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Operating Earnings, Surplus and Asset Valuation Reserve

Operating Earnings1

Surplus and Asset Valuation Reserve1

Our growth in insurance in force and assets under management—along with the investment returns we generate—drive our strong earnings and the growth in surplus and asset valuation reserve. Surplus is an additional source of capital above and beyond the money already set aside to pay each and every benefit we've promised.

"For policyholders, surplus is the most important financial measure—it is the primary indicator of the strength of your life insurer."

Surplus in a mutual company can be used in one of three ways, all of which ultimately benefit our current and future customers: 1) to further enhance our financial strength and ensure we can meet our obligations regardless of what the future may hold; 2) to further grow our various business operations; or 3) to be distributed as a dividend to the owners of eligible policies.

For policyholders, surplus is the most important financial measure—it is the primary indicator of the strength of your life insurer.

When the financial crisis hit in 2008, many companies struggled to come up with the capital needed to keep operations running—with some even requiring a taxpayer-funded bailout. At New York Life, our surplus cushioned the impact on us and helped preserve the company's top ratings for financial strength. And in the five years that followed, we initiated some important strategic decisions that enabled us to simultaneously grow on all three sides of the surplus triangle.

Along with our large and stable book of life insurance (which forms the foundation of our financial strength and our surplus growth), we have been increasing the scope of our retail and institutional investment businesses. Today, contributions to surplus from our investment operations are growing in size—and growing rapidly. We also made the decision to divest our companies and joint ventures in Asia, adding that additional capital back into surplus.

The result? Since 2009, surplus has grown over $6 billion. New York Life continues to grow in size and reach. And in 2013 and 2014, we have been the only major mutual U.S. life insurance company to increase both its dividend scale and total dividend payout to eligible policyholders.

1) Operating earnings is the measure used for management purposes to track the company's results from ongoing operations and the underlying profitability of the business. This chart is based on accounting principles generally accepted in the United States of America (GAAP) with certain adjustments we believe are more appropriate as a measurement approach (non-GAAP). Policyholders may request a copy of the GAAP-basis consolidated financial statements and a detailed reconciliation to our non-GAAP performance measures by writing to the Secretary of New York Life Insurance Company, 51 Madison Avenue, New York, NY 10010. In addition, the statements and reconciliation mentioned above, as well as the statutory financial statements mentioned in Note 5, will be available mid-April 2014 on our website (www.newyorklife.com).

The New York State Department of Financial Services (the department) recognizes only statutory accounting practices for determining and reporting the financial condition and results of operations of an insurance company, for determining its solvency under the New York Insurance Law, and for management determining whether its financial condition warrants the payment of a dividend to its policyholders. No consideration is given by the department to financial statements prepared in accordance with GAAP in making such determinations.

2) Total Surplus, which includes the Asset Valuation Reserve (AVR), is one of the key indicators of the company's long-term financial strength and stability and is presented on a consolidated basis of the company. NYLIC's statutory surplus was $17.84 billion and $16.57 billion at December 31, 2013 and 2012, respectively. Included in NYLIC's statutory surplus is NYLIAC's statutory surplus totaling $6.75 billion and $6.40 billion at December 31, 2013 and 2012, respectively. AVR for NYLIC was $2.42 billion and $2.28 billion at December 31, 2013 and 2012, respectively. AVR for NYLIAC was $0.87 billion and $0.76 billion at December 31, 2013 and 2012, respectively. Policyholders may obtain a copy of the statutory financial statements applicable to their respective companies by contacting the Secretary of the parent company, New York Life Insurance Company, 51 Madison Avenue, New York, NY 10010.