<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 March 31, 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 March 31, 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


PART I:    Financial Information
           ---------------------

           Item 1:     Financial Statements:

                         Statutory Statement of Financial Position -
                          March 31, 1997 and December 31, 1996............   3

                         Statutory Statement of Income -
                          Three Months Ended
                          March 31, 1997 and 1996.........................   4

                         Statutory Statement of Shareholder's Equity -
                          Three Months Ended
                          March 31, 1997 and 1996.........................   5

                         Statutory Statement of Cash Flows -
                          Three Months Ended
                          March 31, 1997 and 1996.........................   6

                         Notes to Financial Statements....................   7

           Item 2:     Management's Discussion and Analysis of
                       Financial Condition and Results of
                       Operations.........................................   9


PART II:   Other Information
           -----------------

           Item 1:     Not applicable.

           Item 2:     Not applicable.

           Item 3:     Not applicable.

           Item 4:     Not applicable.

           Item 5:     Not applicable.

           Item 6:     Not applicable.

                                       2
<PAGE>
 
                          C.M. LIFE INSURANCE COMPANY

                   STATUTORY STATEMENT OF FINANCIAL POSITION
<TABLE> 
<CAPTION> 
                                                 March 31,          December 31,
                                                      1997                  1996
                                                 ---------             ---------
                                                     (In Thousands Except for
                                                         Share Information)
<S>                                            <C>                   <C> 
Assets:                                       
Bonds                                          $   768,397           $   736,524
Common stocks                                       54,996                55,642
Mortgage loans                                      45,085                33,791
Policy loans                                       137,126               132,942
Cash and short-term instruments                     41,654                63,688
                                               -----------           -----------
        Total invested assets                    1,047,258             1,022,587
                                              
Investment and insurance amounts receivable         27,224                32,783
Transfer due from separate account                  28,072                24,278
Federal income tax receivable                        3,162                 7,094
Other assets                                            87                    87
Separate account assets                            818,094               779,742
                                               -----------           -----------
                                              
                                               $ 1,923,897           $ 1,866,571
                                               ===========           ===========
Liabilities:                                  
                                              
Policyholders' reserves and funds              $   910,682           $   907,492
Policy claims and other benefits                     3,733                 3,843
Payable to parent and affiliates                     1,825                 9,654
Asset valuation reserve                             19,105                18,475
Investment reserves                                  3,290                 3,329
Other liabilities                                   55,009                34,292
Separate account reserves and liabilities          818,094               779,742
                                               -----------           -----------
                                              
                                                 1,811,738             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
Shareholder's equity                                65,900                63,485
                                               -----------           -----------
                                                   112,159               109,744
                                               -----------           -----------
                                               $ 1,923,897           $ 1,866,571
                                               ===========           ===========
</TABLE> 

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

                                       3
<PAGE>
 
                          C.M. LIFE INSURANCE COMPANY

                         STATUTORY STATEMENT OF INCOME
<TABLE> 
<CAPTION> 
                                                 Three Months Ended March 31,
                                          
                                                   1997                 1996
                                                 --------             --------
                                          
                                                         (In Thousands)
<S>                                              <C>                  <C> 
Income:                                   
                                          
Premium income                                   $ 78,098             $ 81,633
Net investment and other income                    16,825               18,479
                                                 --------             --------
                                          
                                                   94,923              100,112
                                                 --------             --------
                                          
Benefits and expenses:                    
                                          
Policy benefits and payments                       27,013               21,769
Addition to policyholder's reserves, funds
  and separate accounts                            39,434               57,187
Operating expenses                                 11,663                6,083
Commissions                                         7,476                3,162
State taxes, licenses and fees                      1,164                1,265
                                                 --------             --------
                                                   86,750               89,466
Net gain from operations before federal   
  income taxes                                      8,173               10,646
                                          
Federal income taxes                                3,902                4,234
                                                 --------             --------
Net gain from operations                            4,271                6,412
                                          
Net realized capital gain (loss)                     ( 10)               2,313
                                                 --------             --------
                                          
Net income                                       $  4,261             $  8,725
                                                 ========             ========
</TABLE> 

                The accompanying notes are an integral part of
                     these unaudited financial statements.
               Certain prior year amounts have been reclassed
                      to conform with 1997 presentation.

                                       4
<PAGE>
 
                           C.M. LIFE INSURANCE COMPANY

             STATUTORY STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
<TABLE> 
<CAPTION> 
                                                 Three Months Ended March 31,
                                           
                                                   1997                1996
                                                 --------            --------
                                           
                                                        (In Thousands)
                                           
<S>                                              <C>                 <C> 
Shareholder's equity, beginning of year            $109,744           $113,199
Increases (decreases) due to:              
Net income                                            4,261              8,725
Change in asset valuation and investment   
  reserves                                             (591)            (2,799)
Change in non-admitted assets                          (789)               100
Net unrealized capital gain (loss)                     (466)            (1,268)
                                                   ---------          ---------
                                           
                                                      2,415              4,758
                                                   ---------          --------
                                           
Shareholder's equity, end of period                $112,159           $117,957
                                                   =========          ========
</TABLE> 

   The accompanying notes are an integral part of these unaudited financial
statements. Certain prior year amounts have been reclassed to conform with 1997
presentation.

                                       5
<PAGE>
 
                           C.M. LIFE INSURANCE COMPANY

                        STATUTORY STATEMENT OF CASH FLOWS
<TABLE> 
<CAPTION> 
                                                   Three Months  Ended March 31,
                                                  
                                                      1997              1996
                                                    --------          -------
                                                  
                                                          (In Thousands)
<S>                                                 <C>               <C> 
Operating activities:                             
                                                  
    Net income                                      $   4,261          $  8,725
    Additions to policyholder's reserves, funds,                     
      and other benefits                                3,080            11,045
    Net realized capital gain (loss)                      (10)            2,313
    Change in payable from parent                      (7,828)            8,794
    Other changes                                      13,961             3,885
                                                    ---------         ---------
                                                                     
    Net cash provided by operating activities          13,464            34,762
                                                                     
Investing activities:                                                
    Loans and purchases of investments                (81,927)          (40,900)
    Sales or maturities of investments and                           
      receipts from repayment of loans                 34,223            37,204
                                                    ----------        ---------
                                                                     
    Net cash used in investing activities             (47,704)           (3,696)
                                                                     
Financing and miscellaneous activities:                              
    Other, net                                         12,206             1,147
                                                    ---------         ---------
                                                                     
Increase (decrease) in short-term investments         (22,034)           32,213
                                                                     
Cash and short-term investments, beginning of                        
  year                                                 63,688            15,069
                                                    ----------        ---------
                                                                     
Cash and short-term investments, end of period      $  41,654         $  47,282
                                                    ==========        =========
</TABLE> 

   The accompanying notes are an integral part of these unaudited financial
statements. Certain prior year amounts have been reclassed to conform with 1997
presentation.

                                       6
<PAGE>
 
                          C.M. Life Insurance Company
                         Notes to Financial Statements
                            March 31, 1997 and 1996
                                  (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 March 31, 1997 and December 31, 1996, and
         its results of operations, shareholder's equity and cash flows for the
         three months ended March 31, 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.

                                       7
<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 $10,158 thousand and
         $6,019 thousand for the three months ended March 31, 1997 and 1996,
         respectively. 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
         policies with issue dates on or after January 1, 1986. In return,
         MassMutual pays C.M. Life a stipulated expense allowance, death and
         surrender benefits, and a modified coinsurance 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 March 31,
                                                1997                       1996
                                                ----                       ----
                                                        (In Thousands)
         <S>                                    <C>                     <C> 
         Gross Investment Income              
           Bonds                                $13,606                 $14,129
           Common and preferred stock               178                     172
           Mortgage loans                           687                     725
           Policy loans                           2,631                   2,530
           Cash and short-term investments          773                     347
           Other                                      2                    (373)
                                                -------                 -------
           Total gross investment income         17,877                  17,530
         Less:  investment expenses                 258                     161
                                                -------                 -------
         Net investment income                  $17,619                 $17,368
                                                =======                 =======
</TABLE> 

                                       8
<PAGE>
 
                                    Item 2.
               Management's Discussion and Analysis of Financial
                      Condition and Results of Operations

         Results of Operations
         ---------------------
         For the Three Months Ended March 31, 1997
         -----------------------------------------
                Compared to the Three Months Ended March 31, 1996
                -------------------------------------------------

         For the three months ended March 31, 1997, C.M. Life had net income of
         $4,261 thousand, as compared with net income of $8,725 thousand for the
         three months ended March 31, 1996. The decrease in net income of $4,464
         thousand is primarily attributable to increased sales of Universal Life
         policies, which in the year of issuance, generate commissions and other
         acquisition costs which exceed the revenues received, increased death
         claims, and a decrease in realized capital gains.

         Premium income, net of reinsurance ceded, decreased $3,535 thousand to
         $78,098 thousand for the three months ended March 31, 1997 from $81,633
         thousand for the same period during 1996. The 4.3% decrease in premiums
         is attributable to a decrease in variable annuity products of 14.9%
         from the prior year, offset by a 42.7% increase in sales of the
         Universal Life policies, the result is a change in C.M. Life's mix of
         business in which Universal and other life products represented 30% of
         total premium income during 1997 compared to 21% for 1996, while
         annuity products represented 70% during 1997 compared to 79% in 1996.

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

<TABLE> 
<CAPTION> 
                                                               Three Months Ended March 31,
                                                        1997                           1996
                                                        ----                           ----
                                                                    (In Thousands)
         <S>                                <C>              <C>        <C>              <C> 
         Premium income                                                               
             Universal and other life       $      23,110    30%        $      17,038    21%
             Annuities                             54,988    70%               64,595    79%
                                            -------------               ------------- 
         Total                              $      78,098               $      81,633 
                                            =============               ============= 
</TABLE> 

         Net investment and other income decreased $1,654 thousand to $16,825
         thousand in 1997 from $18,479 thousand in 1996. Other income, which is
         primarily comprised of reserve adjustment and commission and expense
         allowances on reinsurance ceded, decreased by $1,934 thousand, due to
         little growth in the reinsured block of business. Net investment income
         increased by $280 thousand which was primarily attributable to an
         overall increase in C.M. Life's general investment account assets,
         offset by a slight decline in the gross yield for the portfolio from
         7.3% for 1996 to 7.2% for 1997.

         Policy benefits and payments increased $5,244 thousand to $27,013
         thousand in 1997 from $21,769 thousand in 1996. Surrender benefits
         decreased by $3,618 thousand, essentially due to decreased variable and
         fixed annuity withdrawals and contract surrenders. Death claims, net of
         reinsurance, grew to $9,096 thousand in 1997 from $1,086 thousand in
         1996, which is due to an increase in the life insurance in force and
         worse than expected mortality. Although mortality experience declined
         during the first three months of 1997, C.M. Life does not believe this
         is an indication of future trends.

         Addition to policyholder reserves, funds and separate accounts
         decreased $17,753 thousand to $39,434 thousand in 1997 from $57,187
         thousand in 1996. The decrease is primarily attributable to lower
         annuity deposits and increased death claims.

         Operating expenses and commissions increased $9,894 thousand to $19,139
         thousand in 1997 from $9,245 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, increased fees from C.M. Life's
         management services agreement with MassMutual resulting from the use of
         estimated fees through the third quarter 1996, 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

                                       9
<PAGE>
 
         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 decreased $331 thousand to $3,902 thousand
         from $4,234 thousand as a result of decreased taxable income. Taxable
         income decreased $942 thousand to $11,101 thousand in 1997 from $12,053
         thousand in 1996. The change in taxable income is primarily
         attributable to the $2,473 thousand decrease in net gain from
         operations offset by book tax differences of $1,531 thousand. These
         book tax differences include the timing of the deductibility of
         acquisition costs and other items.

         Realized capital losses of $10 thousand were recorded for the three
         months ended March 31, 1997 as compared to realized capital gains of
         $2,313 for the same period in 1996. The decrease of $2,323 thousand
         from the prior year is primarily attributable to gains generated during
         the first quarter of 1996 on the sale of common stock investments.

         Statement of Financial Position
         -------------------------------         

         Total assets increased by $57,326 thousand or 3.1% to $1,923,897
         thousand at March 31, 1997 from $1,866,571 thousand at year end 1996.
         Much of this growth was due to continued growth in C.M. Life's separate
         investment accounts, which assets increased by $38,352 thousand.

         Total liabilities increased in 1997 by $54,911 thousand or 3.1% to
         $1,811,738 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 $25,670 thousand and
         $35,909 thousand for the three months ended March 31, 1997 and 1996,
         respectively. In 1997, net cash provided by operating activities
         declined by $10,239 thousand as compared to 1996, primarily due to
         increased surrender benefits and sales growth which generates
         commissions and acquisition costs in excess of revenues in the first
         contract year. 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
         $41,654 thousand at March 31, 1997.

         The liquidity position of C.M. Life is proactively managed on an
         ongoing basis to meet cash needs while minimizing adverse impacts on
         investments 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. 

                                       10
<PAGE>
 
         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 March 31, 1997, C.M. Life's total adjusted capital as defined by
         the NAIC was $131,264 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 RBC. C.M. Life's total adjusted capital was well in
         excess of all RBC standards at March 31, 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 three months
         ended March 31, 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
         -----------

         March 31, 1997, C.M. Life had $1,047,258 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++), Standard and Poor's Corporation (AAA) and
         Duff & Phelps Credit Rating Company (AAA). In April 1997, Duff & Phelps
         Credit Rating Company reaffirmed C.M. Life's AAA rating.

                                       11
<PAGE>
 
         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.

         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 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. At March 31, 1997, C.M. Life
         elected not to admit $1,628 thousand of guaranty fund premium tax
         offset receivable relating to prior assessments.

         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 accompanying statutory financial statements, except as to form,
         have been prepared in conformity with the practices of the NAIC and the
         accounting practices prescribed or permitted by the Insurance
         Department of the State of Connecticut ("statutory accounting
         practices"). Prior to 1996 financial statements prepared using
         statutory accounting practices were considered to be in conformity with
         GAAP for wholly-owned stock life insurance subsidiaries of mutual life
         insurance companies. In accordance with the Financial Accounting
         Standards Board ("FASB") interpretation No. 40 ("Fin. 40"),
         "Applicability of Generally Accepted Accounting Principles to Mutual
         Life Insurance and Other Enterprises", 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

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<PAGE>
 
         certain FASB statements to mutual life insurance companies and deferred
         the effective date of Fin. 40 to financial statements issued or
         reissued after 1996. Accordingly, the financial statements presented
         herein are no longer considered to be in conformity with GAAP.

         The NAIC recently issued an exposure draft on codification changes to
         existing statutory accounting practices. At this time, C.M. Life has
         not determine the impact of these changes.

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<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:     May  12, 1997              By: /s/ Lawrence V. Burkett, Jr.
                                       ------------------------------
                                     Lawrence V. Burkett, Jr.
                                     President and Chief Executive Officer
                                     (Principal Executive Officer)

Date:     May  12, 1997              By: /s/ John Miller, Jr.
                                       ----------------------
                                     John Miller, Jr.
                                     Comptroller
                                     (Chief Accounting Officer)

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