
Realized and unrealized gain
(loss) on investments:
Net realized gain (loss) on
investments.................. 12 10 0
Net change in unrealized
appreciation (depreciation)
of investments............... 83 2 (61)
---- --- ---
Net realized and unrealized gain
(loss) on investments.......... 95 12 (61)
---- --- ---
Net increase (decrease) in net
assets resulting from
operations..................... $125 $27 $(5)
==== === ===
</TABLE>
---------------
** Commencement of operations
See notes to financial statements.
F-6
<PAGE> 9
MONY
VARIABLE ACCOUNT L
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
MONY CUSTOM ESTATE MASTER
----------------------------------------------------------------------------------
ENTERPRISE ACCUMULATION
TRUST FIDELITY VARIABLE INSURANCE PRODUCTS FUND
------------------------------- ------------------------------------------------
VIP III
CAPITAL MULTI-CAP VIP VIP II GROWTH
APPRECIATION GROWTH GROWTH CONTRAFUND OPPORTUNITIES
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------- -------------- -------------- -------------- --------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
JANUARY 14, JANUARY 14, JANUARY 4, JULY 6, JANUARY 4,
2000** 2000** 2000** 2000** 2000**
THROUGH THROUGH THROUGH THROUGH THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2000 2000 2000 2000 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Dividend income.................. $ 0 $ 0 $ 160 $ 0 $ 107
Distribution from capital gain... 496 8 0 0 0
Mortality and expense risk
charges........................ (12) (17) (8) (4) (3)
----- ----- ----- --- -----
Net investment income (loss)..... 484 (9) 152 (4) 104
----- ----- ----- --- -----
Realized and unrealized gain
(loss) on investments:
Net realized gain (loss) on
investments.................. (8) (69) (5) 1 (12)
Net change in unrealized
appreciation (depreciation)
of investments............... (160) (284) (233) 15 (124)
----- ----- ----- --- -----
Net realized and unrealized gain
(loss) on investments.......... (168) (353) (238) 16 (136)
----- ----- ----- --- -----
Net increase (decrease) in net
assets resulting from
operations..................... $ 316 $(362) $ (86) $12 $ (32)
===== ===== ===== === =====
<CAPTION>
MONY CUSTOM ESTATE MASTER
-----------------------------------------------------------------
JANUS ASPEN SERIES
-----------------------------------------------------------------
AGGRESSIVE CAPITAL WORLDWIDE
GROWTH BALANCED APPRECIATION GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------- -------------- -------------- --------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
APRIL 7, JANUARY 4, APRIL 7, JANUARY 4,
2000** 2000** 2000** 2000**
THROUGH THROUGH THROUGH THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2000 2000 2000 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Dividend income.................. $ 935 $ 169 $ 62 $ 833
Distribution from capital gain... 0 0 0 0
Mortality and expense risk
charges........................ (15) (3) (12) (15)
----- ----- ---- -------
Net investment income (loss)..... 920 166 50 818
----- ----- ---- -------
Realized and unrealized gain
(loss) on investments:
Net realized gain (loss) on
investments.................. (136) (2) (67) (2)
Net change in unrealized
appreciation (depreciation)
of investments............... (712) (125) 254 (1,671)
----- ----- ---- -------
Net realized and unrealized gain
(loss) on investments.......... (848) (127) 187 (1,673)
----- ----- ---- -------
Net increase (decrease) in net
assets resulting from
operations..................... $ 72 $ 39 $237 $ (855)
===== ===== ==== =======
<CAPTION>
MONY CUSTOM ESTATE MASTER
-------------------------------
DREYFUS
-------------------------------
SOCIALLY
RESPONSIBLE
STOCK INDEX GROWTH FUND,
FUND INC.
SUBACCOUNT SUBACCOUNT
-------------- --------------
FOR THE PERIOD FOR THE PERIOD
MAY 3, SEPTEMBER 13,
2000 ** 2000**
THROUGH THROUGH
SEPTEMBER 30, SEPTEMBER 30,
2000 2000
(UNAUDITED) (UNAUDITED)
-------------- --------------
<S> <C> <C>
Dividend income.................. $ 69 $ 0
Distribution from capital gain... 0 0
Mortality and expense risk
charges........................ (19) (1)
----- -----
Net investment income (loss)..... 50 (1)
----- -----
Realized and unrealized gain
(loss) on investments:
Net realized gain (loss) on
investments.................. 31 (2)
Net change in unrealized
appreciation (depreciation)
of investments............... (381) (212)
----- -----
Net realized and unrealized gain
(loss) on investments.......... (350) (214)
----- -----
Net increase (decrease) in net
assets resulting from
operations..................... $(300) $(215)
===== =====
</TABLE>
---------------
** Commencement of operations
See notes to financial statements.
F-7
<PAGE> 10
MONY
VARIABLE ACCOUNT L
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION AND BUSINESS
MONY Variable Account L (the "Variable Account") is a separate investment
account established on November 28, 1990 by MONY Life Insurance Company
("MONY"), under the laws of the State of New York.
The Variable Account operates as a unit investment trust under the
Investment Company Act of 1940 (the "1940 Act"). The Variable Account holds
assets that are segregated from all of MONY's other assets and, at present, is
used to support Flexible Premium Variable Life Insurance policies, which include
Variable Life (Strategist) Variable Universal Life (MONYEquity Master, MONY
Custom Equity Master and MONY Custom Estate Master). These policies are issued
by MONY. For presentation purposes, the information related only to the Variable
Universal Life Insurance policies (MONY Custom Estate Master) is presented here.
There are twenty-five MONY Custom Estate Master Subaccounts within the
Variable Account, each of which invests only in a corresponding portfolio of the
MONY Series Fund, Inc. (the "Fund"), the Enterprise Accumulation Trust
("Enterprise"), Dreyfus Stock Index Fund, The Dreyfus Socially Responsible
Growth Fund, Inc., Fidelity Variable Insurance Products Funds, or Janus Aspen
Series (collectively, the "Funds"). Twenty-two subaccounts of the MONY Custom
Estate Master commenced operations as of September 30,2000 The Funds are
registered under the 1940 Act as an open end, diversified, management investment
companies The Fund and Enterprise are affiliated with MONY.
A full presentation of the related financial statements and footnotes of
the Funds are contained on pages hereinafter and should be read in conjunction
with these financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
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.
Investment:
The investment in shares of each of the respective Funds' portfolio is
stated at value which is the net asset value of the respective portfolio as
reported by such portfolio. Net asset values are based upon market or fair
valuations of the securities held in each of the corresponding portfolios of the
Funds. For the money market portfolios, the net asset value is based on
amortized cost of the securities held, which approximates market value.
Investment Transactions and Investment Income:
Investments in the portfolios of the Funds are recorded on the trade date.
Realized gains and losses on redemption of investments in the portfolios of the
Funds are determined on the identified cost basis. Dividend income is recorded
on ex-dividend date. Dividend income includes distributions of investment income
and capital gains received from the respective portfolios of the Funds. Dividend
income received is reinvested in additional shares of the respective portfolios
of the Funds.
Taxes:
MONY is currently taxed as a life insurance company and will include the
Variable Account's operations in its tax return. MONY does not expect, based on
current tax law, to incur any income tax burden upon the earnings or realized
capital gains attributable to the Variable Account. Based on this expectation,
no charges are currently being deducted from the Variable Account for Federal
income tax purposes.
F-8
<PAGE> 11
MONY
VARIABLE ACCOUNT L
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
3. RELATED PARTY TRANSACTIONS
MONY is the legal owner of the assets held by the Variable Account.
Policy premiums received from MONY by the Variable Account represent gross
policy premiums recorded by MONY less deductions retained as compensation for
certain sales distribution expenses and premium taxes.
The cost of insurance, administration charges, and, if applicable, the cost
of any optional benefits added by riders to the insurance policies are deducted
monthly from the cash value of the contract to compensate MONY . A surrender
charge may be imposed by MONY when a full or partial surrender is requested by
the policyholders. These deductions are treated as contractholder redemptions by
the Variable Account. The amount deducted for the MONY Custom Estate Master
Subaccounts for the nine months ended September 30, 2000 aggregated $13,535.
MONY receives from the Variable Account the amounts deducted for mortality
and expense risks at an annual rate of 0.35% of the average daily net assets of
each of the MONY Custom Estate Master subaccounts. As investment adviser to the
Fund, it receives amounts paid by the Fund for those services.
Enterprise Capital Management, Inc., a wholly-owned subsidiary of MONY,
acts as investment adviser to the portfolios of Enterprise, and it receives
amounts paid by Enterprise for those services.
4. INVESTMENT TRANSACTIONS:
Cost of shares acquired and proceeds from shares redeemed by each
subaccount during the nine months ended September 30, 2000 were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS FROM
MONY CUSTOM ESTATE MASTER SUBACCOUNTS SHARES ACQUIRED SHARES REDEEMED
------------------------------------- --------------- ---------------
<S> <C> <C>
MONY Series Fund, Inc.
Money Market Portfolio.................................. $63,381 $4,397
Long Term Portfolio..................................... 4,416 212
Enterprise Accumulation Trust
Equity Portfolio........................................ 9,330 326
Small Company Value Portfolio........................... 11,620 306
Managed Portfolio....................................... 2,139 146
International Growth Portfolio.......................... 6,204 438
Growth Portfolio........................................ 29,108 1,562
Small Company Growth Portfolio.......................... 7,085 421
Equity Income Portfolio................................. 8,147 471
Capital Appreciation Portfolio.......................... 10,417 646
Multi-Cap Growth Portfolio.............................. 17,344 828
Growth & Income Portfolio............................... 9,117 457
High Yield Portfolio.................................... 4,416 212
Balanced Portfolio...................................... 2,358 2,334
Fidelity Variable Insurance Products Funds
VIP Growth Portfolio.................................... 7,149 397
VIP II Contrafund Portfolio............................. 11,261 211
VIP III Growth Opportunities Portfolio.................. 1,790 215
</TABLE>
F-9
<PAGE> 12
MONY
VARIABLE ACCOUNT L
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
4. INVESTMENT TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
COST OF PROCEEDS FROM
MONY CUSTOM ESTATE MASTER SUBACCOUNTS SHARES ACQUIRED SHARES REDEEMED
------------------------------------- --------------- ---------------
<S> <C> <C>
Janus Aspen Series
Aggressive Growth Portfolio............................. $15,471 $ 713
Balanced Portfolio...................................... 2,174 254
Capital Appreciation Portfolio.......................... 13,472 577
Worldwide Growth Portfolio.............................. 20,099 731
Dreyfus
Stock Index Portfolio................................... 20,742 881
Socially Responsible Portfolio.......................... 7,022 74
</TABLE>
F-10
<PAGE> 13
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
($ IN MILLIONS)
<S> <C> <C>
ASSETS
Investments:
Fixed maturity securities available for sale, at fair
value.................................................. $ 3,083.5 $ 3,066.7
Equity securities available for sale, at fair value....... 537.5 519.8
Mortgage loans on real estate............................. 1,119.3 1,270.4
Policy loans.............................................. 78.7 69.1
Real estate to be disposed of............................. 235.7 300.9
Real estate held for investment........................... 46.6 46.2
Other invested assets..................................... 90.0 37.9
--------- ---------
5,191.3 5,311.0
========= =========
Cash and cash equivalents................................... 278.5 232.6
Accrued investment income................................... 76.8 74.6
Amounts due from reinsurers................................. 485.2 488.0
Deferred policy acquisition costs........................... 636.4 558.3
Other assets................................................ 529.9 348.3
Assets transferred in Group Pension Transaction (Note 4).... 4,980.8 5,109.8
Separate account assets..................................... 6,103.0 6,398.3
Closed Block assets (Note 6)................................ 6,218.2 6,182.1
--------- ---------
Total assets........................................... $24,500.1 $24,703.0
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Future policy benefits...................................... $ 972.7 $ 954.3
Policyholders' account balances............................. 1,908.7 1,942.9
Other policyholders' liabilities............................ 117.0 120.4
Amounts due to reinsurers................................... 87.4 83.8
Accounts payable and other liabilities...................... 574.0 580.9
Short-term debt............................................. 52.8 53.4
Long-term debt.............................................. 217.0 245.4
Current federal income taxes payable........................ 130.7 147.4
Deferred federal income taxes............................... 52.1 (16.9)
Liabilities transferred in Group Pension Transaction (Note
4)........................................................ 4,968.7 5,099.1
Separate account liabilities................................ 6,100.6 6,396.2
Closed Block liabilities (Note 6)........................... 7,310.3 7,303.3
--------- ---------
Total liabilities...................................... $22,492.0 $22,910.2
========= =========
Commitments and contingencies (Note 5)
Common stock, $1.0 par value; 2.5 million shares authorized
and outstanding........................................... $ 2.5 $ 2.5
Capital in excess of par.................................... 1,628.6 1,563.6
Retained earnings........................................... 397.5 256.1
Accumulated other comprehensive (loss)...................... (20.5) (29.4)
--------- ---------
Total shareholders' equity............................. 2,008.1 1,792.8
--------- ---------
Total liabilities and shareholders' equity............. $24,500.1 $24,703.0
========= =========
</TABLE>
See accompanying notes to unaudited interim condensed consolidated financial
statements.
F-11
<PAGE> 14
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
FOR THE THREE-MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
--------- ---------
($ IN MILLIONS, EXCEPT
SHARE DATA AND PER
SHARE AMOUNTS)
<S> <C> <C>
REVENUES:
Premiums.................................................... $ 26.5 $ 20.8
Universal life and investment-type product policy fees...... 51.2 47.8
Net investment income....................................... 130.8 123.9
Net realized (losses)/gains on investments.................. 20.3 22.5
Group Pension Profits (Note 4).............................. 10.8 21.5
Other income................................................ 51.7 47.2
Contribution from the Closed Block (Note 6)................. 10.7 9.5
------ ------
302.0 293.2
------ ------
BENEFITS AND EXPENSES:
Benefits to policyholders................................... 46.0 34.9
Interest credited to policyholders' account balances........ 26.7 26.4
Amortization of deferred policy acquisition costs........... 16.0 21.9
Dividends to policyholders.................................. 0.6 0.7
Other operating costs and expenses.......................... 111.5 164.8
------ ------
200.8 248.7
------ ------
Income before income taxes and extraordinary item........... 101.2 44.5
Income tax expense.......................................... 33.6 15.3
------ ------
Income before extraordinary item............................ 67.6 29.2
Extraordinary loss, net of tax.............................. 1.0 1.9
------ ------
Net income.................................................. 66.6 27.3
Other comprehensive loss, net............................... 34.7 (28.5)
------ ------
Comprehensive income/(loss)................................. $101.3 $ (1.2)
====== ======
</TABLE>
See accompanying notes to unaudited interim condensed consolidated financial
statements
F-12
<PAGE> 15
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
----------- ----------
($ IN MILLIONS, EXCEPT
SHARE DATA AND PER SHARE
AMOUNTS)
<S> <C> <C>
REVENUES:
Premiums.................................................... $ 84.4 $ 65.0
Universal life and investment-type product policy fees...... 157.0 145.7
Net investment income....................................... 514.1 320.7
Net realized gains on investments........................... 36.9 93.1
Group Pension Profits (Note 4).............................. 29.0 47.8
Other income................................................ 172.3 138.9
Contribution from the Closed Block (Note 6)................. 32.1 31.4
-------- -------
1,025.8 842.6
-------- -------
BENEFITS AND EXPENSES:
Benefits to policyholders................................... 126.9 108.3
Interest credited to policyholders' account balances........ 76.6 80.7
Amortization of deferred policy acquisition costs........... 58.8 54.1
Dividends to policyholders.................................. 1.8 1.4
Other operating costs and expenses.......................... 376.3 391.3
-------- -------
640.4 635.8
-------- -------
Income before income taxes and extraordinary item........... 385.4 206.8
Income tax expense.......................................... 131.3 70.7
-------- -------
Income before extraordinary item............................ 254.1 136.1
-------- -------
Extraordinary loss, net of tax.............................. 37.7 1.9
-------- -------
Net income.................................................. 216.4 134.2
-------- -------
Other comprehensive loss, net............................... 8.9 (140.7)
-------- -------
Comprehensive income/(loss)................................. $ 225.3 $ (6.5)
======== =======
</TABLE>
See accompanying notes to unaudited interim condensed consolidated financial
statements
F-13
<PAGE> 16
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT
OF CHANGES IN SHAREHOLDERS' EQUITY
NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
ACCUMULATED
CAPITAL OTHER TOTAL
COMMON IN EXCESS RETAINED COMPREHENSIVE SHAREHOLDERS'
STOCK OF PAR EARNINGS INCOME EQUITY
------ --------- -------- ------------- -------------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1999............... $2.5 $1,563.6 $256.1 $(29.4) $ 1,792.8
Capital Contribution..................... 65.0 65.0
Dividends Payable........................ (75.0) (75.0)
Comprehensive income.....................
Net income.......................... 216.4 216.4
Other comprehensive income(1)....... 8.9 8.9
---------
Comprehensive income..................... 225.3
---- -------- ------ ------ ---------
BALANCE, SEPTEMBER 30, 2000.............. $2.5 $1,628.6 $397.5 $(20.5) $2,0080.1
==== ======== ====== ====== =========
</TABLE>
---------------
(1) Represents unrealized losses on investments, net of unrealized gains,
reclassification adjustments, and taxes.
See accompanying notes to unaudited interim condensed consolidated financial
statements.
F-14
<PAGE> 17
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
--------- ---------
($ IN MILLIONS)
<S> <C> <C>
NET CASH (USED IN)/PROVIDED BY OPERATING ACTIVITIES......... $ (100.1) $ 39.3
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales, maturities or repayment of:
Fixed maturities securities............................... 449.6 472.5
Equity securities......................................... 318.2 168.2
Mortgage loans on real estate............................. 353.3 101.3
Real estate............................................... 102.8 257.6
Other invested assets..................................... 1.6 4.6
Acquisitions of investments:
Fixed maturities securities............................... (458.3) (631.8)
Equity securities......................................... (98.2) (105.9)
Mortgage loans on real estate............................. (175.2) (337.8)
Real estate............................................... (36.3) (29.2)
Other invested assets..................................... (37.9) (4.7)
Policy loans, net......................................... (9.6) (28.2)
Other, net................................................ (150.0) 16.0
Property, plant and equipment, net.......................... (28.9) (14.7)
--------- ---------
Net cash provided by/(used in) investing activities......... $ 231.1 $ (132.1)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of debt............................................ 215.0 --
Repayments of debt.......................................... (284.3) (29.2)
Receipts from annuity and universal life policies credited
to policyholder account balances.......................... 1,854.7 1,293.0
Return of policyholder's account balances on annuity and
universal life policies................................... (1,860.5) (1,288.4)
Capital Contribution........................................ 65.0 --
Dividends paid to shareholders.............................. (75.0)
--------- ---------
Net cash (used in) financing activities..................... (85.1) (24.6)
--------- ---------
Net (decrease)/increase in cash and cash equivalents........ 45.9 (117.4)
Cash and cash equivalents, beginning of period.............. 232.6 270.2
--------- ---------
Cash and cash equivalents, end of period.................... $ 278.5 $ 152.8
========= =========
</TABLE>
See accompanying notes to unaudited interim condensed consolidated financial
statements.
F-15
<PAGE> 18
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND DESCRIPTION OF BUSINESS:
On November 16, 1998, pursuant to its Plan of Reorganization (the "Plan")
which was approved by the New York Superintendent of Insurance on the same day
(the "Plan Effective Date"), The Mutual Life Insurance Company of New York
("MONY") converted from a mutual life insurance company to a stock life
insurance company (the "Demutualization") and became a wholly owned subsidiary
of The MONY Group Inc., (the "MONY Group" or the "Holding Company"), a Delaware
corporation organized on June 24, 1997 for the purpose of becoming the parent
holding company of MONY. The MONY Group has no other operations or subsidiaries.
In connection with the Plan, MONY established a closed block to fund the
guaranteed benefits and dividends of certain participating insurance policies,
and eligible policyholders received cash, policy credits, or shares of common
stock of the MONY Group in exchange for their membership interests in MONY.
Also, on November 16, 1998, the MONY Group consummated an initial public
offering (the "Offerings") of approximately 12.9 million shares of its common
stock and MONY changed its name to MONY Life Insurance Company (MONY Life
Insurance Company and its subsidiaries are hereafter referred to as "MONY Life"
or the "Company"). The shares of common stock issued in the Offerings are in
addition to approximately 34.3 million shares of common stock of the MONY Group
distributed to the aforementioned policyholders. The Plan and the Offerings are
hereafter collectively referred to as the "Transaction". During 1999, the
Company increased the number of its common shares authorized and outstanding
from 2.0 million to 2.5 million in order to comply with regulatory requirements.
MONY Life is primarily engaged in the business of providing a wide range of
life insurance, annuity, and investment products and services to higher income
individuals, particularly family builders, pre-retirees, and small business
owners (see Note 3). The Company distributes its products primarily through its
career agency sales force and various complementary distribution channels. These
include sales of mutual funds sold by Enterprise Capital Management through
third-party broker dealers, sales of protection products sold by the Company's
U.S. Financial Life Insurance Company ("USFL") subsidiary through brokerage
general agencies, sales of corporate-owned life insurance ("COLI") products by
the Company's corporate marketing team and sales of a variety of financial
products and services through the Company's Trusted Securities Advisors Corp.
subsidiary. The Company primarily sells its products in all 50 of the United
States, the District of Columbia, the U.S. Virgin Islands, Guam and the
Commonwealth of Puerto Rico.
2. BASIS OF PRESENTATION:
The accompanying unaudited interim condensed consolidated financial
statements have been prepared in conformity with generally accepted accounting
principles in the United States ("GAAP"). The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. In the opinion of management these statements include all
normal recurring adjustments necessary to present fairly the financial position,
results of operations and cash flows of the Company for the periods presented.
These statements should be read in conjunction with the consolidated financial
statements of the Company for the year ended December 31, 1999. The results of
operations for the three-month and nine-month periods ended September 30, 2000
are not necessarily indicative of the results to be expected for the full year.
Certain reclassifications have been made in the amounts presented for the
comparative prior periods to conform those periods to the current presentation.
F-16
<PAGE> 19
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. SEGMENT INFORMATION:
The Company's business activities consist of the following: protection
product operations, accumulation product operations, mutual fund operations,
securities broker-dealer operations, insurance brokerage operations, and certain
insurance lines of business no longer written by the Company (the "run-off
businesses"). These business activities represent the Company's operating
segments. Except as discussed below, these segments are managed separately
because they either provide different products or services, are subject to
different regulation, require different strategies, or have different technology
requirements.
Management considers the Company's mutual fund operations to be an integral
part of the products offered by the Company's accumulation products segment. The
Company's mutual fund operation, which is conducted through its Enterprise
Capital Management subsidiary, offers proprietary mutual funds directly to
retail customers as well as proprietary and non-proprietary mutual funds through
products marketed by the accumulation products segment. Accordingly, for
management purposes (including performance assessment and making decisions
regarding the allocation of resources) the Company aggregates its mutual fund
operations with its accumulation products segment.
Of the aforementioned segments, only the protection products segment and
the accumulation products segment qualify as reportable segments in accordance
with FASB Statement No. 131. All of the Company's other segments are combined
and reported in an other products segment.
Products comprising the protection products segment primarily include a
wide range of insurance products, including; whole life, term life, universal
life, variable universal life, corporate-owned life insurance, last survivor
variable universal life, group universal life and special-risk products. In
addition, included in the protection products segment are: (i) the assets and
liabilities transferred pursuant to the Group Pension Transaction, as well as
the Group Pension Profits (see Note 4) and (ii) the Closed Block assets and
liabilities, as well as the Contribution from the Closed Block (see Note 6). The
Protection Products segment also includes the in-force business from last
survivor universal life and last survivor whole life products. In its
Accumulation Products segment, the Company primarily offers flexible premium
variable annuities and proprietary retail mutual funds. The Accumulation
Products segment also includes the in-force business from single premium
deferred annuities and immediate annuities. The Company's other products segment
primarily consists of the securities broker-dealer operation, the insurance
brokerage operation, and the run-off businesses. The securities broker-dealer
operation markets the Company's proprietary investment products and, in
addition, provides customers of the Company's protection and accumulation
products access to other non-proprietary investment products (including stocks,
bonds, limited partnership interests, tax-exempt unit investment trusts and
other investment securities). The insurance brokerage operation provides the
Company's field agency force with access to life, annuity, small group health
and specialty insurance products written by other carriers to meet the insurance
and investment needs of its customers. The run-off businesses primarily consist
of group life and health business, as well as group pension business that was
not included in the Group Pension Transaction (see Note 4).
Set forth in the table below is certain financial information with respect
to the Company's operating segments as of September 30, 2000 and December 31,
1999 and for the three-month and nine-month periods ended September 30, 2000 and
1999, as well as amounts not allocated to the segments. The Company evaluates
the performance of each operating segment based on profit or loss from
operations before income taxes and certain nonrecurring items (e.g. items of an
unusual or infrequent nature). In addition, all segment revenues are from
external customers.
Assets have been allocated to the segments in amounts sufficient to support
the associated liabilities of each segment. In addition, capital is allocated to
each segment in amounts sufficient to maintain a
F-17
<PAGE> 20
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
targeted regulatory risk-based capital ("RBC") level for each segment.
Allocations of net investment income and net realized gains on investments were
based on the amount of assets allocated to each segment. Other costs and
operating expenses were allocated to each of the segments based on: (i) a review
of the nature of such costs, (ii) time studies analyzing the amount of employee
compensation costs incurred by each segment, and (iii) cost estimates included
in the Company's product pricing. Substantially all non-cash transactions and
impaired real estate (including real estate acquired in satisfaction of debt)
are included in the protection products segment.
Amounts reported as "reconciling amounts" in the table below represent
amounts not allocated to segments and primarily relate to certain expenses
relating to the Company's employee benefit plans.
Except for various allocations discussed below, the accounting policies of
the segments are the same as those described in the preparation of the Unaudited
Interim Condensed Consolidated Financial Statements. The Company evaluates the
performance of each operating segment based on profit or loss from operations
before income taxes and nonrecurring items (e.g. items of an unusual or
infrequent nature). The Company does not allocate certain nonrecurring items to
the segments. In addition, all segment revenues are from external customers.
SEGMENT SUMMARY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FOR THE THREE-MONTH FOR THE NINE-MONTH
PERIODS ENDED PERIODS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- ------------------
2000 1999 2000 1999
-------- -------- ------- -------
($ IN MILLIONS)
<S> <C> <C> <C> <C>
PREMIUMS:
Protection Products(1)........................... $ 24.3 $ 19.0 $ 77.6 $ 58.3
Accumulation Products............................ 0.0 (0.2) 0.4 0.6
Other Products................................... 2.2 2.0 6.4 6.1
------ ------ ------ ------
$ 26.5 $ 20.8 $ 84.4 $ 65.0
====== ====== ====== ======
UNIVERSAL LIFE AND INVESTMENT-TYPE PRODUCT POLICY
FEES:
Protection Products.............................. $ 33.8 $ 29.9 $102.3 $ 91.5
Accumulation Products............................ 17.3 17.8 53.8 53.8
Other Products................................... 0.1 0.1 0.9 0.4
------ ------ ------ ------
$ 51.2 $ 47.8 $157.0 $145.7
====== ====== ====== ======
NET INVESTMENT INCOME AND NET REALIZED GAINS
(LOSSES) ON INVESTMENTS:
Protection Products(2)........................... $ 96.1 $ 98.6 $367.7 $276.6
Accumulation Products............................ 30.4 30.1 106.6 91.6
Other Products................................... 17.7 16.5 63.9 44.4
Reconciling amounts.............................. 6.9 1.2 12.8 1.2
------ ------ ------ ------
$151.1 $146.4 $551.0 $413.8
====== ====== ====== ======
OTHER INCOME:
Protection Products(3)(9)........................ $ 25.7 $ 33.5 $ 77.1 $ 88.8
Accumulation Products............................ 29.8 24.1 92.5 68.1
Other Products................................... 16.2 19.4 60.3 57.9
Reconciling amounts.............................. 1.5 1.2 3.5 3.3
------ ------ ------ ------
$ 73.2 $ 78.2 $233.4 $218.1
====== ====== ====== ======
</TABLE>
F-18
<PAGE> 21
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
FOR THE THREE-MONTH FOR THE NINE-MONTH
PERIODS ENDED PERIODS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- ------------------
2000 1999 2000 1999
-------- -------- ------- -------
($ IN MILLIONS)
<S> <C> <C> <C> <C>
AMORTIZATION OF DEFERRED POLICY ACQUISITION
COSTS:
Protection Products(13).......................... $ 9.2 $ 14.0 $ 37.4 $ 31.3
Accumulation Products............................ 6.8 7.9 21.4 22.8
------ ------ ------ ------
$ 16.0 $ 21.9 $ 58.8 $ 54.1
====== ====== ====== ======
BENEFITS TO POLICYHOLDERS:(4)
Protection Products.............................. $ 46.6 $ 33.7 $124.9 $107.4
Accumulation Products............................ 16.4 17.6 53.4 54.9
Other Products................................... 7.8 7.5 19.5 21.9
Reconciling amounts.............................. 1.9 2.5 5.7 4.8
------ ------ ------ ------
$ 72.7 $ 61.3 $203.5 $189.0
====== ====== ====== ======
DIVIDENDS TO POLICYHOLDERS:
Protection Products.............................. $ 0.0 $ 0.1 $ (0.2) $ (0.7)
Accumulation Products............................ 0.4 0.4 1.2 1.3
Other Products................................... 0.2 0.2 0.8 0.8
------ ------ ------ ------
$ 0.6 $ 0.7 $ 1.8 $ 1.4
====== ====== ====== ======
OTHER OPERATING COSTS AND EXPENSES:
Protection Products.............................. $ 56.0 $ 59.2 $200.4 $190.0
Accumulation Products............................ 26.2 24.7 87.1 75.9
Other Products................................... 24.7 22.0 78.3 66.5
Reconciling amounts.............................. 4.6 58.9 10.5 58.9
------ ------ ------ ------
$111.5 $164.8 $376.3 $391.3
====== ====== ====== ======
INCOME BEFORE INCOME TAXES:
Protection Products.............................. $ 68.1 $ 74.0 $262.2 $187.2
Accumulation Products............................ 27.7 21.2 90.2 59.2
Other Products................................... 3.5 8.3 32.9 19.6
Reconciling amounts.............................. 1.9 (59.0) 0.1 (59.2)
------ ------ ------ ------
$101.2 $ 44.5 $385.4 $206.8
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
<S> <C> <C>
ASSETS:(7)
Protection Products(5)(10).................................. $16,505.2 $16,164.5
Accumulation Products....................................... 5,859.6 6,175.0
Other Products.............................................. 1,090.8 1,187.6
Reconciling amounts......................................... 1,044.5 1,175.9
--------- ---------
$24,500.1 $24,703.0
========= =========
DEFERRED POLICY ACQUISITION COSTS:
Protection Products(11)..................................... $ 1,105.0 $ 1,094.9
Accumulation Products....................................... 151.1 153.3
--------- ---------
$ 1,256.1 $ 1,248.2
========= =========
</TABLE>
F-19
<PAGE> 22
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
AS OF AS OF
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
<S> <C> <C>
POLICYHOLDERS LIABILITIES:
Protection Products(6)(12).................................. $10,261.8 $10,231.7
Accumulation Products....................................... 1,097.1 1,236.3
Other Products.............................................. 392.2 418.9
Reconciling amounts......................................... 17.5 17.4
--------- ---------
$11,768.6 $11,904.3
========= =========
SEPARATE ACCOUNT LIABILITIES:(7)
Protection Products(8)...................................... $ 3,946.8 $ 3,843.5
Accumulation Products....................................... 4,313.3 4,548.9
Other Products.............................................. 511.1 604.2
Reconciling amounts......................................... 786.2 832.3
--------- ---------
$ 9,557.4 $ 9,828.9
========= =========
</TABLE>
---------------
(1) Excludes $136.0 million and $144.2 million of individual life premiums in
the Closed Block for the three-month periods ended September 30, 2000 and
1999, respectively, and $419.6 million and $448.6 million for the
nine-month periods ended September 30, 2000 and 1999, respectively (see
Note 6).
(2) Excludes net investment income and net realized gains on investments in the
Closed Block of $101.8 million and $96.7 million for the three-month
periods ended September 30, 2000 and 1999, respectively, and $289.9 million
and $288.6 million for the nine-month periods ended September 30, 2000 and
1999, respectively (see Note 6).
(3) Includes Group Pension Profits of $10.8 million and $21.5 million for the
three-month periods ended September 30, 2000 and 1999, respectively, and
$29.0 million and $47.8 million for the nine-month period ended September
30, 2000 and 1999, respectively (see Note 4).
(4) Includes interest credited to policyholders' account balances. Excludes
$150.2 million and $147.6 million of benefits and interest credited to
policyholders' account balances related to the Closed Block for the
three-month periods ended September 30, 2000 and 1999, respectively, and
$456.7 million and $466.0 million for the nine-month periods ended
September 30, 2000 and 1999, respectively (see Note 6).
(5) Includes assets transferred in the Group Pension Transaction of $4,980.8
million and $5,109.8 million as of September 30, 2000 and December 31,
1999, respectively (see Note 4).
(6) Includes policyholder liabilities transferred in the Group Pension
Transaction of $1,500.7 million and $1,645.7 million as of September 30,
2000 and December 31, 1999, respectively (see Note 4).
(7) Each segment includes separate account assets in an amount equal to the
corresponding liability reported.
(8) Includes separate account liabilities transferred in the Group Pension
Transaction of $3,456.9 million and $3,432.7 million as of September 30,
2000 and December 31, 1999 respectively (see Note 4).
(9) Includes $10.7 million and $9.5 million relating to the Contribution from
the Closed Block for the three-month periods ended September 30, 2000 and
1999, respectively and $32.1 million and $31.4 million for the nine-month
periods ended September 30, 2000 and 1999, respectively (see Note 6).
(10) Includes Closed Block assets of $6,218.2 million and $6,182.1 million as of
September 30, 2000 and December 31, 1999, respectively (see Note 6).
F-20
<PAGE> 23
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(11) Includes deferred policy acquisition costs allocated to the Closed Block of
$619.7 million and $689.9 million as of September 30, 2000 and December 31,
1999, respectively (see Note 6).
(12) Includes Closed Block policyholders' liabilities of $7,269.5 million and
$7,241.0 million as of September 30, 2000 and December 31, 1999,
respectively (see Note 6).
(13) Excludes $14.7 million and $19.4 million of amortization of deferred policy
acquisition costs related to the Closed Block for the three-month periods
ended September 30, 2000 and 1999, respectively, and $46.6 million and
$54.5 million for the nine-month periods ended September 30, 2000 and 1999,
respectively (see Note 6).
The following is a summary of premiums and universal life and
investment-type product policy fees by product for the three-month and
nine-month periods ended September 30, 2000 and 1999, respectively.
<TABLE>
<CAPTION>
THREE-MONTH NINE-MONTH
PERIODS ENDED PERIODS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------- ---------------
2000 1999 2000 1999
------ ------ ------ ------
($ IN MILLIONS) ($ IN MILLIONS)
<S> <C> <C> <C> <C>
PREMIUMS:
Individual life(1).................................... $24.1 $18.9 $ 77.2 $ 57.9
Group insurance....................................... 2.2 2.0 6.4 6.1
Disability income insurance........................... 0.2 0.1 0.4 0.4
Other................................................. -- (0.2) 0.4 0.6
----- ----- ------ ------
Total....................................... $26.5 $20.8 $ 84.4 $ 65.0
===== ===== ====== ======
UNIVERSAL LIFE AND INVESTMENT-TYPE PRODUCT POLICY
FEES:
Universal life........................................ $17.6 $17.7 $ 52.1 $ 54.4
Variable universal life............................... 12.4 9.2 38.5 25.8
Corporate sponsored variable universal life........... 1.2 0.9 3.4 3.0
Group universal life.................................. 2.6 2.1 8.3 8.3
Individual variable annuities......................... 17.3 17.7 53.6 53.4
Individual fixed annuities............................ 0.1 0.2 1.1 0.8
----- ----- ------ ------
Total....................................... $51.2 $47.8 $157.0 $145.7
===== ===== ====== ======
</TABLE>
---------------
(1) Excludes revenues from individual life in the Closed Block of $136.0 million
and $144.2 million for the three-month periods ended September 30, 2000 and
1999, respectively, and $419.6 million and $448.6 million for the nine-month
periods ended September 30, 2000 and 1999, respectively.
4. THE GROUP PENSION TRANSACTION:
On December 31, 1993 (the "Group Pension Transaction Date"), MONY entered
into an agreement (the "Agreement") with AEGON USA, Inc. ("AEGON") under which
the Company transferred a substantial portion of its group pension business
(hereafter referred to as the "Group Pension Transaction"), to AEGON's
wholly-owned subsidiary, AUSA Life Insurance Company, Inc. ("AUSA"). The Company
also transferred to AUSA the corporate infrastructure supporting the group
pension business, including data processing systems, facilities and regional
offices. AUSA was newly formed by AEGON solely for the purpose of facilitating
this transaction. In connection with the transaction, the Company and AEGON have
entered into certain service agreements. These agreements, among other things,
provide that the Company will continue to manage the transferred assets, and
that AUSA will
F-21
<PAGE> 24
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
continue to provide certain administrative services to the Company's remaining
group pension contracts not included in the transfer.
Pursuant to the Agreement, MONY agreed to make a $200 million capital
investment in AEGON by purchasing $150 million face amount of Series A Notes and
$50 million face amount of Series B Notes (hereinafter referred to as the
"Notes"). The Series A Notes pay interest at 6.44 percent per annum and the
Series B Notes pay interest at 6.24 percent per annum. Both the Series A Notes
and the Series B Notes mature on December 31, 2002. MONY's investment in the
Series A Notes was intended to provide AEGON with the funding necessary to
capitalize AUSA.
In accordance with GAAP, the transaction did not constitute a sale because
MONY retained substantially all the risks and rewards associated with the
deposits on contracts in force and transferred to AEGON on the Group Pension
Transaction Date (the "Existing Deposits"). Accordingly, the Company continues
to reflect the transferred assets and liabilities on its balance sheet under
separate captions entitled "Assets transferred in Group Pension Transaction" and
"Liabilities transferred in Group Pension Transaction". In addition, MONY
reports in its GAAP earnings the profits from the Existing Deposits as discussed
below.
Pursuant to the Agreement, MONY receives from AUSA (i) payments on an
annual basis through December 31, 2002 (the "Group Pension Payments") equal to
all of the earnings from the Existing Deposits, (ii) a final payment (the "Final
Value Payment") at December 31, 2002 based on the remaining fair value of the
Existing Deposits, and (iii) a contingent payment (the "New Business Growth
Payment") at December 31, 2002 based on new business growth subsequent to the
Group Pension Transaction Date. However, the level of new business growth
necessary for MONY to receive the New Business Growth Payment make it unlikely
that MONY will ever receive any such payment.
With respect to the Group Pension Payments, the annual results from the
Existing Deposits are measured on a basis in accordance with the Agreement (such
basis hereafter referred to as the "Earnings Formula") which is substantially
the same as GAAP, except that: (i) asset impairments on fixed maturity
securities are only recognized when such securities are designated with a
National Association of Insurance Commissioners ("NAIC") rating of "6", and (ii)
no impairment losses are recognized on mortgage loans until such loans are
disposed of or at the time, and in the calculation, of the Final Value Payment.
Earnings which emerge from the Existing Deposits pursuant to the
application of the Earnings Formula are recorded in MONY's financial statements
only after adjustments (primarily to recognize asset impairments in accordance
with SFAS Nos. 114 and 115) to reflect such earnings on a basis entirely in
accordance with GAAP (such earnings hereafter referred to as the "Group Pension
Profits"). Losses which arise from the application of the Earnings Formula for
any annual period will be reflected in MONY's results of operations (after
adjustments to reflect such losses in accordance with GAAP) only up to the
amount for which MONY is at risk (as described below), which at any time is
equal to the then outstanding principal amount of the Series A Notes.
Operating losses reported in any annual period pursuant to the Earnings
Formula are carried forward to reduce any earnings in subsequent years reported
pursuant to the Earnings Formula. Any resultant deficit remaining at December
31, 2002 will be deducted from the Final Value Payment and New Business Growth
Payment, if any, due to MONY. If a deficit still remains, it will be applied (as
provided for in the Agreement) as an offset against the principal payment due to
MONY upon maturity of the Series A Notes.
Management expects that Group Pension Profits will continue to decrease in
the future consistent with the runoff of the Existing Deposits.
F-22
<PAGE> 25
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following tables set forth certain summarized financial information
relating to the Group Pension Transaction as of the dates and for the periods
indicated, including information regarding: (i) the general account assets
transferred to support the Existing Deposits in the Group Pension Transaction
(hereafter referred to as the "AEGON Portfolio"), (ii) the transferred separate
account assets and liabilities and (iii) the components of revenue and expense
comprising the Group Pension Profits:
<TABLE>
<CAPTION>
AS OF AS OF
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
($ IN MILLIONS)
<S> <C> <C>
ASSETS:
General Account Fixed Maturities: available for sale, at
estimated fair value (amortized cost; $1,423.7 million and
$1,532.4 million, respectively)........................... $1,411.4 $1,510.0
Mortgage loans on real estate............................. 54.7 98.5
Real estate to be disposed of............................. -- 16.8
Cash and cash equivalents................................. 35.2 25.3
Accrued investment income................................. 22.6 26.5
-------- --------
Total general account assets........................... 1,523.9 1,677.1
Separate account assets..................................... 3,456.9 3,432.7
-------- --------
Total assets........................................... $4,980.8 $5,109.8
======== ========
LIABILITIES:
General Account(1)
Policyholders' account balances........................... $1,500.7 $1,645.7
Other liabilities......................................... 11.1 20.7
-------- --------
Total general account liabilities...................... $1,511.8 $1,666.4
-------- --------
Separate account liabilities(2)............................. $3,456.9 $3,432.7
-------- --------
Total Liabilities...................................... $4,968.7 $5,099.1
======== ========
</TABLE>
---------------
(1) Includes general account liabilities transferred in connection with the
Group Pension Transaction pursuant to indemnity reinsurance of $76.0 million
and $88.9 million as of September 30, 2000 and December 31, 1999,
respectively.
(2) Includes separate account liabilities transferred in connection with the
Group Pension Transaction pursuant to indemnity reinsurance of $16.8 million
and $20.3 million as of September 30, 2000 and December 31, 1999,
respectively.
F-23
<PAGE> 26
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
FOR THE FOR THE
THREE-MONTH NINE-MONTH
PERIODS ENDED PERIODS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
2000 1999 2000 1999
----- ----- ----- -----
($ IN MILLIONS)
<S> <C> <C> <C> <C>
REVENUES:
Product policy fees..................................... $ 7.4 $ 5.4 $19.4 $17.5
Net investment income................................... 27.8 31.6 86.2 98.2
Net realized gains on investments....................... 1.0 11.5 1.6 15.8
----- ----- ----- -----
Total revenues..................................... 36.2 48.5 107.2 131.5
----- ----- ----- -----
BENEFITS AND EXPENSES:
Interest Credited to policyholders' account balances.... 21.7 22.4 64.9 67.9
Other operating costs and expenses...................... 3.7 4.6 13.3 15.8
----- ----- ----- -----
Total benefits and expenses........................ 25.4 27.0 78.2 83.7
----- ----- ----- -----
Group Pension Profits................................. $10.8 $21.5 $29.0 $47.8
===== ===== ===== =====
</TABLE>
5. COMMITMENTS AND CONTINGENCIES:
a.) Since late 1995 a number of purported class actions were commenced in
various state and federal courts against the Company alleging that the Company
engaged in deceptive sales practices in connection with the sale of whole and
universal life insurance policies from the early 1980s through the mid 1990s.
Although the claims asserted in each case are not identical, they seek
substantially the same relief under essentially the same theories of recovery
(i.e., breach of contract, fraud, negligent misrepresentation, negligent
supervision and training, breach of fiduciary duty, unjust enrichment and
violation of state insurance and/or deceptive business practice laws).
Plaintiffs in these cases seek primarily equitable relief (e.g., reformation,
specific performance, mandatory injunctive relief prohibiting the Company from
canceling policies for failure to make required premium payments, imposition of
a constructive trust and creation of a claims resolution facility to adjudicate
any individual issues remaining after resolution of all class-wide issues) as
opposed to compensatory damages, although they also seek compensatory damages in
unspecified amounts. The Company has answered the complaints in each action,
(except for one being voluntarily held in abeyance), has denied any wrongdoing
and has asserted numerous affirmative defenses.
On June 7, 1996, the New York State Supreme Court certified one of those
cases, the Goshen v. The Mutual Life Insurance Company of New York and MONY Life
Insurance Company of America, (now known as Defilippo, et al v. The Mutual Life
Insurance Company of New York and MONY Life Insurance Company) being the first
of the aforementioned class actions filed, as a nationwide class consisting of
all persons or entities who have, or at the time of the policy's termination
had, an ownership interest in a whole or universal life insurance policy issued
by the Company and sold on an alleged "vanishing premium" basis during the
period January 1, 1982 to December 31, 1995. On March 27, 1997, the Company
filed a motion to dismiss or, alternatively, for summary judgment on all counts
of the complaint. All of the other putative class actions have been consolidated
and transferred by the Judicial Panel on Multidistrict Litigation to the United
States District Court for the District of Massachusetts, and/or are being
voluntarily held in abeyance pending the outcome of the Goshen case.
On October 21, 1997, the New York State Supreme Court granted the Company's
motion for summary judgment and dismissed all claims filed in the Goshen case
against the Company. On
F-24
<PAGE> 27
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
December 20, 1999, the New York State Court of Appeals affirmed the dismissal of
all but one of the claims in the Goshen case (a claim under New York's General
Business Law), which has been remanded back to the New York State Supreme Court
for further proceedings consistent with the opinion. The New York State Supreme
Court has subsequently reaffirmed that, for purposes of the remaining New York
General Business law claims, the class is now limited to New York purchases
only, (and plaintiffs have appealed this aspect of the ruling), and has further
held that the New York General Business Law claims of all class members whose
claims accrued prior to November 29, 1992 are barred by the applicable statute
of limitations. The Company intends to defend itself vigorously against the sole
remaining claim.
b.) On November 16, 1999, The MONY Group, Inc. and MONY Life Insurance
Company were served with a complaint in an action entitled Calvin Chatlos, M.D.,
and Alvin H. Clement, On Behalf of Themselves And All Others Similarly Situated
v. The MONY Life Insurance Company, The MONY Group Inc., and Neil D. Levin,
Superintendent, New York Department of Insurance, filed in the United States
District Court for the Southern District of New York. The action purports to be
brought as a class action on behalf of all individuals who had an ownership
interest in one or more in-force life insurance policies issued by MONY Life
Insurance Company as of November 16, 1998. The complaint alleges that (i) the
New York Superintendent of Insurance, Neil D. Levin, violated Section 7312 of
the New York Insurance Law by approving the plan of demutualization, which
plaintiffs claim was not fair and adequate, primarily because it allegedly
failed to provide for sufficient assets for the mechanism established under the
plan to preserve reasonable dividend expectations of the closed block, and (ii)
MONY Life violated Section 7312 by failing to develop and submit to the
Superintendent a plan of demutualization that was fair and adequate. The
plaintiffs seek equitable relief in the form of an order vacating and/or
modifying the Superintendent's order approving the plan of demutualization
and/or directing the Superintendent to order MONY Life to increase the assets in
the closed block, as well as unspecified monetary damages, attorneys' fees and
other relief.
In early January 2000, MONY Life and the Superintendent wrote to the
District Court seeking a pre-motion conference preliminary to the filing of a
motion to dismiss the federal complaint on jurisdictional, federal abstention
and timeliness grounds and for failure to state a claim. Following receipt of
those letters, plaintiffs' counsel offered voluntarily to dismiss their
complaint, and a stipulation and order to that effect was thereafter filed and
approved by the court.
On March 27, 2000, plaintiffs filed a new action in New York State Supreme
Court bearing the same caption and naming the same defendants as the previously
filed federal action. The state court complaint differs from the complaint
previously filed in federal court in two primary respects. First, it no longer
asserts a claim for damages against the Superintendent, nor does its prayer for
relief seek entry of an order vacating or modifying the Superintendent's
decision or requiring the Superintendent to direct MONY Life to place additional
assets into the closed block. Rather, it seeks an accounting and an order from
the Court directing MONY Life to transfer additional assets to the closed block.
Second, the new complaint contains claims for breach of contract and
fiduciary duty, as well as new allegations regarding the adequacy of the
disclosures contained in the Policyholder Information Booklet distributed to
policyholders soliciting their approval of the plan of demutualization (which
plaintiffs claim violated both the Insurance Law and MONY Life's fiduciary
duties).
In order to challenge successfully the New York Superintendent's approval
of the plan, plaintiffs would have to sustain the burden of showing that such
approval was arbitrary and capricious or an abuse of discretion, made in
violation of lawful procedures, affected by an error of law or not supported by
substantial evidence. In addition, Section 7312 provides that MONY Life may ask
the court to require the challenging party to give security for the reasonable
expenses, including attorneys' fees, which may be incurred by MONY Life or the
Superintendent or for which MONY Life may become liable, to which
F-25
<PAGE> 28
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
security MONY Life shall have recourse in such amount as the court shall
determine upon the termination of the action.
MONY Life and the Superintendent have moved to dismiss the state court
complaint in its entirety on a variety of grounds. That motion is fully briefed
and awaiting decision by the court. MONY Life believes that there are
substantial defenses to plaintiffs' claims and intends to defend itself
vigorously.
c.) In addition to the matters discussed above, the Company is involved in
various other legal actions and proceedings in connection with its businesses.
The claimants in certain of these actions and proceedings seek damages of
unspecified amounts.
While the outcome of matters discussed in 5(a), 5(b) and 5(c) cannot be
predicted with certainty, in the opinion of management, any additional liability
beyond that recorded in the consolidated financial statements at September 30,
2000, resulting from the resolution of these matters will not have a material
adverse effect on the Company's consolidated financial position or results of
operations. There can be no assurance, however, that the present litigation will
not have a material adverse effect on MONY Life.
d.) Insurance companies are subject to assessments, up to statutory limits,
by state guaranty funds for losses of policyholders of insolvent insurance
companies. In the opinion of management, such assessments will not have a
material adverse effect on the consolidated financial position and the results
of operations of the Company.
e.) The Company maintains a line of credit with domestic banks totaling
$150.0 million with a scheduled renewal date in June 2001. Under this line of
credit, the Company is required to maintain a certain statutory tangible net
worth and debt to capitalization ratio. The Company has complied with all
covenants relating thereto. The Company has not borrowed against these lines of
credit since their inception.
f.) At September 30, 2000, the Company had commitments to issue $10.5
million of fixed rate agricultural loans with periodic interest rate reset
dates. The initial interest rates on such loans range from approximately 7.85%
to 9.15%. In addition, the Company had commitments to issue $115.3 million of
fixed rate and floating rate commercial mortgage loans with interest rates
ranging from 7.75% to 9.30%. The Company had commitments outstanding to purchase
private fixed and floating rate maturity securities as of September 30, 2000 of
$145.8 million with interest rates from 7.61% to 10.75%. At September 30, 2000,
the Company had commitments to contribute capital to its equity partnership
investments of $119.5 million.
6. CLOSED BLOCK:
In accordance with New York State Insurance Law, on November 16, 1998, the
Company established a closed block (the "Closed Block") of certain participating
insurance policies as defined in the Plan (the "Closed Block Business"). In
conjunction therewith, the Company allocated assets to the Closed Block expected
to produce cash flows which, together with anticipated revenues from the Closed
Block Business, are reasonably expected to be sufficient to support the Closed
Block Business, including but not limited to, provision for payment of claims
and surrender benefits, certain expenses and taxes, and for continuation of
current payable dividend scales in effect at the date of Demutualization,
assuming the experience underlying such dividend scales continues, and for
appropriate adjustments in such scales if the experience changes. The assets
allocated to the Closed Block and the aforementioned revenues inure solely to
the benefit of the owners of policies included in the Closed Block.
The assets and liabilities allocated to the Closed Block were recorded in
the Company's financial statements at their historical carrying values. The
carrying values of the assets allocated to the Closed
F-26
<PAGE> 29
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Block are less than the carrying value of the Closed Block liabilities at the
Plan Effective Date. The excess of the Closed Block liabilities over the Closed
Block assets at the Plan Effective Date represents the total estimated future
post-tax contribution expected to emerge from the operation of the Closed Block,
which will be recognized in the Company's income over the period the policies
and the contracts in the Closed Block remain in force.
To the extent that the actual cash flows, subsequent to the Plan Effective
Date, from the assets allocated to the Closed Block and the Closed Block
Business are, in the aggregate, more favorable than assumed in establishing the
Closed Block, total dividends paid to the Closed Block policyholders in future
years will be greater than the total dividends that would have been paid to such
policyholders if the current payable dividend scales had been continued.
Conversely, to the extent that the actual cash flows, subsequent to the Plan
Effective Date, from the assets allocated to the Closed Block and the Closed
Block Business are, in the aggregate, less favorable than assumed in
establishing the Closed Block, total dividends paid to the Closed Block
policyholders in future years will be less than the total dividends that would
have been paid to such policyholders if the current payable dividend scales had
been continued. Accordingly, the recognition of the aforementioned estimated
future post-tax contribution expected to emerge from the operation of the Closed
Block is not affected by the aggregate actual experience of the Closed Block
assets and the Closed Block Business subsequent to the Plan Effective Date,
except in the unlikely event that the Closed Block assets and the actual
experience of the Closed Block Business subsequent to the Plan Effective Date
are not sufficient to pay the guaranteed benefits on the Closed Block Policies,
in which case the Company will be required to fund any such deficiency from its
general account assets outside of the Closed Block.
In addition, MONY Life has undertaken to reimburse the Closed Block from
its general account assets outside the Closed Block for any reduction in
principal payments due on the Series A Notes (which have been allocated to the
Closed Block) pursuant to the terms thereof, as described in Note 4. Since the
Closed Block has been funded to provide for the payment of guaranteed benefits
and the continuation of current payable dividends on the policies included
therein, it will not be necessary to use general funds to pay guaranteed
benefits unless the Closed Block Business experiences very substantial ongoing
adverse experience in investment, mortality, persistency or other experience
factors. The Company regularly (at least quarterly) monitors the experience from
the Closed Block and may make changes to the dividend scale, when appropriate,
to ensure the profits are distributed to Closed Block policyholders in a fair
and equitable manner. In addition, periodically the New York Insurance
Department requires the filing of an independent auditor's report on the
operations of the Closed Block.
The results of the Closed Block are presented as a single line item in the
Company's statements of income entitled, "Contribution from the Closed Block".
Prior to the establishment of the Closed Block the results of the assets and
policies comprising the Closed Block were reported in various line items in the
Company's income statements, including: premiums, investment income, net
realized gains and losses on investments, benefits, amortization of deferred
policy acquisition costs, etc. In addition, all assets and liabilities allocated
to the Closed Block are reported in the Company's balance sheet separately under
the captions "Closed Block assets" and "Closed Block liabilities", respectively.
Accordingly, certain line items in the Company's financial statements subsequent
to the establishment of the Closed Block reflect material reductions in reported
amounts, as compared to periods prior to the establishment of the Closed Block,
while having no effect on net income.
The pre-tax Contribution from the Closed Block includes only those
revenues, benefit payments, dividends, premium taxes, state guaranty fund
assessments, and investment expenses considered in funding the Closed Block.
However, many expenses associated with operating the Closed Block and
administering the policies included therein were excluded from and, accordingly,
not funded in the Closed Block. These
F-27
<PAGE> 30
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
expenses are reported in the Company's statement of operations, outside of the
Contribution from the Closed Block, consistent with how they are funded. Such
expenses are reported in the separate line items to which they apply based on
the nature of such expenses. Federal income taxes applicable to the Closed
Block, which are funded in the Closed Block, are reflected as a component of
federal income tax expense in the Company's statement of operations. Since many
expenses related to the Closed Block are funded outside the Closed Block,
operating costs and expenses outside the Closed Block are disproportionate to
the level of business outside the Closed Block.
The following tables set forth certain summarized financial information
relating to the Closed Block, as of and for the periods indicated:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
($ IN MILLIONS)
<S> <C> <C>
ASSETS:
Fixed Maturities:
Available for sale, at estimated fair value (amortized
cost; $3,524.2 and $3,589.6, respectively)............. $3,449.8 $3,479.5
Mortgage loans on real restate............................ 539.9 443.0
Policy loans.............................................. 1,181.3 1,199.1
Real estate............................................... 24.0 22.1
Cash and cash equivalents................................. 145.0 111.3
Premiums receivable....................................... 8.8 14.2
Deferred policy acquisition costs......................... 619.7 689.9
Other assets.............................................. 249.7 223.0
-------- --------
Total Closed Block assets.............................. $6,218.2 $6,182.1
======== ========
LIABILITIES:
Future policy benefits.................................... $6,790.1 $6,781.5
Policyholders' account balances........................... 292.4 294.6
Other Policyholders' liabilities.......................... 187.0 164.9
Other liabilities......................................... 40.8 62.3
-------- --------
Total Closed Block liabilities......................... $7,310.3 $7,303.3
======== ========
</TABLE>
F-28
<PAGE> 31
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
FOR THE FOR THE
THREE-MONTH NINE-MONTHS
PERIODS ENDED PERIODS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------- ---------------
2000 1999 2000 1999
------ ------ ------ ------
($ IN MILLIONS)
<S> <C> <C> <C> <C>
REVENUES:
Premiums............................................ $136.0 $144.2 $419.6 $448.6
Net investment income............................... 101.8 96.7 289.9 288.6
Net realized gains (losses) on investments.......... -- -- --
Other income........................................ 0.6 0.4 1.7 1.1
------ ------ ------ ------
Total revenues................................. 238.4 241.3 711.2 738.3
------ ------ ------ ------
BENEFITS AND EXPENSES:
Benefits to policyholders........................... 148.0 145.5 450.2 459.5
Interest credited to policyholders' account
balances.......................................... 2.2 2.1 6.5 6.5
Amortization of deferred policy acquisition costs... 14.7 19.4 46.6 54.5
Dividends to policyholders.......................... 60.4 63.4 169.1 179.8
Other operating costs and expenses.................. 2.4 1.4 6.7 6.6
------ ------ ------ ------
Total benefits and expenses.................... 227.7 231.8 679.1 706.9
------ ------ ------ ------
Contribution from the Closed Block.................. $ 10.7 $ 9.5 $ 32.1 $ 31.4
====== ====== ====== ======
</TABLE>
For the three-month periods ended September 30, 2000 and 1999, there were
$5.6 million and $0.0 million, respectively, in charges for other than temporary
impairments on fixed maturity securities in the Closed Block. For the nine-month
periods ended September 30, 2000 and 1999, there were $10.1 million and $0.0
million, respectively, in charges for other than temporary impairments on fixed
maturity securities in the Closed Block. At September 30, 2000 and December 31,
1999, there were $5.5 million and $0.0 million, respectively, of fixed income
securities that were non-income producing for the twelve months preceding such
dates. At September 30, 2000 and December 31, 1999, there were no non-income
producing mortgage loans for the twelve months preceding such dates in the
Closed Block.
7. EXTRAORDINARY AND OTHER ITEMS:
a) In January 2000, the New York Insurance Department approved, and MONY
Life paid, a dividend to MONY Group in the amount of $75 million.
b) On January 12, 2000, the Holding Company filed a registration statement
on Form S-3 with the Securities and Exchange Commission (the "SEC") to register
certain securities. This registration, known as a "Shelf Registration", provides
MONY Group with the ability to offer various securities to the public, when it
deems appropriate, to raise proceeds up to an amount not to exceed $1.0 billion
in the aggregate for all issuances of securities thereunder. It is the intention
of MONY Group to use this facility to raise proceeds for mergers and
acquisitions and for other general corporate matters of MONY Group and its
subsidiaries, as it considers necessary.
c) On March 8, 2000, the Holding Company issued $300.0 million principal
amount of senior notes (the "Senior Notes") pursuant to the aforementioned Shelf
Registration. The Senior Notes mature on March 15, 2010 and bear interest at
8.35% per annum. The principal amount of the Senior Notes is payable at maturity
and interest is payable semi-annually. The net proceeds to the Company from the
issuance of the Senior Notes, after deducting underwriting commissions and other
expenses (primarily legal and accounting fees), were approximately $296.6
million. Approximately $280.0 million of the net
F-29
<PAGE> 32
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
proceeds from the issuance of the Senior Notes was used by the Holding Company
to finance the repurchase, on March 8, 2000, by MONY Life of all of its
outstanding $115.0 million face amount 9.5% coupon surplus notes, and $116.5
million face amount of its $125.0 million face amount 11.25% coupon surplus
notes (hereafter referred to as the "9.5% Notes" and "11.25% Notes",
respectively), which were outstanding at December 31, 1999. The balance of the
net proceeds from the issuance of the Senior Notes was retained by the Holding
Company for general corporate purposes. In the third quarter of 2000, the
Company repurchased another $6.5 million face amount of the 11.25% Notes.
To finance MONY Life's repurchase of the 9.5% Notes and the 11.25% Notes,
the Holding Company on March 8, 2000:
(i) purchased two surplus notes from MONY Life (hereafter referred as
the "Inter-Company Surplus Notes") to replace 9.5% Notes and the 11.25%
Notes. The term of the Inter-Company Surplus Notes are identical to the
9.2% Notes and 11.25% Notes, except that the Inter-Company Surplus Notes
were provided to yield a current market rate of interest and the
Inter-Company Surplus Note issued to replace the $116.5 million face amount
of the 11.25% Notes was issued a face amount of $100.0 million, and
(ii) contributed capital to MONY Life in the amount of $65.0 million.
As a result of the repurchase of the 9.5% Notes and substantially all of
the 11.25% Notes, MONY Life recorded a pre-tax tax loss of $56.5 million ($36.7
million after tax) during the first quarter of 2000 and $1.6 million ($1.0
million after tax) during the third quarter of 2000. The loss resulted from the
premium paid by MONY Life to the holders of the 9.5% Notes and the 11.25% Notes
reflecting the excess of their fair value over their carrying value on MONY
Life's books at the date of the transaction of approximately $7.0 million and
$51.1 million, respectively. This loss is reported, net of tax, as an
extraordinary item on MONY Life's income statement for the nine-month period
ended September 30, 2000.
8. ACQUISITION OF THE ADVEST GROUP, INC.:
On August 23, 2000, The MONY Group Inc, and The Advest Group, Inc.
("Advest"), entered into a definitive Agreement and Plan of Merger, dated as of
August 23, 2000 (the "merger agreement"), providing, for the acquisition of
Advest by MONY Group Inc.. Advest is a diversified financial services company
providing securities brokerage, trading, investment banking, trust and asset
management services. The merger agreement provides that the value of the
consideration to be received by Advest shareholders will be fixed five days
prior to the transaction closing date using the 10-day average closing price of
MONY Group's shares at that time. Advest stockholders may elect to receive the
consideration in shares of MONY Group common stock, an equivalent value in cash
based upon the average closing price of MONY Group's shares, or a combination of
cash and shares of MONY Group common stock. These elections will then be
adjusted, as necessary, on a pro rata basis, to produce an aggregate
consideration consisting of 49.9% cash and 50.1% MONY Group common stock.
The business combination will be accounted for under the purchase method of
accounting. Accordingly, a portion of the purchase price will be allocated to
net tangible and intangible assets acquired based on their estimated fair
values. The consummation of the merger, which is pending certain regulatory
approvals, is expected to occur on or about December 31, 2000. Details of the
proposed merger, including a copy of the merger agreement has been filed with
the Securities and Exchange Commission on Form S-4 and mailed to all
shareholders.
F-30
<PAGE> 33
THE MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. NEW ACCOUNTING PRONOUNCEMENTS:
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS 133 requires all derivatives to be
recognized in the statement of financial position as either assets or
liabilities and measured at fair value. The corresponding derivative gains and
losses should be reported based on the hedge relationship that exists, if there
is one. Changes in the fair value of derivatives that are not designated as
hedges or that do not meet the hedge accounting criteria in SFAS 133, are
required to be reported in earnings. SFAS 133, as amended by SFAS 137, is
effective for all fiscal quarters of the fiscal years beginning after June 15,
2000. SFAS 137 delayed the effective date of SFAS 133 by one year. Adoption of
SFAS 133 is not expected to have a material effect on the Company's financial
condition or results of operations.
F-31
