UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended
December 31, 2008

Commission File Nos. 33-34562;
33-60288; 333-48983; 333-133224

ML LIFE INSURANCE COMPANY OF NEW YORK
(Exact name of Registrant as specified in its charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|New York                                                       |  | 16-1020455                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer Identification No.)

|                                                
|------------------------------------------------
|4 Manhattanville RoadPurchase, New York 10577   
|                                                
|(Address of Principal Executive Offices)        
|1-800-333-6524                                  
|                                                
|(Registrants telephone no. including area code)

Securities registered pursuant to Section 12(b) or 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act. [ ] Yes
[X] No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
15(d) of the Act. [ ] Yes
[X] No

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X] Yes  [  ]  No

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, or a smaller reporting company.  See the
definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.

[ ]  large accelerated filer
     [ ]  accelerated filer
     [X] non-accelerated filer
     [ ] smaller reporting company


Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). [ ] Yes
[X] No

State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average
bid and asked price of such common equity, as of the last business day of the registrants  most recently completed second
fiscal quarter: Not applicable.

Indicate the number of shares outstanding of each of the registrants
classes of common stock, as of the latest practicable date.

Common 220,000

REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION I(1)(a)
AND (b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.





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##### 



PART I
 
 Item 1. Business
       Our Insurance
Companies
 
 Item 1A. Risk Factors
 Risk Factors that Could Affect ML Life Insurance Company of New York
  Economic Environment
 The markets in the United States have been experiencing extreme and unprecedented volatility and
disruption. We are exposed to significant financial and capital markets risk which may also
adversely affect our results of operations, financial condition and liquidity. In addition, the
current financial crisis has resulted in government initiatives intended to alleviate the crisis.
These initiatives may not be effective and/or may be accompanied by other initiatives, including
new capital requirements or other regulations which could materially affect our results of
operations, financial condition and liquidity
  1




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##### 



Competitive Environment
 Industry trends could adversely affect our financial results
  Competitive factors may adversely affect our market share and financial results
   Regulatory and Legislative Risks
 The insurance industry is heavily regulated and changes in regulation may adversely affect our
financial results
   2




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##### 



Changes in tax legislation could make certain insurance products less attractive to consumers
   Market Risk
 Changes in equity markets and other factors may significantly affect our financial results
   Changes in equity markets and interest rates affects the profitability of our products with
guaranteed benefits, therefore, such changes may have a material adverse effect on our financial
results
    3




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Credit Risk
 Defaults in our bond portfolios may adversely affect profitability and shareholders equity
  Interest Rate Risk
 Changes in market interest rates may adversely affect our financial results
    Liquidity Risk
 Business and financial results may be adversely affected by an inability to sell assets to meet
maturing obligations
  4




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##### 



Underwriting Risk
 Differences between actual claims experience and underwriting and reserving assumptions may require
liabilities to be increased, which may have a material adverse effect on our financial results
  Concentration Risk
 The use of a single distribution channel may adversely affect our financial results
  The company may elect, for any number of reasons, to discontinue new sales at any point in time.
Some of the reasons for discontinuing new business could be due to unfavorable economic conditions,
contracting markets, inability to administer newer and innovative products and the ability to raise
sufficient capital to cover new business
  Other Risks
 Inadequate or failed processes or systems, human factors or external events may adversely affect
our profitability, reputation or operational effectiveness
  Litigation and regulatory investigations may adversely affect our business, results of operations,
and financial condition
  Item 1B. Unresolved Staff Comments
  Item 2. Properties
  5




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##### 



Item 3. Legal Proceedings
  Item 4. Submission of Matters to a Vote of Security Holders
  6




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##### 



PART II
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
 (a)
    
    The Registrant is a wholly owned subsidiary of AUSA. There is no public trading market
for the Registrants common stock.
  (b)
    
    Not applicable.(c)
    
    Not applicable.
 Item 6. Selected Financial Data
  Item 7. Managements Narrative Analysis of Results of Operations
  Forward Looking Statements
  1)
    
    Changes in general economic conditions;2)
    
    Changes in the performance of financial markets, including emerging markets, such as with
regard to:
 a)
    
    The frequency and severity of defaults by issuers in our fixed income investment
portfolios; andb)
    
    The effects of corporate bankruptcies and/or accounting restatements on the financial
markets and the resulting decline in the value of equity and debt securities we hold;
 3)
    
    The frequency and severity of insured loss events;4)
    
    Changes affecting mortality and other factors that may impact the profitability of our
insurance products;5)
    
    Changes affecting interest rate levels and continuing low or rapidly changing interest rate
levels;6)
    
    Increasing levels of competition;7)
    
    Changes in laws and regulations, particularly those affecting our operations, the products we
sell, and the attractiveness of certain products to our customers;8)
    
    Regulatory changes relating to the insurance industry in the jurisdictions in which we
operate;9)
    
    Lowering of one or more of the financial strength ratings and the adverse impact such action
may have on the premium writings, policy retention, profitability and liquidity;10)
    
    Acts of God, acts of terrorism, acts of war and pandemics;11)
    
    Changes in the policies of central banks and/or governments;12)
    
    Litigation or regulatory actions that could require us to pay significant damages or change
the way we do business;13)
    
    Customer responsiveness to both new products and distribution channels;14)
    
    Competitive, legal, regulatory or tax changes that affect the distribution cost of or demand
for our products; and15)
    
    Our failure to achieve anticipated levels of earnings or operational efficiencies as well as
other cost saving initiatives
  7




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##### 



Business Overview
  Acquisition
 Business Combinations Goodwill and Other Intangibles
  Purchase Price AllocationDecember 31,
    
    
    
    
    
    December 31(dollars in millions)
    
    2007
    
    Adjustments
    
    2008 (a)Value of business acquired, gross
    
    $
    44.0
    
    
    $
    6.8
    
    
    $
    50.8Goodwill
    
    
    6.9
    
    
    
    (3.3
    )
    
    
    3.6Other intangibles
    
    
    8.3
    
    
    
    (1.2
    )
    
    
    7.1Federal income taxes  current
    
    
    0.8
    
    
    
    (0.1
    )
    
    
    0.7Reinsurance receivable
    
    
    0.9
    
    
    
    
    
    
    
    0.9Other assets
    
    
    5.2
    
    
    
    0.1
    
    
    
    5.3Policyholder account balances
    
    
    140.8
    
    
    
    4.1
    
    
    
    144.9Future policy benefits
    
    
    22.8
    
    
    
    (3.6
    )
    
    
    19.2Federal income taxes  deferred
    
    
    
    
    
    
    1.8
    
    
    
    1.8
 
 (a)
    
    This reflects the December 31, 2008 balance before adjustments for unrealized gains
(losses) on investments, amortization and/or impairments. Push Down Basis of Accounting in Financial Statements of a Subsidiary
 Critical Accounting Policies and Estimates
  8




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##### 



Valuation of Fixed Maturity and Equity Securities
 Accounting for Certain
Investments in Debt and Equity Securities
    Derivative Instruments
  Other-Than-Temporary Impairment Losses on Investments
  Deferred Policy Acquisition Costs (DAC)
 Accounting and
Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and
Losses from the Sale of Investments
 9




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##### 



Deferred Sales Inducements (DSI)
   Value of Business Acquired (VOBA)
  10




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##### 



Other Intangibles
 th
 Goodwill
 th
 Policyholder Liabilities
 Accounting and Reporting by
Insurance Enterprises Accounting and Reporting by Insurance Enterprises for Certain
Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments , Accounting for Derivative Instruments and Hedging Activities Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration
Contracts and for Separate Accounts
 Policyholder Account Balances
  Future Policy Benefits
  11




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##### 



December 31,(dollars in millions)
    
    2008
    
    2007GMDB liability
    
    $
    0.5
    
    
    $
    2.2GMIB liability
    
    
    1.1
    
    
    
    
    December 31,(dollars in millions)
    
    2008
    
    2007GMWB liability
    
    $
    4.3
    
    
    $
    0.6GMIB reinsurance asset
    
    
    (7.4
    )
    
    
    (0.4
    )
 Federal Income Taxes
   Accounting for Uncertainty in
Income Taxes,
  12




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##### 



Recent Developments
 Recent Accounting Pronouncements
 Current Adoption of Recent Accounting Pronouncements
 Amendments to the Impairment and Interest Income Measurement Guidance of
EITF Issue No. 99-20 Recognition of Interest Income and Impairment on
Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a Transferor in
Securitized Financial Assets Accounting for
Certain Investments in Debt and Equity Securities
 Determining the Fair Value of a Financial Asset
When the Market for That Asset Is Not Active. Fair Value Measurements
 Disclosures about Credit
Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation
No. 45; and Clarification of the Effective Date of FASB Statement No. 161 Accounting for Derivative Instruments and Hedging Activities, Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness to Others,
 The Hierarchy of Generally Accepted Accounting
Principles
 The Fair Value Option for Financial Assets and
Financial Liabilities
 Fair Value Measurements.
 13




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##### 



Future Adoption of Recent Accounting Pronouncements
 Determination of the Useful Life of Intangible
Assets Goodwill and Other Intangible Assets
  Disclosures about Derivative Instruments and Hedging
Activities  an amendment of FASB Statement No. 133 Accounting for Derivative Instruments and Hedging
Activities
 Noncontrolling Interests in Consolidated Financial
Statement Consolidated Financial
Statements
 Business Combinations Business Combinations
 New Business
  14




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##### 



2008
    
    
    
    2007
    
    
    2006(dollars in millions)
    
    Successor
    
    
    
    PredecessorVariable Annuity Deposits
    
    $
    9.8
    
    
    
    $
    36.6
    
    
    $
    60.9All Other Deposits
    
    
    0.1
    
    
    
    
    0.1
    
    
    
    0.4Total Direct Deposits
    
    $
    9.9
    
    
    
    $
    36.7
    
    
    $
    61.3
   Surrenders
  Financial Condition
  2008(dollars in millions)
    
    SuccessorInvestment performance
    
    $
    (233.0
    )Deposits
    
    
    9.8Policy fees and charges
    
    
    (15.5
    )Surrenders, benefits and withdrawals
    
    
    (88.7
    )Net decrease
    
    $
    (327.4
    )
 15




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##### 



2008(dollars in millions)
    
    SuccessorDeposits collected
    
    $
    9.9Internal tax-free exchanges
    
    
    (0.8
    )Net contract owner deposits
    
    
    9.1Contract owner withdrawals
    
    
    23.2Net transfers from Separate Accounts
    
    
    77.7Net contract owner withdrawals
    
    
    100.9Net contract owner activity
    
    $
    (91.8
    )
 Investments
   2008
    
    
    2007SuccessorFixed maturitiesInvestment grade fixed maturity securities
    
    
    51
    %
    
    
    35
    %Below investment grade fixed maturity securities
    
    
    3
    
    
    
    8Total fixed maturities
    
    
    54
    
    
    
    43Equity securities
    
    
    
    
    
    
    1Cash and cash equivalents
    
    
    14
    
    
    
    26Policy loans
    
    
    32
    
    
    
    30100
    %
    
    
    100
    %
 16




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##### 



Fixed Maturities and Equity Securities
  2008% ofAmortized
    
    
    Gross Unrealized
    
    
    Estimated
    
    
    Estimated(dollars in millions)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value
    
    
    Fair ValueFixed maturity securitiesCorporate bondsFinancial services
    
    $
    17.4
    
    
    $
    
    
    
    $
    (2.1
    )
    
    $
    15.3
    
    
    
    13
    %Industrial
    
    
    56.5
    
    
    
    0.6
    
    
    
    (4.4
    )
    
    
    52.7
    
    
    
    46Utility
    
    
    4.4
    
    
    
    
    
    
    
    (0.1
    )
    
    
    4.3
    
    
    
    4Asset-backed securitiesHousing related
    
    
    2.8
    
    
    
    
    
    
    
    (0.1
    )
    
    
    2.7
    
    
    
    2Credit cards
    
    
    2.7
    
    
    
    
    
    
    
    (0.5
    )
    
    
    2.2
    
    
    
    2Autos
    
    
    2.0
    
    
    
    
    
    
    
    (0.2
    )
    
    
    1.8
    
    
    
    2Commercial
mortgage-backed securities  non agency backed
    
    
    24.8
    
    
    
    
    
    
    
    (5.0
    )
    
    
    19.8
    
    
    
    17Residential mortgage-backed securitiesAgency backed
    
    
    9.7
    
    
    
    0.2
    
    
    
    (0.1
    )
    
    
    9.8
    
    
    
    8Non agency backed
    
    
    1.4
    
    
    
    
    
    
    
    (0.5
    )
    
    
    0.9
    
    
    
    1Government and government agenciesUnited States
    
    
    2.2
    
    
    
    0.1
    
    
    
    
    
    
    
    2.3
    
    
    
    2Foreign
    
    
    4.0
    
    
    
    0.2
    
    
    
    (0.2
    )
    
    
    4.0
    
    
    
    3Total fixed maturity securities
    
    
    127.9
    
    
    
    1.1
    
    
    
    (13.2
    )
    
    
    115.8
    
    
    
    100Equity securities
    
    
    0.3
    
    
    
    
    
    
    
    (0.1
    )
    
    
    0.2
    
    
    
    Total
    
    $
    128.2
    
    
    $
    1.1
    
    
    $
    (13.3
    )
    
    $
    116.0
    
    
    
    100
    %
 2007 (a)% ofEstimated
    
    
    Estimated(dollars in millions)
    
    Fair Value
    
    
    Fair ValueFixed maturity securitiesCorporate bondsFinancial services
    
    $
    33.5
    
    
    
    32
    %Industrial
    
    
    34.7
    
    
    
    33Utility
    
    
    5.6
    
    
    
    6Asset-backed securitiesHousing related
    
    
    0.7
    
    
    
    1Autos
    
    
    0.2
    
    
    
    0Other
    
    
    0.8
    
    
    
    1Commercial mortgage-backed securities  non agency backed
    
    
    1.8
    
    
    
    2Residential mortgage-backed securitiesAgency backed
    
    
    8.7
    
    
    
    9Non agency backed
    
    
    1.5
    
    
    
    2Government and government agenciesUnited States
    
    
    8.9
    
    
    
    9Foreign
    
    
    3.8
    
    
    
    4Total fixed maturity securities
    
    
    100.2
    
    
    
    99Equity securities
    
    
    1.1
    
    
    
    1Total
    
    $
    101.3
    
    
    
    100
    %
 
 (a)
    
    In accordance with push down accounting, amortized cost was equal to estimated fair
value at December 31, 2007.  17




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##### 



Financial Sectors
  Banking
      2008SuccessorEstimated
    
    
    GrossAmortized
    
    
    Fair
    
    
    Unrealized(dollars in millions)
    
    Cost
    
    
    Value
    
    
    LossHybrid
    
    $
    2.1
    
    
    $
    1.2
    
    
    $
    (0.9
    )Upper Tier 2
    
    
    0.5
    
    
    
    0.2
    
    
    
    (0.3
    )Total
    
    $
    2.6
    
    
    $
    1.4
    
    
    $
    (1.2
    )
 18




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Insurance and Other Financial Sectors
  REITs
  Industrial Sectors
  Basic Industries and Capital Goods
   Consumer Cyclical
     19




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##### 



Consumer Non-Cyclical
   Energy
  Communications
    Government and Government Agencies  Foreign
  Asset-Backed Securities  Credit Cards
  20




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##### 



Commercial
Mortgage-Backed Securities
  2008SuccessorEstimated
    
    
    GrossAmortized
    
    
    Fair
    
    
    Unrealized(dollars in millions)
    
    Cost
    
    
    Value
    
    
    LossAAA  Senior
    
    $
    22.2
    
    
    $
    18.6
    
    
    $
    (3.6
    )AAA  Mezzanine
    
    
    0.9
    
    
    
    0.5
    
    
    
    (0.4
    )AAA  Junior
    
    
    1.7
    
    
    
    0.7
    
    
    
    (1.0
    )Total
    
    $
    24.8
    
    
    $
    19.8
    
    
    $
    (5.0
    )
 2008SuccessorEstimated Fair Value by Vintage(dollars in millions)
    
    2004&Prior
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    TotalAAA  Senior (a)
    
    $
    0.4
    
    
    $
    3.2
    
    
    $
    15.0
    
    
    $
    
    
    
    $
    
    
    
    $
    18.6AAA  Mezzanine
    
    
    
    
    
    
    
    
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    0.5AAA  Junior
    
    
    
    
    
    
    0.4
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    0.7Total
    
    $
    0.4
    
    
    $
    3.6
    
    
    $
    15.8
    
    
    $
    
    
    
    $
    
    
    
    $
    19.8
 
 (a)
    
    All 2004 & Prior AAAs are classified as AAA  Senior. This was prior to the market
convention of Credit Enhanced tiering within AAAs, which started in 2005.    Residential Mortgage-Backed Securities
  21




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##### 



2008
    
    
    2007SuccessorEstimated
    
    
    EstimatedAmortized
    
    
    Fair
    
    
    Fair(dollars in millions)
    
    Cost
    
    
    Value
    
    

Value (a)AAA
    
    $
    46.2
    
    
    $
    40.7
    
    
    $
    27.1AA
    
    
    9.7
    
    
    
    9.4
    
    
    
    19.5A
    
    
    35.0
    
    
    
    33.8
    
    
    
    35.2BBB
    
    
    29.8
    
    
    
    26.5
    
    
    
    17.5Below investment grade
    
    
    7.2
    
    
    
    5.4
    
    
    
    0.9Total fixed maturity securities
    
    $
    127.9
    
    
    $
    115.8
    
    
    $
    100.2Investment grade
    
    
    94
    %
    
    
    95
    %
    
    
    99
    %Below investment grade
    
    
    6
    %
    
    
    5
    %
    
    
    1
    %
 
 (a)
    
    In accordance with push down accounting, amortized cost was equal to estimated fair
value at December 31, 2007.   22




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##### 



2008 (a)SuccessorEstimated
    
    
    
    
    
    
    ContinuousFair
    
    
    Amortized
    
    
    Gross Unrealized(dollars in millions)
    
    Value
    
    
    Cost
    
    
    LossesInvestment Grade SecuritiesLess than or equal to 90 days:CorporateFinancial services
    
    $
    4.8
    
    
    $
    5.2
    
    
    $
    (0.4
    )Industrial
    
    
    9.2
    
    
    
    10.3
    
    
    
    (1.1
    )Utility
    
    
    1.2
    
    
    
    1.2
    
    
    
    Asset-backed securities  credit cards
    
    
    0.2
    
    
    
    0.3
    
    
    
    (0.1
    )Commercial mortgage-backed securities  non agency backed
    
    
    6.8
    
    
    
    8.3
    
    
    
    (1.5
    )Residential mortgage-back securities  agency backed
    
    
    1.4
    
    
    
    1.5
    
    
    
    (0.1
    )Equities
    
    
    
    
    
    
    0.1
    
    
    
    (0.1
    )Total
    
    
    23.6
    
    
    
    26.9
    
    
    
    (3.3
    )Greater than 90 days but less than or equal to 180 days:CorporateFinancial services
    
    
    1.1
    
    
    
    1.2
    
    
    
    (0.1
    )Industrial
    
    
    11.3
    
    
    
    12.4
    
    
    
    (1.1
    )Asset-backed securitiesHousing related
    
    
    2.1
    
    
    
    2.2
    
    
    
    (0.1
    )Credit cards
    
    
    2.0
    
    
    
    2.4
    
    
    
    (0.4
    )Autos
    
    
    1.8
    
    
    
    2.0
    
    
    
    (0.2
    )Commercial mortgage-backed securities  non agency backed
    
    
    12.1
    
    
    
    14.6
    
    
    
    (2.5
    )Residential mortgage-back securities  agency backed
    
    
    0.1
    
    
    
    0.1
    
    
    
    Government and government agencies  foreign
    
    
    0.3
    
    
    
    0.3
    
    
    
    Total
    
    
    30.8
    
    
    
    35.2
    
    
    
    (4.4
    )Greater than 180 days but less than or equal to 270 days:CorporateFinancial services
    
    
    3.8
    
    
    
    4.3
    
    
    
    (0.5
    )Industrial
    
    
    5.0
    
    
    
    5.3
    
    
    
    (0.3
    )Utility
    
    
    1.5
    
    
    
    1.5
    
    
    
    Residential mortgage-back securities  non agency backed
    
    
    0.9
    
    
    
    1.4
    
    
    
    (0.5
    )Total
    
    
    11.2
    
    
    
    12.5
    
    
    
    (1.3
    )Greater than 270 days but less than or equal to one year:CorporateFinancial services
    
    
    2.5
    
    
    
    3.8
    
    
    
    (1.3
    )Industrial
    
    
    2.0
    
    
    
    2.2
    
    
    
    (0.2
    )Utility
    
    
    0.1
    
    
    
    0.1
    
    
    
    Commercial mortgage-backed securities  non agency backed
    
    
    0.9
    
    
    
    1.9
    
    
    
    (1.0
    )Total
    
    $
    5.5
    
    
    $
    8.0
    
    
    $
    (2.5
    )
 23




---



##### 



2008 (a)SuccessorEstimated
    
    
    
    
    
    
    ContinuousFair
    
    
    Amortized
    
    
    Gross Unrealized(dollars in millions)
    
    Value
    
    
    Cost
    
    
    LossesInvestment Grade Securities (continued)Total of all investment grade securitiesCorporateFinancial services
    
    $
    12.3
    
    
    $
    14.4
    
    
    $
    (2.1
    )Industrial
    
    
    27.4
    
    
    
    30.2
    
    
    
    (2.8
    )Utility
    
    
    2.8
    
    
    
    2.9
    
    
    
    (0.1
    )Asset-backed securitiesHousing related
    
    
    2.1
    
    
    
    2.2
    
    
    
    (0.1
    )Credit cards
    
    
    2.2
    
    
    
    2.7
    
    
    
    (0.5
    )Autos
    
    
    1.8
    
    
    
    2.0
    
    
    
    (0.2
    )Commercial mortgage-backed securities  non agency backed
    
    
    19.8
    
    
    
    24.8
    
    
    
    (5.0
    )Residential mortgage-backed securitiesAgency backed
    
    
    1.5
    
    
    
    1.6
    
    
    
    (0.1
    )Non agency backed
    
    
    0.9
    
    
    
    1.4
    
    
    
    (0.5
    )Government and government agencies  foreign
    
    
    0.3
    
    
    
    0.3
    
    
    
    Equities
    
    
    
    
    
    
    0.1
    
    
    
    (0.1
    )Total
    
    $
    71.1
    
    
    $
    82.6
    
    
    $
    (11.5
    )Total
number of securities in a continuous unrealized loss position
    
    
    
    
    
    
    
    
    
    
    108
  
 (a)
    
    In accordance with push down accounting, amortized cost was equal to estimated fair
value at December 31, 2007.  2008 (a)SuccessorEstimated
    
    
    
    
    
    
    ContinuousFair
    
    
    Amortized
    
    
    Gross Unrealized(dollars in millions)
    
    Value
    
    
    Cost
    
    
    LossesBelow Investment Grade SecuritiesLess than or equal to 90 days:Corporate  industrial
    
    $
    2.0
    
    
    $
    2.3
    
    
    $
    (0.3
    )Government and government agencies  foreign
    
    
    0.7
    
    
    
    0.9
    
    
    
    (0.2
    )Total
    
    
    2.7
    
    
    
    3.2
    
    
    
    (0.5
    )Greater than 90 days but less than or equal to 180 days:Corporate  industrial
    
    
    2.0
    
    
    
    2.8
    
    
    
    (0.8
    )Total
    
    
    2.0
    
    
    
    2.8
    
    
    
    (0.8
    )Greater than 180 days but less than or equal to 270 days:Corporate  industrial
    
    
    
    
    
    
    0.2
    
    
    
    (0.2
    )Total
    
    
    
    
    
    
    0.2
    
    
    
    (0.2
    )Greater than 270 days but less than or equal to one year:Corporate  industrial
    
    
    0.1
    
    
    
    0.3
    
    
    
    (0.2
    )Equities
    
    
    0.1
    
    
    
    0.2
    
    
    
    (0.1
    )Total
    
    
    0.2
    
    
    
    0.5
    
    
    
    (0.3
    )Total of all below investment grade securitiesCorporate  industrial
    
    
    4.1
    
    
    
    5.6
    
    
    
    (1.5
    )Government and government agencies  foreign
    
    
    0.7
    
    
    
    0.9
    
    
    
    (0.2
    )Equities
    
    
    0.1
    
    
    
    0.2
    
    
    
    (0.1
    )Total
    
    $
    4.9
    
    
    $
    6.7
    
    
    $
    (1.8
    )Total number of securities in a continuous unrealized loss position
    
    
    
    
    
    
    
    
    
    
    18
 
 (a)
    
    In accordance with push down accounting, amortized cost was equal to estimated fair
value at December 31, 2007. 24




---



##### 



2008 (a)SuccessorRatio of Amortized
    
    EstimatedCost to Estimated
    
    Fair
    
    
    Amortized
    
    
    Gross Unrealized(dollars in millions)
    
    Fair Value
    
    Value
    
    
    Cost
    
    
    LossLess than or equal to 90 days:70% to 100%
    
    $
    2.4
    
    
    $
    2.7
    
    
    $
    (0.3
    )40% to 70%
    
    
    0.3
    
    
    
    0.5
    
    
    
    (0.2
    )Less than or equal to 90 days total
    
    
    
    
    2.7
    
    
    
    3.2
    
    
    
    (0.5
    )Greater than 90 days but less than or
equal to 180 days:70% to 100%
    
    
    1.2
    
    
    
    1.4
    
    
    
    (0.2
    )40% to 70%
    
    
    0.8
    
    
    
    1.4
    
    
    
    (0.6
    )Greater than 90 days but less than or
equal to 180 days total
    
    
    
    
    2.0
    
    
    
    2.8
    
    
    
    (0.8
    )Greater than 180 days but less than
or equal to 270 days:Below 40%
    
    
    
    
    
    
    0.2
    
    
    
    (0.2
    )Greater than 180 days but less
than or equal to 270 days total
    
    
    
    
    
    
    
    
    0.2
    
    
    
    (0.2
    )Greater than 270 days but less than
or equal to one year:70% to 100%
    
    
    0.2
    
    
    
    0.2
    
    
    
    Below 40%
    
    
    
    
    
    
    0.3
    
    
    
    (0.3
    )Greater than 270 days but less
than or equal to one year total
    
    
    
    
    0.2
    
    
    
    0.5
    
    
    
    (0.3
    )Total
    
    
    
    $
    4.9
    
    
    $
    6.7
    
    
    $
    (1.8
    )
 
 (a)
    
    In accordance with push down accounting, amortized cost was equal to estimated fair
value at December 31, 2007.  Subprime Mortgage Investments
  25




---



##### 



Other-Than-Temporary Impairments
  Business Environment
  Equity Market Performance
     Medium Term Interest Rates, Corporate Credit and Credit Spreads
    26




---



##### 



2008
    
    
    
    2007Successor
    
    
    
    PredecessorAverage medium term interest rate yield (a)
    
    
    0.89
    %
    
    
    
    3.38
    %Decrease in medium term interest rates (in basis points)
    
    
    (249
    )
    
    
    
    (139
    )Credit spreads (in basis points) (b)
    
    
    735
    
    
    
    
    230Expanding of credit spreads (in basis points)
    
    
    505
    
    
    
    
    153Increase (decrease) on market valuations: (in millions)Available-for-sale investment securities
    
    $
    (12.2
    )
    
    
    $
    0.5Interest-sensitive policyholder liabilities
    
    
    (0.1
    )
    
    
    
    Net increase (decrease) on market valuations
    
    $
    (12.3
    )
    
    
    $
    0.5
 
 (a)
    
    The Company defines medium term interest rates as the average interest rate on U.S.
Treasury securities with terms of one to five years.(b)
    
    The Company defines credit spreads according to the Merrill Lynch U.S. Corporate Bond
Index for BBB-A Rated bonds with three to five year maturities.  Liquidity and Capital Resources
 Liquidity
  Capital Resources
   Statutory Practices and Risk-Based Capital (RBC)
   27




---



##### 



Ratings
   
    
    S&P  AAA to R
    
    A.M. Best  A++ to S
    
    Moodys  Aaa to C
    
    Fitch  AAA to C
      S&P
    
    AA
    
    (3rd out of 21)A.M. Best
    
    A+
    
    (2nd out of 16)Moodys
    
    A1
    
    (5th out of 21)Fitch
    
    AA
    
    (3rd out of 24)
  Commitments and Contingencies
  Less
    
    
    One To
    
    
    Four To
    
    
    MoreThan One
    
    
    Three
    
    
    Five
    
    
    Than Five(dollars in millions) (a)
    
    Year
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    TotalGeneral accounts
    
    $
    17.1
    
    
    $
    31.1
    
    
    $
    26.4
    
    
    $
    84.6
    
    
    $
    159.2Separate Accounts
    
    
    64.1
    
    
    
    139.5
    
    
    
    128.3
    
    
    
    513.5
    
    
    
    845.4$
    81.2
    
    
    $
    170.6
    
    
    $
    154.7
    
    
    $
    598.1
    
    
    $
    1,004.6
 
 (a)
    
    The policyholder liabilities include benefit and claim liabilities of which a
significant portion represents policies and contracts that do not have a stated
contractual maturity. The projected cash benefit payments in the table above are based
on managements best estimates of the expected gross benefits and expenses, partially
offset by the expected gross premiums, fees and charges relating to the existing business
inforce. Estimated cash benefit payments are based on mortality and lapse assumptions
comparable with the Companys historical experience, modified for recently observed
trends. Actual payment obligations may differ if experience varies from these
assumptions. The cash benefit payments are presented on an undiscounted basis and are
before deduction of tax and before reinsurance. The liability amounts in the Companys
Financial Statements reflect the discounting for interest as well as adjustments for the
timing of other factors as described above. As a result, the sum of the cash benefit
payments shown for all years in the table above exceeds the corresponding policyholder
liability amounts. 28




---



##### 



Results of Operations
  
    
    the charges imposed on variable annuity and variable life insurance contracts, and
    
    the net earnings from investment of fixed rate life insurance and annuity contract owner
deposits less interest credited to contract owners, commonly known as interest spread
 Critical Accounting Policies
 2008 compared to 2007
   2008
    
    
    
    2007(dollars in millions)
    
    Successor
    
    
    
    Predecessor
    
    
    ChangeAsset-based policy charge revenue
    
    $
    11.6
    
    
    
    $
    14.3
    
    
    $
    (2.7
    ) (a)Guaranteed benefit based policy charge revenue
    
    
    1.3
    
    
    
    
    1.2
    
    
    
    0.1Non-asset based policy charge revenue
    
    
    5.6
    
    
    
    
    5.3
    
    
    
    0.3$
    18.5
    
    
    
    $
    20.8
    
    
    $
    (2.3
    )
 
 (a)
    
    Asset-based policy charge revenue was negatively impacted by the decrease in average
variable account balances during 2008 as compared to 2007.  2008
    
    
    
    2007(dollars in millions)
    
    Successor
    
    
    
    Predecessor
    
    
    ChangeCredit related gains (losses)
    
    $
    (0.5
    )
    
    
    $
    1.1
    
    
    $
    (1.6
    ) (a)Interest related gains (losses)
    
    
    (0.2
    )
    
    
    
    
    
    
    
    (0.2
    )Equity related gains
    
    
    1.3
    
    
    
    
    
    
    
    
    1.3
    (b)Associated amortization on VOBA
    
    
    0.2
    
    
    
    
    
    
    
    
    0.2Total net realized investment gains
    
    $
    0.8
    
    
    
    $
    1.1
    
    
    $
    (0.3
    )Write-downs for other-than-temporary impairments
included in net realized investment gains (losses)
    
    $
    (0.6
    )
    
    
    $
    
    
    
    $
    (0.6
    )
 
 (a)
    
    The increase in credit related losses during 2008 were primarily due to one credit
impairment in the third quarter of 2008 and a large credit related gain in 2007.(b)
    
    The increase in equity related gains principally relates to net gains on futures
contracts in 2008 as there were no futures contracts in 2007. 29




---



##### 



2008
    
    
    
    2007(dollars in millions)
    
    Successor
    
    
    
    Predecessor
    
    
    ChangeAnnuity benefit unlocking
    
    $
    2.3
    
    
    
    $
    (1.2
    )
    
    $
    3.5
    (a)Annuity benefit expense
    
    
    (1.3
    )
    
    
    
    1.1
    
    
    
    (2.4
    ) (b)Life insurance mortality expense
    
    
    1.6
    
    
    
    
    2.2
    
    
    
    (0.6
    ) (c)$
    2.6
    
    
    
    $
    2.1
    
    
    $
    0.5
 
 (a)
    
    See the Critical Accounting Policies and Estimatessection above for further
discussion of variable benefit unlocking.(b)
    
    The decrease in annuity benefit expense was primarily due to the decrease in the
guaranteed minimum benefit amounts as a result of volatile equity markets effect on
reinsurance reserves.(c)
    
    The decrease in life insurance mortality expense during 2008 was due to a lower volume
of claims in 2008 versus 2007.      2008
    
    
    
    2007(dollars
in millions)
    
    Successor
    
    
    
    Predecessor
    
    
    ChangeCommissions
    
    $
    2.2
    
    
    
    $
    0.9
    
    
    $
    1.3
    (a)General insurance expense
    
    
    2.8
    
    
    
    
    3.2
    
    
    
    (0.4
    )Taxes, licenses, and fees
    
    
    0.5
    
    
    
    
    (0.2
    )
    
    
    0.7
    (b)$
    5.5
    
    
    
    $
    3.9
    
    
    $
    1.6
 
 (a)
    
    The increase in commissions is primarily due to commission expense paid to
Transamerica Capital, Inc., a related party during 2008.(b)
    
    The increase in taxes, license, and fees is primarily due to lower New York State
Franchise tax in 2007. 30




---



##### 



2007 compared to 2006
   2007
    
    
    2006(dollars in millions)
    
    Predecessor
    
    
    Predecessor
    
    
    ChangeAsset-based policy charge revenue
    
    $
    14.3
    
    
    $
    12.8
    
    
    $
    1.5
    (a)Guaranteed benefit based policy charge revenue
    
    
    1.2
    
    
    
    0.8
    
    
    
    0.4
    (b)Non-asset based policy charge revenue
    
    
    5.3
    
    
    
    6.0
    
    
    
    (0.7
    ) (c)$
    20.8
    
    
    $
    19.6
    
    
    $
    1.2
 
 (a)
    
    Asset-based policy charge revenue was favorably impacted by the increase in average
variable account balances during 2007 as compared to 2006.(b)
    
    The increase in guaranteed benefit based policy charge revenue is due to the increase
in inforce variable annuity contracts containing guaranteed benefit riders.(c)
    
    The decrease in non-asset based policy charge revenue is primarily due to unfavorable
policy adjustments for certain variable life insurance contracts.   2007
    
    
    2006(dollars in millions)
    
    Predecessor
    
    
    Predecessor
    
    
    ChangeVariable annuity benefit expense
    
    $
    1.1
    
    
    $
    1.9
    
    
    $
    (0.8
    ) (a)Variable annuity guaranteed benefit reserve unlocking
    
    
    (1.2
    )
    
    
    (0.9
    )
    
    
    (0.3
    ) (b)Life insurance benefit expense
    
    
    2.2
    
    
    
    1.6
    
    
    
    0.6
    (c)$
    2.1
    
    
    $
    2.6
    
    
    $
    (0.5
    )
 
 (a)
    
    The decrease in variable annuity benefit expense is primarily due to decreased GMDB
liability accumulations resulting from the application of the mean reversion technique.
In addition, GMWB liabilities were impacted by favorable market valuation adjustments.
See the Critical Accounting Policiessection above for a further discussion of variable
annuity guaranteed benefit liabilities.(b)
    
    See the Critical Accounting Policiessection above for a further discussion of
variable annuity benefit reserve unlocking.(c)
    
    The increase in life insurance benefit expense is primarily due to an increase in the
number of death claims and amounts per claim during the 2007 as compared 2006. Critical Accounting Policies
 31




---



##### 



2007
    
    
    2006(dollars in millions)
    
    Predecessor
    
    
    Predecessor
    
    
    ChangeGeneral insurance expenses
    
    $
    3.2
    
    
    $
    3.6
    
    
    $
    (0.4
    ) (a)Taxes, licenses, and fees
    
    
    (0.2
    )
    
    
    0.1
    
    
    
    (0.3
    ) (b)Commissions
    
    
    0.9
    
    
    
    0.7
    
    
    
    0.2$
    3.9
    
    
    $
    4.4
    
    
    $
    (0.5
    )
 
 (a)
    
    The decrease in general insurance expenses is primarily due to decreased compensation
and auditing expenses.(b)
    
    The decrease in taxes, licenses, and fees is primarily due to lower New York State
Franchise tax expense. Segment Information
   Successor2008 (dollars in millions)
    
    Annuities
    
    Life
    
    TotalNet revenues (a)
    
    $
    15.5
    
    
    $
    8.7
    
    
    $
    24.2Net income (loss)
    
    
    (4.0
    )
    
    
    1.8
    
    
    
    (2.2
    )
 Predecessor2007 (dollars in millions)
    
    Annuities
    
    Life
    
    Other
    
    TotalNet revenues (a)
    
    $
    16.1
    
    
    $
    7.3
    
    
    $
    2.1
    
    
    $
    25.5Net income
    
    
    7.3
    
    
    
    1.9
    
    
    
    1.4
    
    
    
    10.6
 Predecessor2006 (dollars in millions)
    
    Annuities
    
    Life
    
    Other
    
    TotalNet revenues (a)
    
    $
    13.6
    
    
    $
    8.2
    
    
    $
    1.4
    
    
    $
    23.2Net income
    
    
    4.8
    
    
    
    1.9
    
    
    
    0.9
    
    
    
    7.6
 
 (a)
    
    Management considers interest credited to policyholder liabilities in evaluating net
revenues.  32




---



##### 



Item 7A. Quantitative and Qualitative Disclosures about Market Risk
 Market Risk
     Interest Rate Risk
   2008
    
    2007
    
    2006
    
    2005
    
    20043-Month US Libor
    
    
    1.43
    %
    
    
    4.70
    %
    
    
    5.36
    %
    
    
    4.54
    %
    
    
    2.56
    %10-Year US Treasury
    
    
    2.21
    %
    
    
    4.03
    %
    
    
    4.70
    %
    
    
    4.39
    %
    
    
    4.22
    %
  33




---



##### 



Estimated Approximate Effects on:Change in Interest Rates: (dollars in millions)
    
    Net Income
    
    Equity2008Shift Up of 100 Basis Points
    
    $
    0.1
    
    
    $
    (2.8
    )Shift Down of 100 Basis Points
    
    $
    (0.4
    )
    
    $
    2.72007Shift Up of 100 Basis Points
    
    $
    
    
    
    $
    (2.5
    )Shift Down of 100 Basis Points
    
    $
    
    
    
    $
    2.7
  Credit Risk
  Equity Market Risk
   2008
    
    2007
    
    2006
    
    2005
    
    2004S&P 500
    
    
    903
    
    
    
    1,468
    
    
    
    1,418
    
    
    
    1,248
    
    
    
    1,212NASDAQ
    
    
    1,577
    
    
    
    2,652
    
    
    
    2,415
    
    
    
    2,205
    
    
    
    2,175DOW
    
    
    8,776
    
    
    
    13,265
    
    
    
    12,463
    
    
    
    10,718
    
    
    
    10,783
  34




---



##### 



Estimated Approximate Effects on Net IncomeImmediate Change of: (dollars in millions)
    
    2008
    
    2007Equity Increase of 10%
    
    $
    0.7
    
    
    $
    0.4Equity Increase of 20%
    
    $
    1.2
    
    
    $
    0.9Equity Decrease of 10%
    
    $
    (2.6
    )
    
    $
    (0.4
    )Equity Decrease of 20%
    
    $
    (5.8
    )
    
    $
    (0.9
    )
  Liquidity Risk
  Underwriting Risk
     35




---



##### 



Estimated Approximate Effects on Net IncomeImmediate Change of: (dollars in millions)
    
    2008
    
    200720% Increase in Lapse Rates
    
    $
    (1.2
    )
    
    $
    (0.2
    )20% Decrease in Lapse Rates
    
    $
    1.2
    
    
    $
    0.210% Increase in Mortality Rates
    
    $
    (0.9
    )
    
    $
    (0.2
    )10% Decrease in Mortality Rates
    
    $
    0.5
    
    
    $
    0.2
  Item 8. Financial Statements and Supplementary Data
  Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
     Item 9A(T). Controls and Procedures
    36




---



##### 



Item 9B. Other Information
  37




---



##### 



PART III
  Item 14. Principal Account Fees and Services
 Fees Paid to the Registrants Independent Auditor
   2008SuccessorAudit (a)
    
    $
    400,000
 
 (a)
    
    Audit fees consist of fees for the annual financial statement audit (including required
quarterly reviews) and other procedures required to be performed by the independent auditor
to be able to form an opinion on MLLICNYs financial statements. These other procedures
include information systems and procedural reviews and testing performed in order to
understand and place reliance on the systems of internal control, and consultations
relating the audit or quarterly review. They also include fees billed for other audit
services, which are those services that only the external auditor reasonably can provide,
and include statutory audits, comfort letters, services associated with SEC registration
statements, periodic reports and other documents filed with the SEC.   2007PredecessorAudit (a)
    
    $
    261,229
 
 (a)
    
    Audit fees consist of fees for the annual financial statement audit (including required
quarterly reviews) and other procedures required to be performed by the independent auditor
to be able to form an opinion on MLLICNYs financial statements. These other procedures
include information systems and procedural reviews and testing performed in order to
understand and place reliance on the systems of internal control, and consultations
relating the audit or quarterly review. They also include fees billed for other audit
services, which are those services that only the external auditor reasonably can provide,
and include statutory audits, comfort letters, services associated with SEC registration
statements, periodic reports and other documents filed with the SEC. Audit Committee Pre-approval Policies and Procedures
  38




---



##### 



(i)
    
    may be pre-approved by the Audit Committee without consideration of specific case-by-case
services (general pre-approval); or
 (ii)
    
    require the specific pre-approval of the Audit Committee (specific pre-approval).
Appendices to the Pre-approval Policy (that are adopted each year) set out the audit,
audit-related, tax, and other services that have received the general pre-approval of the
Audit Committee. All other audit, audit-related, tax and other services must receive specific
pre-approval from the Audit Committee.
  39




---



##### 



PART IV
 Item 15. Exhibits and Financial Statement Schedules
  (1)
    
    The following financial statements of the Registrant
are filed as part of this report
 a.
    
    Independent Auditors Report dated
March 25, 2009 (Ernst & Young LLP).b.
    
    Independent Auditors Report dated
March 2, 2007 (Deloitte & Touche LLP).c.
    
    Balance Sheets at December 31, 2008 and
2007.d.
    
    Statements of Income for the Years
Ended December 31, 2008, 2007 and 2006.e.
    
    Statements of Comprehensive Income for
the Years Ended December 31, 2008, 2007 and 2006.f.
    
    Statements of Stockholders Equity for
the Years Ended December 31, 2008, 2007 and 2006.g.
    
    Statements of Cash Flows for the Years
Ended December 31, 2008, 2007 and 2006.h.
    
    Notes to Financial Statements for the
Years Ended December 31, 2008, 2007 and 2006.
 (2)
    
    Not applicable.(3)
    
    The following exhibits are filed as part of this
report:
 40




---



##### 



|    |  |                                                                                                                                                                                                                                                                                                   
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1 |  | Certificate of Amendment of the Charter of ML Life
Insurance Company of New York. (Incorporated by reference
to Exhibit 6(a)(ii) to Post-Effective Amendment No. 10 to
ML of New York Variable Annuity Account As registration
statement on Form N-4, File No. 33-43654, filed December 9,
1996.)
|3.2 |  | By-Laws of ML Life Insurance Company of New York.
(Incorporated by reference to Exhibit 6(b) to
Post-Effective Amendment No. 10 to ML of New York Variable
Annuity Account As registration statement on Form N-4,
File No. 33-43654, filed December 9, 1996.)                                    
|4.1 |  | Modified Guaranteed Annuity Contract. (Incorporated by
reference to Exhibit 4(a) to Pre-Effective Amendment No. 1
to the Registrants registration statement on Form S-1,
File No. 33-34562, filed October 16, 1990.)                                                                             
|4.2 |  | Modified Guaranteed Annuity Contract Application.
(Incorporated by reference to Exhibit 4(b) to Pre-Effective
Amendment No. 1 to the Registrants registration statement
on Form S-1, File No. 33-34562, filed October 16, 1990.)                                                                 
|4.3 |  | Qualified Retirement Plan Endorsement. (Incorporated by
reference to Exhibit 4(c) to Pre-Effective Amendment No. 1
to the Registrants registration statement on Form S-1,
File No. 33-34562, filed October 16, 1990.)                                                                            
|4.4 |  | IRA Endorsement. (Incorporated by reference to Exhibit 4(d)
to Pre-Effective Amendment No. 1 to the Registrants
registration statement on Form S-1, File No. 33-34562,
filed October 16, 1990.)                                                                                                  
|4.5 |  | Company Name Change Endorsement. (Incorporated by reference
to Exhibit 4(e) to Post-Effective Amendment No. 3 to the
Registrants registration statement on Form S-1, File No.
33-34562, filed March 30, 1992.)                                                                                   
|4.6 |  | IRA Endorsement, MLNY009 (Incorporated by reference to
Exhibit 4(d)(2) to Post-Effective Amendment No. 1 to the
Registrants registration statement on Form S-1, File No.
33-60288, filed March 31, 1994).                                                                                        

41



---



##### 



|     |  |                                                                                                                                                                                                                                                                                                                                               
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.7  |  | Modified Guaranteed Annuity Contract MLNY-AY-991/94.
(Incorporated by reference to Exhibit 4(a)(2) to
Post-Effective Amendment No. 3 to the Registrants
registration statement on Form S-1, File No. 33-60288,
filed December 7, 1994).                                                                                                      
|4.8  |  | Qualified Retirement Plan Endorsement MLNY-AYQ-991/94.
(Incorporation by reference to Exhibit 4(c)(2) to
Post-Effective Amendment No. 3 to the Registrants
registration statement on Form S-1, File No. 33-60288,
filed December 7, 1994).                                                                                                   
|10.1 |  | General Agency Agreement between Royal Tandem Life
Insurance Company and Merrill Lynch Life Agency Inc.
(Incorporated by reference to Exhibit 10(a) to
Pre-Effective Amendment No. 1 to the Registrants
registration statement on Form S-1, File No. 33-34562,
filed October 16, 1990.)                                                      
|10.2 |  | Investment Management Agreement by and between Royal Tandem
Life Insurance Company and Equitable Capital Management
Corporation. (Incorporated by reference to Exhibit 10(b) to
Pre-Effective Amendment No. 1 to the Registrants
registration statement on Form S-1, File No. 33-34562,
filed October 16, 1990.)                             
|10.3 |  | Shareholders Agreement by and among The Equitable Life
Assurance Society of the United States and Merrill Lynch & Co., Inc. and Tandem Financial Group, Inc. (Incorporated by
reference to Exhibit 10(c) to Pre-Effective Amendment No. 1
to the Registrants registration statement on Form S-1,
File No. 33-34562, filed October 16, 1990.)
|10.4 |  | Service Agreement by and between Royal Tandem Life
Insurance Company and Tandem Financial Group, Inc.
(Incorporated by reference to Exhibit 10(d) to
Pre-Effective Amendment No. 1 to the Registrants
registration statement on Form S-1, File No. 33-34562,
filed October 16, 1990.)                                                        
|10.5 |  | Service Agreement by and between Tandem Financial Group,
Inc. and Merrill Lynch & Co., Inc. (Incorporated by
reference to Exhibit 10(e) to Pre-Effective Amendment No. 1
to the Registrants registration statement on Form S-1,
File No. 33-34562, filed October 16, 1990.)                                                                  

42



---



##### 



|      |  |                                                                                                                                                                                                                                                                                                                                                                       
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.6  |  | Form of Investment Management Agreement by and between
Royal Tandem Life Insurance Company and Merrill Lynch Asset
Management, Inc. (Incorporated by reference to Exhibit
10(f) to Post-Effective Amendment No. 1 to the Registrants
registration statement on Form S-1, File No. 33-34562,
filed March 7, 1991.)                                                    
|10.7  |  | Assumption Reinsurance Agreement between Merrill Lynch Life
Insurance Company, Tandem Insurance Group, Inc. and Royal
Tandem Life Insurance Company and Family Life Insurance
Company. (Incorporated by reference to Exhibit 10(g) to
Post-Effective Amendment No. 3 to the Registrants
registration statement on Form S-1, File No. 33-34562,
filed March 30, 1992.)
|10.8  |  | Indemnity Agreement between ML Life Insurance Company of
New York and Merrill Lynch Life Agency, Inc. (Incorporated
by reference to Exhibit 10(h) to Post-Effective Amendment
No. 3 to the Registrants registration statement on Form
S-1, File No. 33-34562, filed March 30, 1992.)                                                                                 
|10.9  |  | Amended General Agency Agreement between ML Life Insurance
Company of New York and Merrill Lynch Life Agency, Inc.
(Incorporated by reference to Exhibit 10(i) to
Post-Effective Amendment No. 3 to the Registrants
registration statement on Form S-1, File No. 33-34562,
filed March 30, 1992.)                                                                    
|10.10 |  | Amended Management Agreement between ML Life Insurance
Company of New York and Merrill Lynch Asset Management,
Inc. (Incorporated by reference to Exhibit 10(j) to the
Registrants registration statement on Form S-1, File No.
33-60288, filed March 30, 1993.)                                                                                                     
|10.11 |  | Mortgage Loan Servicing Agreement between ML Life Insurance
Company of New York and Merrill Lynch & Co., Inc.
(Incorporated by reference to Exhibit 10(k) to
Post-Effective Amendment No. 4 to the Registrants
registration statement on Form S-1, File No. 33-60288,
filed March 29, 1995.)                                                                         
|10.12 |  | Master Distribution Agreement between Merrill Lynch Insurance Group, Inc., Merrill
Lynch & Co., Inc., and AEGON USA, Inc. (Incorporated by reference to
Exhibit 10.2 to Registrants Current Report on Form 8-K, File No. 33-34562, filed
January 4, 2008.)                                                                                                           
|10.13 |  | Non-Affiliated Broker-Dealer Wholesaling Agreement between ML Life Insurance
Company of New York, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and
Transamerica Capital, Inc. (Incorporated by reference to Exhibit 10.13 to the
Registrants Annual Report on Form 10-K, File Nos. 33-34562, 33-60288, 333-48983,
and 333-133224, filed March 27, 2008.)      
|10.14 |  | Selling Agreement between ML Life Insurance Company of New York, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, and Merrill Lynch Life Agency, Inc.
(Incorporated by reference to Exhibit 10.14 to the Registrants Annual Report on
Form 10-K, File Nos. 33-34562, 33-60288, 333-48983, and 333-133224, filed March 27, 2008.)                                  
|10.15 |  | Keep Well Agreement between AEGON USA And ML Life Insurance Company of New York.
(Incorporated by reference to Exhibit 10.15 to the Registrants Annual Report on
Form 10-K, File Nos. 33-34562, 33-60288, 333-48983, and 333-133224, filed March 27, 2008.)                                                                                                          
|10.16 |  | Purchase Agreement between Merrill Lynch Insurance Group, Inc., Merrill
Lynch & Co., Inc., and AEGON USA, Inc. (Incorporated by reference to Exhibit 10.1 to
Registrants Current Report on Form 8-K, File No. 33-34562, filed August 17, 2007.)                                                                                                                      
|10.17 |  | First Amendment to Purchase Agreement between Merrill Lynch
Insurance Group, Inc., Merrill Lynch & Co., Inc., and AEGON USA,
Inc. (Incorporated by reference to Exhibit 10.1 to Registrants Current
Report on Form 8-K, File No. 33-34562, filed January 4, 2008.)                                                                                                   
|10.18 |  | Principal Underwriting Agreement between Transamerica Capital, Inc. and ML Life
Insurance Company of New York, is filed herewith.                                                                                                                                                                                                                                     
|23.1  |  | Written Consent of Deloitte & Touche LLP, independent
registered public accounting firm, is filed herewith.                                                                                                                                                                                                                                                           
|23.2  |  | Written Consent of Ernst & Young LLP, independent
registered public accounting firm, is filed herewith.                                                                                                                                                                                                                                                               
|24.1  |  | Powers of Attorney for Lon K. Olejniczak, Robert R. Frederick, John T. Mallett,
Ronald          L. Ziegler, Eric J. Martin and Robert F. Colby.
(Incorporated by reference to Exhibit   24.1 to the Registrants Annual Report on
Form 10-K, File Nos. 33-34562, 33-60288,        333-48983, and 333-133224, filed March 27, 2008.)                                   
|24.2  |  | Powers of Attorney are filed herewith.                                                                                                                                                                                                                                                                                                                                

43



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##### 



|     |  |                                                                                                                                                                                            
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification by the Chief Executive Officer of the Registrant
pursuant to Rule 15d-14(a), is filed herewith.                                                                              
|31.2 |  | Certification by the Chief Financial Officer of the Registrant
pursuant to Rule 15d-14(a), is filed herewith.                                                                              
|32.1 |  | Certification by the Chief Executive Officer of the
Registrant pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, is filed herewith.
|32.2 |  | Certification by the Chief Financial Officer of the
Registrant pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
is filed herewith.

44



---



##### 



MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
     45




---



##### 



INDEX TO FINANCIAL STATEMENTS
 Independent Registered Public Accounting Firm Reports
    
    
    47Balance Sheets at December 31, 2008 and 2007
    
    
    49Statements of Income for the Years Ended December 31, 2008, 2007 and 2006
    
    
    50Statements of Comprehensive Income for the Years Ended December 31, 2008, 2007 and 2006
    
    
    51Statements of Stockholders Equity for the Years Ended December 31, 2008, 2007 and 2006
    
    
    52Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006
    
    
    53Notes to Financial Statements for the Years Ended December 31, 2008, 2007 and 2006
    
    
    54
 46




---



##### 



[Ernst & Young LLP]
  
     
 47




---



##### 



[Deloitte & Touche LLP]
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
  .
  DELOITTE & TOUCHE LLP
  48




---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY OWNED SUBSIDIARY OF AEGON USA, LLC.)
BALANCE SHEETS
 December 312008
    
    
    2007(dollars in thousands, except share data)
    
    SuccessorASSETSInvestmentsFixed maturity available-for-sale securities, at estimated
fair value (amortized cost: 2008 - $127,986; 2007 - $100,231)
    
    $
    115,834
    
    
    $
    100,231Equity available-for-sale securities, at estimated fair value
(cost: 2008 - $257; 2007 - $1,126)
    
    
    163
    
    
    
    1,126Policy loans
    
    
    67,387
    
    
    
    69,165Total investments
    
    
    183,384
    
    
    
    170,522Cash and cash equivalents
    
    
    29,973
    
    
    
    60,406Accrued investment income
    
    
    3,158
    
    
    
    2,866Deferred policy acquisition costs
    
    
    373
    
    
    
    Deferred sales inducements
    
    
    165
    
    
    
    Value of business acquired
    
    
    41,525
    
    
    
    44,024Other intangibles
    
    
    
    
    
    
    8,330Goodwill
    
    
    500
    
    
    
    6,882Federal income taxes  current
    
    
    1,443
    
    
    
    836Federal income taxes  deferred
    
    
    5,183
    
    
    
    Reinsurance receivables
    
    
    680
    
    
    
    925Other assets
    
    
    5,018
    
    
    
    5,200Separate Accounts assets
    
    
    598,438
    
    
    
    925,828Total Assets
    
    $
    869,840
    
    
    $
    1,225,819LIABILITIES AND STOCKHOLDERS EQUITYLiabilitiesPolicyholder liabilities and accrualsPolicyholder account balances
    
    $
    135,062
    
    
    $
    140,782Future policy benefits
    
    
    19,872
    
    
    
    22,764Claims and claims settlement expenses
    
    
    2,096
    
    
    
    4,618157,030
    
    
    
    168,164Other policyholder funds
    
    
    204
    
    
    
    989Affiliated payables  net
    
    
    49
    
    
    
    Other liabilities
    
    
    827
    
    
    
    Separate Accounts liabilities
    
    
    598,438
    
    
    
    925,828Total Liabilities
    
    
    756,548
    
    
    
    1,094,981Stockholders EquityCommon stock ($10 par value; 220,000 shares authorized,
issued and outstanding)
    
    
    2,200
    
    
    
    2,200Additional paid-in capital
    
    
    128,638
    
    
    
    128,638Accumulated other comprehensive loss, net of taxes
    
    
    (8,333
    )
    
    
    Retained deficit
    
    
    (9,213
    )
    
    
    Total Stockholders Equity
    
    
    113,292
    
    
    
    130,838Total Liabilities and Stockholders Equity
    
    $
    869,840
    
    
    $
    1,225,819
  49




---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY OWNED SUBSIDIARY OF AEGON USA, LLC.)
STATEMENTS OF INCOME
 For the Years Ended December 31,2008
    
    
    
    2007
    
    
    2006(dollars in thousands)
    
    Successor
    
    
    
    Predecessor
    
    
    PredecessorRevenuesPolicy charge revenue
    
    $
    18,531
    
    
    
    $
    20,782
    
    
    $
    19,577Net investment income
    
    
    11,066
    
    
    
    
    11,246
    
    
    
    11,523Net realized investment gains (losses)
    
    
    782
    
    
    
    
    1,141
    
    
    
    (71
    )Total Revenues
    
    
    30,379
    
    
    
    
    33,169
    
    
    
    31,029Benefits and ExpensesInterest credited to policyholder liabilities
    
    
    6,180
    
    
    
    
    7,643
    
    
    
    7,823Policy benefits (net of reinsurance recoveries:2008 - $496; 2007 - $1,846;
2006 - $1,219)
    
    
    2,625
    
    
    
    
    2,069
    
    
    
    2,608Reinsurance premium ceded
    
    
    1,404
    
    
    
    
    1,872
    
    
    
    1,915Amortization of deferred policy acquisition costs
    
    
    31
    
    
    
    
    2,184
    
    
    
    3,269Amortization of value of business acquired
    
    
    9,025
    
    
    
    
    
    
    
    
    Amortization of other intangibles
    
    
    368
    
    
    
    
    
    
    
    
    Impairment charges
    
    
    9,879
    
    
    
    
    
    
    
    
    Insurance expenses and taxes
    
    
    5,544
    
    
    
    
    3,942
    
    
    
    4,424Total Benefits and Expenses
    
    
    35,056
    
    
    
    
    17,710
    
    
    
    20,039Income (Loss) Before Taxes
    
    
    (4,677
    )
    
    
    
    15,459
    
    
    
    10,990Federal Income Tax Expense (Benefit)Current
    
    
    
    
    
    
    
    3,786
    
    
    
    3,656Deferred
    
    
    (2,464
    )
    
    
    
    1,062
    
    
    
    (230
    )Federal Income Tax Expense (Benefit)
    
    
    (2,464
    )
    
    
    
    4,848
    
    
    
    3,426Net Income (Loss)
    
    $
    (2,213
    )
    
    
    $
    10,611
    
    
    $
    7,564
  50




---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY OWNED SUBSIDIARY OF AEGON USA, LLC.)
STATEMENTS OF COMPREHENSIVE INCOME
 For the Years Ended December 31,2008
    
    
    
    2007
    
    
    2006(dollars in thousands)
    
    Successor
    
    
    
    Predecessor
    
    
    PredecessorNet Income (Loss)
    
    $
    (2,213
    )
    
    
    $
    10,611
    
    
    $
    7,564Other Comprehensive Income (Loss)Net unrealized gains (losses) on available-for-sale securitiesNet unrealized holding gains (losses) arising during
the period
    
    
    (12,246
    )
    
    
    
    499
    
    
    
    509Reclassification adjustment for gains included
in net income
    
    
    
    
    
    
    
    (2
    )
    
    
    (71
    )(12,246
    )
    
    
    
    497
    
    
    
    438Adjustments:Policyholder liabilities
    
    
    (83
    )
    
    
    
    (20
    )
    
    
    214Deferred policy acquisition costs
    
    
    (38
    )
    
    
    
    
    
    
    
    Value of business acquired
    
    
    (454
    )
    
    
    
    
    
    
    
    Deferred federal income taxes
    
    
    4,488
    
    
    
    
    (167
    )
    
    
    (228
    )3,913
    
    
    
    
    (187
    )
    
    
    (14
    )Total other comprehensive income (loss), net of taxes
    
    
    (8,333
    )
    
    
    
    310
    
    
    
    424Comprehensive Income (Loss)
    
    $
    (10,546
    )
    
    
    $
    10,921
    
    
    $
    7,988
  51




---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY OWNED SUBSIDIARY OF AEGON USA, LLC.)
STATEMENTS OF STOCKHOLDERS EQUITY
 AccumulatedAdditional
    
    
    Other
    
    
    Retained
    
    
    TotalCommon
    
    
    Paid-in
    
    
    Comprehensive
    
    
    Earnings
    
    
    Stockholders(dollars in thousands)
    
    Stock
    
    
    Capital
    
    
    Income (Loss)
    
    
    (Deficit)
    
    
    EquityBalance, January 1, 2006 (Predecessor)
    
    $
    2,200
    
    
    $
    52,310
    
    
    $
    (1,177
    )
    
    $
    30,556
    
    
    $
    83,889Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,564
    
    
    
    7,564Cash dividend paid to Merrill Lynch
Insurance Group, Inc.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,111
    )
    
    
    (4,111
    )Other comprehensive income, net of taxes
    
    
    
    
    
    
    
    
    
    
    424
    
    
    
    
    
    
    
    424Balance, January 1, 2007 (Predecessor)
    
    
    2,200
    
    
    
    52,310
    
    
    
    (753
    )
    
    
    34,009
    
    
    
    87,766Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,611
    
    
    
    10,611Cash dividend paid to Merrill Lynch
Insurance Group, Inc.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,453
    )
    
    
    (5,453
    )Other comprehensive income, net of taxes
    
    
    
    
    
    
    
    
    
    
    310
    
    
    
    
    
    
    
    310Balance, at date of acquisition, (Predecessor)
    
    
    2,200
    
    
    
    52,310
    
    
    
    (443
    )
    
    
    39,167
    
    
    
    93,234Effect of push down accounting of AEGON
USA, LLC.s purchase price on ML Life
Insurance Company of New Yorks net assets
acquired
    
    
    
    
    
    
    76,328
    
    
    
    443
    
    
    
    (39,167
    )
    
    
    37,604Balance, December 31, 2007 (Successor)
    
    
    2,200
    
    
    
    128,638
    
    
    
    
    
    
    
    
    
    
    
    130,838Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,213
    )
    
    
    (2,213
    )Cash dividend paid to AEGON USA, LLC.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,000
    )
    
    
    (7,000
    )Other comprehensive loss, net of taxes
    
    
    
    
    
    
    
    
    
    
    (8,333
    )
    
    
    
    
    
    
    (8,333
    )Balance, December 31, 2008 (Successor)
    
    $
    2,200
    
    
    $
    128,638
    
    
    $
    (8,333
    )
    
    $
    (9,213
    )
    
    $
    113,292
  52




---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY OWNED SUBSIDIARY OF AEGON USA, LLC.)
STATEMENTS OF CASH FLOWS
 For the Years Ended December 31,2008
    
    
    
    2007
    
    
    2006(dollars in thousands)
    
    Successor
    
    
    
    Predecessor
    
    
    PredecessorCASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)
    
    $
    (2,213
    )
    
    
    $
    10,611
    
    
    $
    7,564Adjustment to reconcile net income (loss) to net cash and cash
equivalents provided by operating activities:Changes in:Deferred policy acquisition costs
    
    
    (411
    )
    
    
    
    433
    
    
    
    553Deferred sales inducements
    
    
    (165
    )
    
    
    
    (557
    )
    
    
    (1,239
    )Value of business acquired
    
    
    9,025
    
    
    
    
    
    
    
    
    Other intangibles
    
    
    368
    
    
    
    
    
    
    
    
    Benefit reserves
    
    
    (1,290
    )
    
    
    
    (592
    )
    
    
    56Federal income tax accruals
    
    
    (3,178
    )
    
    
    
    1,062
    
    
    
    (230
    )Claims and claims settlement expenses
    
    
    (2,522
    )
    
    
    
    (3,883
    )
    
    
    5,172Other policyholder funds
    
    
    (785
    )
    
    
    
    310
    
    
    
    415Other operating assets and liabilities, net
    
    
    1,091
    
    
    
    
    (2,559
    )
    
    
    (3,987
    )Amortization (accretion) of investments
    
    
    (64
    )
    
    
    
    238
    
    
    
    603Impairment charges
    
    
    9,879
    
    
    
    
    
    
    
    
    Interest credited to policyholder liabilities
    
    
    6,180
    
    
    
    
    7,643
    
    
    
    7,823Net realized investment (gains) losses
    
    
    (782
    )
    
    
    
    (1,141
    )
    
    
    71Net cash and cash equivalents provided by operating activities
    
    
    15,133
    
    
    
    
    11,565
    
    
    
    16,801CASH FLOWS FROM INVESTING ACTIVITIESSales of available-for-sale securities
    
    
    32,068
    
    
    
    
    12,210
    
    
    
    22,173Maturities of available-for-sale securities
    
    
    36,215
    
    
    
    
    41,362
    
    
    
    41,403Purchases of available-for-sale securities
    
    
    (95,749
    )
    
    
    
    (19,808
    )
    
    
    (32,653
    )Net settlements on futures contracts
    
    
    1,273
    
    
    
    
    
    
    
    
    Policy loans on insurance contracts, net
    
    
    1,778
    
    
    
    
    3,614
    
    
    
    1,614Net cash and cash equivalents provided by (used in) investing
activities
    
    
    (24,415
    )
    
    
    
    37,378
    
    
    
    32,537CASH FLOWS FROM FINANCING ACTIVITIESCash dividend paid to AEGON USA, LLC.
    
    
    (7,000
    )
    
    
    
    
    
    
    
    Cash dividend paid to Merrill Lynch Insurance Group, Inc.
    
    
    
    
    
    
    
    (5,453
    )
    
    
    (4,111
    )Policyholder deposits
    
    
    9,090
    
    
    
    
    32,544
    
    
    
    52,072Policyholder withdrawals
    
    
    (23,241
    )
    
    
    
    (51,580
    )
    
    
    (75,997
    )Net cash and cash equivalents used in financing activities
    
    
    (21,151
    )
    
    
    
    (24,489
    )
    
    
    (28,036
    )Net increase (decrease) in cash and cash equivalents (1)
    
    
    (30,433
    )
    
    
    
    24,454
    
    
    
    21,302Cash and cash equivalents, beginning of year
    
    
    60,406
    
    
    
    
    35,952
    
    
    
    14,650Cash and cash equivalents, end of year
    
    $
    29,973
    
    
    
    $
    60,406
    
    
    $
    35,952
 
 (1)
    
    Included in net increase (decrease) in cash and cash
equivalents is interest received (2008  $6; 2007  $0; 2006  $0); interest paid (2008  $9; 2007  $74; 2006  $179); federal income taxes
paid (2008  $1,443; 2007  $5,686; 2006  $3,234); and federal income taxes received (2008  $729;
2007  $0; 2006  $0)  53




---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY OWNED SUBSIDIARY OF AEGON USA, LLC.)
NOTES TO FINANCIAL STATEMENTS
 Note 1. Summary of Significant Accounting Policies
 Description of Business
    Basis of Reporting
  Business Combinations Goodwill and Other Intangibles
 Push Down Basis of Accounting in Financial Statements of a Subsidiary
  Accounting Estimates and Assumptions
  54




---



##### 



Investments
 Fixed maturity and equity securities
       Policy loans
  Derivative Instruments
  Cash and Cash Equivalents
  55




---



##### 



Deferred Policy Acquisition Costs (DAC)
      Deferred Sales Inducements (DSI)
   56




---



##### 



Value of Business Acquired (VOBA)
  Other Intangibles
  Goodwill
  Separate Accounts
   Policyholder Account Balances
  2008Interest-sensitive life products
    
    4.00%Interest-sensitive deferred annuities
    
    3.00%  6.80%
 57




---



##### 



Future Policy Benefits
  2008Interest rates used for liabilities
    
    2.55%  5.75%
 Revenue Recognition
    Claims and Claims Settlement Expenses
  Federal Income Taxes
 Accounting for Income Taxes.
    58




---



##### 



Recent Accounting Pronouncements
 Current Adoption of Recent Accounting Pronouncements
 Amendments to the Impairment and Interest Income Measurement Guidance of
EITF Issue No. 99-20 Recognition of Interest Income and Impairment on
Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a Transferor in
Securitized Financial Assets Accounting for
Certain Investments in Debt and Equity Securities
 Determining the Fair Value of a Financial Asset
When the Market for That Asset Is Not Active. Fair Value Measurements
 Disclosures about Credit
Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation
No. 45; and Clarification of the Effective Date of FASB Statement No. 161 Accounting for Derivative Instruments and Hedging Activities, Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness to Others,
 The Hierarchy of Generally Accepted Accounting
Principles
 The Fair Value Option for Financial Assets and
Financial Liabilities
 Fair Value Measurements.
 59




---



##### 



Future Adoption of Recent Accounting Pronouncements
 Determination of the Useful Life
of Intangible Assets Goodwill and Other Intangible Assets
  Disclosures about Derivative Instruments and Hedging
Activities  an amendment of FASB Statement No. 133 Accounting for Derivative Instruments and Hedging
Activities Noncontrolling Interests in Consolidated Financial
Statement Consolidated Financial
Statements  Business Combinations Business Combinations
 Note 2. Adjustments to Initial Purchase Price Allocation
  60




---



##### 



Purchase Price AllocationDecember 31,
    
    
    
    
    
    December 312007
    
    Adjustments
    
    2008 (a)Value of business acquired, gross
    
    $
    44,024
    
    
    $
    6,829
    
    
    $
    50,853Goodwill
    
    
    6,882
    
    
    
    (3,286
    )
    
    
    3,596Other intangibles
    
    
    8,330
    
    
    
    (1,180
    )
    
    
    7,150Federal income taxes  current
    
    
    836
    
    
    
    (107
    )
    
    
    729Reinsurance receivable
    
    
    925
    
    
    
    26
    
    
    
    951Other assets
    
    
    5,200
    
    
    
    50
    
    
    
    5,250Policyholder account balances
    
    
    140,782
    
    
    
    4,129
    
    
    
    144,911Future policy benefits
    
    
    22,764
    
    
    
    (3,566
    )
    
    
    19,198Federal income taxes  deferred
    
    
    
    
    
    
    1,769
    
    
    
    1,769
 
 (a)
    
    This reflects the December 31, 2008 balance before adjustments for unrealized gains
(losses) on investments, amortization and/or impairments.      Note 3. Fair Value of Financial Instruments
 Fair Value Measurements
  61




---



##### 



Fair Value Hierarchy
   Level 1
 Level 2
 a)
    
    Quoted prices for similar assets or liabilities in active marketsb)
    
    Quoted prices for identical or similar assets or liabilities in non-active
marketsc)
    
    Inputs other than quoted market prices that are observabled)
    
    Inputs that are derived principally from or corroborated by observable market
data through correlation or other means
 Level 3
  2008Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssetsFixed maturity securities (a)
    
    $
    2,316
    
    
    $
    108,410
    
    
    $
    5,108
    
    
    $
    115,834Equity securities (a)
    
    
    
    
    
    
    163
    
    
    
    
    
    
    
    163Cash and cash equivalents (b)
    
    
    
    
    
    
    33,253
    
    
    
    
    
    
    
    33,253Separate Accounts assets (c)
    
    
    598,438
    
    
    
    
    
    
    
    
    
    
    
    598,438Total assets
    
    $
    600,754
    
    
    $
    141,826
    
    
    $
    5,108
    
    
    $
    747,688LiabilitiesFuture policy benefits
(embedded derivatives only) (d)
    
    $
    
    
    
    $
    
    
    
    $
    (3,179
    )
    
    $
    (3,179
    )Total liabilities
    
    $
    
    
    
    $
    
    
    
    $
    (3,179
    )
    
    $
    (3,179
    )
 
 (a)
    
    For publicly traded securities (Level 1), fair value is determined using quoted market
prices. For securities without a readily ascertainable market value (Level 2), the Company
utilizes pricing services and corroborated broker quotes. Such estimated fair values do not
necessarily represent the values for which these securities could have been sold at the
date of the Balance Sheet. Level 3 consists of two types of securities: a) securities
whose fair value is estimated based on non-binding broker quotes and b) immaterial mortgage
backed securities without a readily ascertainable market value whose amortized cost equals
fair value.(b)
    
    Cash and cash equivalents are primarily valued at amortized cost, which approximates
fair value. Operating cash is not included in the abovementioned table.(c)
    
    Separate Accounts assets are carried at the net asset value provided by the fund
managers.(d)
    
    The Company records liabilities, which can be either positive or negative, for
contracts containing guaranteed minimum withdrawal benefits (GMWB) and reinsurance on
guaranteed minimum income benefit (GMIB reinsurance) riders in accordance with SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities.The GMWB and GMIB
reinsurance provisions are treated as an embedded derivative and are required to be
reported separately from the host variable annuity contract. The fair value of the GMWB
and GMIB reinsurance obligations are calculated based on actuarial and capital market
assumptions related to the projected cash flows, including benefits and related contract
charges, over the anticipated life of the related contracts. The cash flow estimates are
produced by using stochastic techniques under a variety of market return scenarios and
other best estimate assumptions. 62




---



##### 



Fixed MaturityBalance at December 31, 2007
    
    $
    1,244Total unrealized loss (a)
    
    
    (1,166
    )Purchases (sales)  net
    
    
    3,002Transfers into Level 3  net
    
    
    2,007Changes in valuation (b)
    
    
    21Balance at December 31, 2008 (c)
    
    $
    5,108
 
 (a)
    
    Recorded as a component of other comprehensive income (loss).(b)
    
    Recorded as a component of net investment income in the Statements of Income.(c)
    
    Recorded as a component of fixed maturity available-for-sale securities in the Balance
Sheets.   GMIBGMWB
    
    
    ReinsuranceBalance at December 31, 2007
    
    $
    595
    
    
    $
    (395
    )Purchase price adjustment
    
    
    (267
    )
    
    
    (1,078
    )Changes in valuation (a)
    
    
    3,942
    
    
    
    (5,976
    )Balance at December 31, 2008 (b)
    
    $
    4,270
    
    
    $
    (7,449
    )
 
 (a)
    
    Recorded as a component of policy benefits in the Statements of Income.(b)
    
    Recorded as a component of future policy benefits in the Balance Sheets. 63




---



##### 



Note 4. Investments
 Fixed Maturity and Equity Securities
  2008SuccessorEstimatedAmortized
    
    
    Gross Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueFixed maturity securities:Corporate securities
    
    $
    78,355
    
    
    $
    642
    
    
    $
    (6,632
    )
    
    $
    72,365Mortgage-backed securities and
other asset backed securities
    
    
    43,381
    
    
    
    176
    
    
    
    (6,361
    )
    
    
    37,196U.S. Government and agencies
    
    
    2,200
    
    
    
    116
    
    
    
    
    
    
    
    2,316Foreign governments
    
    
    4,050
    
    
    
    167
    
    
    
    (260
    )
    
    
    3,957Total fixed maturity securities
    
    $
    127,986
    
    
    $
    1,101
    
    
    $
    (13,253
    )
    
    $
    115,834Equity securities  preferred stocks
    
    $
    257
    
    
    $
    
    
    
    $
    (94
    )
    
    $
    163
 2007SuccessorEstimatedFairValue (a)Fixed maturity securities:Corporate securities
    
    $
    73,852Mortgage-backed securities and other asset backed securities
    
    
    13,701U.S. Government and agencies
    
    
    8,877Foreign governments
    
    
    3,801Total fixed maturity securities
    
    $
    100,231Equity securities  preferred stocks
    
    $
    1,126
 
 (a)
    
    In accordance with push down accounting, amortized cost was equal to estimated fair
value at December 31, 2007.   2008
    
    
    2007SuccessorEstimated
    
    
    EstimatedAmortized
    
    
    Fair
    
    
    FairCost
    
    
    Value
    
    
    Value (a)Investment grade
    
    $
    120,799
    
    
    $
    110,412
    
    
    $
    99,301Below investment grade
    
    
    7,187
    
    
    
    5,422
    
    
    
    930Total fixed maturity securities
    
    $
    127,986
    
    
    $
    115,834
    
    
    $
    100,231
 
 (a)
    
    In accordance with push down accounting, amortized cost was equal to estimated fair
value at December 31, 2007.  64




---



##### 



2008
    
    
    2007SuccessorEstimated
    
    
    EstimatedAmortized
    
    
    Fair
    
    
    FairCost
    
    
    Value
    
    
    Value (a)Fixed maturity securities:Due in one year or less
    
    $
    10,392
    
    
    $
    10,373
    
    
    $
    35,520Due after one year through five years
    
    
    25,519
    
    
    
    24,166
    
    
    
    34,794Due after five years through ten years
    
    
    39,921
    
    
    
    37,053
    
    
    
    9,804Due after ten years
    
    
    8,773
    
    
    
    7,046
    
    
    
    6,41284,605
    
    
    
    78,638
    
    
    
    86,530Mortgage-backed securities and other asset backed securities
    
    
    43,381
    
    
    
    37,196
    
    
    
    13,701Total fixed maturity securities
    
    $
    127,986
    
    
    $
    115,834
    
    
    $
    100,231
 
 (a)
    
    In accordance with push down accounting, amortized cost was equal to estimated fair
value at December 31, 2007.   Unrealized Gains (Losses) on Fixed Maturity and Equity Securities
  2008 (a)SuccessorEstimated
    
    
    
    
    
    
    Continuous GrossFair
    
    
    Amortized
    
    
    UnrealizedValue
    
    
    Cost
    
    
    LossesLess than or equal to 90 days:Fixed maturitiesCorporate securities
    
    $
    17,174
    
    
    $
    19,027
    
    
    $
    (1,853
    )Mortgage-backed securities and other asset backed
    
    
    8,379
    
    
    
    10,113
    
    
    
    (1,734
    )Foreign governments
    
    
    680
    
    
    
    923
    
    
    
    (243
    )Equities
    
    
    35
    
    
    
    80
    
    
    
    (45
    )26,268
    
    
    
    30,143
    
    
    
    (3,875
    )Greater than 90 days but less than or equal to 180 days:Fixed maturitiesCorporate securities
    
    
    14,378
    
    
    
    16,417
    
    
    
    (2,039
    )Mortgage-backed securities and other asset backed
    
    
    18,130
    
    
    
    21,323
    
    
    
    (3,193
    )Foreign governments
    
    
    318
    
    
    
    335
    
    
    
    (17
    )$
    32,826
    
    
    $
    38,075
    
    
    $
    (5,249
    )
 65




---



##### 



2008 (a)SuccessorEstimated
    
    
    
    
    
    
    Continuous GrossFair
    
    
    Amortized
    
    
    Unrealized(continued)
    
    Value
    
    
    Cost
    
    
    LossesGreater than 180 days but less than or equal to 270 days:Fixed maturitiesCorporate securities
    
    $
    10,333
    
    
    $
    11,348
    
    
    $
    (1,015
    )Mortgage-backed securities and other asset backed
    
    
    888
    
    
    
    1,353
    
    
    
    (465
    )11,221
    
    
    
    12,701
    
    
    
    (1,480
    )Greater than 270 days but less than or equal to one year:Fixed maturitiesCorporate securities
    
    
    4,643
    
    
    
    6,368
    
    
    
    (1,725
    )Mortgage-backed securities and other asset backed
    
    
    910
    
    
    
    1,879
    
    
    
    (969
    )Equities
    
    
    128
    
    
    
    177
    
    
    
    (49
    )5,681
    
    
    
    8,424
    
    
    
    (2,743
    )Total
    
    $
    75,996
    
    
    $
    89,343
    
    
    $
    (13,347
    )
 
 (a)
    
    In accordance with push down accounting, amortized cost was equal to estimated fair
value at December 31, 2007.   2008 (a)SuccessorFair
    
    
    Gross Unrealized
    
    
    Number ofValue
    
    
    Losses
    
    
    SecuritiesDecline > 20%Less than or equal to 90 days
    
    $
    5,940
    
    
    $
    (2,203
    )
    
    
    8Greater than 90 days but less than or equal to 180 days
    
    
    5,023
    
    
    
    (1,779
    )
    
    
    8Greater than 180 days but less than or equal to 270 days
    
    
    1,257
    
    
    
    (871
    )
    
    
    4Greater than 270 days but less than or equal to one year
    
    
    3,004
    
    
    
    (2,699
    )
    
    
    11Total
    
    $
    15,224
    
    
    $
    (7,552
    )
    
    
    31Decline > 40%Less than or equal to 90 days
    
    $
    638
    
    
    $
    (660
    )
    
    
    3Greater than 90 days but less than or equal to 180 days
    
    
    793
    
    
    
    (681
    )
    
    
    3Greater than 180 days but less than or equal to 270 days
    
    
    270
    
    
    
    (379
    )
    
    
    2Greater than 270 days but less than or equal to one year
    
    
    2,403
    
    
    
    (2,384
    )
    
    
    7Total
    
    $
    4,104
    
    
    $
    (4,104
    )
    
    
    15
 
 (a)
    
    In accordance with push down accounting, amortized cost was equal to estimated fair
value at December 31, 2007.  66




---



##### 



December 312008 (a)AssetsFixed maturity securities
    
    $
    (12,152
    )Equity securities
    
    
    (94
    )Deferred policy acquisitions costs
    
    
    (38
    )Value of business acquired
    
    
    (454
    )(12,738
    )LiabilitiesPolicyholder account balances
    
    
    (83
    )Federal income taxes  deferred
    
    
    4,4884,405Stockholders equityAccumulated other comprehensive loss, net of taxes (a)
    
    $
    (8,333
    )
 
 (a)
    
    At December 31, 2007 accumulated other comprehensive loss, net of taxes, was zero as a
result of push down accounting at the acquisition date.  Derivatives
  Net Investment Income
  2008
    
    
    
    2007
    
    
    2006Successor
    
    
    
    PredecessorFixed maturity securities
    
    $
    6,326
    
    
    
    $
    5,727
    
    
    $
    6,930Policy loans on insurance contracts
    
    
    3,279
    
    
    
    
    3,385
    
    
    
    3,560Cash and cash equivalents
    
    
    1,638
    
    
    
    
    2,300
    
    
    
    1,397Equity securities
    
    
    38
    
    
    
    
    71
    
    
    
    53Other
    
    
    
    
    
    
    
    12
    
    
    
    (20
    )Gross investment income
    
    
    11,281
    
    
    
    
    11,495
    
    
    
    11,920Less investment expenses
    
    
    (215
    )
    
    
    
    (249
    )
    
    
    (397
    )Net investment income
    
    $
    11,066
    
    
    
    $
    11,246
    
    
    $
    11,523
 Realized Investment Gains (Losses)
  2008
    
    
    2007
    
    2006Successor
    
    
    PredecessorProceeds
    
    $
    32,068
    
    
    
    $
    12,210
    
    
    $
    22,173Gross realized investment gains
    
    
    461
    
    
    
    
    1,268
    
    
    
    89Gross realized investment losses
    
    
    1,104
    
    
    
    
    127
    
    
    
    160
 67




---



##### 



2008
    
    
    
    2007
    
    
    2006Successor
    
    
    
    PredecessorFixed maturity securities
    
    $
    (628
    )
    
    
    $
    1,141
    
    
    $
    (71
    )Equity securities
    
    
    (15
    )
    
    
    
    
    
    
    
    Derivatives
    
    
    1,273
    
    
    
    
    
    
    
    
    Associated amortization on VOBA
    
    
    152
    
    
    
    
    
    
    
    
    Net realized investment gains (losses)
    
    $
    782
    
    
    
    $
    1,141
    
    
    $
    (71
    )
  Note 5. VOBA, Other Intangibles and Goodwill
   VOBA
    
    2008Purchase price adjustment
    
    $
    6,829Accretion (amortization) expense
    
    
    (2,239
    )Unlocking
    
    
    (6,786
    )Amortization related to realized losses on investments and derivatives
    
    
    152Adjustment related to unrealized gains on investments
    
    
    (454
    )Change in VOBA carrying amount
    
    $
    (2,499
    )
   2009
    
    $
    2,8632010
    
    $
    2,9332011
    
    $
    3,0752012
    
    $
    3,0932013
    
    $
    3,210
 68




---



##### 



th
 Note 6. DAC and DSI
  DAC
    
    
    DSIBalance, January 1, 2007 (Predecessor)
    
    $
    22,485
    
    
    $
    1,840Capitalization
    
    
    1,751
    
    
    
    714Normal amortization
    
    
    (4,009
    )
    
    
    (182
    )Unlocking
    
    
    1,825
    
    
    
    25Push down accounting adjustment
    
    
    (22,052
    )
    
    
    (2,397
    )Balance, December 31, 2007 (Successor)
    
    
    
    
    
    
    Capitalization
    
    
    442
    
    
    
    177Normal amortization
    
    
    11
    
    
    
    1Unlocking
    
    
    (42
    )
    
    
    (13
    )Adjustment related to unrealized gain on investments
    
    
    (38
    )
    
    
    Balance, December 31, 2008 (Successor)
    
    $
    373
    
    
    $
    165
   Note 7. Variable Contracts Containing Guaranteed Benefits
 Variable Annuity Contracts Containing Guaranteed Benefits
  
    
    In general, contracts containing GMDB provisions provide a death benefit equal to the
greater of the GMDB or the contract value. Depending on the type of contract, the GMDB may
equal: i) contract deposits accumulated at a specified
interest rate, ii) the contract value on specified contract anniversaries, iii) return of
contract deposits, or iv) some combination of these benefits. Each benefit type is reduced
for contract withdrawals.
    
    In general, contracts containing GMIB provisions provide the option to receive a
guaranteed future income stream upon annuitization. There is a waiting period of ten years
that must elapse before the GMIB provision can be exercised.
 69




---



##### 




    
    Contracts containing GMWB provisions provide the contract owner the ability to withdraw
minimum annual payments regardless of the impact of market performance on the contract
owners account value. In general, withdrawal percentages are based on the contract
owners age at the time of the first withdrawal. The Company began offering the GMWB
benefit provision in the first quarter 2006.
  GMDB
    
    GMIB
    
    GMWB2008Net amount at risk (a)
    
    $
    167,799
    
    
    $
    54,279
    
    
    $
    11,327Average attained age of contract owners
    
    
    69
    
    
    
    62
    
    
    
    73Weighted average period remaining until
expected annuitization
    
    
    n/a
    
    
    6.1 yrs
    
    
    n/a2007Net amount at risk (a)
    
    $
    23,456
    
    
    $
    1,090
    
    
    $
    24Average attained age of contract owners
    
    
    68
    
    
    
    61
    
    
    
    72Weighted average period remaining until
expected annuitization
    
    
    n/a
    
    
    7.0 yrs
    
    
    n/a
 
 (a)
    
    Net amount at risk for GMDB is defined as the current GMDB in excess of the contract
owners account balance at the Balance Sheet date. Net amount at risk for GMIB is defined
as the present value of the minimum guaranteed annuity payments available to the contract
owner in excess of the contract owners account balance at the Balance Sheet date. Net
amount at risk for GMWB is defined as the present value of the minimum guaranteed
withdrawals available to the contract owner in excess of the contract owners account
balance at the Balance Sheet date.  70




---



##### 



GMDB
    
    
    GMIBBalance, January 1, 2007 (Predecessor)
    
    $
    2,836
    
    
    $
    47Guaranteed benefits incurred
    
    
    1,139
    
    
    
    34Guaranteed benefits paid
    
    
    (323
    )
    
    
    Unlocking
    
    
    (1,191
    )
    
    
    20Push-down accounting adjustment
    
    
    (240
    )
    
    
    (101
    )Balance, December 31, 2007 (Successor)
    
    
    2,221
    
    
    
    Purchase price adjustment
    
    
    (2,221
    )
    
    
    Guaranteed benefits incurred
    
    
    1,127
    
    
    
    491Guaranteed benefits paid
    
    
    (2,307
    )
    
    
    Unlocking
    
    
    1,677
    
    
    
    626Balance, December 31, 2008 (Successor)
    
    $
    497
    
    
    $
    1,117
    MoneyEquity
    
    
    Bond
    
    
    Balanced
    
    
    Market
    
    
    Other
    
    
    Total2008 (Successor)GMDB Only
    
    $
    147,508
    
    
    $
    63,836
    
    
    $
    40,367
    
    
    $
    18,950
    
    
    $
    104
    
    
    $
    270,765GMDB and GMIB
    
    
    64,741
    
    
    
    24,476
    
    
    
    24,035
    
    
    
    4,896
    
    
    
    699
    
    
    
    118,847GMDB and GMWB
    
    
    7,489
    
    
    
    2,277
    
    
    
    4,526
    
    
    
    20
    
    
    
    170
    
    
    
    14,482GMWB only
    
    
    7,949
    
    
    
    2,463
    
    
    
    4,661
    
    
    
    109
    
    
    
    249
    
    
    
    15,431GMIB only
    
    
    3,489
    
    
    
    789
    
    
    
    1,230
    
    
    
    20
    
    
    
    68
    
    
    
    5,596No guaranteed benefit
    
    
    1,725
    
    
    
    440
    
    
    
    1,000
    
    
    
    160
    
    
    
    37
    
    
    
    3,362Total
    
    $
    232,901
    
    
    $
    94,281
    
    
    $
    75,819
    
    
    $
    24,155
    
    
    $
    1,327
    
    
    $
    428,4832007 (Successor)GMDB Only
    
    $
    291,825
    
    
    $
    84,448
    
    
    $
    55,742
    
    
    $
    19,498
    
    
    $
    255
    
    
    $
    451,768GMDB and GMIB
    
    
    116,853
    
    
    
    26,682
    
    
    
    28,442
    
    
    
    3,318
    
    
    
    1,586
    
    
    
    176,881GMDB and GMWB
    
    
    12,903
    
    
    
    2,690
    
    
    
    3,993
    
    
    
    17
    
    
    
    341
    
    
    
    19,944GMWB only
    
    
    14,247
    
    
    
    3,182
    
    
    
    3,437
    
    
    
    184
    
    
    
    497
    
    
    
    21,547GMIB only
    
    
    6,212
    
    
    
    995
    
    
    
    1,086
    
    
    
    
    
    
    
    151
    
    
    
    8,444No guaranteed benefit
    
    
    3,078
    
    
    
    462
    
    
    
    470
    
    
    
    191
    
    
    
    101
    
    
    
    4,302Total
    
    $
    445,118
    
    
    $
    118,459
    
    
    $
    93,170
    
    
    $
    23,208
    
    
    $
    2,931
    
    
    $
    682,886
 Variable Life Contracts Containing Guaranteed Benefits
  71




---



##### 



GMDB LifeBalance, January 1, 2007 (Predecessor)
    
    $
    219Guaranteed benefits incurred
    
    
    13Push down accounting adjustment
    
    
    (232
    )Balance, December 31, 2007 (Successor)
    
    
    
  2008
    
    
    2007SuccessorBalanced
    
    $
    53,440
    
    
    $
    105,742Equity
    
    
    74,664
    
    
    
    78,332Bond
    
    
    12,799
    
    
    
    29,471Money Market
    
    
    29,052
    
    
    
    29,397Total
    
    $
    169,955
    
    
    $
    242,942
 Note 8. Federal Income Taxes
  2008
    
    
    
    2007
    
    
    2006Successor
    
    
    
    PredecessorProvisions for income taxes computed
at Federal statutory rate (35%)
    
    $
    (1,671
    )
    
    
    $
    5,411
    
    
    $
    3,847Increase (decrease) in income taxes resulting from:Dividend received deduction
    
    
    (595
    )
    
    
    
    (407
    )
    
    
    (360
    )Foreign tax credit
    
    
    (72
    )
    
    
    
    (156
    )
    
    
    (61
    )Tax goodwill amortization
    
    
    (128
    )
    
    
    
    
    
    
    
    Other
    
    
    2
    
    
    
    
    
    
    
    
    Federal income tax provision
    
    $
    (2,464
    )
    
    
    $
    4,848
    
    
    $
    3,426Effective tax rate
    
    
    53
    %
    
    
    
    31
    %
    
    
    31
    %
 72




---



##### 



2008
    
    
    
    2007
    
    
    2006Successor
    
    
    
    PredecessorDAC
    
    $
    9,967
    
    
    
    $
    113
    
    
    $
    49Policyholder account balances
    
    
    (3,154
    )
    
    
    
    397
    
    
    
    (740
    )Other
    
    
    111
    
    
    
    
    
    
    
    
    Investment adjustments
    
    
    5,227
    
    
    
    
    357
    
    
    
    27Net operating loss carryforward
    
    
    3,724
    
    
    
    
    
    
    
    
    VOBA
    
    
    (13,815
    )
    
    
    
    
    
    
    
    Intangible assets
    
    
    3,123
    
    
    
    
    
    
    
    
    Deferred sales inducements
    
    
    
    
    
    
    
    195
    
    
    
    434Total
    
    $
    5,183
    
    
    
    $
    1,062
    
    
    $
    (230
    )
  2008
    
    
    2007 (a)SuccessorDeferred tax
assetsDAC
    
    $
    10,155
    
    
    $
    15,502Tax VOBA
    
    
    719
    
    
    
    Investment adjustments
    
    
    5,227
    
    
    
    Net operating loss carryforward
    
    
    3,724
    
    
    
    Intangible assets
    
    
    3,123
    
    
    
    Other
    
    
    111
    
    
    
    Policyholder account balances
    
    
    
    
    
    
    3,286Total deferred tax assets
    
    
    23,059
    
    
    
    18,788Deferred tax liabilitiesBook VOBA
    
    
    14,534
    
    
    
    18,788DAC
    
    
    188
    
    
    
    Policyholder account balances
    
    
    3,154
    
    
    
    Total deferred tax liabilities
    
    
    17,876
    
    
    
    18,788Total deferred tax asset (liability)
    
    $
    5,183
    
    
    $
    
 
 (a)
    
    At December 28, 2007, all deferred tax assets and liabilities associated with the
predecessor were adjusted to zero due to the Section 338 tax election made by AUSA. The
Section 338 election caused the predecessor to treat the acquisition as a sale of its
assets for federal tax purposes which reversed all of the predecessors temporary
differences.    73




---



##### 



Accounting for Uncertainty in
Income Taxes
   Note 9. Reinsurance
    PercentageCeded to
    
    Assumed
    
    
    
    
    
    of amountGross
    
    other
    
    from other
    
    Net
    
    assumed toamount
    
    companies
    
    companies
    
    amount
    
    netLife insurance inforce
    
    $
    453,578
    
    
    $
    20,753
    
    
    $
    1,330
    
    
    $
    434,155
    
    
    
    0.31
    %
   Note 10. Related Party Transactions
   74




---



##### 



75




---



##### 



Note 11. Stockholders Equity and Statutory Accounting Practices
        Note 12. Commitments and Contingencies
  76




---



##### 



Note 13. Segment Information
   2008SuccessorLifeAnnuities
    
    Insurance
    
    TotalNet revenues (a)
    
    $
    15,527
    
    
    $
    8,672
    
    
    $
    24,199Amortization of VOBA
    
    
    6,175
    
    
    
    2,850
    
    
    
    9,025Policy benefits (net of reinsurance)
    
    
    972
    
    
    
    1,653
    
    
    
    2,625Federal income tax expense (benefit)
    
    
    (2,997
    )
    
    
    533
    
    
    
    (2,464
    )Net income (loss)
    
    
    (3,996
    )
    
    
    1,783
    
    
    
    (2,213
    )
 2007PredecessorLifeAnnuities
    
    Insurance
    
    Other
    
    TotalNet revenues (a)
    
    $
    16,130
    
    
    $
    7,252
    
    
    $
    2,144
    
    
    $
    25,526Policy benefits (net of reinsurance)
    
    
    (124
    )
    
    
    2,193
    
    
    
    
    
    
    
    2,069Federal income tax expense
    
    
    3,199
    
    
    
    898
    
    
    
    751
    
    
    
    4,848Net income
    
    
    7,278
    
    
    
    1,940
    
    
    
    1,393
    
    
    
    10,611
 77




---



##### 



2006PredecessorLifeAnnuities
    
    Insurance
    
    Other
    
    TotalNet revenues (a)
    
    $
    13,613
    
    
    $
    8,204
    
    
    $
    1,389
    
    
    $
    23,206Policy benefits (net of reinsurance)
    
    
    961
    
    
    
    1,647
    
    
    
    
    
    
    
    2,608Federal income tax expense
    
    
    2,139
    
    
    
    801
    
    
    
    486
    
    
    
    3,426Net income
    
    
    4,769
    
    
    
    1,892
    
    
    
    903
    
    
    
    7,564
 
 (a)
    
    Net revenues include total net revenues net of interest credited to policyholder
liabilities.  TotalTotal
    
    
    PolicyholderAssets
    
    
    Liabilities2008Annuities
    
    $
    550,783
    
    
    $
    80,497Life Insurance
    
    
    319,057
    
    
    
    76,533Total
    
    $
    869,840
    
    
    $
    157,0302007Annuities
    
    $
    857,543
    
    
    $
    87,180Life Insurance
    
    
    368,276
    
    
    
    80,984Total
    
    $
    1,225,819
    
    
    $
    168,164
 78




---



##### 



SIGNATURES

Pursuant to the requirements
of Section 13 or 15(d) 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.

|                     |  |                                                   |                                                      
|-------------------- |  | ------------------------------------------------- | -----------------------------------------------------
|                     |  | ML Life Insurance Company of New York(Registrant)
|                    
|Date:
March 26, 2009 |  | By:                                               | *                                                    
|                     |  |                                                   | John T. Mallett
Treasurer and Chief Financial Officer

Pursuant to the requirements of the
Securities Exchange Act of 1934, this Report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.

Signatures
    
    Title
    
    Date*

Lon J. Olejniczak
    
    Director and President
    
    March 26, 2009*

Karen Alvarado
    
    Director and
Assistant Vice
President
    
    March 26, 2009*

William Brown, Jr.
    
    Director
    
    March 26, 2009*

William L. Busler
    
    Director
    
    March 26, 2009*

Frank A. Camp
    
    Director and Secretary
    
    March 26, 2009*

Robert F. Colby
    
    Director
    
    March 26, 2009*

Robert R. Frederick
    
    Director and Senior
Vice President
    
    March 26, 2009*

Steven E. Frushtick
    
    Director
    
    March 26, 2009*

John T. Mallett
    
    Director, Treasurer
and Chief Financial
Officer
    
    March 26, 2009*

Ronald F. Mosher
    
    Director
    
    March 26, 2009*

Peter P. Post
    
    Director
    
    March 26, 2009*

Cornelis H. Verhagen
    
    Director
    
    March 26, 2009*

Ronald L. Ziegler
    
    Director and Senior
Vice President
    
    March 26, 2009*

Eric J. Martin
    
    Vice President and
Corporate Controller
    
    March 26, 2009/s/ Darin D. Smith

Darin D. Smith
    
    Vice President and
Assistant Secretary
    
    March 26, 2009





|     |  |                                                                  
|---- |  | -----------------------------------------------------------------
|*By: |  | Darin D. Smith  Attorney-in-Fact pursuant to Powers of Attorney.

79



---



##### 



SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.

|                                                                                                                                      
|--------------------------------------------------------------------------------------------------------------------------------------
|No annual report covering the Registrants last fiscal year or proxy
material has been or will be sent to Registrants security holder

80



---



##### 



EXHIBIT INDEX

|            |  |                                                                                  |  |                                                                                                                                                                                                               
|----------- |  | -------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                      |  | Location                                                                                                                                                                                                      
|            |  |                                                                                  |  |                                                                                                                                                                                                               
|3.1         |  | Certificate of Amendment of the Charter of
ML Life Insurance Company of New York |  | Incorporated by reference to Exhibit
6(a)(ii) to Post-Effective Amendment No.
10 to ML of New York Variable Annuity
Account As registration statement on Form
N-4, File No. 33-43654, filed December 9,
1996.
|3.2         |  | By-Laws of ML Life Insurance Company of
New York                                 |  | Incorporated by reference to Exhibit 6(b)
to Post-Effective Amendment No. 10 to ML
of New York Variable Annuity Account As
registration statement on Form N-4, File
No. 33-43654, filed December 9, 1996.    
|4.1         |  | Modified Guaranteed Annuity Contract                                             |  | Incorporated by reference to Exhibit 4(a)
to Pre-Effective Amendment No. 1 to the
Registrants registration statement on
Form S-1, File No. 33-34562, filed October
16, 1990.                                 
|4.2         |  | Modified Guaranteed Annuity Contract
Application                                 |  | Incorporated by reference to Exhibit 4(b)
to Pre-Effective Amendment No. 1 to the
Registrants registration statement on
Form S-1, File No. 33-34562, filed October
16, 1990.                                 
|4.3         |  | Qualified Retirement Plan Endorsement                                            |  | Incorporated by reference to Exhibit 4(c)
to Pre-Effective Amendment No. 1 to the
Registrants registration statement on
Form S-1, File No. 33-34562, filed
October 16, 1990.                                 
|4.4         |  | IRA Endorsement                                                                  |  | Incorporated by reference to Exhibit 4(d)
to Pre-Effective Amendment No. 1 to the
Registrants registration statement on
Form S-1, File No. 33-34562, filed October
16, 1990.                                 

E-1



---



##### 



|     |  |                                                                                                                                                                               |  |                                                                                                                                                                                                          
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.5  |  | Company Name Change Endorsement                                                                                                                                               |  | Incorporated by reference to
        Exhibit 4(e) to Post-Effective Amendment No. 3 to the Registrants
        registration statement on Form S-1, File No. 33-34562, filed
        March 30, 1992.     
|4.6  |  | IRA Endorsement, MLNY009                                                                                                                                                      |  | Incorporated by reference to
        Exhibit 4(d)(2) to Post-Effective Amendment No. 1 to the Registrants
        registration statement on Form S-1, File No. 33-60288, filed
        March 31, 1994.  
|4.7  |  | Modified Guaranteed Annuity
        Contract
        MLNY-AY-991/94                                                                                                           |  | Incorporated by reference to
        Exhibit 4(a)(2) to Post-Effective Amendment No. 3 to the Registrants
        registration statement on Form S-1, File No. 33-60288, filed
        December 7, 1994.
|4.8  |  | Qualified Retirement Plan
        Endorsement 
        MLNY-AYQ-991/94                                                                                                        |  | Incorporated by reference to
        Exhibit 4(c)(2) to Post-Effective Amendment No. 3 to the Registrants
        registration statement on Form S-1, File No. 33-60288, filed
        December 7, 1994.
|10.1 |  | General Agency Agreement between
        Royal Tandem Life Insurance Company and Merrill Lynch Life Agency Inc.                                                               |  | Incorporated by reference to
        Exhibit 10(a) to Pre-Effective Amendment No. 1 to the Registrants
        registration statement on Form S-1, File No. 33-34562, filed
        October 16, 1990.   
|10.2 |  | Investment Management Agreement
        by and between Royal Tandem Life Insurance Company and Equitable Capital
        Management Corporation                               |  | Incorporated by reference to
        Exhibit 10(b) to Pre-Effective Amendment No. 1 to the Registrants
        registration statement on Form S-1, File No. 33-34562, filed
        October 16, 1990.   
|10.3 |  | Shareholders Agreement
        by and among The Equitable Life Assurance Society of the United States
        and Merrill Lynch & Co., Inc. and Tandem Financial Group, Inc. |  | Incorporated by reference to
        Exhibit 10(c) to Pre- Effective Amendment No. 1 to the Registrants
        registration statement on Form S-1, File No. 33-34562, filed
        October 16, 1990.  

E-2



---



##### 



|      |  |                                                                                                                                                                                       |  |                                                                                                                                                                               
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.4  |  | Service Agreement by and between Royal
Tandem Life Insurance Company and Tandem
Financial Group, Inc.                                                                                 |  | Incorporated by reference to Exhibit 10(d)
to Pre-Effective Amendment No. 1 to the
Registrants registration statement on
Form S-1, File No. 33-34562, filed October
16, 1990.
|10.5  |  | Service Agreement by and between Tandem
Financial Group, Inc. and Merrill Lynch
&
Co., Inc.                                                                                           |  | Incorporated by reference to Exhibit 10(e)
to Pre-Effective Amendment No. 1 to the
Registrants registration statement on
Form S-1, File No. 33-34562, filed October
16, 1990.
|10.6  |  | Form of Investment Management Agreement by
and between Royal Tandem Life Insurance
Company and Merrill Lynch Asset
Management, Inc.                                                   |  | Incorporated by reference to Exhibit 10(f)
to Post-Effective Amendment No. 1 to the
Registrants registration statement on
Form S-1, File No. 33-34562, filed March
7, 1991.  
|10.7  |  | Assumption Reinsurance Agreement between
Merrill Lynch Life Insurance Company,
Tandem Insurance Group, Inc. and Royal
Tandem Life Insurance Company and Family
Life Insurance Company |  | Incorporated by reference to Exhibit 10(g)
to Post-Effective Amendment No. 3 to the
Registrants registration statement on
Form S-1, File No. 33-34562, filed March
30, 1992. 
|10.8  |  | Indemnity Agreement between ML Life
Insurance Company of New York and Merrill
Lynch Life Agency, Inc.                                                                                 |  | Incorporated by reference to Exhibit 10(h)
to Post-Effective Amendment No. 3 to the
Registrants registration statement on
Form S-1, File No. 33-34562, filed March
30, 1992. 
|10.9  |  | Amended General Agency Agreement between
ML Life Insurance Company of New York and
Merrill Lynch Life Agency, Inc.                                                                    |  | Incorporated by reference to Exhibit 10(i)
to Post-Effective Amendment No. 3 to the
Registrants registration statement on
Form S-1, File No. 33-34562, filed March
30, 1992. 
|10.10 |  | Amended Management Agreement between ML
Life Insurance Company of New York and
Merrill Lynch Asset Management, Inc.                                                                   |  | Incorporated by reference to Exhibit 10(j)
to the Registrants registration statement
on Form S-1, File No. 33-60288, filed March
30, 1993.                                   

E-3



---



##### 



|      |  |                                                                                                                                                                                      |  |                                                                                                                                                                          
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.11 |  | Mortgage Loan Servicing Agreement between
ML Life Insurance Company of New York and
Merrill Lynch & Co., Inc.                                                                        |  | Incorporated by reference to Exhibit 10(k)
to the Registrants registration statement
on Form S-1, File No. 33-60288, filed
March 29, 1995.                              
|10.12 |  | Master Distribution Agreement between Merrill
Lynch Insurance Group, Inc., Merrill Lynch & Co., Inc., and AEGON USA, Inc.                                                            |  | Incorporated by reference to Exhibit 10.1 to
Registrants Current Report on Form 8-K, File No. 33-34562, filed January 4, 2008.                                          
|     
|10.13 |  | Non-Affiliated Broker-Dealer Wholesaling
Agreement between ML Life Insurance Company of New York, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, and Transamerica Capital, Inc. |  | Incorporated by reference to Exhibit 10.13 to the
Registrants Annual Report on Form 10-K, File Nos. 33-34562, 33-60288, 333-48983, and 333-133224,
filed March 27, 2008.
|     
|10.14 |  | Selling Agreement between ML Life Insurance Company of New York, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Merrill Lynch Life Agency, Inc.                             |  | Incorporated by reference to Exhibit 10.14 to the
Registrants Annual Report on Form 10-K, File Nos. 33-34562, 33-60288, 333-48983, and 333-133224,
filed March 27, 2008.
|     
|10.15 |  | Keep Well Agreement between AEGON USA And ML Life Insurance Company of New York                                                                                                      |  | Incorporated by reference to Exhibit 10.15 to the
Registrants Annual Report on Form 10-K, File Nos. 33-34562, 33-60288, 333-48983, and 333-133224,
filed March 27, 2008.
|     
|10.16 |  | Purchase Agreement between Merrill Lynch
Insurance Group, Inc., Merrill Lynch & Co., Inc., and AEGON USA, Inc.                                                                       |  | Incorporated by reference to Exhibit 10.1 to
Registrants Current Report on Form 8-K, File No. 33-34562, filed August 17, 2007.                                          
|     
|10.17 |  | First Amendment to Purchase Agreement between Merrill
Lynch Insurance Group, Inc., Merrill Lynch & Co., Inc., and AEGON USA, Inc.                                                    |  | Incorporated by reference to Exhibit 10.1 to
Registrants Current Report on Form 8-K, File No. 33-34562, filed January 4, 2008.                                          
|     
|10.18 |  | Principal Underwriting Agreement between
Transamerica Capital, Inc. and ML Life Insurance
Company of New York.                                                                       |  | Exhibit 10.18                                                                                                                                                            
|     
|23.1  |  | Written Consent of Deloitte & Touche LLP, independent registered public accounting firm                                                                                              |  | Exhibit 23.1                                                                                                                                                             
|     
|23.2  |  | Written Consent of
Ernst & Young LLP, independent registered public accounting firm                                                                                                  |  | Exhibit 23.2                                                                                                                                                             
|     
|24.1  |  | Powers of Attorney for Lon K. Olejniczak,
Robert R. Frederick, John T. Mallett, Ronald L. Ziegler, Eric J. Martin and Robert F. Colby.                                               |  | Incorporated by reference to Exhibit 24.1 to the
Registrants Annual Report on Form 10-K, File Nos. 33-34562, 33-60288, 333-48983, and 333-133224,
filed March 27, 2008. 
|     
|24.2  |  | Powers of Attorney                                                                                                                                                                   |  | Exhibit 24.2                                                                                                                                                             
|     
|31.1  |  | Certification by the Chief Executive Officer
pursuant to Rule 15d-14(a).                                                                                                             |  | Exhibit 31.1                                                                                                                                                             
|     
|31.2  |  | Certification by the Chief Financial Officer
pursuant to Rule 15d-14(a).                                                                                                             |  | Exhibit 31.2                                                                                                                                                             
|     
|32.1  |  | Certification by the Chief Executive Officer
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.                               |  | Exhibit 32.1                                                                                                                                                             
|     
|32.2  |  | Certification by the Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.                               |  | Exhibit 32.2                                                                                                                                                             

E-4



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##### 



EXHIBIT INDEX
 10.18
    
    Principal Underwriting Agreement between Transamerica Capital, Inc. and ML Life Insurance
Company of New York.23.1
    
    Written Consent of Deloitte & Touche LLP, independent registered public accounting firm23.2
    
    Written Consent of Ernst & Young LLP, independent registered public accounting firm24.2
    
    Powers of Attorney31.1
    
    Certification by the Chief Executive Officer pursuant to Rule 15d-14(a).31.2
    
    Certification by the Chief Financial Officer pursuant to Rule 15d-14(a).32.1
    
    Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.