New York Life

New York Life is awarded
the highest ratings for financial
strength from all four of the
major rating agencies, a testament
to its solid financial stewardship,
even in troubled times.

We found the right individual in Ted Mathas.
Ted Mathas, who succeeded me in 2008 as the Company’s 18th
CEO, brings immense talent and leadership to the job. Just as important,
there is no one more committed to the continuity of New York
Life’s core values – or more qualified to uphold them.
I first observed Ted’s management skills nine years ago, when he
managed NYLIFE Securities, our broker-dealer subsidiary. Since then,
he has established a remarkable track record for success in a series
of increasingly responsible positions. When the board of directors
convened early in 2008 to consider CEO succession, their choice
was unanimous.
Ted Mathas is an excellent president and CEO. The time is now
right for Ted to assume the additional role of chairman of the board.
We are fortunate to have a leader of Ted’s judgment, energy, intellect
and vision to serve in these capacities.
In conclusion, I am pleased to report that, in spite of the uncertainty
of the financial markets and the state of the economy during
the latter part of 2008, the situation at New York Life is very much
business as usual: Our financial strength is solid. Our values are
sound. Our devotion to doing what’s right for our policyholders is
uncompromised. This is how it always has been and always will be
at New York Life.
On behalf of the board of directors, I thank you for continuing
to let us be “The Company You Keep.”
Sy Sternberg
Chairman of the Board
February 12, 2009
Re p o r t t o Po l i c y h o l d e r s 2 0 0 8
By Gary Wendlandt
Vice Chairman of the Board
and Chief Investment Officer
The latter part of 2008 was characterized by
commentators as a “financial tsunami” – an
apt description.
As I write this report in February of 2009,
there are indications that, with the unprecedented level of government
intervention, some level of stability may be returning to
the financial markets, but there is no evidence to suggest a rapid
economic recovery.
Although subprime mortgage lending was the trigger for the
crisis, it was only one aspect of a much larger credit boom and
bust that has had far-reaching effects on the global economy. At
the height of this boom, we saw widespread declines in lending
standards and, at the same time, a growing number of firms willing
to invest in increasingly risky and complex credit instruments,
with expectations of oversized returns.
An environment of easy credit also encouraged financial institutions
to borrow heavily in order to participate in all manners of
investments. This aggressive leveraging strategy created outsized
immediate returns for these firms but also created staggering
losses when the housing bubble burst.
New York Life has remained strong throughout the crisis,
ending 2008 with over $12.8 billion in statutory capital and
retaining the highest ratings for long-term financial strength
from all four of the major rating agencies.
Last year, I reported to you about our initial response to the
overheated credit market. We believed the risks inherent in popular
investment vehicles far outstripped the rewards. Rather than
get caught in the prevailing climate of over-optimism, we invested
cautiously. As an added precaution, we also temporarily allocated
a larger portion of the Company’s investments into safe U.S.
Treasury bonds.
Putting Your Safety First:
An update on New York Life’s
financial strength
Pu t t i n g Your Sa f e t y Fi r s t
12
Re p o r t t o Po l i c y h o l d e r s 2 0 0 8
In our 2007 Report, I also detailed a number of the most
important principles that guide investment decisions at New York
Life. These guidelines are worth revisiting here, as they will help
you better understand how we have been able to protect the interests
of our policyholders amid the events of 2008.
We maintain diversification.
We do not take outsized stakes in any single investment opportunity,
no matter how attractive it may appear. Because of this, we
had a very low level of exposure to individual firms, particularly in
the troubled financial sector. New York Life typically maintains
one of the most diversified investment portfolios among all of the
major life insurers. As of year-end 2008, our ten largest credit
exposures amounted to less than two percent of our total portfolio.
We conduct our own research.
We do our own fundamental, bottom-up research, rather than rely
on the analysis of others. Based on our research, we independently
concluded that many debt securities – including the complex
repackaging of subprime mortgages – held far more risk than
their ratings suggested.
We insist on getting paid for taking risk.
Our research showed that the real estate loans underlying collateralized
debt obligations (CDOs) were subject to weak lending standards
and questionable underwriting practices. These investments
were inherently risky because they were originated with the intent
to immediately repackage and sell them. We thought it foolish to
take on someone else’s risk if they demonstrated an unwillingness
to hold it themselves.
Similar reasoning stood behind our decision to avoid credit
default swaps – the financial instruments that insure creditors
against the risk of default. The inherent risks were mispriced
because investors believed that historical low levels of default
rates would continue – a misjudgment that proved extremely
costly for many firms.
Pu t t i n g Your Sa f e t y Fi r s t
13
Re p o r t t o Po l i c y h o l d e r s 2 0 0 8
We take a long-term view.
We invest for the long term because we make long-term commitments
to our policyholders. As a mutual company, New York Life
Insurance Company’s investment decisions are not subject to
shareholder pressures for quarterly profit gains. We will – and do
– forsake the potential of short-term gains in order to preserve
long-term safety. This is exactly what took place two years ago,
when we reallocated some of our investable cash flow from credit
market investments to the security and liquidity of U.S. government
bonds.
We maintain ample liquidity.
For New York Life, liquidity is “king,” as we must always be prepared
to meet our obligations to policyholders. Our strong balance
sheet is your assurance of protection in this environment.
Unlike other financial firms, we have not been forced to sell
assets in order to raise cash in a down market and do not require
infusions of government capital. Indeed, the strength and liquidity
of our portfolio will enable us to take advantage of the attractive
investment opportunities that will arise in the years ahead.
We don’t blindly follow the crowd.
New York Life has been through numerous economic cycles in its
164-year history, and we have learned to avoid both the frenzy of
overheated markets and the panic that occurs when markets tumble.
For example, we did not join the rush to invest in hedge
funds, as we are not comfortable with their lack of transparency.
We simply will not participate in investments we cannot thoroughly
analyze.
Pu t t i n g Your Sa f e t y Fi r s t
14
Re p o r t t o Po l i c y h o l d e r s 2 0 0 8
Sadly, the most damaging losses suffered by financial companies
and individual investors could have been avoided through
the application of these, and other, common-sense investment
principles. On pages 18 and 19, we discuss a few of the ways New
York Life’s investment philosophy can apply to your own family’s
financial planning.
As we look ahead, it is still not possible to forecast the duration
or depth of the current economic cycle. It appears that the
recession will continue well into 2009 and it is reasonable to
expect that corporate bankruptcies and defaults will continue to rise.
New York Life is certainly not immune to what occurs in the
financial markets, but historically, our portfolio has experienced
lower defaults – and better recoveries in cases of defaults – than
market averages. With our strong balance sheet, disciplined
investment approach and rigorous risk controls, we are well positioned
to continue to deliver superior investment results.
Our primary goal is ensuring we can meet all of our obligations
to policyholders, now and decades from now. No matter how the
markets perform in 2009 – and in the years beyond – New York
Life will be here, secure as always, standing behind every promise
we make.
Pu t t i n g Your Sa f e t y Fi r s t
15
Re p o r t t o Po l i c y h o l d e r s 2 0 0 8
Our Performance at a Glance
Our Pe r f o r m a n c e a t a G l a n c e
16
YEAR IN $ MILLIONS
2008 1,283
2007 1,278
2006 1,096
2005 942
2004 978
Operating earnings is the measure used for
management purposes to highlight the Company’s
results from ongoing operations and the underlying
profitability of our business. In 2008, New York
Life achieved record-setting operating earnings of
$1.283 billion.
OPERATING EARNINGS3, 4
YEAR IN $ MILLIONS
2008 12,826
2007 14,680
2006 13,859
2005 12,853
2004 11,838
Surplus and asset valuation reserves, the funds that
ensure we can meet future obligations to policyholders
and finance our growth, declined in 2008 as a result of
the weak equity and credit markets, yet remain well above
historical levels. The Company has more than enough
capital to meet rating agency capital requirements for
their highest possible financial strength ratings.
YEAR IN $ BILLIONS
2008 14.0
2007 13.0
2006 11.9
2005 10.8
2004 10.1
This chart shows the revenue the Company has
generated from its domestic and international
business during the last five years – primarily premium
and fee income, deposits included in policyholder
account balances for life and annuity products,
and net margins on guaranteed products. Operating
revenue has grown steadily since 2004.
OPERATING REVENUE3
NOTES APPEAR ON PAGE 2O.
YEAR IN $ BILLIONS
2008 14.7
2007 14.1
2006 12.6
2005 10.9
2004 9.5
With $14.7 billion in payments made to beneficiaries
and policyholders in 2008, we again
exceeded previous totals, a reflection of the
growing number of people who today count on
New York Life for financial security. Benefits
include death claims paid to beneficiaries and
annuity payments. Dividends are payments made
to eligible policyholders from divisible surplus.
POLICYHOLDER BENEFITS AND DIVIDENDS1
SURPLUS AND ASSET VALUATION RESERVES2
YEAR IN $ MILLIONS
2008 2,427
2007 2,149
2006 1,891
2005 1,583
2004 1,488
This chart shows the growth of new insurance sales
since 2004 and includes results from both our
domestic and international operations. 2008 was
another record year for the Company, exceeding
$2 billion in sales for the second consecutive year.
Over the past four years, our insurance sales have
grown at a compound annual rate of 13 percent.
INSURANCE SALES5
Re p o r t t o Po l i c y h o l d e r s 2 0 0 8
Our Pe r f o r m a n c e a t a G l a n c e
17
YEAR IN $ BILLIONS
2008 249.1
2007 280.0
2006 261.5
2005 222.8
2004 213.0
Assets under management declined in 2008, a
result of the weakening of equity markets. However,
over the past four years, the Company’s assets
under management have grown by over $36 billion,
reflecting the strength of the Company’s diversified
products and distribution channels.
ASSETS UNDER MANAGEMENT
YEAR IN $ MILLIONS
2008 26,632
2007 24,789
2006 23,815
2005 18,776
2004 15,406
Investment sales include new sales of investment
annuities, mutual funds and other investment-related
products by both our domestic and international
operations. In 2008, investment sales increased
over $1.8 billion from 2007, due to growth of our
fixed annuity business.
INVESTMENT SALES6
YEAR IN $ BILLIONS
2008 781.2
2007 750.9
2006 694.8
2005 647.7
2004 611.2
This chart shows the growth of the Company’s
individual life insurance in force over the last
four years. Our steady growth – $170 billion
since 2004 – is the sign of a strong and
vibrant company.
NOTES APPEAR ON PAGE 20.
INDIVIDUAL LIFE INSURANCE IN FORCE7
Re p o r t t o Po l i c y h o l d e r s 2 0 0 8
The current state of the economy is understandably a cause for
concern. While everyone’s situation is unique, we offer the following
suggestions for you to keep in mind as you review your family’s
financial plans.
Preserve Your Future Assets
Unless absolutely necessary, you should not tap into assets and
resources set aside for future use in an effort to address current
challenges and expenses. Early withdrawals from IRAs and other
qualified plans often bring costly taxes and penalties. Moreover,
you can never recoup the time you’ve spent saving for retirement.
If you start using the dollars that you’ve been accumulating for
years, you may find it difficult to replenish those savings and you
will have fewer assets working for you when the markets rebound.
Maintain a Diversified Portfolio
All types of financial assets – life insurance, savings accounts,
CDs, annuities, bonds and stocks – perform differently in different
economic climates. Maintaining a broad portfolio mix (that is,
“not putting all your eggs in one basket”) can help dampen the
effects of market fluctuations or problems in any single area.
Don’t Chase the Latest Financial or Investment Fads
History has proven that acting on the latest “hot” financial tip
usually produces dismal results in the end. Take the time to
regularly review your financial plans with your agent or advisor
to ensure they continue to meet your needs and objectives – but
don’t hastily abandon what you have to blindly follow the crowd in
another direction. And don’t listen to people who try to forecast
market movements. They don’t know!
Protecting Your Family’s
Financial Future
Adhering to Sound Planning Principles Is
the Best Course of Action – in Good Times and Bad
P r o t e c t i n g Your Fa m i l y ’ s Fi n a n c i a l Future
18
Re p o r t t o Po l i c y h o l d e r s 2 0 0 8
Manage Your Risk Carefully
If you take on too much risk when the markets are soaring (when
everything looks safe), you are exposing yourself to sizable losses
when the markets decline, making it very difficult to stay the
course and ultimately achieve your long-term investment goals.
When planning for retirement, many people choose to balance
the inherent risks of investment products with other financial
products that offer guaranteed income upon retirement (such as
Guaranteed Lifetime Income annuities). Regardless of what products
you ultimately purchase, be sure to check the financial
strength rating of the company you are buying from.
Keep a Long-Term Perspective on Your Financial Future
It is important to remember that markets are cyclical: They go
up…they go down…and they go up again, bringing feelings of
both optimism and pessimism for investors. Rather than react to
each swing of the market, it is usually appropriate to stick with a
carefully considered long-term strategy, especially when it comes
to your retirement and other long-range needs. Your New York
Life agent can help you select from a number of products that
have withstood the test of time and bring a measure of safety, so
you know your money will be there when you need it – even if
that is decades from today.
Call upon the Knowledge of Your New York Life Agent
As a New York Life customer, you are not alone when it comes to
planning for, and protecting, your family’s financial future. We
stand ready to assist you in any way we can – and your New York
Life agent is just a phone call away. He or she is most familiar
with your particular situation, plans and objectives. And when
you do business with one of our representatives, you can be confident
that you are working with someone who is held to the highest
standards of professionalism and integrity, and backed by one
of the strongest and most respected companies – a company that
will be there for you in good times and bad.
P r o t e c t i n g Your Fa m i l y ’ s Fi n a n c i a l Future
19
Re p o r t t o Po l i c y h o l d e r s 2 0 0 8
Notes
No t e s
20
1 Policyholder benefits and dividends include New York Life Insurance Company (NYLIC), New York Life
Insurance and Annuity Corporation (NYLIAC), NYLIFE Insurance Company of Arizona (NYLAZ) and
the Company’s international operations at percent ownership. NYLIC’s policyholder benefits and dividends
were $8.1 billion for each of the 12 months ended December 31, 2007 and 2008. NYLIAC’s policyholder
benefits and dividends were $5.4 billion and $5.2 billion for the 12 months ended December 31, 2007 and
2008, respectively. NYLAZ is not authorized in New York and does not conduct insurance business in New York.
2 Statutory capital includes statutory surplus and the asset valuation reserve (AVR) on a consolidated basis of
the Company. NYLIC’s statutory surplus was $11,959 million and $11,793 million at December 31, 2007 and
2008, respectively. Included in NYLIC’s statutory surplus is NYLIAC’s statutory surplus totaling $2,650 million
and $3,596 million at December 31, 2007 and 2008, respectively. AVR for NYLIC was $2,257 million and
$649 million at December 31, 2007 and 2008, respectively. AVR for NYLIAC was $464 million and
$384 million at December 31, 2007 and 2008, respectively.
3 This chart has been prepared in accordance with our primary management reporting system, which 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. A reconciliation is contained in the Company’s
2008 Annual Report. Policyholders may request a copy of the GAAP-basis consolidated unabridged financial
statements and the 2008 Annual Report by writing to New York Life Insurance Company, 51 Madison
Avenue, New York, New York 10010.
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, New York 10010.
The GAAP and statutory financial statements mentioned above will be available beginning mid-April 2009
on our Web site (www.newyorklife.com).
Although the GAAP-basis consolidated unabridged financial statements are prepared in accordance with
GAAP, the New York State Insurance Department (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 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. The
notes to the GAAP-basis consolidated unabridged financial statements contain a reconciliation of GAAP net
income to statutory net income as well as a reconciliation of GAAP policyholders’ equity to statutory surplus
and asset valuation reserves.
4 This indicator has been revised for years 2004–2007 to conform to the Company’s change in definition
of operating earnings, effective 1/1/2008. A complete description of this revision can be found in the
Company’s 2008 Annual Report, which will be available beginning mid-April 2009 on our Web site
(www.newyorklife.com).
5 This indicator has been revised for years 2004–2007 to conform to the Company’s change in definition
of insurance sales, which adjusted single premium sales including immediate annuities to 50 percent,
effective 1/1/2008. A complete description of this revision can be found in the Company’s 2008
Annual Report, which will be available beginning mid-April 2009 on our Web site (www.newyorklife.com).
6 2006 investment sales include $1.1 billion of sales related to an acquisition of an investment subsidiary in
2006. 2004 investment sales include $1.25 billion of sales related to an acquisition of an investment subsidiary
in 2004. This indicator has been revised for years 2004–2007 to conform to the Company’s change in definition
of investment sales, effective 1/1/2008. A complete description of this revision can be found in the Company’s
2008 Annual Report, which will be available beginning mid-April 2009 on our Web site (www.newyorklife.com).
7 Face amounts.