<PAGE>
 
                                    FORM 10-Q



                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934



For Quarter Ended September 30, 1997             Commission File Number 33-85988
                  ------------------                                    --------

                           C.M. LIFE INSURANCE COMPANY
                           ---------------------------
             (Exact name of registrant as specified in its charter)


           Connecticut                                    06-1041383
           -----------                                    ----------
   (State or other jurisdiction of                     (I.R.S. Employer
  incorporation or organization)                       Identification No.)


                 140 Garden Street, Hartford, Connecticut 06154
                 ----------------------------------------------
                    (Address of principal executive offices)
                                   (Zip Code)


                                 (860) 987-6500
                                 --------------
              (Registrant's telephone number, including area code)


                                      None
                                      ----
                     (Former name, former address and former
                   fiscal year, if changed since last report)





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.

                                 (1) Yes  X  No
                                         ---    --- 
                                 (2) Yes  X  No
                                         ---    --- 


Registrant has 12,500 shares of common stock outstanding on September 30, 1997,
all of which are owned by Massachusetts Mutual Life Insurance Company.

The Registrant meets the conditions set forth in General Instruction (1) (a) and
(b) of Form 10Q and is therefore filing this form with the reduced disclosure
format.
<PAGE>
 
                           C.M. LIFE INSURANCE COMPANY


                                      INDEX


<TABLE> 
<S>                                                                                        <C> 
PART I:     Financial Information
            ---------------------
          
            Item 1:      Condensed Financial Statements:
          
                            Statutory Statement of Financial Position -
                              September 30, 1997 and December 31, 1996...................   3
          
                            Statutory Statement of Income -
                              Three Months Ended
                              September 30, 1997 and 1996................................   4
          
                            Statutory Statement of Income -
                              Nine Months Ended
                              September 30, 1997 and 1996................................   5
          
                            Statutory Statement of Shareholder's Equity -
                              Nine Months Ended
                              September 30, 1997 and 1996................................   6
          
                            Statutory Statement of Cash Flows -
                              Nine Months Ended
                              September 30, 1997 and 1996................................   7
          
                            Condensed Notes to Financial Statements......................   8
          
            Item 2:      Management's Discussion and Analysis of
                         Financial Condition and Results of
                         Operations......................................................  10
          
            Item 3:      Not Applicable
          
PART II:    Other Information
            -----------------
          
            Item 1:         None.
          
            Item 2:         Not applicable.
          
            Item 3:         Not applicable.
          
            Item 4:         Not applicable.
          
            Item 5:         None.
          
            Item 6:         Exhibits.....................................................  17
</TABLE> 

                                       2
<PAGE>
 
                           C.M. LIFE INSURANCE COMPANY

              STATUTORY STATEMENT OF FINANCIAL POSITION (Unaudited)


<TABLE> 
<CAPTION> 
                                                                      September 30,                December 31,
                                                                           1997                        1996
                                                                          ------                      ------
                                                                             (In Thousands Except for
                                                                                 Share Information)
<S>                                                                   <C>                          <C> 
Assets:

Bonds                                                                   $  687,384                 $  736,524
Common stocks                                                               64,931                     55,642
Mortgage loans                                                              87,590                     33,791
Policy loans                                                               139,305                    132,942
Receivable for investments sold                                             18,401                          0
Cash and short-term instruments                                             78,980                     63,688
                                                                        ----------                 ----------
       Total invested assets                                             1,076,591                  1,022,587

Investment income and insurance amounts receivable                          27,167                     32,783
Transfer due from separate account                                          32,207                     24,278
Federal income tax receivable                                                    0                      7,094
Other assets                                                                    76                         87
Separate account assets                                                  1,053,890                    779,742
                                                                        ----------                 ----------

                                                                        $2,189,931                 $1,866,571
                                                                        ==========                 ==========
Liabilities:

Policyholders' reserves and funds                                       $  928,818                 $  907,492
Policy claims and other benefits                                             6,138                      3,843
Payable to parent                                                           15,752                      9,654
Federal income tax payable                                                  10,174                          0
Asset valuation reserve                                                     22,988                     18,475
Investment reserves                                                          4,150                      3,329
Other liabilities                                                           27,823                     34,292
Separate account reserves and liabilities                                1,053,890                    779,742
                                                                        ----------                 ----------

                                                                         2,069,733                  1,756,827
                                                                        ----------                 ----------

Shareholder's equity:

Common stock, $200 par value
       50,000 shares authorized
       12,500 shares issued and outstanding                                  2,500                      2,500
Paid-in capital and contributed surplus                                     43,759                     43,759
Retained earnings                                                           73,939                     63,485
                                                                        ----------                 ----------
                                                                           120,198                    109,744
                                                                        ----------                 ----------
                                                                        $2,189,931                 $1,866,571
                                                                        ==========                 ==========
</TABLE> 

              The accompanying notes are an integral part of these
                        condensed financial statements.

                                       3
<PAGE>
 
                           C.M. LIFE INSURANCE COMPANY

                    STATUTORY STATEMENT OF INCOME (Unaudited)

<TABLE> 
<CAPTION> 
                                                              Three Months Ended September 30,
                                                         
                                                                     1997             1996
                                                                    -----            -----
                                                         
                                                                         (In Thousands)
<S>                                                                <C>              <C> 
Income:                                                  
                                                         
Premium income                                                     $ 78,176         $ 77,313
Net investment and other income                                      18,096           13,632
                                                                   --------         --------
                                                         
                                                                     96,272           90,945
                                                                   --------         --------
                                                         
Benefits and expenses:                                   
                                                         
Policy benefits and payments                                         23,347           26,979
Addition to policyholder's reserves, funds               
  and separate accounts                                              36,188           50,688
Operating expenses                                                    9,558           12,699
Commissions                                                           7,891            8,014
State taxes, licenses and fees                                          453              399
                                                                  ---------        ---------
                                                                     77,437           98,779
Net gain (loss) from operations before federal           
  income taxes                                                       18,835           (7,834)
                                                         
Federal income taxes (benefit)                                       10,407           (1,984)
                                                                  ---------         ---------
Net gain (loss) from operations                                       8,428           (5,850)
                                                         
Net realized capital gain (loss)                                        345           (1,424)
                                                                  ---------         ---------
                                                         
Net income (loss)                                                  $  8,773         $ (7,274)
                                                                   ========         =========
</TABLE> 

              The accompanying notes are an integral part of these
                         condensed financial statements.

                                       4
<PAGE>
 
                           C.M. LIFE INSURANCE COMPANY

                    STATUTORY STATEMENT OF INCOME (Unaudited)


<TABLE> 
<CAPTION> 
                                                                               Nine Months Ended September 30,

                                                                                      1997             1996
                                                                                     ------           ------

                                                                                        (In Thousands)
<S>                                                                                 <C>              <C> 
Income:

Premium income                                                                      $ 233,038        $ 230,896
Net investment and other income                                                        52,384           53,331
                                                                                   ----------       ----------

                                                                                      285,422          284,227
                                                                                    ---------        ---------

Benefits and expenses:

Policy benefits and payments                                                           76,884           72,788
Addition to policyholder's reserves, funds
  and separate accounts                                                               123,780          158,059
Operating expenses                                                                     30,206           24,898
Commissions                                                                            20,615           16,617
State taxes, licenses and fees                                                          2,637            2,496
                                                                                   ----------       ----------
                                                                                      254,122          274,858
Net gain from operations before federal
  income taxes                                                                         31,300            9,369

Federal income taxes                                                                   20,459            5,561
                                                                                    ---------        ---------
Net gain from operations                                                               10,841            3,808

Net realized capital gain                                                                 330              846
                                                                                  -----------       ----------

Net income                                                                         $   11,171        $   4,654
                                                                                   ==========        =========

</TABLE> 

              The accompanying notes are an integral part of these
                        condensed financial statements.

                                       5
<PAGE>
 
                           C.M. LIFE INSURANCE COMPANY

       STATUTORY STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY (Unaudited)


<TABLE> 
<CAPTION> 
                                                                                   Nine Months Ended September 30,

                                                                                        1997            1996
                                                                                       ------          ------

                                                                                           (In Thousands)
<S>                                                                                   <C>             <C> 
Shareholder's equity, beginning of year                                               $109,744        $113,199
Increases (decreases) due to:
Net income                                                                              11,171           4,654
Change in asset valuation and investment
  reserves                                                                              (5,334)           (982)
Change in non-admitted assets and other                                                   (919)           (533)
Net changes in unrealized capital gain                                                   5,536           1,038
                                                                                      --------        --------

                                                                                        10,454           4,177
                                                                                      --------        --------

Shareholder's equity, end of period                                                   $120,198        $117,376
                                                                                      ========        ========
</TABLE> 

              The accompanying notes are an integral part of these
                        condensed financial statements.

                                       6
<PAGE>
 
                           C.M. LIFE INSURANCE COMPANY

                  STATUTORY STATEMENT OF CASH FLOWS (Unaudited)

<TABLE> 
<CAPTION> 
                                                                                 Nine Months Ended September 30,

                                                                                       1997             1996
                                                                                       ----             ----

                                                                                          (In Thousands)
<S>                                                                                 <C>              <C>   
Operating activities:

    Net income                                                                      $  11,171        $   4,654
    Additions to policyholder's reserves, funds,
      and other benefits                                                               23,621           24,894
    Net realized capital gain                                                            (330)            (846)
    Change in payable to parent                                                         6,098           26,370
    Other changes                                                                       4,113           (2,651)
                                                                                    ---------        ---------

    Net cash provided by operating activities                                          44,673           52,421

Investing activities:
    Loans and purchases of investments                                               (293,298)        (114,521)
    Sales or maturities of investments and
      receipts from repayment of loans                                                251,119          114,315
                                                                                    ---------        ---------

    Net cash used in investing activities                                             (42,179)            (206)

Financing and miscellaneous activities:
    Changes in remittances and items not allocated, and other                          12,798           32,794
                                                                                    ---------        ---------

Increase in cash and short-term investments                                            15,292           85,009

Cash and short-term investments, beginning of
  year                                                                                 63,688           15,069
                                                                                    ---------        ---------

Cash and short-term investments, end of period                                      $  78,980        $ 100,078
                                                                                    =========        =========
</TABLE> 

              The accompanying notes are an integral part of these
                        condensed financial statements.

                                       7
<PAGE>
 
                           C.M. Life Insurance Company
                          Notes to Financial Statements
                               September 30, 1997
                                   (Unaudited)


1.      General:
        --------

        C.M. Life Insurance Company ("C.M. Life"), 140 Garden Street, Hartford,
        Connecticut, 06154, is a stock life insurance company. It was chartered
        by a Special Act of the Connecticut General Assembly on April 25, 1980.
        It is principally engaged in the sale of life insurance and annuities,
        primarily flexible premium universal life insurance and variable annuity
        products, and is licensed to sell life insurance and annuities in Puerto
        Rico, the District of Columbia and all 50 states except New York.
        Effective March 1, 1996, C.M. Life became a wholly owned stock life
        insurance subsidiary of Massachusetts Mutual Life Insurance Company
        ("MassMutual") when the operations of C.M. Life's former parent,
        Connecticut Mutual Life Insurance Company were merged with and into
        MassMutual.

        In the opinion of C.M. Life these financial statements contain all
        adjustments, consisting of only normal recurring adjustments, necessary
        to present fairly its financial position in accordance with statutory
        accounting principles, as of September 30, 1997 and December 31, 1996,
        the results of its operations for the three month and nine month periods
        ended September 30, 1997 and 1996, and changes in shareholder's equity
        and its cash flows for the periods ended September 30, 1997 and 1996.

        The accompanying unaudited interim financial statements have been
        prepared in accordance with the instructions to Form 10-Q and the rules
        and regulations of the Securities and Exchange Commission. These
        financial statements have been prepared under the presumption that users
        of the interim financial information have either read or have access to
        C.M. Life's audited financial statements for the year ended December 31,
        1996. Accordingly, footnote disclosures, which would substantially
        duplicate the disclosures contained in C.M. Life's December 31, 1996
        audited financial statements, have been omitted from these interim
        financial statements. Certain information and footnote disclosures
        normally included in financial statements prepared in accordance with
        statutory accounting principles have been condensed or omitted pursuant
        to instructions, rules and regulations. Although C.M. Life believes that
        the disclosures are adequate to make the information presented not
        misleading, it is suggested that these unaudited interim financial
        statements be read in conjunction with the audited financial statements
        and the notes thereto included in C.M. Life's annual report on Form 10-K
        for the year ended December 31, 1996.

        The accompanying statutory financial statements, except as to form, have
        been prepared in conformity with the practices of the National
        Association of Insurance Commissioners and the accounting practices
        prescribed or permitted by the Insurance Department of the State of
        Connecticut ("statutory accounting practices") which prior to 1996 were
        considered to be in conformity with generally accepted accounting
        principles ("GAAP"). In 1993, the Financial Accounting Standards Board
        ("FASB") issued interpretation No. 40 ("Fin. 40"), "Applicability of
        Generally Accepted Accounting Principles to Mutual Life Insurance and
        Other Enterprises", which clarified that wholly owned stock life
        insurance subsidiaries of mutual life insurance companies issuing
        financial statements described as prepared in conformity with GAAP after
        1995 are required to apply all applicable GAAP pronouncements in
        preparing those financial statements. In January 1995, the FASB issued
        Statement No. 120 ("SFAS 120"), "Accounting and Reporting by Mutual Life
        Insurance Enterprises and by Insurance Enterprises for Certain
        Long-Duration Participating Contracts," which among other things,
        extended the applicability of certain FASB statements to mutual life
        insurance companies and deferred the effective date of Fin. 40 to
        financial statements issued or reissued after 1996.

        The accompanying statutory financial statements are different in some
        respects from GAAP financial statements. The more significant
        differences are as follows: (a) acquisition costs, such as commissions
        and other costs in connection with acquiring new business, are charged
        to current operations as incurred, whereas GAAP would require these
        expenses to be capitalized and recognized over the life of the policies;
        (b) policy reserves are based upon statutory mortality and interest
        requirements without consideration of withdrawals, whereas GAAP reserves
        would be based upon reasonably conservative estimates of mortality,
        morbidity, interest and withdrawals; (c) bonds are generally carried at
        amortized cost whereas GAAP would value bonds at fair value and (d)
        deferred income taxes are not provided for book-tax timing differences
        whereas GAAP would record deferred income taxes. Management has not yet
        completed GAAP financial statements, but believes that shareholder's
        equity based upon GAAP will be higher than shareholder's equity based
        upon statutory accounting practices.

                                       8
<PAGE>
 
        The preparation of financial statements requires management to make
        estimates and assumptions that affect the reported amounts of assets and
        liabilities, as well as disclosures of contingent assets and
        liabilities, at the date of the financial statements. Management must
        also make estimates and assumptions that affect the amounts of revenues
        and expenses during the reporting period. Future events, including
        changes in the levels of mortality, morbidity, interest rates and asset
        valuations, could cause actual results to differ from the estimates used
        in the financial statements.


2.      Related Party Transactions:
        ---------------------------

        MassMutual and C.M. Life have an agreement whereby MassMutual, for a
        fee, will furnish C.M. Life, as required, operating facilities, human
        resources, computer software development and managerial services.
        Investment and administrative services are provided to C.M. Life
        pursuant to a management services agreement with MassMutual. Fees
        incurred under the terms of the agreement were $9,873 thousand and
        $30,941 thousand for the three and nine month periods ended September
        30, 1997 and $12,615 thousand and $25,187 thousand for the same periods
        in 1996. Similar arrangements were in place with Connecticut Mutual Life
        Insurance Company, C.M. Life's former parent, prior to its merger with
        MassMutual.

        C.M. Life cedes a portion of its life insurance business to MassMutual 
        and other insurers in the normal course of business. C.M. Life's
        retention limit per individual insured is $4,000 thousand and the
        portion of the risk exceeding the retention limit is reinsured with
        other insurers. C.M. Life is contingently liable with respect to ceded
        reinsurance in the event any reinsurer is unable to fulfill its
        contractual obligations.

        C.M. Life has a modified coinsurance quota-share reinsurance agreement
        with MassMutual whereby C.M. Life cedes 50% of the premiums on certain
        universal life policies issued in 1985 and 75% of the premiums on
        certain universal life policies with issue dates on or after January 1,
        1986. In return, MassMutual pays C.M. Life a stipulated expense
        allowance, death benefits, surrender charges, and a modified coinsurance
        reserve adjustment. Reserves for payment of future benefits for the
        ceded policies are retained by C.M. Life.


3.      Net Investment Income
        ---------------------

<TABLE> 
<CAPTION> 
                                                                Three Months Ended                  Nine Months Ended
                                                                   September 30,                      September 30,
                                                               1997            1996              1997               1996
                                                               ----            ----              ----               ----
                                                                                   (in Thousands)
<S>                                                           <C>            <C>                <C>                <C> 
Gross Investment Income:
 Bonds                                                        $13,034        $12,963            $40,397            $41,168
 Common and preferred stock                                       286              0              1,114                292
 Mortgage loans                                                 1,307            333              3,181              3,203
 Policy loans                                                   2,736          2,523              8,036              7,513
 Cash and short-term investments                                  694          1,310              2,079              2,567
 Other                                                             59            560                 53                395
                                                              -------        -------            -------            -------
 Total gross investment income                                 18,116         17,689             54,860             55,138
Less: investment expenses                                         322            297                883                458
                                                              -------        -------            -------            -------
Net investment income                                         $17,794        $17,392            $53,977            $54,680
                                                              =======        =======            =======            =======
</TABLE> 

4.      Recent Accounting Pronouncements
        --------------------------------

        In February 1997, the Financial Accounting Standards Board ("FASB")
        issued Statement of Financial Accounting Standards No. 129,
        "Disclosure of information about Capital Structure", and is effective
        for financial statements issued for periods ending after December 15,
        1997. The adoption of this pronouncement is expected to have no impact
        on the financial statements of C. M. Life.

                                       9
<PAGE>
 
        In June of 1997, the FASB issued two pronouncements, Statement of
        Financial Accounting Standards No. 130, "Reporting Comprehensive
        Income," and No. 131, "Disclosures about Segments of an Enterprise and
        Related Information." and are effective for financial statements issued
        for periods beginning after December 15, 1997. The adoption of these
        pronouncements is expected to impact the presentation of financial
        information only.


5.      Other
        -----

        Certain prior year amounts have been reclassed to conform to 1997
        presentation.



                                     Item 2.
                Management's Discussion and Analysis of Financial
                       Condition and Results of Operations

        Results of Operations
        ---------------------
        For the Three Months Ended September 30, 1997
        ---------------------------------------------
               Compared to the Three Months Ended September 30, 1996
               -----------------------------------------------------

        For the three months ended September 30, 1997, C.M. Life had net income
        of $8,773 thousand, as compared with a net loss of $7,274 thousand for
        the same period in 1996. The increase in net income of $16,047 thousand
        is attributable to the implementation of a new reinsurance agreement,
        increased fee income due to growth of separate accounts, an increase in
        realized capital gains, a decrease in benefit payments and a decrease in
        operating expenses and commissions partially offset by an increase in
        federal income taxes.

        In September 1996, C.M. Life entered into a yearly renewal term
        quota-share reinsurance agreement (YRT agreement) whereby it cedes 90%
        of the second and later years premiums on certain Universal Life
        policies. In return the reinsurer pays C.M. Life a stipulated expense
        allowance and death benefits. Reserves for payment of future benefits
        for the ceded policies are held by the reinsurer, on a quota-share
        basis.

        Premium income, net of reinsurance ceded, increased $863 thousand to
        $78,176 thousand for the three months ended September 30, 1997 from
        $77,313 thousand for the same period during 1996. The 1.1% increase in
        premiums is attributable to a decrease in variable annuity products of
        8.8% from the prior year, offset by 25.9% increase in Universal Life
        premiums. The result is a change in C.M. Life's mix of business in which
        Universal and other life products represented 36.0% of total premium
        income during 1997 compared to 29.0% for 1996, while annuity products
        represented 64.0% during 1997 compared to 71.0% in 1996.

        Variable annuity premiums have declined due to lower sales through the
        brokerage distribution channel and a shift towards sales of variable
        annuity products issued by MassMutual and C.M. Life's affiliate MML
        Baystate Insurance Company.

        The following table sets forth premium information for C.M. Life's
        products.

<TABLE> 
<CAPTION> 
                                                               Three Months Ended September 30,
                                                             1997                             1996
                                                             ----                             ----
                                                                         (In Thousands)
        <S>                                      <C>                <C>           <C>                 <C>  
        Premium income
            Universal and other life             $      27,824      36%           $      22,093       29%
            Annuities                                   50,352      64%                  55,220       71%
                                                 -------------                    -------------
        Total                                    $      78,176                    $      77,313
                                                 =============                    =============
</TABLE> 

                                      10
<PAGE>
 
       Net investment and other income increased $4,466 thousand to $18,096
       thousand in 1997 from $13,632 thousand in 1996. Other income which is
       comprised of reinsurance expense and commission allowances and modified
       co-insurance reserve adjustment increased by $4,062 thousand. The
       increase is primarily attributable to a year to date adjustment of the
       modified co-insurance reserve adjustment. Net investment income increased
       by $402 thousand which is attributable to an increase in invested assets
       partially offset by a decline in the gross portfolio yield. The decline
       in portfolio yield is attributable to a declining interest rate
       environment; over time the portfolio yield is reduced as funds from
       maturing investments are reinvested at lower prevailing interest rates.

       Policy benefits and payments decreased $3,632 thousand to $23,347
       thousand in 1997 from $26,979 thousand in 1996 primarily due to a decline
       in death benefits, net of reinsurance of $3,714. The level of death
       benefits is within expectations and is not indicative of a trend.

       Addition to policyholder reserves, funds and separate accounts decreased
       $14,500 thousand to $36,188 thousand in 1997 from $50,688 thousand in
       1996. The addition to policyholder reserves, funds and separate accounts
       is lower primarily due to the decrease in variable annuity premiums and
       the implementation of the YRT agreement, effective starting in September
       1996, which provides a reserve credit for certain Universal Life
       policies, and increased fee income from separate accounts.

       Acquisition costs and operating expenses decreased $3,264 thousand to
       $17,449 thousand in 1997 from $20,713 thousand in 1996. The decrease is
       primarily due to a nonrecurring adjustment in the third quarter of 1996
       whereby the calculation of expenses due to MassMutual under the
       management services agreement was modified. The decrease is also
       attributable to the modification of C.M. Life's variable annuity
       underwriting agreements with G.R. Phelps and Co., Inc. ("G.R. Phelps")
       and MML Distributors, both affiliated companies. Effective March 1, 1996,
       C.M. Life modified its underwriting agreements such that it would pay all
       future commissions relating to variable annuity contracts and would also
       retain rights to all future contract fees and charges related to these
       contracts. Prior to the contract modification, G.R. Phelps and MML
       Distributors paid variable annuity commissions in exchange for the rights
       to future contract fees and charges related to these contracts. C.M. Life
       expects the future revenue on these contracts to exceed acquisition
       costs.

       Federal income tax expense increased $12,391 thousand to $10,407 thousand
       from tax benefit of $1,984 thousand as a result of increased taxable
       income. Taxable income increased $31,119 thousand to $25,430 thousand in
       1997 from a tax loss of $5,689 thousand in 1996. The increase in taxable
       income is primarily attributable to the difference between statutory and
       tax reserves basis and other book tax differences include the timing of
       the deductibility of acquisition costs.

       Realized capital gains of $345 thousand were recorded for the three 
       months ended September 30, 1997 as compared to realized capital losses
       of $1,424 thousand for the same period in 1996, an increase of $1,769
       thousand from the prior year.

       Results of Operations
       ---------------------
       For the Nine Months Ended September 30, 1997
       --------------------------------------------
           Compared to the Nine Months Ended September 30, 1996
           ----------------------------------------------------

       For the Nine months ended September 30, 1997, C.M. Life had net income of
       $11,171 thousand, as compared with net income of $4,654 thousand for the
       same period in 1996. The increase in net income of $6,517 thousand is
       partially attributable to the implementation of a reinsurance agreement
       which mitigates the surplus strain normally associated with life
       insurance sales in the year of issuance, increase in fee income due to
       growth in separate accounts, partially offset by increased operating
       expenses and commissions, increased death claims, a decrease in
       investment and other income and an increase in federal income tax expense
       attributable to taxable income in excess of book income.

       In September 1996, C.M. Life entered into a yearly renewal term quota-
       share reinsurance agreement (YRT agreement) whereby it cedes 90% of the
       second and later years premiums on certain Universal Life policies. In
       return the reinsurer pays C.M. Life a stipulated expense allowance and
       death benefits. Reserves for payment of future benefits for the ceded
       policies are held by the reinsurer, on a quota-share basis.

                                      11
<PAGE>
 
        Premium income, net of reinsurance ceded, increased $2,142 thousand to
        $233,038 thousand for the nine months ended September 30, 1997 from
        $230,896 thousand for the same period during 1996. The 0.9% increase in
        premiums is attributable to a decrease in variable annuity products of
        11.4% from the prior year, offset by a 39.7% increase in Universal Life
        premiums, the result is a change in C.M. Life's mix of business in which
        Universal and other life products represented 33.0% of total premium
        income during 1997 compared to 24.0% for 1996, while annuity products
        represented 67.0% during 1997 compared to 76.0% in 1996. 

        Variable annuity premiums have declined due to lower sales through the
        brokerage distribution channel and a shift towards sales of variable
        annuity products issued by MassMutual and C.M. Life's affiliate MML
        Baystate Insurance Company.

        The following table sets forth premium information for C.M. Life's
        products.

<TABLE> 
<CAPTION> 
                                                                Nine Months Ended September 30,
                                                             1997                             1996
                                                             ----                             ----
                                                                         (In Thousands)
        <S>                                          <C>          <C>               <C>             <C> 
        Premium income
            Universal and other life                 $  77,699    33%               $   55,604      24%
            Annuities                                  155,339    67%                  175,292      76%
                                                      --------                        --------
        Total                                         $233,038                      $  230,896
                                                      ========                        ========
</TABLE> 

       Net investment and other income decreased $947 thousand to $52,384
       thousand in 1997 from $53,331 thousand in 1996. Other income from
       reinsurance ceded decreased by $221 thousand. Net investment income
       decreased by $726 thousand which is attributable a decline in portfolio
       yield, partially offset by an increase in invested assets. The decline in
       portfolio yield is attributable to a declining interest rate environment;
       over time the portfolio yield is reduced as funds from maturing
       investments are reinvested at lower prevailing interest rates.

       Policy benefits and payments increased $4,096 thousand to $76,884
       thousand in 1997 from $72,788 thousand in 1996. Death claims, net of
       reinsurance, grew to $19,708 thousand in 1997 from $14,959 thousand in
       1996. The increase which was lower than expected, is primarily
       attributable to the increase in the life insurance in force. The
       fluxuation in death benefits is within expectations and is not indicative
       of a trend.

       Addition to policyholder reserves, funds and separate accounts decreased
       $34,279 thousand to $123,780 thousand in 1997 from $158,059 thousand in
       1996. The decrease is primarily attributable to a decrease in annuity
       premiums, increased annuity surrenders, increased fee income from
       separate accounts and the implementation of the YRT agreement starting in
       September 1996.

       Acquisition costs and operating expenses increased $9,306 thousand to
       $50,821 thousand in 1997 from $41,515 thousand in 1996. The increase is
       primarily related to the following factors; increased expenses associated
       with the production of new business primarily resulting from the change
       in the mix of business towards greater Universal Life sales, increased
       fees from C.M. Life's management services agreement with MassMutual, and
       the modification of C.M. Life's variable annuity underwriting agreements
       with G.R. Phelps and Co., Inc. ("G.R. Phelps") and MML Distributors, both
       affiliated companies. Effective March 1, 1996, C.M. Life modified its
       underwriting agreements such that it would pay all future commissions
       relating to variable annuity contracts and would also retain rights to
       all future contract fees and charges related to these contracts. Prior to
       the contract modification, G.R. Phelps and MML Distributors paid variable
       annuity commissions in exchange for the rights to future contract fees
       and charges related to these contracts. C.M. Life expects the future
       revenue on these contracts to exceed acquisition costs.

       Federal income tax expense increased $14,898 thousand to $20,459 thousand
       from $5,561 thousand as a result of increased taxable income. Taxable
       income increased $38,255 thousand to $54,050 thousand in 1997 from
       $15,795 thousand in 1996. The increase in taxable income is primarily
       attributable to the difference between statutory book and tax reserves
       basis. Other book tax differences include the timing of the deductibility
       of acquisition costs and other items.

       Realized capital gains of $330 thousand were recorded for the nine
       months ended September 30, 1997 as compared to realized capital gains of
       $846 thousand for the same period in 1996. The decrease of $516 thousand
       from the prior year is primarily attributable to gains generated during
       the first quarter of 1996 on the sale of common stock investments.

                                      12
<PAGE>
 
        Statement of Financial Position
        -------------------------------

        Total assets increased by $323,360 thousand or 17.3% to $2,189,931
        thousand at September 30, 1997 from $1,866,571 thousand at year end
        1996. Much of this increase was due to continued growth from new
        premiums and appreciation of assets in C.M. Life's separate investment
        accounts, which increased by $274,148 thousand.

        Mortgage loans increased $53,799 thousand to $87,590 thousand reflecting
        a more favorable real estate investment environment. Total liabilities
        increased in 1997 by $312,906 thousand or 17.8% to $2,069,733 thousand
        from $1,756,827 thousand at year end 1996. As with assets, most of this
        growth occurred in the separate investment accounts. Growth in the
        separate investment account's assets and liabilities is attributable to
        continued variable annuity sales and deposits.

        Liquidity
        ---------

        Net cash provided by operating activities was $44,673 thousand and
        $52,421 thousand for the nine months ended September 30, 1997 and 1996,
        respectively. In 1997, net cash provided by operating activities
        declined by $7,748 thousand as compared to 1996, primarily due to
        increased surrender and death benefits, sales growth which generates
        commissions and acquisition costs in excess of revenues in the first
        contract year. Net cash from financing and miscellaneous activities
        decreased by $19,996 thousand to $12,798 thousand primarily due to 1996
        unremitted reimbursements to MassMutual. The Board of Directors of
        MassMutual has authorized the contribution of funds to C.M. Life
        sufficient to meet the capital requirements of all states in which C.M.
        Life is licensed to do business.

        C.M. Life has structured its investment portfolio to ensure a strong
        liquidity position in order to permit timely payment of policy and
        contract benefits without requiring an untimely sale of assets. C.M.
        Life manages its liquidity position by matching its exposure to cash
        demands with adequate sources of cash and other liquid assets.

        C.M. Life's principal sources of liquidity are cash flow and holdings of
        cash, near cash and other readily marketable assets. The primary cash
        flow sources are investment income and proceeds from maturities on
        invested assets, life insurance premiums, annuity considerations and
        deposits.

        C.M. Life's liquid assets include substantial Treasury holdings,
        short-term money market investments, stocks and marketable long-term
        fixed income securities. Cash and short-term investments totaled $78,980
        thousand at September 30, 1997.

        The liquidity position of C.M. Life is proactively managed on an ongoing
        basis to meet cash needs while minimizing adverse impacts on investment
        returns. A variety of scenarios are analyzed by modeling potential
        demands on liquidity, taking into account the provisions of C.M. Life's
        policies and contracts in force, C.M. Life's cash flow position and the
        volume of cash and readily marketable securities in C.M. Life's
        portfolio.

        C.M. Life also employs sophisticated quantitative asset/liability cash
        flow management techniques to optimize and control the investment return
        and liquidity for each portfolio, taking into account the distinguishing
        liability characteristics of each portfolio.

        A primary liquidity concern for C.M. Life is the risk of early
        contractholder and policyholder withdrawal. The most affected products
        are individual life insurance and individual deferred annuities.
        Personal life insurance policies are less susceptible to withdrawal than
        annuity contracts because annuities are primarily used as investment
        vehicles, while personal life policies are used to fulfill longer term
        financial planning needs. C.M. Life closely evaluates and manages its
        liquidity risk.

        Capital Resources
        -----------------

        As of September 30, 1997, C.M. Life's total adjusted capital as defined
        by the NAIC was $143,186 thousand. The NAIC has developed the "Risk
        Based Capital" ("RBC") model to compare the total adjusted capital with
        a standard design in order to reflect C.M. Life's risk profile. Although
        C.M. Life believes that there is no single appropriate means of
        measuring risk-based capital needs, it feels that the NAIC approach to
        RBC measurement is reasonable, and will manage its capital position with
        significant attention to maintaining adequate total adjusted capital
        relative to 

                                      13
<PAGE>
 
        RBC. C.M. Life's total adjusted capital was well in excess of all RBC
        standards at September 30, 1997 and 1996. Management believes that C.M.
        Life enjoys a strong capital position in light of the risks to which it
        is subject and that it is well positioned to meet policyholder and other
        obligations.

        Segment Information
        -------------------

        C.M. Life's operations consisted of one business segment, which was 
        principally the sale of universal life insurance and annuity products.
        C.M. Life is not dependent upon any single customer and no single
        customer accounted for more than 10% of revenues for the nine months
        ended September 30, 1997 and 1996.

        Reserves
        --------

        In accordance with the life insurance laws and regulations under which
        C.M. Life operates, it is obligated to carry on its books, as
        liabilities, actuarially determined reserves to meet its obligations on
        outstanding contracts. Reserves are based on mortality tables in general
        use in the United States and are computed to equal amounts that, with
        additions from premiums to be received, and with interest on such
        reserves computed annually at certain assumed rates, will be sufficient
        to meet C.M. Life's policy obligations at their maturities or in the
        event of an insured's death. In the accompanying financial statements,
        these reserves are determined in accordance with statutory regulations.

        Investments
        -----------

        September 30, 1997, C.M. Life had $1,076,591 thousand of invested assets
        in its general investment account. The portfolio of invested assets is
        managed to support the liabilities of the lines of business in light of
        yield, liquidity and diversification considerations. The general
        investment account portfolio does not include C.M. Life's separate
        account investment assets.

        Competition
        -----------

        The life insurance industry is highly competitive. There are more than
        1,700 life insurance companies in the United States, many of which offer
        insurance products similar to those marketed by C.M. Life. In addition
        to competition within the industry, insurers are increasingly facing
        competition from non-traditional sources in the financial services
        business, including mutual funds, banks, securities brokerage houses and
        other financial services entities, many of which provide alternative
        investment and savings vehicles for consumers. Legislative initiatives
        proposed at the federal level would, if enacted, reorder the financial
        services industry, thereby changing the environment in which C.M. Life
        competes.

        C.M. Life's management believes its financial strength, agent skill and
        historical product performance provide competitive advantages for the
        products it offers in these markets. In early 1996, after the merger of
        MassMutual and Connecticut Mutual Life Insurance Company, C.M. Life
        received the following ratings from the various rating agencies, A.M.
        Best Company, Inc. (A++), and Duff & Phelps Credit Rating Company (AAA).
        In April 1997, Duff & Phelps Credit Rating Company reaffirmed C.M.
        Life's AAA rating and in October 1997 Standard and Poor's Corporation
        reaffirmed its (AAA) rating.

        MassMutual, C.M. Life's parent, has received the highest ratings from
        A.M. Best Company, Inc. (A++), Standard & Poor's Corporation (AAA), and
        Duff & Phelps Credit Rating Company (AAA), as well as a rating of Aa1 by
        Moody's Investors Service, Inc. (the highest in its "excellent"
        category). In late 1995 and early 1996, all four of these agencies
        conducted thorough reviews of MassMutual's ratings in light of the
        Connecticut Mutual Life Insurance Company merger. In all four cases, the
        1995 ratings for MassMutual were reaffirmed. In April 1997 Duff & Phelps
        Credit Rating Company and Moody's Investor Service, Inc. again
        reaffirmed their previous ratings and in October 1997 Standard and
        Poor's Corporation reaffirmed its (AAA) rating.

        Regulation
        ----------

        C.M. Life is organized as a Connecticut stock life insurance company,
        and is subject to Connecticut laws governing insurance companies. C.M.
        Life is regulated and supervised by the State of Connecticut Insurance
        Commissioner. By March 1 of every year, C.M. Life must prepare and file
        an annual statement, in a form prescribed by the State of 

                                      14
<PAGE>
 
        Connecticut Insurance Department, as of December 31 of the preceding
        year. The Commissioner and his or her agents have the right at all times
        to review or examine C.M. Life's books and assets. A full examination of
        C.M. Life's operations is conducted periodically according to the rules
        and practices of the NAIC. C.M. Life is also subject to the insurance
        laws of the states in which it is authorized to do business, to various
        federal and state securities laws and regulations, and to regulatory
        agencies which administer those laws and regulations.

        C.M. Life is licensed to transact its insurance business in, and is
        subject to regulation and supervision by the Commonwealth of Puerto
        Rico, the District of Columbia and all 50 states of the United States,
        except New York. The extent of such regulation varies, but most
        jurisdictions have laws and regulations requiring the licensing of
        insurers and their agents and setting standards of solvency and business
        conduct to be maintained by licensed insurance companies, and may
        regulate withdrawal from certain markets. In addition, statutes and
        regulations usually require the approval of policy forms and, for
        certain lines of insurance, the approval of rates. Such statutes and
        regulations also prescribe the permitted types and concentration of
        investments. C.M. Life is also subject to regulation of its accounting
        methodologies and is required to file detailed annual financial
        statements with supervisory agencies in each of the jurisdictions in
        which it does business. Each of its operations and accounts is also
        subject to examination by such agencies at regular intervals.

        C.M. Life is subject to guaranty fund assessments in all states in which
        it does business. The guaranty associations are organized to pay
        contractual obligations under insurance policies issued by impaired or
        insolvent insurers. C.M. Life believes such assessments in excess of
        amounts accrued will not materially affect its financial position,
        results of operations or liquidity.

        In addition to regulation of its insurance business, C.M. Life is
        subject to various types of federal and state laws and regulations
        affecting the conduct, taxation and other aspects of their businesses.
        Certain policies and contracts offered by C.M. Life are subject to
        various levels of regulation under the federal securities laws
        administered by the Securities and Exchange Commission.

        C.M. Life's management believes it is in compliance in all material
        respects with all applicable laws and regulations.

        New Accounting Pronouncements
        -----------------------------

        The NAIC is codifing statutory accounting principles, which are
        anticipated to be effective January 1, 1999. At this time, the codified
        statutory accounting principles have been exposed for public comment but
        have not been finalized. C.M. Life has not determined the impact of
        changes which may result from these new principles.

                                      15
<PAGE>
 
                                   SIGNATURES



Pursuant to the  requirements  of Section 13 or 15(d) of the  Securities Act 
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.


                                       C.M. LIFE INSURANCE COMPANY
                                             (Registrant)



Date:     November 13, 1997            By: /s/ Lawrence V. Burkett, Jr.
                                         ------------------------------
                                         Lawrence V. Burkett, Jr.
                                         President and Chief Executive Officer
                                         (Principal Executive Officer)

Date:     November 13, 1997            By: /s/ John Miller, Jr.
                                         ----------------------
                                         John Miller, Jr.
                                         Comptroller
                                         (Chief Accounting Officer)

                                      16