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New York Life Well-Prepared For Pandemic, Stress Test Reveals

Company Cites Recent Pandemic Alert by World Health Organization

NEW YORK, N.Y., July 8, 2009 – Recently, the World Health Organization raised the pandemic alert to level 6, which officially declared the H1N1 flu outbreak a pandemic. New York Life Insurance Company, the largest mutual life insurance company in the United States, announced today that the company is well prepared to meet its commitments to policyholders in a pandemic, even one as severe as the highly lethal 1918 flu pandemic.

New York Life said that in February 2006, well before the financial crisis began, it "stress tested" its Surplus and Asset Valuation Reserve under three different catastrophic scenarios, and in recent weeks the company re-tested under the same scenarios:

  • a major pandemic
  • a decade-long low interest rate environment
  • a stock market drop of 40%

The company's analysis indicated that New York Life has the capital and liquidity to withstand any of these shocks and still maintain very strong capital levels.

Ted Mathas, New York Life chairman, president and CEO, said, “Our company is well aware of the risks associated with pandemics. The 1918 flu pandemic -- which claimed millions of lives around the world -- was the single biggest event in our company’s 164-year history, in terms of death claims. It far surpassed World Wars and other disasters in its devastating human cost. Using our historical records of the 1918 pandemic, we conducted a stress test to determine our financial preparedness. This stress test included both the impact of higher mortality claims as well as the indirect macroeconomic effects of a pandemic. We found we could maintain very strong capital levels even under the extreme scenario of another pandemic of 1918 proportions. Our tests show that New York Life's policyholders are well protected and that the company has more than enough capital and liquidity to handle such extreme events and meet all of our obligations.

“One of the key reasons we can withstand these potential calamities is our mutuality. Being focused on long term financial strength has meant that in recent years we were able to accumulate an additional one billion dollars per year in the company’s surplus, increasing it from $8.8 billion in 2002 to $14.7 billion in 2007. We would not have been able to do this if we were a public company, having to deploy any excess capital to satisfy the shorter-term demands of equity investors. Our surplus is a kind of rainy day fund, a cushion of safety for our policyholders that underpins our commitments. And even the severe financial crisis we’re in now has only reduced this surplus to approximately $12 billion. When we constructed the catastrophic scenarios three years ago we believed it was extremely remote that two of them might occur simultaneously. Now this is a real possibility – and we know New York Life can handle the challenge.”

Mr. Mathas noted that in addition to New York Life having more than $12 billion in surplus, it has more than $40 billion in total liquidity to handle extreme scenarios. The company's cash and invested assets total more than $148 billion.* As a mutual life insurer New York Life has no shareholders. For 164 years it has had a single focus on policyholders, which enables the company to manage for the long term and husband capital in the event of catastrophes.

New York Life Insurance Company, a Fortune 100 company founded in 1845, is the largest mutual life insurance company in the United States and one of the largest life insurers in the world. New York Life has the highest possible financial strength ratings from all four of the major credit rating agencies. Headquartered in New York City, New York Life’s family of companies offers life insurance, retirement income, investments and long-term care insurance. New York Life Investments** provides institutional asset management and retirement plan services. Other New York Life affiliates provide an array of securities products and services, as well as institutional and retail mutual funds.

Please visit New York Life’s Web site at for more information.

* Surplus includes Asset Valuation Reserve (AVR). A discussion of liquidity is contained in our 2008 Annual Report on page 23. The separate statutory financial statements (including assets, liabilities, and surplus and AVR) for our insurance companies, as well as our 2008 Annual Report, are available on our Web site, Copies of the statutory financial statements are also available by contacting the Secretary of New York Life Insurance Company, 51 Madison Avenue, New York, NY 10010.

** New York Life Investments is a service mark used by New York Life Investment Management Holdings LLC and its subsidiary, New York Life Investment Management LLC.

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New York Life Well-Prepared For Pandemic, Stress Test Reveals

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