C.M. Life Insurance Company ("the Company"), is a wholly-owned stock life insurance subsidiary of Massachusetts Mutual Life Insurance Company ("MassMutual"). The Company is primarily engaged in the sale of variable annuity and flexible premium universal life and variable life insurance products distributed through career agents and brokers. The Company is licensed to sell life insurance and annuities in Puerto Rico, the District of Columbia and 49 states (excluding New York).

The accompanying unaudited interim financial statements have been prepared in accordance with the instructions to Form 10-Q and the rules and regulations of the Securities and Exchange Commission. These financial statements have been prepared under the presumption that users of the interim financial information have either read or have access to the Company's audited statutory financial statements for the year ended December 31, 1999. Accordingly, footnote disclosures, which would substantially duplicate the disclosures contained in the Company's December 31, 1999, audited statutory financial statements, have been omitted from these interim financial statements. These unaudited interim financial statements should be read in conjunction with the audited statutory financial statements and notes thereto, included in the Company's Annual Report on Form 10-K, for the year ended December 31, 1999.

The accompanying statutory financial statements have been prepared in conformity with the statutory accounting practices, except as to form, of the National Association of Insurance Commissioners ("NAIC") and the accounting practices prescribed or permitted by the State of Connecticut Insurance Department and are different in some respects from financial statements prepared in accordance with generally accepted accounting principles ("GAAP"). The more significant differences are as follows: (a) acquisition costs, such as commissions and other costs directly related to acquiring new business, are charged to current operations as incurred, whereas GAAP would require these expenses to be capitalized and recognized over the life of the policies; (b) statutory policy reserves are based upon the commissioners reserve valuation methods and statutory mortality, morbidity and interest assumptions, whereas GAAP reserves would generally be based upon net level premium, estimated gross margin methods, and appropriately conservative estimates of future mortality, morbidity and interest assumptions; (c) bonds are generally carried at amortized cost, whereas GAAP generally requires they be reported at fair value; (d) deferred income taxes are not provided for book-tax timing differences as would be required by GAAP; and (e) payments received for universal and variable life products and variable annuities are reported as premium income and changes in reserves, whereas, under GAAP, these payments would be recorded as deposits to policyholders' account balances.

In March 1998, the NAIC adopted the Codification of Statutory Accounting Principles ("Codification"). Codification provides a comprehensive guide of statutory accounting principles for use by insurers in all states and is expected to become effective January 1, 2001. The effect of adopting Codification shall be reported as an adjustment to surplus on the effective date. The Company is currently reviewing the impact of Codification; however, due to the nature of certain required accounting changes and their sensitivity to factors such as interest rates, the actual impact upon adoption cannot be determined at this time.

The Company has entered into variable annuity exchange programs with its parent whereby certain MassMutual variable annuity contract holders can make a non-taxable exchange of their contract for an enhanced C.M. Life variable annuity contract. The Company received premiums of $486.0 million and $686.5 million for the three and six months ended June 30, 2000, respectively, related to these exchange programs. The Company is currently negotiating with MassMutual, to compensate them for the lost revenue associated with the exchange of these contracts. Once estimable, these costs will be charged to current operations.

MassMutual and the Company have an agreement whereby MassMutual, for a fee, furnishes the Company, as required, operating facilities, human resources, computer software development, and managerial services. Also, investment and administrative services are provided to the Company pursuant to a management services agreement with MassMutual. Fees incurred under the terms of these agreements were $42.7 million and $82.3 million for the three and six month periods ending June 30, 2000, and $19.2 million and $36.1 million for the three and six month periods ended June 30, 1999, respectively. While management believes that these fees are calculated on a reasonable basis, they may not necessarily be indicative of the costs that would have been incurred on a stand-alone basis.

The Company cedes a portion of its life insurance business to MassMutual and other insurers in the normal course of business. The Company's retention limit per individual insured is $15.0 million; the portion of the risk exceeding the retention limit is reinsured with other insurers, including MassMutual. The Company is contingently liable with respect to ceded reinsurance in the event any reinsurer is unable to fulfill its contractual obligations. The Company has a modified coinsurance quota-share reinsurance agreement with MassMutual, whereby the Company cedes 75% of the premiums on certain universal life policies. In return, MassMutual pays the Company a stipulated expense allowance, death and surrender benefits, and a modified coinsurance adjustment based upon experience. The Company retains the assets and related reserves for payment of future benefits on the ceded policies. Premium income of $14.3 million and $17.3 million was ceded to MassMutual while policyholders' benefits of $19.6 million and $21.2 million were paid to the Company for the six month periods ending June 30, 2000 and 1999, respectively. For the three month periods ending June 30, 2000 and 1999, premium income of $6.7 million and $8.2 million was ceded to MassMutual while policyholders' benefits of $9.8 million and $9.3 million were paid to the Company.

The Company also has a stop-loss agreement with MassMutual under which the Company cedes claims which, in aggregate, exceed .32% of the covered volume for any year, with maximum coverage of $25.0 million above the aggregate limit. The aggregate limit was $65.6 million as of June 30, 2000 and $45.4 million as of December 31, 1999; it was not exceeded in any of the periods being reported. Premium income of $0.6 million was ceded to MassMutual for the six month periods ending June 30, 2000 and 1999. Premium income of $0.3 million was ceded to MassMutual for the three month periods ending June 30, 2000 and 1999.

Effective January 1, 2000, the Company entered into a coinsurance agreement with MassMutual, whereby the Company cedes substantially 100% of the premiums on new issues of certain universal life policies. In return, MassMutual pays the Company a stipulated expense allowance and death and surrender benefits. MassMutual holds the assets and related reserves for payment of future benefits on the ceded policies. Premium income of $9.7 million and $13.2 million was ceded to MassMutual for the three and six month periods ending June 30, 2000. Through June 30, 2000, there were no policyholders' benefits paid to the Company under the contract.

7.4% in 1999. The increase in income from mortgage loans is due to a 48% increase in average invested mortgage loans and an increase in the annualized yield from 6.7% in 1999 to 9.8% in 2000. The mortgage loan increase is a direct result of the strategy employed during second half of 1999 to increase the Company's mortgage acquisition activity.

The increase in gross investment income from other investments is primarily due to increased dividends received from affiliated mutual funds, partially offset by a 66% decrease in the average amount of other investments compared to the prior year. The decrease in gross investment income from policy loans is attributable to an 18% decrease in average policy loans compared to the prior year. The increase in gross investment income from cash and short-term investments is primarily due to a 74% increase in average invested cash and short-term investments balances over the prior year.

The increase in fees and other income is primarily due to contract charges from the separate accounts, which increased $14.2 million or 173%, to $22.4 million for the six months ended June 30, 2000 from $8.2 million for the same period in 1999. This increase is attributable to the continued growth in the Company's separate account assets coupled with market appreciation of these same assets over the prior year.

Policyholders' benefits and payments increased for the six months ended June 30, 2000 primarily due to surrender benefits on individual annuity products. Individual annuity surrenders increased $88.6 million, or 72%, from the prior year. Life insurance surrenders increased $4.3 million, or 26%, from the prior year.

Addition to policyholders' reserves and funds includes the change in general account reserves and transfers to and from the separate accounts, based upon policyholder elections. The growth in these benefits is primarily attributable to the Company's premium and sales growth. The increase for the six months ended June 30, 2000 includes a $895.6 million increase in separate account deposits, partially offset by a $66.8 million increase in separate account withdrawals and other transfers. General account reserves also increased, primarily due to a $19.2 million increase in the growth in life reserves and a $20.2 million increase in the growth in annuity reserves.

Commissions increased for the six months ended June 30, 2000 due principally to increases in sales of annuities and life insurance. Life insurance commissions increased $20.7 million, or 94%, while annuity products' commissions increased $12.1 million, or 159% between periods. The overall decrease in commissions as a percentage of sales is due to the shift in sales mix to annuity products, which have lower commission rates than life products.

The increase in operating expenses, state taxes, licenses and fees for the six months ended June 30, 2000 is primarily attributable to the increased production of new business that resulted in increased management fees. Management fees charged by MassMutual include increases in agency allowances and other expenses associated with the production of new business.

The decrease in federal income taxes for the six months ended June 30, 2000 is primarily attributable to the net loss from operations before federal income taxes and the timing of the tax deductibility of reserves, partially offset by the timing of the tax deductibility of acquisition costs. Taxable income (loss) decreased $26.7 million to a taxable loss of $2.6 million for the six months ended June 30, 2000 from taxable income of $24.1 million for the same period in 1999.

Realized capital losses, after the transfer to the Interest Maintenance Reserve ("IMR"), increased for the six months ended June 30, 2000 primarily due to credit-related mortgage losses, which are not transferred to the IMR. In 1999, the Company had no realized capital gains and losses, after the transfer to the IMR.

•     capital and surplus contributed by MassMutual of $15 million, and
•     an increase of $2.3 million due to the change in Asset Valuation Reserve ("AVR") and General Investment Reserve ("GIR").

Cash and short-term investments decreased $17.0 million, or 9%, from the prior year as a result of the reinvestment of cash held at December 31, 1999, into bonds.

Net cash provided by operating activities increased $25.3 million, or 44%, from the prior year. This increase is primarily due to increased premiums and investment income, partially offset by increased surrender benefits, withdrawals, general expenses, commissions and state taxes, licenses and fees.

Loans and purchases of investments increased $18.8 million, or 7%, while sales and maturities of investments and receipts from repayment of loans decreased $26.6 million, or 12%, from the prior year. The increase in net cash used in investing activities is primarily due to a larger volume of bond purchases due to business growth and a decrease in sales and maturities of bonds between years.

In June, MassMutual made a $15 million capital and surplus contribution necessary to support our continued business growth. The Board of Directors of MassMutual has authorized the contribution of funds to the Company sufficient to meet the capital requirements of all states in which the Company is licensed to do business.

As of June 30, 2000, the Company's total adjusted capital as defined by the NAIC was $110.0 million. The NAIC developed the Risk Based Capital ("RBC") model to compare the total adjusted capital with a standard design in order to reflect an insurance company's risk profile. Although management believes that there is no single appropriate means of measuring RBC needs, management feels that the NAIC approach to RBC measurement is reasonable, and the Company manages its capital position with significant attention to maintaining adequate total adjusted capital relative to RBC. The Company's total adjusted capital was well in excess of all RBC standards at June 30, 2000. Management believes that the Company enjoys a strong capital position in light of its risks and the Company is well positioned to meet policyholder and other obligations.

The Company's market risk and financial instrument holdings as of June 30, 2000, are similar to its market risk and financial instrument holdings as of December 31, 1999, a description of which is included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999.

(a) Exhibit Index

                 27. Financial Data Schedule

(b) Reports on Form 8-K

                 No reports on Form 8-K were filed by the Registrant with the Securities and Exchange Commission during the quarter ended June 30, 2000.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.