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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2008

or



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

For the transition period  to

Commission File Number 333-149714

TIAA-CREF Life Insurance Company

(Exact name of registrant as specified in its charter)



|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|New York                                                       |  | 13-3917848                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)

730 Third Avenue

New York, N.Y. 10017-3206

(Address of Principal Executive Office,
including zip code)

(212) 490-9000

(Registrants telephone number, including area code)

N/A

(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.     ̈  Yes    x  No*

* The Company has only been subject to the reporting
requirements of the Securities Exchange Act of 1934 since July 23, 2008.

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



|                           |  |                      |  |                                               |  |                             
|-------------------------- |  | -------------------- |  | --------------------------------------------- |  | ----------------------------
|Large accelerated filer   ̈ |  | Accelerated filer   ̈ |  | Non-accelerated file  x                       |  | Smaller reporting company   ̈
|                           |  |                      |  | (Do not check if a smaller reporting
company) |  |                             

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).     ̈  Yes    x  No

As of November 13, 2008, the registrant had 2,500 common shares, $1,000 par value per share, outstanding, all of which are held by Teachers Insurance and Annuity Association of America.









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TIAA-CREF LIFE INSURANCE COMPANY

FORM 10-Q

TABLE OF CONTENTS



|           |  |                                                                                                                              |  |     
|---------- |  | ---------------------------------------------------------------------------------------------------------------------------- |  | ----
|           |  |                                                                                                                              |  | Page
|PART I.    |  | FINANCIAL INFORMATION                                                                                                        |  |     
|           |  |                                                                                                                             
|Item 1.    |  | Unaudited Statutory-Basis Financial Statements                                                                               |  |     
|           |  |                                                                                                                             
|           |  | Statements of Admitted Assets, Liabilities and Capital and Surplus as of September 30, 2008, and December 31, 2007 (audited) |  | 3   
|           |  |                                                                                                                             
|           |  | Statements of Operations for the Three and Nine Months Ended September 30, 2008, and 2007                                    |  | 4   
|           |  |                                                                                                                             
|           |  | Statement of Changes in Capital and Surplus for the Nine Months Ended September 30, 2008                                     |  | 5   
|           |  |                                                                                                                             
|           |  | Statements of Cash Flows for the Nine Months Ended September 30, 2008, and 2007                                              |  | 6   
|           |  |                                                                                                                             
|           |  | Notes to Financial Statements                                                                                                |  | 7   
|           |  |                                                                                                                             
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                        |  | 13  
|           |  |                                                                                                                             
|Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                                                                   |  | 25  
|           |  |                                                                                                                             
|Item 4.    |  | Controls and Procedures                                                                                                      |  | 26  
|           |  |                                                                                                                             
|PART II.   |  | OTHER INFORMATION                                                                                                            |  |     
|           |  |                                                                                                                             
|Item 1.    |  | Legal Proceedings                                                                                                            |  | 26  
|           |  |                                                                                                                             
|Item 1A.   |  | Risk Factors                                                                                                                 |  | 26  
|           |  |                                                                                                                             
|Item 2.    |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                  |  | 26  
|           |  |                                                                                                                             
|Item 3.    |  | Defaults Upon Senior Securities                                                                                              |  | 26  
|           |  |                                                                                                                             
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                                                          |  | 26  
|           |  |                                                                                                                             
|Item 5.    |  | Other Information                                                                                                            |  | 26  
|           |  |                                                                                                                             
|Item 6.    |  | Exhibits                                                                                                                     |  | 27  
|           | 
|SIGNATURES |  | 28                                                                                                                          



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##### Table of Contents

PART I  FINANCIAL INFORMATION



|Item 1. | Unaudited Statutory-Basis Financial Statements
|------- | ----------------------------------------------

TIAA-CREF LIFE INSURANCE COMPANY

STATUTORY-BASIS STATEMENTS OF ADMITTED ASSETS,

LIABILITIES AND CAPITAL AND SURPLUS



|                                                                               |  |                   |           |                  |   |          
|------------------------------------------------------------------------------ |  | ----------------- | --------- | ---------------- | - | ---------
|                                                                               |  | September 30,2008 |           | December 31,2007
|                                                                               |  | (Unaudited)       |           |                 
|                                                                               |  | (in thousands)   
|ADMITTED ASSETS                                                                |  |                   |           |                  |   |          
|Bonds                                                                          |  | $                 | 2,153,894 |                  | $ | 2,164,565
|Preferred stocks                                                               |  |                   | 47,867    |                  |   | 62,836   
|Mortgages                                                                      |  |                   | 81,166    |                  |   | 87,120   
|Other long term investments                                                    |  |                   | 5,766     |                  |   | 1,863    
|Cash, cash equivalents and short-term investments                              |  |                   | 65,723    |                  |   | 61,566   
|Investment income due and accrued                                              |  |                   | 29,264    |                  |   | 28,225   
|Separate account assets                                                        |  |                   | 601,119   |                  |   | 695,507  
|Federal income tax recoverable from TIAA                                       |  |                   |          |                  |   | 755      
|Net deferred federal income tax asset                                          |  |                   | 2,159     |                  |   | 2,506    
|Other assets                                                                   |  |                   | 10,629    |                  |   | 10,407   
|                                                                               |  |                   |           |                  |   |          
|TOTAL ADMITTED ASSETS                                                          |  | $                 | 2,997,587 |                  | $ | 3,115,350
|                                                                               |  |                   |           |                  |   |          
|LIABILITIES, CAPITAL AND SURPLUS                                               |  |                   |           |                  |   |          
|Liabilities                                                                    |  |                   |           |                  |   |          
|Reserves for life and health, annuities and deposit-type contracts             |  | $                 | 2,080,946 |                  | $ | 2,043,643
|Asset valuation reserve                                                        |  |                   | 13,711    |                  |   | 10,326   
|Interest maintenance reserve                                                   |  |                   | 1,670     |                  |   | 1,229    
|Separate account liabilities                                                   |  |                   | 581,320   |                  |   | 694,131  
|Federal income tax payable to TIAA                                             |  |                   | 2,422     |                  |   |         
|Other liabilities                                                              |  |                   | 26,183    |                  |   | 33,891   
|                                                                               |  |                   |           |                  |   |          
|TOTAL LIABILITIES                                                              |  |                   | 2,706,252 |                  |   | 2,783,220
|                                                                               |  |                   |           |                  |   |          
|Capital and Surplus                                                            |  |                   |           |                  |   |          
|Capital (2,500 shares of $1,000 par value common stock issued and outstanding) |  |                   | 2,500     |                  |   | 2,500    
|Additional paid-in capital                                                     |  |                   | 287,500   |                  |   | 287,500  
|Surplus                                                                        |  |                   | 1,335     |                  |   | 42,130   
|                                                                               |  |                   |           |                  |   |          
|TOTAL CAPITAL AND SURPLUS                                                      |  |                   | 291,335   |                  |   | 332,130  
|                                                                               |  |                   |           |                  |   |          
|TOTAL LIABILITIES, CAPITAL AND SURPLUS                                         |  | $                 | 2,997,587 |                  | $ | 3,115,350
|                                                                               |  |                   |           |                  |   |          

See notes to statutory  basis financial statements.



3



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TIAA-CREF LIFE INSURANCE COMPANY

STATUTORY-BASIS STATEMENTS OF OPERATIONS

(Unaudited)



|                                                                                                      |  |                                         |         |   |                                        |   |         |      |  |   |         |   |  |   |          |  
|----------------------------------------------------------------------------------------------------- |  | --------------------------------------- | ------- | - | -------------------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | -------- | -
|                                                                                                      |  | For the three monthsended September 30, |         |   | For the nine monthsended September 30, |  
|                                                                                                      |  | 2008                                    |         |   | 2007                                   |   |         | 2008 |  |   | 2007    |  
|                                                                                                      |  | (in thousands)                          |        
|REVENUES                                                                                              |  |                                         |         |   |                                        |   |         |      |  |   |         |   |  |   |          |  
|Insurance and annuity premiums and other considerations                                               |  | $                                       | 52,426  |   |                                        | $ | 47,001  |      |  | $ | 118,315 |   |  | $ | 128,612  |  
|Net investment income                                                                                 |  |                                         | 29,678  |   |                                        |   | 30,634  |      |  |   | 93,364  |   |  |   | 96,717   |  
|                                                                                                      |  |                                         |         |   |                                        |   |         |      |  |   |         |   |  |   |          |  
|TOTAL REVENUES                                                                                        |  | $                                       | 82,104  |   |                                        | $ | 77,635  |      |  | $ | 211,679 |   |  | $ | 225,329  |  
|                                                                                                      |  |                                         |         |   |                                        |   |         |      |  |   |         |   |  |   |          |  
|EXPENSES                                                                                              |  |                                         |         |   |                                        |   |         |      |  |   |         |   |  |   |          |  
|Policy and contract benefits                                                                          |  | $                                       | 42,856  |   |                                        | $ | 48,816  |      |  | $ | 115,082 |   |  | $ | 188,268  |  
|Increase (decrease) in policy and contract reserves                                                   |  |                                         | 10,035  |   |                                        |   | (18,914 | )    |  |   | 30,426  |   |  |   | (113,644 | )
|Operating expenses                                                                                    |  |                                         | 9,338   |   |                                        |   | 10,424  |      |  |   | 30,215  |   |  |   | 29,421   |  
|Transfers to separate accounts, net                                                                   |  |                                         | 6,331   |   |                                        |   | 24,865  |      |  |   | 5,427   |   |  |   | 78,880   |  
|Other, net                                                                                            |  |                                         | 6,205   |   |                                        |   | 7,556   |      |  |   | 17,096  |   |  |   | 20,187   |  
|                                                                                                      |  |                                         |         |   |                                        |   |         |      |  |   |         |   |  |   |          |  
|TOTAL EXPENSES                                                                                        |  | $                                       | 74,765  |   |                                        | $ | 72,747  |      |  | $ | 198,246 |   |  | $ | 203,112  |  
|                                                                                                      |  |                                         |         |   |                                        |   |         |      |  |   |         |   |  |   |          |  
|Income before federal income tax and net realized capital losses                                      |  |                                         | 7,339   |   |                                        |   | 4,888   |      |  |   | 13,433  |   |  |   | 22,217   |  
|Federal income tax expense (benefit)                                                                  |  |                                         | 2,755   |   |                                        |   | (376    | )    |  |   | 3,188   |   |  |   | 5,102    |  
|Net realized capital losses less capital gains taxes, after transfers to interest maintenance reserve |  |                                         | (34,827 | ) |                                        |   | (1,330  | )    |  |   | (46,442 | ) |  |   | (1,795   | )
|                                                                                                      |  |                                         |         |   |                                        |   |         |      |  |   |         |   |  |   |          |  
|NET (LOSS) INCOME                                                                                     |  | $                                       | (30,243 | ) |                                        | $ | 3,934   |      |  | $ | (36,197 | ) |  | $ | 15,320   |  
|                                                                                                      |  |                                         |         |   |                                        |   |         |      |  |   |         |   |  |   |          |  

See notes to statutory  basis financial statements.



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TIAA-CREF LIFE INSURANCE COMPANY

STATUTORY-BASIS STATEMENT OF CHANGES IN CAPITAL AND SURPLUS

(Unaudited)



|                                             |  |              |       |                          |   |                  |  |   |         |   |  |   |         |  
|-------------------------------------------- |  | ------------ | ----- | ------------------------ | - | ---------------- |  | - | ------- | - |  | - | ------- | -
|                                             |  | CapitalStock |       | AdditionalPaid-InCapital |   | Surplus(Deficit) |  |   | Total   |  
|                                             |  |              |       | (in thousands)           |   |                  |  |  
|Balance, December 31, 2007                   |  | $            | 2,500 |                          | $ | 287,500          |  | $ | 42,130  |   |  | $ | 332,130 |  
|Net loss                                     |  |              |      |                          |   |                 |  |   | (36,197 | ) |  |   | (36,197 | )
|Net unrealized capital gains on investments  |  |              |      |                          |   |                 |  |   | 87      |   |  |   | 87      |  
|Change in asset valuation reserve            |  |              |      |                          |   |                 |  |   | (3,386  | ) |  |   | (3,386  | )
|Net surplus contributed to separate account  |  |              |      |                          |   |                 |  |   | (18,768 | ) |  |   | (18,768 | )
|Other changes in surplus in separate account |  |              |      |                          |   |                 |  |   | 18,424  |   |  |   | 18,424  |  
|Change in net deferred income tax            |  |              |      |                          |   |                 |  |   | 10,783  |   |  |   | 10,783  |  
|Change in non-admitted assets:               |  |              |       |                          |   |                  |  |   |         |   |  |   |         |  
|Deferred federal income tax asset            |  |              |      |                          |   |                 |  |   | (11,130 | ) |  |   | (11,130 | )
|Deferred premium asset limitation            |  |              |      |                          |   |                 |  |   | (960    | ) |  |   | (960    | )
|Other                                        |  |              |      |                          |   |                 |  |   | (153    | ) |  |   | (153    | )
|Prior year income (surplus) adjustment       |  |              |      |                          |   |                 |  |   | 505     |   |  |   | 505     |  
|                                             |  |              |       |                          |   |                  |  |   |         |   |  |   |         |  
|Balance, September 30, 2008                  |  | $            | 2,500 |                          | $ | 287,500          |  | $ | 1,335   |   |  | $ | 291,335 |  
|                                             |  |              |       |                          |   |                  |  |   |         |   |  |   |         |  

See notes to statutory  basis financial statements.



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TIAA-CREF LIFE INSURANCE COMPANY

STATUTORY-BASIS STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                       |  |                                        |         |   |      |   |         |  
|---------------------------------------------------------------------- |  | -------------------------------------- | ------- | - | ---- | - | ------- | -
|                                                                       |  | For the nine months endedSeptember 30, |        
|                                                                       |  | 2008                                   |         |   | 2007 |  
|                                                                       |  | (in thousands)                         |        
|CASH FROM OPERATIONS                                                   |  |                                        |         |   |      |   |         |  
|Insurance and annuity premiums and other considerations                |  | $                                      | 116,234 |   |      | $ | 125,974 |  
|Miscellaneous income                                                   |  |                                        | 8,673   |   |      |   | 8,001   |  
|Net investment income                                                  |  |                                        | 120,395 |   |      |   | 131,520 |  
|                                                                       |  |                                        |         |   |      |   |         |  
|Total Receipts                                                         |  |                                        | 245,302 |   |      |   | 265,495 |  
|                                                                       |  |                                        |         |   |      |   |         |  
|Policy and contract benefits                                           |  |                                        | 114,868 |   |      |   | 188,107 |  
|Operating expenses                                                     |  |                                        | 31,182  |   |      |   | 34,915  |  
|Federal income tax expense                                             |  |                                        | 11      |   |      |   | 3,980   |  
|Net transfers to separate accounts                                     |  |                                        | 24,047  |   |      |   | 79,599  |  
|                                                                       |  |                                        |         |   |      |   |         |  
|Total Disbursements                                                    |  |                                        | 170,108 |   |      |   | 306,601 |  
|                                                                       |  |                                        |         |   |      |   |         |  
|Net cash from operations                                               |  |                                        | 75,194  |   |      |   | (41,106 | )
|                                                                       |  |                                        |         |   |      |   |         |  
|CASH FROM INVESTMENTS                                                  |  |                                        |         |   |      |   |         |  
|Proceeds from long-term investments sold, matured, or repaid:          |  |                                        |         |   |      |   |         |  
|Bonds                                                                  |  |                                        | 524,161 |   |      |   | 500,666 |  
|Stocks                                                                 |  |                                        | 3,548   |   |      |   | 7,125   |  
|Mortgages                                                              |  |                                        | 9,167   |   |      |   | 19,071  |  
|Miscellaneous proceeds                                                 |  |                                        | 3       |   |      |   | 28      |  
|Cost of investments acquired:                                          |  |                                        |         |   |      |   |         |  
|Bonds                                                                  |  |                                        | 576,299 |   |      |   | 390,438 |  
|Stocks                                                                 |  |                                        | 2,800   |   |      |   | 26,658  |  
|Mortgages and real estate                                              |  |                                        |        |   |      |   | 29      |  
|Net miscellaneous applications                                         |  |                                        | 6,907   |   |      |   | 1,252   |  
|Net increase in contract loans and premium notes                       |  |                                        | 62      |   |      |   | 270     |  
|                                                                       |  |                                        |         |   |      |   |         |  
|Net cash from investments                                              |  |                                        | (49,189 | ) |      |   | 108,243 |  
|                                                                       |  |                                        |         |   |      |   |         |  
|CASH FROM FINANCING AND OTHER                                          |  |                                        |         |   |      |   |         |  
|Net withdrawals on deposit-type contract funds                         |  |                                        | (18,112 | ) |      |   | (90,256 | )
|Other cash applied                                                     |  |                                        | (3,736  | ) |      |   | (8,264  | )
|                                                                       |  |                                        |         |   |      |   |         |  
|Net cash from financing and other                                      |  |                                        | (21,848 | ) |      |   | (98,520 | )
|                                                                       |  |                                        |         |   |      |   |         |  
|NET CHANGE IN CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS        |  |                                        | 4,157   |   |      |   | (31,383 | )
|CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS, BEGINNING OF PERIOD |  |                                        | 61,566  |   |      |   | 113,178 |  
|                                                                       |  |                                        |         |   |      |   |         |  
|CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS, END OF PERIOD       |  | $                                      | 65,723  |   |      | $ | 81,795  |  
|                                                                       |  |                                        |         |   |      |   |         |  

See notes to statutory  basis financial statements.



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TIAA-CREF LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

Note
1  Organization and Operations

TIAA-CREF Life Insurance Company commenced operations as a legal reserve life insurance company under the
insurance laws of the State of New York on December 18, 1996, under its former name, TIAA Life Insurance Company, and changed its name to TIAA-CREF Life Insurance Company (TIAA-CREF Life or the Company) on May 1,
1998. TIAA-CREF Life is a direct wholly-owned subsidiary of Teachers Insurance and Annuity Association of America (TIAA or the Parent), a legal reserve life insurance company established under the insurance laws of the State
of New York in 1918. As of September 30, 2008, the Company was licensed in all 50 states and the District of Columbia.

The Company issues
non-qualified annuity contracts with fixed and variable components, fixed and variable universal life contracts, funding agreements, and term insurance and single premium immediate annuities.

Note 2  Significant Accounting Policies

Basis of
Presentation:The accompanying statutory-basis financial statements are unaudited and have been prepared on the basis of statutory accounting principles (SAP) prescribed or permitted by the New York State Insurance Department (the
Department), a comprehensive basis of accounting that differs from accounting principles generally accepted in the United States (GAAP). The Department requires insurance companies domiciled in the State of New York to
prepare their statutory-basis financial statements in accordance with the National Association of Insurance Commissioners (NAIC) Accounting Practices and Procedures Manual (NAIC SAP), subject to any deviation prescribed or
permitted by the Department (New York SAP).

The accompanying statutory-basis financial statements include all adjustments considered necessary
by management to present a fair statement of the Companys financial position, results of operations and cash flows for the periods presented. The results reported in the accompanying statutory-basis financial statements should not be regarded
as necessarily indicative of results that may be expected for the entire year. The accompanying unaudited statutory-basis financial statements and these notes should be read in conjunction with the Companys audited statutory-basis financial
statements for the year ended December 31, 2007, included in the Companys registration statement on Form S-1 (File No. 333-149714), as filed with the Securities and Exchange Commission (SEC) on July 18, 2008, and
declared effective by the SEC on July 23, 2008. Certain information and disclosures normally included in the notes to statutory-basis financial statements have been condensed or omitted, although management believes that the disclosures
contained herein are adequate to make the information presented not misleading.

Recent Accounting Pronouncements: The NAIC promulgates Statutory
Accounting Principles primarily through the issuance of Statements of Statutory Accounting Principles (SSAPs). The NAIC has not recently adopted any SSAPs effective for the current accounting period that have had a material impact on the
Company.



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TIAA-CREF LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS  (continued)

Note 3  Long Term
Bonds and Preferred Stocks

The cost, estimated fair values and the unrealized gains and losses of long-term bonds and preferred stocks at
September 30, 2008, and December 31, 2007, are shown below (in thousands):



|                                                                          |  |       |           |                  |   |        |                     |   |          |   |  |   |          
|------------------------------------------------------------------------- |  | ----- | --------- | ---------------- | - | ------ | ------------------- | - | -------- | - |  | - | ---------
|                                                                          |  |       |           | Gross Unrealized |   |        | EstimatedFair Value
|September 30, 2008                                                        |  | Cost* |           | Gains            |   | Losses |                     |  
|U.S. Government                                                           |  | $     | 12,460    |                  | $ | 2,025  |                     | $ |         |   |  | $ | 14,485   
|All Other Governments                                                     |  |       | 5,000     |                  |   |       |                     |   |         |   |  |   | 5,000    
|Special Revenue & Special Assesment, Non-guaranteed Agencies & Government |  |       | 366,339   |                  |   | 1,415  |                     |   | (24,241  | ) |  |   | 343,513  
|Public Utilities                                                          |  |       | 300,004   |                  |   | 653    |                     |   | (11,118  | ) |  |   | 289,539  
|Industrial & Miscellaneous                                                |  |       | 1,470,884 |                  |   | 5,626  |                     |   | (93,937  | ) |  |   | 1,382,573
|                                                                          |  |       |           |                  |   |        |                     |   |          |   |  |   |          
|Total Bonds                                                               |  |       | 2,154,687 |                  |   | 9,719  |                     |   | (129,296 | ) |  |   | 2,035,110
|Preferred Stock                                                           |  |       | 47,867    |                  |   |       |                     |   | (8,904   | ) |  |   | 38,963   
|                                                                          |  |       |           |                  |   |        |                     |   |          |   |  |   |          
|Total Bonds and Preferred Stock                                           |  | $     | 2,202,554 |                  | $ | 9,719  |                     | $ | (138,200 | ) |  | $ | 2,074,073
|                                                                          |  |       |           |                  |   |        |                     |   |          |   |  |   |          
|                                                                          |  |       |          
|                                                                          |  |       |           | Gross Unrealized |   |        | EstimatedFair Value
|December 31, 2007                                                         |  | Cost* |           | Gains            |   | Losses |                     |  
|U.S. Government                                                           |  | $     | 12,530    |                  | $ | 1,957  |                     | $ |         |   |  | $ | 14,487   
|All Other Governments                                                     |  |       | 4,995     |                  |   |       |                     |   | (20      | ) |  |   | 4,975    
|Special Revenue & Special Assesment, Non-guaranteed Agencies & Government |  |       | 189,336   |                  |   | 2,140  |                     |   | (781     | ) |  |   | 190,695  
|Public Utilities                                                          |  |       | 162,790   |                  |   | 805    |                     |   | (1,688   | ) |  |   | 161,907  
|Industrial & Miscellaneous                                                |  |       | 1,795,362 |                  |   | 15,743 |                     |   | (36,480  | ) |  |   | 1,774,625
|                                                                          |  |       |           |                  |   |        |                     |   |          |   |  |   |          
|Total Bonds                                                               |  |       | 2,165,013 |                  |   | 20,645 |                     |   | (38,969  | ) |  |   | 2,146,689
|Preferred Stock                                                           |  |       | 63,186    |                  |   | 665    |                     |   | (2,727   | ) |  |   | 61,124   
|                                                                          |  |       |           |                  |   |        |                     |   |          |   |  |   |          
|Total Bonds and Preferred Stock                                           |  | $     | 2,228,199 |                  | $ | 21,310 |                     | $ | (41,696  | ) |  | $ | 2,207,813
|                                                                          |  |       |           |                  |   |        |                     |   |          |   |  |   |          



|* | Amortized cost for bonds and original cost for preferred stocks are presented net of cumulative adjustments for other-than-temporary impairments. The costs exclude valuation
adjustments of $793 thousand and $798 thousand as of September 30, 2008, and December 31, 2007, respectively.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

TIAA-CREF LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS  (continued)

Note 3  Long Term
Bonds and Preferred Stocks (concluded)

Unrealized Losses on Bonds and Preferred Stocks: The cost, gross unrealized losses and estimated fair
values for securities, by the length of time that individual securities had been in a continuous unrealized loss position as of September 30, 2008, are shown in the table below (in thousands):



|                                       |  |       |           |                     |   |          |                     |  |   |          
|-------------------------------------- |  | ----- | --------- | ------------------- | - | -------- | ------------------- |  | - | ---------
|September 30, 2008                     |  | Cost* |           | GrossUnrealizedLoss |   |          | EstimatedFair Value
|Less than twelve months:               |  |       |           |                     |   |          |                     |  |   |          
|Bonds                                  |  | $     | 1,391,732 |                     | $ | (78,315  | )                   |  | $ | 1,313,417
|Preferred Stocks                       |  |       | 27,114    |                     |   | (5,799   | )                   |  |   | 21,315   
|                                       |  |       |           |                     |   |          |                     |  |   |          
|Total less than twelve months          |  | $     | 1,418,846 |                     | $ | (84,114  | )                   |  | $ | 1,334,732
|                                       |  |       |           |                     |   |          |                     |  |   |          
|More than twelve months:               |  |       |           |                     |   |          |                     |  |   |          
|Bonds                                  |  | $     | 279,364   |                     | $ | (50,981  | )                   |  | $ | 228,383  
|Preferred Stocks                       |  |       | 20,753    |                     |   | (3,105   | )                   |  |   | 17,648   
|                                       |  |       |           |                     |   |          |                     |  |   |          
|Total more than twelve months          |  |       | 300,117   |                     |   | (54,086  | )                   |  |   | 246,031  
|                                       |  |       |           |                     |   |          |                     |  |   |          
|Total - All bonds and preferred stocks |  | $     | 1,718,963 |                     | $ | (138,200 | )                   |  | $ | 1,580,763
|                                       |  |       |           |                     |   |          |                     |  |   |          
|                                       |  |       |          
|December 31, 2007                      |  | Cost* |           | GrossUnrealizedLoss |   |          | EstimatedFair Value
|Less than twelve months:               |  |       |           |                     |   |          |                     |  |   |          
|Bonds                                  |  | $     | 477,441   |                     | $ | (20,509  | )                   |  | $ | 456,932  
|Preferred Stocks                       |  |       | 29,905    |                     |   | (1,753   | )                   |  |   | 28,152   
|                                       |  |       |           |                     |   |          |                     |  |   |          
|Total less than twelve months          |  | $     | 507,346   |                     | $ | (22,262  | )                   |  | $ | 485,084  
|                                       |  |       |           |                     |   |          |                     |  |   |          
|More than twelve months:               |  |       |           |                     |   |          |                     |  |   |          
|Bonds                                  |  | $     | 728,723   |                     | $ | (18,460  | )                   |  | $ | 710,263  
|Preferred Stocks                       |  |       | 10,017    |                     |   | (974     | )                   |  |   | 9,043    
|                                       |  |       |           |                     |   |          |                     |  |   |          
|Total more than twelve months          |  |       | 738,740   |                     |   | (19,434  | )                   |  |   | 719,306  
|                                       |  |       |           |                     |   |          |                     |  |   |          
|Total - All bonds and preferred stocks |  | $     | 1,246,086 |                     | $ | (41,696  | )                   |  | $ | 1,204,390
|                                       |  |       |           |                     |   |          |                     |  |   |          



|* | Amortized cost for bonds and original cost for preferred stocks are presented net of cumulative adjustments for other-than-temporary impairments.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------

For the nine months ended September 30, 2008, the categories of securities where the estimated fair value declined and remained below cost for twelve months or
greater were concentrated in Finance (22.3%), Asset Backed Securities (20.4%), Mortgage Backed Securities (18.9%), Manufacturing (9.1%), Utilities (11.4%) and Oil & Gas (5.3%). The preceding percentages were calculated as a percentage
of the gross unrealized loss. The Company holds nine securities which have been in a continuous unrealized loss position for more than 12 months where the gross unrealized loss for each security was greater than $1.0 million at September 30,
2008.



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##### Table of Contents

TIAA-CREF LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS  (continued)

Note 4  Investment
Income and Capital Gains and Losses

Net Investment Income:The components of net investment income for the three month and nine month periods
ended September 30, 2008, and 2007 were as follows (in thousands):



|                                                           |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|---------------------------------------------------------- |  | --------------------------------------- | ------ | - | -------------------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                           |  | For the three monthsended September 30, |        |   | For the nine monthsended September 30, |  
|                                                           |  | 2008                                    |        |   | 2007                                   |   |        | 2008 |  |   | 2007   |  
|Bonds                                                      |  | $                                       | 28,515 |   |                                        | $ | 29,161 |      |  | $ | 86,452 |   |  | $ | 89,764 |  
|Stocks                                                     |  |                                         | 1,022  |   |                                        |   | 903    |      |  |   | 3,309  |   |  |   | 2,105  |  
|Mortgages                                                  |  |                                         | 858    |   |                                        |   | 1,297  |      |  |   | 2,889  |   |  |   | 4,212  |  
|Cash, cash equivalents and short-term investments          |  |                                         | 263    |   |                                        |   | 1,279  |      |  |   | 1,445  |   |  |   | 3,742  |  
|Other long-term investments                                |  |                                         | 13     |   |                                        |   | 11     |      |  |   | 36     |   |  |   | 28     |  
|Other liabilities*                                         |  |                                         | (20    | ) |                                        |   | (52    | )    |  |   | (142   | ) |  |   | (183   | )
|                                                           |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Total gross investment income                              |  |                                         | 30,651 |   |                                        |   | 32,599 |      |  |   | 93,989 |   |  |   | 99,668 |  
|Less investment expenses                                   |  |                                         | (672   | ) |                                        |   | (864   | )    |  |   | (2,365 | ) |  |   | (2,433 | )
|                                                           |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Net investment income before amortization of net IMR gains |  |                                         | 29,979 |   |                                        |   | 31,735 |      |  |   | 91,624 |   |  |   | 97,235 |  
|Amortization of net IMR (losses) gains                     |  |                                         | (301   | ) |                                        |   | (1,101 | )    |  |   | 1,740  |   |  |   | (518   | )
|                                                           |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Net investment income                                      |  | $                                       | 29,678 |   |                                        | $ | 30,634 |      |  | $ | 93,364 |   |  | $ | 96,717 |  
|                                                           |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  



|* | Derivative instruments are included in other liabilities.
|- | ---------------------------------------------------------

Realized
Capital Gains and Losses:The net realized capital gains (losses) on sales and redemptions and other-than-temporary impairments of investments by portfolio for the three month and nine month periods ended September 30, 2008, and 2007 were
as follows (in thousands):



|                                                  |  |                                         |         |   |                                        |   |        |      |  |   |         |   |  |   |        |  
|------------------------------------------------- |  | --------------------------------------- | ------- | - | -------------------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------ | -
|                                                  |  | For the three monthsended September 30, |         |   | For the nine monthsended September 30, |  
|                                                  |  | 2008                                    |         |   | 2007                                   |   |        | 2008 |  |   | 2007    |  
|Bonds                                             |  | $                                       | (21,495 | ) |                                        | $ | (212   | )    |  | $ | (29,634 | ) |  | $ | (203   | )
|Stocks                                            |  |                                         | (14,091 | ) |                                        |   | (692   | )    |  |   | (14,754 | ) |  |   | (692   | )
|Mortgages                                         |  |                                         | (1      | ) |                                        |   | (2,934 | )    |  |   | 3,216   |   |  |   | (2,934 | )
|Cash, cash equivalents and short-term investments |  |                                         |        |   |                                        |   | 6      |      |  |   | 3       |   |  |   | 29     |  
|Other liabilities*                                |  |                                         |        |   |                                        |   | (516   | )    |  |   | (3,093  | ) |  |   | (1,252 | )
|                                                  |  |                                         |         |   |                                        |   |        |      |  |   |         |   |  |   |        |  
|Total before transfers to the IMR                 |  |                                         | (35,587 | ) |                                        |   | (4,348 | )    |  |   | (44,262 | ) |  |   | (5,052 | )
|Transfers to the IMR                              |  |                                         | 760     |   |                                        |   | 3,018  |      |  |   | (2,180  | ) |  |   | 3,257  |  
|                                                  |  |                                         |         |   |                                        |   |        |      |  |   |         |   |  |   |        |  
|Net realized capital losses                       |  | $                                       | (34,827 | ) |                                        | $ | (1,330 | )    |  | $ | (46,442 | ) |  | $ | (1,795 | )
|                                                  |  |                                         |         |   |                                        |   |        |      |  |   |         |   |  |   |        |  



|* | Derivative instruments are included in other liabilities.
|- | ---------------------------------------------------------



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TIAA-CREF LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS  (continued)

Note 4  Investment
Income and Capital Gains and Losses (concluded)

The net realized capital gains (losses) on sales and redemptions of investments by category for the
three month and nine month periods ended September 30, 2008, and 2007 were as follows (in thousands):



|                                  |  |                                         |         |   |                                        |   |        |      |  |   |         |   |  |   |        |  
|--------------------------------- |  | --------------------------------------- | ------- | - | -------------------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------ | -
|                                  |  | For the three monthsended September 30, |         |   | For the nine monthsended September 30, |  
|                                  |  | 2008                                    |         |   | 2007                                   |   |        | 2008 |  |   | 2007    |  
|Losses on sale or maturity        |  | $                                       | (11,213 | ) |                                        | $ | (13    | )    |  | $ | (5,830  | ) |  | $ | (216   | )
|Other-than-temporary impairments  |  |                                         | (24,374 | ) |                                        |   | (4,360 | )    |  |   | (38,521 | ) |  |   | (4,894 | )
|Foreign exchange gains            |  |                                         |        |   |                                        |   | 25     |      |  |   | 89      |   |  |   | 58     |  
|                                  |  |                                         |         |   |                                        |   |        |      |  |   |         |   |  |   |        |  
|Total before transfers to the IMR |  |                                         | (35,587 | ) |                                        |   | (4,348 | )    |  |   | (44,262 | ) |  |   | (5,052 | )
|Transfers to the IMR              |  |                                         | 760     |   |                                        |   | 3,018  |      |  |   | (2,180  | ) |  |   | 3,257  |  
|                                  |  |                                         |         |   |                                        |   |        |      |  |   |         |   |  |   |        |  
|Net realized capital losses       |  | $                                       | (34,827 | ) |                                        | $ | (1,330 | )    |  | $ | (46,442 | ) |  | $ | (1,795 | )
|                                  |  |                                         |         |   |                                        |   |        |      |  |   |         |   |  |   |        |  

Note 5  Derivative Financial Instruments

The following table summarizes the Companys derivative instruments outstanding as of September 30, 2008 and December 31, 2007 (in thousands):



|                                |  |                    |       |               |                   |     |                     |  |   |          |   |               |   |        |                     |   |        |   |  |   |        |  
|------------------------------- |  | ------------------ | ----- | ------------- | ----------------- | --- | ------------------- |  | - | -------- | - | ------------- | - | ------ | ------------------- | - | ------ | - |  | - | ------ | -
|                                |  | September 30, 2008 |       |               | December 31, 2007 |    
|                                |  | Notional           |       | CarryingValue |                   |     | EstimatedFair Value |  |   | Notional |   | CarryingValue |   |        | EstimatedFair Value |  
|Foreign currency swap contracts |  |                    |       |               |                   |     |                     |  |   |          |   |               |   |        |                     |   |        |   |  |   |        |  
|Assets                          |  | $                  |      |               | $                 |    |                     |  | $ |         |   |               | $ |       |                     | $ |       |   |  | $ |       |  
|Liabilities                     |  |                    |      |               |                   |    |                     |  |   |         |   |               |   | 6,047  |                     |   | (3,332 | ) |  |   | (3,332 | )
|                                |  |                    |       |               |                   |     |                     |  |   |          |   |               |   |        |                     |   |        |   |  |   |        |  
|Subtotal                        |  |                    |      |               |                   |    |                     |  |   |         |   |               |   | 6,047  |                     |   | (3,332 | ) |  |   | (3,332 | )
|                                |  |                    |       |               |                   |     |                     |  |   |          |   |               |   |        |                     |   |        |   |  |   |        |  
|Interest rate swap contracts    |  |                    |       |               |                   |     |                     |  |   |          |   |               |   |        |                     |   |        |   |  |   |        |  
|Assets                          |  |                    |      |               |                   |    |                     |  |   |         |   |               |   |       |                     |   |       |   |  |   |       |  
|Liabilities                     |  |                    | 4,000 |               |                   | (26 | )                   |  |   | (26      | ) |               |   | 4,000  |                     |   | (90    | ) |  |   | (90    | )
|                                |  |                    |       |               |                   |     |                     |  |   |          |   |               |   |        |                     |   |        |   |  |   |        |  
|Subtotal                        |  |                    | 4,000 |               |                   | (26 | )                   |  |   | (26      | ) |               |   | 4,000  |                     |   | (90    | ) |  |   | (90    | )
|                                |  |                    |       |               |                   |     |                     |  |   |          |   |               |   |        |                     |   |        |   |  |   |        |  
|Total Derivatives               |  |                    |       |               |                   |     |                     |  |   |          |   |               |   |        |                     |   |        |   |  |   |        |  
|Assets                          |  |                    |      |               |                   |    |                     |  |   |         |   |               |   |       |                     |   |       |   |  |   |       |  
|Liabilities                     |  |                    | 4,000 |               |                   | (26 | )                   |  |   | (26      | ) |               |   | 10,047 |                     |   | (3,422 | ) |  |   | (3,422 | )
|                                |  |                    |       |               |                   |     |                     |  |   |          |   |               |   |        |                     |   |        |   |  |   |        |  
|Subtotal                        |  | $                  | 4,000 |               | $                 | (26 | )                   |  | $ | (26      | ) |               | $ | 10,047 |                     | $ | (3,422 | ) |  | $ | (3,422 | )
|                                |  |                    |       |               |                   |     |                     |  |   |          |   |               |   |        |                     |   |        |   |  |   |        |  

The Companys one foreign currency swap contract outstanding at December 31, 2007, expired on
June 4, 2008. The remaining balance consists of one interest rate swap contract.



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TIAA-CREF LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS  (concluded)

Note 6  Disclosures
About Fair Value of Financial Instruments

The estimated fair value amounts of financial instruments presented in the following table were determined by
the Company using market information available as of September 30, 2008 and December 31, 2007, and appropriate valuation methodologies (in thousands):



|                                                  |  |                    |           |                     |   |               |  |                     |           |  |   |          
|------------------------------------------------- |  | ------------------ | --------- | ------------------- | - | ------------- |  | ------------------- | --------- |  | - | ---------
|                                                  |  | September 30, 2008 |           | December 31, 2007  
|                                                  |  | CarryingValue      |           | EstimatedFair Value |   | CarryingValue |  | EstimatedFair Value
|Assets                                            |  |                    |           |                     |   |               |  |                     |           |  |   |          
|Bonds                                             |  | $                  | 2,153,894 |                     | $ | 2,035,110     |  | $                   | 2,164,565 |  | $ | 2,146,689
|Preferred Stocks                                  |  |                    | 47,867    |                     |   | 38,963        |  |                     | 62,836    |  |   | 61,124   
|Mortgages                                         |  |                    | 81,166    |                     |   | 79,939        |  |                     | 87,120    |  |   | 87,517   
|Cash, cash equivalents and short-term investments |  |                    | 65,723    |                     |   | 65,723        |  |                     | 61,566    |  |   | 61,566   
|Separate account assets                           |  |                    | 581,320   |                     |   | 581,320       |  |                     | 694,131   |  |   | 694,131  
|Separate account seed money investments           |  |                    | 19,799    |                     |   | 19,799        |  |                     | 1,376     |  |   | 1,376    
|Liabilities                                       |  |                    |           |                     |   |               |  |                     |           |  |   |          
|Liability for deposit-type contracts              |  | $                  | 849,545   |                     | $ | 849,545       |  | $                   | 808,995   |  | $ | 808,995  
|Derivative financial instruments                  |  |                    | 26        |                     |   | 26            |  |                     | 3,422     |  |   | 3,422    
|Separate account liabilities                      |  |                    | 581,320   |                     |   | 581,320       |  |                     | 694,131   |  |   | 694,131  

The aggregate carrying values and estimated fair values of publicly traded and privately placed bonds at
September 30, 2008 and December 31, 2007, were as follows (in thousands):



|                       |  |                    |           |                     |   |               |  |                     |           |  |   |          
|---------------------- |  | ------------------ | --------- | ------------------- | - | ------------- |  | ------------------- | --------- |  | - | ---------
|                       |  | September 30, 2008 |           | December 31, 2007  
|                       |  | CarryingValue      |           | EstimatedFair Value |   | CarryingValue |  | EstimatedFair Value
|Publicly traded bonds  |  | $                  | 1,684,882 |                     | $ | 1,589,375     |  | $                   | 1,691,897 |  | $ | 1,676,411
|Privately placed bonds |  |                    | 469,012   |                     |   | 445,735       |  |                     | 472,668   |  |   | 470,278  
|                       |  |                    |           |                     |   |               |  |                     |           |  |   |          
|Total                  |  | $                  | 2,153,894 |                     | $ | 2,035,110     |  | $                   | 2,164,565 |  | $ | 2,146,689
|                       |  |                    |           |                     |   |               |  |                     |           |  |   |          



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

The following discussion highlights significant factors influencing the financial position and results of operations of TIAA-CREF Life Insurance Company (referred to in this document as we,
our, us, or the Company). It should be read in conjunction with the unaudited statutory-basis financial statements and related notes included in Part I, Item 1 of this report and the audited statutory-basis
financial statements as of and for the year ended December 31, 2007, and Potential Risk Factors That May Affect Future Results included in our registration statement on Form S-1 filed with the SEC on July 18, 2008, and declared
effective on July 23, 2008 (Registration Statement).

FORWARD-LOOKING STATEMENTS

This discussion reviews our financial condition and results of operations, including our liquidity and capital resources, for the periods covered by the unaudited
statutory-basis financial statements included in this report. Historical information is presented and discussed and, where appropriate, factors that may affect future financial performance are also identified and discussed. Certain statements
included in this section may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of
1995.

Forward-looking statements include statements about managements expectations, beliefs, intentions or strategies for the future, include the
assumptions underlying these forward-looking statements, and are based on the current expectations, estimates and projections made by management. Forward-looking statements include any statement that may predict, forecast, indicate or imply future
results, performance or achievements instead of historical facts and may contain words like believe, expect, estimate, project, budget, forecast, anticipate,
plan, will, shall, may, and other words, phrases or expressions with similar meaning. While management believes the assumptions underlying any of its forward-looking statements to be reasonable, such
information may be subject to risks and uncertainties which may be difficult to predict or may be beyond managements control, and we cannot give assurance that such statements will prove to be correct. Refer to Potential Risk Factors
That May Affect Future Results included in our Registration Statement for more information about the risks that could affect our future results. A copy of our Registration Statement, including exhibits, is available on the internet site of the
SEC at http://www.sec.gov.

Given these risks and uncertainties, you should not place undue reliance on managements forward-looking statements
as a prediction of actual results. Additionally, managements forward-looking statements represent managements views only as of the date of this report, and management does not undertake any obligation to update, publicly or otherwise,
any forward-looking statement, whether as a result of new information, changed assumptions, future events or otherwise.

OUR BUSINESS

Overview

We are a stock life insurance company that commenced
operations as a legal reserve life insurance company under the laws of the State of New York on December 18, 1996, under our former name, TIAA Life Insurance Company. We changed our name to TIAA-CREF Life Insurance Company on May 1, 1998.
Our headquarters are located at 730 Third Avenue, New York, NY 10017-3206. We are a wholly-owned subsidiary of TIAA. We are subject to regulation by the State of New York Superintendent of Insurance as well as by the insurance regulatory authorities
of certain other states and jurisdictions. We are licensed to issue life insurance and annuity products in all 50 states and the District of Columbia.

Our
primary products are individual annuities, life insurance and funding agreements; the individual annuities and life insurance products are marketed directly to individuals while the funding agreements are issued directly to states. Our individual
products are available to the general public; however, we market primarily to the individuals who own retirement annuities or insurance policies issued by our parent, TIAA. TIAA provides retirement annuities and insurance coverage to more than
3.4 million individuals primarily at 15,000 educational, research and cultural institutions, as well as other nonprofit organizations and certain governmental entities across the United States.



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##### Table of Contents

The majority of the services required for our business operations are provided by TIAA and certain of its direct and
indirect wholly-owned subsidiaries pursuant to various service, investment management, administrative, selling and distribution agreements. Under these agreements, we reimburse TIAA (and TIAA reimburses its applicable subsidiaries) for all costs
associated with providing these services. We believe that such services are efficiently performed in this manner to meet our operational needs and that we, thereby, minimize duplication of costs among TIAA and its subsidiaries. We do not currently
have any employees.

Financial Highlights

For the
first nine months of 2008, we recognized a net loss of $36.2 million compared to net income of $15.3 million for the first nine months of 2007. Our operations were negatively affected by a $3.3 million decrease in our net investment income,
resulting from declining interest rates and a slightly reduced level of invested assets. In addition, we recorded $1.7 million of additional ceded reinsurance premiums during the first quarter of 2008. We recognized approximately $46.4 million of
net realized losses during the first nine months of 2008, primarily due to other-than-temporary impairments within our investment portfolio. At September 30, 2008, total assets were approximately $2,997.6 million, and statutory capital and
surplus was approximately $291.3 million.

While we continued to avoid significant losses associated within our investment portfolio related directly to
the sub-prime mortgage loan market, the resulting contraction of corporate credit in many fixed income markets produced certain valuation impairments in our investment portfolios. We recognized a number of these impairments as realized losses
because we deemed those valuation impairments to be other than temporary. The credit market has been affected by the re-pricing of financial risk within the context of individual security valuations. This re-pricing of risk has been a sharp contrast
to the historically low levels of credit spreads that preceded the current environment which began to occur during the latter part of 2007. With the market requiring higher yields related to corporate credit, the valuations of existing investments
declined in response to market conditions and yielded the recognition of realized impairment losses of $38.5 million during the first nine months of 2008 of which $24.4 million was recognized during the third quarter of 2008.

The deteriorating conditions in the financial and credit markets during the first nine months ended September 30, 2008 had a direct impact on a number of holdings
in our investment portfolio. The market deterioration continued subsequent to September 30, 2008. On-going review of our investment portfolio (through November 12, 2008) has indicated approximately $1.5 million of additional net realized
losses, including net realized losses on sales of securities and an other-than-temporary impairment on one additional holding.

In a challenging period for
the financial services industry, premiums for the first nine months of 2008 of $118.3 million were below premiums of $128.6 million for the first nine months of 2007, representing a decline of $10.3 million, or 8.0%. Policy and contract benefits
also declined for the first nine months of 2008 to $115.1 million from $188.3 million for the same prior year period, representing a decrease of $73.2 million. A key driver for both of these declines was a reduced number of customer-requested,
Internal Revenue Code (IRC) Section 1035 internal tax-free exchanges (internal tax-free exchanges). An internal tax-free exchange is when one annuity contract is surrendered to open another annuity contract within the
same insurance company or affiliate. The reduction in internal tax-free exchanges was primarily attributable to more competitive interest rates compared to other market returns for the first nine months of 2008 compared to the same period of 2007.
The more competitive interest rates resulted in a more competitive portfolio rate for one of our variable annuity products with fixed account options. With a more competitive portfolio rate, the incentive to move accumulations from this product to
another variable annuity without fixed account options was no longer as advantageous resulting in the decline of internal tax-free exchanges. The impact of the reduced internal tax-free exchanges was thus twofold; a decline in surrenders on the
variable annuity product with fixed account options and a decline in premiums from internal tax-free exchanges for our variable annuity products without fixed account options.



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Our Segments

We
provide financial services through the production, sale, distribution and administration of individual annuities, life insurance and funding agreements. We operate three business segments, each distinguished by broad product categories and each
having a strategic focus. Our segments are Individual Annuities, Life Insurance and Funding Agreements. Total premiums and other considerations by segment for the first nine months of 2008 and 2007 are set forth in the following table (in millions):



|                                        |  |                                         |       |      |   |                     |  |   |       |   |  |      |   
|--------------------------------------- |  | --------------------------------------- | ----- | ---- | - | ------------------- |  | - | ----- | - |  | ---- | --
|                                        |  | For the nine months ended September 30, |      
|                                        |  |                                         |       |      |   | Increase/(decrease) | 
|                                        |  | 2008                                    |       | 2007 |   | $                   |  |   | %     |  
|Segment                                 |  |                                         |       |      |   |                     |  |   |       |   |  |      |   
|Individual Annuity                      |  | $                                       | 97.9  |      | $ | 108.5               |  | $ | (10.6 | ) |  | (9.8 | %)
|Life Insurance                          |  |                                         | 20.4  |      |   | 20.1                |  |   | 0.3   |   |  | 1.5  | % 
|                                        |  |                                         |       |      |   |                     |  |   |       |   |  |      |   
|Total premiums and other considerations |  | $                                       | 118.3 |      | $ | 128.6               |  | $ | (10.3 | ) |  | (8.0 | %)
|                                        |  |                                         |       |      |   |                     |  |   |       |   |  |      |   
|Funding Agreements *                    |  | $                                       | 99.5  |      | $ | 76.9                |  | $ | 22.6  |   |  | 29.4 | % 
|                                        |  |                                         |       |      |   |                     |  |   |       |   |  |      |   
|Total deposits received                 |  | $                                       | 99.5  |      | $ | 76.9                |  | $ | 22.6  |   |  | 29.4 | % 
|                                        |  |                                         |       |      |   |                     |  |   |       |   |  |      |   



|* | The deposits that we receive on funding agreements are recorded as liabilities and are not treated as premiums or as revenue under SAP. These liabilities are included in Reserves
for Life and Health, Annuities and Deposit-type Contracts.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Individual Annuities.We market a variety of individual after-tax annuity
contracts. We distribute our annuity products through non-commissioned agents appointed by us. Those agents selling variable annuities and/or modified guaranteed annuities are also registered representatives of our affiliated broker-dealers. We
offer both flexible premium deferred annuities and single premium immediate annuities.

Our variable annuities offer contract owners the opportunity to
invest in various investment subaccounts of the Separate Accounts, based on the contract owners investment allocation decisions, while some of the variable annuities also offer a fixed account option through our General Account, which
guarantees principal and a minimum interest rate. The Separate Accounts that support our variable annuities are registered with the SEC as unit investment trusts, and their assets are invested in corresponding portfolios of the TIAA-CREF Life Funds,
a Delaware statutory trust registered with the SEC under the Investment Company Act of 1940 (File No. 811-08961) as an open-end management investment company, or in other, non-proprietary funds.

Premiums, which include internal tax-free exchanges, were lower for the first nine months of 2008 than the first nine months of 2007 because the dollar value of internal
tax-free exchanges decreased significantly from the prior year. With a more competitive portfolio rate on one of variable annuity products with fixed account options, the incentive to move accumulations from this product to another variable annuity
without fixed account options was no longer as advantageous. Excluding internal tax-free exchanges, premiums for the first nine months of 2008 were $11.6 million, or 16.6%, higher than the first nine months of 2007.

During the first nine months of 2008, we began marketing two new deferred annuities. In March 2008, we began offering a deferred annuity product with 47 investment
choices, of which ten are TIAA-CREF Life Funds and the other 37 are non-proprietary funds from 13 other investment management companies. This deferred annuity product allows individual investors to accumulate funds on a tax-deferred basis for
retirement or other long-term investment purposes, and to receive future payment based on the amount accumulated as lifetime income or through other payment options. In September 2008, we began marketing an annuity product that guarantees
principal and a stated interest rate if premiums are held to a maturity date. We expect that these two deferred annuity products will complement each other to meet contract owners risk profiles and to provide contract owners with a variety of
variable annuity investment subaccount options and fixed term deposits. Additionally, we will continue marketing a single premium immediate annuity.

Life Insurance.We distribute and sell term life insurance, universal life insurance and variable universal life insurance products through non-commissioned agents appointed by us. Those agents selling variable insurance products are
also registered representatives of our affiliated broker-dealers. Our primary marketing efforts for term life insurance products involve direct mail and an Internet web site which is designed to direct potential



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##### Table of Contents

policyholders to a call center staffed by licensed agents. Our universal life and variable universal life insurance products are also sold through
non-commissioned agents. Assets associated with variable universal life insurance policies are held in various investment subaccounts of a Separate Account, based on policyholders investment allocation decisions. That Separate Account is
registered with the SEC as a unit investment trust, and its assets are invested in the corresponding portfolios of the TIAA-CREF Life Funds or in other, non-proprietary funds.

Life insurance premiums for variable universal life products for the first nine months of 2008 increased $2.7 million compared to the same prior year period. Although variable universal life premiums increased during
the first nine months of 2008, our total net life insurance premiums remained relatively flat experiencing a slight increase of only $0.3 million for the first nine months of 2008 compared to the prior year period primarily due to an offsetting
decline of $2.4 million in term life insurance premiums.

During the first nine months of 2008, we made an organizational change to cease developing new
financial intermediary relationships while continuing to maintain existing relationships. We expect this to have a near term impact on life insurance premiums, as a significant portion of new life premiums was attributed to the financial
intermediary channel. Our strategy going forward is to increase our focus on our core participant base. New life premiums for next year 2009 are expected to be basically flat relative to 2008.

Funding Agreements.Our Funding Agreements business focuses primarily on providing non-participating flexible premium funding agreements issued from our General
Account to support education-related investment and/or savings programs sponsored by various states. Several states sponsor a 529 college savings plan (named after Section 529 of the IRC), and each plan is a tax-advantaged investment and
savings program designed to encourage account owners to save for the future higher education expenses of a designated beneficiary. Some states offer a guaranteed option to those investing in the states college savings plan. We provide funding
agreements to certain states to support their guaranteed option, which guarantees a return of account owners principal, with interest. We can also make available a funding agreement to any state that provides a state scholarship program for
those seeking higher education. We currently have eight outstanding funding agreements with state-sponsored 529 college savings plans, and existing accumulations remain in the funding agreements previously issued to three other states. We have one
funding agreement with a state associated with their state scholarship program.

The liability for our funding agreement business increased by $6.6
million, or 0.8%, from $842.9 million as of December 31, 2007, to $849.5 million as of September 30, 2008. This increase was primarily driven by deposits of $106.7 million, investments earnings of $23.3 million and other net changes in
reserves of $14.0 million exceeding withdrawals of $124.8 million during the first nine months of 2008. The withdrawals continued to be impacted by the run-off of the funding agreements associated with two states which terminated their contracts for
new deposits in 2006.

KNOWN TRENDS AND UNCERTAINTIES

The various trends that could impact our future results of operations and financial condition include, but are not limited to, general economic conditions, including the interest rate environment and equity market returns, changes in those
general economic conditions, and changes in life expectancy trends, which could impact our Individual Annuity and Life Insurance businesses. Additionally, our Known Trends and Uncertainties, included in Managements Discussion
and Analysis of Financial Condition and Result of Operations of our Registration Statement, are incorporated herein by reference.

CRITICAL
ACCOUNTING POLICIES

Our accounting policies require management to make interpretative and valuation judgments and to make estimates based on
assumptions that affect the amounts of assets, liabilities, revenues and expenses reported in our statutory-basis financial statements. Because the use of assumptions and estimates inherently entails uncertainty, the effects of accounting policies
under different conditions could produce results that are significantly different. Additionally, actual amounts may differ from our estimates. Our Critical Accounting Policies, included in Managements Discussion and Analysis
of Financial Condition and Result of Operations of our Registration Statement, are incorporated herein by reference.



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##### Table of Contents

RESULTS OF OPERATIONS

Three Months Ended September 30, 2008, Compared to Three Months Ended September 30, 2007

The following table sets forth
our statutory-basis statements of operations for the periods indicated (in millions, except percentages):



|                                                                                                  |  |                                          |       |   |      |   |       |                     |  |   |       |   |  |        |   
|------------------------------------------------------------------------------------------------- |  | ---------------------------------------- | ----- | - | ---- | - | ----- | ------------------- |  | - | ----- | - |  | ------ | --
|                                                                                                  |  | For the three months ended September 30, |      
|                                                                                                  |  |                                          |       |   |      |   |       | Increase/(decrease) | 
|                                                                                                  |  | 2008                                     |       |   | 2007 |   |       | $                   |  |   | %     |  
|REVENUES                                                                                          |  |                                          |       |   |      |   |       |                     |  |   |       |   |  |        |   
|Individual annuity premiums and other considerations                                              |  | $                                        | 43.3  |   |      | $ | 38.8  |                     |  | $ | 4.5   |   |  | 11.6   | % 
|Life insurance premiums                                                                           |  |                                          | 9.1   |   |      |   | 8.2   |                     |  |   | 0.9   |   |  | 11.0   | % 
|                                                                                                  |  |                                          |       |   |      |   |       |                     |  |   |       |   |  |        |   
|Total premiums and other considerations                                                           |  |                                          | 52.4  |   |      |   | 47.0  |                     |  |   | 5.4   |   |  | 11.5   | % 
|Net investment income                                                                             |  |                                          | 29.7  |   |      |   | 30.6  |                     |  |   | (0.9  | ) |  | (2.9   | %)
|                                                                                                  |  |                                          |       |   |      |   |       |                     |  |   |       |   |  |        |   
|TOTAL REVENUES                                                                                    |  |                                          | 82.1  |   |      |   | 77.6  |                     |  |   | 4.5   |   |  | 5.8    | % 
|                                                                                                  |  |                                          |       |   |      |   |       |                     |  |   |       |   |  |        |   
|EXPENSES                                                                                          |  |                                          |       |   |      |   |       |                     |  |   |       |   |  |        |   
|Policy and contract benefits                                                                      |  |                                          | 42.9  |   |      |   | 48.8  |                     |  |   | (5.9  | ) |  | (12.1  | %)
|Increase (decrease) in policy and contract reserves                                               |  |                                          | 10.1  |   |      |   | (19.0 | )                   |  |   | 29.1  |   |  | (153.2 | %)
|Operating expenses                                                                                |  |                                          | 9.3   |   |      |   | 10.4  |                     |  |   | (1.1  | ) |  | (10.6  | %)
|Transfers to separate accounts, net                                                               |  |                                          | 6.3   |   |      |   | 24.9  |                     |  |   | (18.6 | ) |  | (74.7  | %)
|Other, net                                                                                        |  |                                          | 6.2   |   |      |   | 7.6   |                     |  |   | (1.4  | ) |  | (18.4  | %)
|                                                                                                  |  |                                          |       |   |      |   |       |                     |  |   |       |   |  |        |   
|TOTAL EXPENSES                                                                                    |  |                                          | 74.8  |   |      |   | 72.7  |                     |  |   | 2.1   |   |  | 2.9    | % 
|                                                                                                  |  |                                          |       |   |      |   |       |                     |  |   |       |   |  |        |   
|Income before federal income taxes and net realized capital losses                                |  |                                          | 7.3   |   |      |   | 4.9   |                     |  |   | 2.4   |   |  | 49.0   | % 
|Federal income tax expense (benefit)                                                              |  |                                          | 2.7   |   |      |   | (0.4  | )                   |  |   | 3.1   |   |  | (775.0 | %)
|Net realized capital losses, net of taxes and after transfers to the interest maintenance reserve |  |                                          | (34.8 | ) |      |   | (1.4  | )                   |  |   | (33.4 | ) |  | 2385.7 | % 
|                                                                                                  |  |                                          |       |   |      |   |       |                     |  |   |       |   |  |        |   
|NET (LOSS) INCOME                                                                                 |  | $                                        | (30.2 | ) |      | $ | 3.9   |                     |  | $ | (34.1 | ) |  | (874.4 | %)
|                                                                                                  |  |                                          |       |   |      |   |       |                     |  |   |       |   |  |        |   

The individual components of net investment income are presented in the table below (in millions, except
percentages):



|                                                                                             |  |                                          |      |   |      |   |      |                     |  |   |      |   |  |        |   
|-------------------------------------------------------------------------------------------- |  | ---------------------------------------- | ---- | - | ---- | - | ---- | ------------------- |  | - | ---- | - |  | ------ | --
|                                                                                             |  | For the three months ended September 30, |     
|                                                                                             |  |                                          |      |   |      |   |      | Increase/(decrease) | 
|                                                                                             |  | 2008                                     |      |   | 2007 |   |      | $                   |  |   | %    |  
|Bonds                                                                                        |  | $                                        | 28.5 |   |      | $ | 29.2 |                     |  | $ | (0.7 | ) |  | (2.4   | %)
|Preferred stocks                                                                             |  |                                          | 1.0  |   |      |   | 0.9  |                     |  |   | 0.1  |   |  | 11.1   | % 
|Mortgages                                                                                    |  |                                          | 0.8  |   |      |   | 1.3  |                     |  |   | (0.5 | ) |  | (38.5  | %)
|Cash, cash equivalents and short-term investments                                            |  |                                          | 0.3  |   |      |   | 1.3  |                     |  |   | (1.0 | ) |  | (76.9  | %)
|Other liabilities*                                                                           |  |                                          | 0.1  |   |      |   | (0.1 | )                   |  |   | 0.2  |   |  | (200.0 | %)
|                                                                                             |  |                                          |      |   |      |   |      |                     |  |   |      |   |  |        |   
|TOTAL GROSS INVESTMENT INCOME                                                                |  |                                          | 30.7 |   |      |   | 32.6 |                     |  |   | (1.9 | ) |  | (5.8   | %)
|Less investment expenses                                                                     |  |                                          | (0.7 | ) |      |   | (0.9 | )                   |  |   | 0.2  |   |  | (22.2  | %)
|                                                                                             |  |                                          |      |   |      |   |      |                     |  |   |      |   |  |        |   
|Net investment income before amortization of net interest maintenance reserve gains (losses) |  |                                          | 30.0 |   |      |   | 31.7 |                     |  |   | (1.7 | ) |  | (5.4   | %)
|Amortization of net interest maintenance reserve losses                                      |  |                                          | (0.3 | ) |      |   | (1.1 | )                   |  |   | 0.8  |   |  | (72.7  | %)
|                                                                                             |  |                                          |      |   |      |   |      |                     |  |   |      |   |  |        |   
|TOTAL NET INVESTMENT INCOME                                                                  |  | $                                        | 29.7 |   |      | $ | 30.6 |                     |  | $ | (0.9 | ) |  | (2.9   | %)
|                                                                                             |  |                                          |      |   |      |   |      |                     |  |   |      |   |  |        |   



|* | Derivative instruments are included in other liabilities.
|- | ---------------------------------------------------------

Total
Premiums and Other Considerations.Total premiums and other considerations totaled $52.4 million for the quarter ended September 30, 2008, compared to $47.0 million for the quarter ended September 30, 2007, an increase of $5.4 million,
or 11.5%.



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##### Table of Contents

Individual annuity premiums and other considerations increased by $4.5 million, or 11.6%, for the quarter ended
September 30, 2008 compared to the same period of 2007. The $4.5 million increase was primarily attributable to an increase of $5.8 million in our variable annuity products with fixed account options, partially offset by a decline of $1.3
million in our variable annuity products without fixed account options, which was driven by a decrease in internal tax-free exchanges.

Life insurance
premiums increased slightly for the quarter ended September 30, 2008, compared to the same period of 2007. The $0.9 million net increase in life insurance premiums was primarily attributable to an increase of $1.3 million in our direct term
life insurance partially offset by a $0.4 million decrease in our universal life products.

Net Investment Income.Net investment income includes
gross earnings on investments, investment expenses and amortization of capital gains and losses from the interest maintenance reserve. Net investment income totaled $29.7 million for the quarter ended September 30, 2008, compared to $30.6
million for the quarter ended September 30, 2007, resulting in a decrease of $0.9 million, or 2.9 %. Contributing to the variance was a $1.7 million decrease in gross investment income which resulted primarily from a decline in the average
invested asset balances and overall decline in interest rates during the third quarter of 2008 as compared to the same period in 2007. This decrease was partially offset by a favorable variance in amortization of the interest maintenance reserve of
$0.9 million resulting from a decline in amortization of net capital losses.

Policy and Contract Benefits.Policy and contract benefits, which
include income benefit payments, annuity and surrender benefits, interest and adjustments on contracts and death payments, totaled $42.9 million for the quarter ended September 30, 2008, compared to $48.8 million for the quarter ended
September 30, 2007, a decrease of $5.9 million, or 12.1%. This decrease was primarily attributable to a $6.5 million decline in surrenders on our individual annuity products in part driven by internal tax-free exchanges, partially offset by a
$0.6 million increase in benefit payments.

The $6.5 million year-over-year decline in surrenders of individual annuity products was primarily driven by
reduced surrender activity of $20.0 million on one of our variable annuity products with fixed account options. Compared to the third quarter of 2007, interest rates for the third quarter of 2008 were more competitive relative to other market
returns which produced a more competitive portfolio rate on this annuity product and resulted in a decrease of customer outflows. Partially offsetting the reduced surrender activity on this variable annuity product was an increase in surrender
activity of $13.5 million on our variable annuity products without fixed account options primarily due to volatile equity market conditions and the recent economic slowdown.

The increase in benefit payments of $0.6 million was primarily due to increases in term life and annuity benefit payments.

Change in Policy and Contract Reserve.For the quarter ended September 30, 2008, the change in policy and contract reserves was $10.1 million, an increase of $29.1 million compared to the quarter ended September 30, 2007.
The $29.1 million increase was primarily attributable to an increase in reserves on one of our variable annuity products with fixed account options, compared to a release of reserves during the quarter ended September 30, 2007. This change was
due to the decline in surrender activity for this variable annuity product, which is discussed in Policy and Contract Benefits above.

Net
Transfers to Separate Accounts.Net transfers to Separate Accounts of $6.3 million during the quarter ended September 30, 2008, compared to $24.9 million during the quarter ended September 30, 2007, resulted in a decrease of $18.6
million. The year-over-year decline was the result of discretionary contract-holder activity and reflected the volatility and continued negative returns of the equity markets during the third quarter of 2008.

Net Realized Capital Losses.Net realized capital losses are comprised of net gains and losses from sales and redemptions of investments as well as related
foreign exchange and write-downs for other-than-temporary impairments of investments. See Critical Accounting Policies included in Managements Discussion and Analysis of Financial Condition and Result of Operations of
our Registration Statement for a discussion of our impairment screening process.

For the quarter ended September 30, 2008, net realized capital
losses (after the transfer of interest-related capital losses to the interest maintenance reserve (IMR) of $0.8 million and $3.0 million for the third quarter of 2008 and 2007, respectively), increased by $33.4 million, to $34.8 million,
from $1.4 million for the quarter ended September 30, 2007. Contributing to this increase was a $20.0 million increase in other-than-temporary impairment write-downs associated with our invested asset portfolios and a $13.9 million increase in
losses from sales and redemptions of investments, partially offset by an increase in foreign exchange gains of $2.7 million.



18



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##### Table of Contents

Nine months Ended September 30, 2008, Compared to Nine months Ended September 30, 2007

The following table sets forth our statutory-basis statements of operations for the periods indicated (in millions, except percentages):



|                                                                                                                       |  |                                         |       |   |      |   |        |                     |  |   |       |   |  |        |   
|---------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- | ----- | - | ---- | - | ------ | ------------------- |  | - | ----- | - |  | ------ | --
|                                                                                                                       |  | For the nine months ended September 30, |      
|                                                                                                                       |  |                                         |       |   |      |   |        | Increase/(decrease) | 
|                                                                                                                       |  | 2008                                    |       |   | 2007 |   |        | $                   |  |   | %     |  
|REVENUES                                                                                                               |  |                                         |       |   |      |   |        |                     |  |   |       |   |  |        |   
|Individual annuity premiums and other considerations                                                                   |  | $                                       | 97.9  |   |      | $ | 108.5  |                     |  | $ | (10.6 | ) |  | (9.8   | %)
|Life insurance premiums                                                                                                |  |                                         | 20.4  |   |      |   | 20.1   |                     |  |   | 0.3   |   |  | 1.5    | % 
|                                                                                                                       |  |                                         |       |   |      |   |        |                     |  |   |       |   |  |        |   
|Total premiums and other considerations                                                                                |  |                                         | 118.3 |   |      |   | 128.6  |                     |  |   | (10.3 | ) |  | (8.0   | %)
|Net investment income                                                                                                  |  |                                         | 93.4  |   |      |   | 96.7   |                     |  |   | (3.3  | ) |  | (3.4   | %)
|                                                                                                                       |  |                                         |       |   |      |   |        |                     |  |   |       |   |  |        |   
|TOTAL REVENUES                                                                                                         |  |                                         | 211.7 |   |      |   | 225.3  |                     |  |   | (13.6 | ) |  | (6.0   | %)
|                                                                                                                       |  |                                         |       |   |      |   |        |                     |  |   |       |   |  |        |   
|EXPENSES                                                                                                               |  |                                         |       |   |      |   |        |                     |  |   |       |   |  |        |   
|Policy and contract benefits                                                                                           |  |                                         | 115.1 |   |      |   | 188.3  |                     |  |   | (73.2 | ) |  | (38.9  | %)
|Increase (decrease) in policy and contract reserves                                                                    |  |                                         | 30.5  |   |      |   | (113.7 | )                   |  |   | 144.2 |   |  | (126.8 | %)
|Operating expenses                                                                                                     |  |                                         | 30.2  |   |      |   | 29.4   |                     |  |   | 0.8   |   |  | 2.7    | % 
|Transfers to separate accounts, net                                                                                    |  |                                         | 5.4   |   |      |   | 78.9   |                     |  |   | (73.5 | ) |  | (93.2  | %)
|Other, net                                                                                                             |  |                                         | 17.1  |   |      |   | 20.2   |                     |  |   | (3.1  | ) |  | (15.3  | %)
|                                                                                                                       |  |                                         |       |   |      |   |        |                     |  |   |       |   |  |        |   
|TOTAL EXPENSES                                                                                                         |  |                                         | 198.3 |   |      |   | 203.1  |                     |  |   | (4.8  | ) |  | (2.4   | %)
|                                                                                                                       |  |                                         |       |   |      |   |        |                     |  |   |       |   |  |        |   
|Income before federal income taxes and net realized capital losses                                                     |  |                                         | 13.4  |   |      |   | 22.2   |                     |  |   | (8.8  | ) |  | (39.6  | %)
|Federal income tax expense                                                                                             |  |                                         | 3.2   |   |      |   | 5.1    |                     |  |   | (1.9  | ) |  | (37.3  | %)
|Net realized capital losses, net of taxes and after transfers to the interest maintenance reserve                      |  |                                         | (46.4 | ) |      |   | (1.8   | )                   |  |   | (44.6 | ) |  | 2477.8 | % 
|                                                                                                                       |  |                                         |       |   |      |   |        |                     |  |   |       |   |  |        |   
|NET (LOSS) INCOME                                                                                                      |  | $                                       | (36.2 | ) |      | $ | 15.3   |                     |  | $ | (51.5 | ) |  | (336.6 | %)
|                                                                                                                       |  |                                         |       |   |      |   |        |                     |  |   |       |   |  |        |   
|                                                                                                                       | 
|The individual components of net investment income are presented in the table below (in millions, except percentages): |  |                                         |       |  
|                                                                                                                       | 
|                                                                                                                       |  | For the nine months ended September 30, |      
|                                                                                                                       |  |                                         |       |   |      |   |        | Increase/(decrease) | 
|                                                                                                                       |  | 2008                                    |       |   | 2007 |   |        | $                   |  |   | %     |  
|Bonds                                                                                                                  |  | $                                       | 86.5  |   |      | $ | 89.8   |                     |  | $ | (3.3  | ) |  | (3.7   | %)
|Preferred stocks                                                                                                       |  |                                         | 3.3   |   |      |   | 2.1    |                     |  |   | 1.2   |   |  | 57.1   | % 
|Mortgages                                                                                                              |  |                                         | 2.9   |   |      |   | 4.2    |                     |  |   | (1.3  | ) |  | (31.0  | %)
|Cash, cash equivalents and short-term investments                                                                      |  |                                         | 1.4   |   |      |   | 3.7    |                     |  |   | (2.3  | ) |  | (62.2  | %)
|Other liabilities*                                                                                                     |  |                                         | (0.1  | ) |      |   | (0.2   | )                   |  |   | 0.1   |   |  | (50.0  | %)
|                                                                                                                       |  |                                         |       |   |      |   |        |                     |  |   |       |   |  |        |   
|TOTAL GROSS INVESTMENT INCOME                                                                                          |  |                                         | 94.0  |   |      |   | 99.6   |                     |  |   | (5.6  | ) |  | (5.6   | %)
|Less investment expenses                                                                                               |  |                                         | (2.4  | ) |      |   | (2.4   | )                   |  |   |      |   |  | 0.0    | % 
|                                                                                                                       |  |                                         |       |   |      |   |        |                     |  |   |       |   |  |        |   
|Net investment income before amortization of net interest maintenance reserve gains (losses)                           |  |                                         | 91.6  |   |      |   | 97.2   |                     |  |   | (5.6  | ) |  | (5.8   | %)
|Amortization of net interest maintenance reserve gains (losses)                                                        |  |                                         | 1.7   |   |      |   | (0.5   | )                   |  |   | 2.2   |   |  | (440.0 | %)
|                                                                                                                       |  |                                         |       |   |      |   |        |                     |  |   |       |   |  |        |   
|TOTAL NET INVESTMENT INCOME                                                                                            |  | $                                       | 93.3  |   |      | $ | 96.7   |                     |  | $ | (3.4  | ) |  | (3.5   | %)
|                                                                                                                       |  |                                         |       |   |      |   |        |                     |  |   |       |   |  |        |   



|* | Derivative instruments are included in other liabilities.
|- | ---------------------------------------------------------

Total
Premiums and Other Considerations.Total premiums and other considerations totaled $118.3 million for the first nine months of 2008, compared to $128.6 million for the first nine months of 2007, a decrease of $10.3 million, or 8.0 %.



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Individual annuity premiums and other considerations decreased by $10.6 million, or 9.8%, during the first nine months of
2008 compared to the same period of 2007. The $10.6 million decrease was primarily attributable to a $23.6 million decline in our variable annuity products without fixed account options, resulting from a decrease in internal tax-free exchanges. The
decrease in premiums for these variable annuity products was partially offset by an increase of $13.0 million in our variable annuity products with fixed account options.

Life insurance premiums increased slightly for the first nine months of 2008, compared to the same period of 2007. The $0.3 million net increase in life insurance premiums was primarily attributable to an increase of
$2.8 million in our universal life products partially offset by a $2.5 million decrease in our direct term life insurance.

Net Investment
Income.Net investment income, which includes gross earnings on investments, investment expenses and amortization of capital gains and losses from the interest maintenance reserve, totaled $93.3 million for the first nine months of 2008,
compared to $96.7 million for the first nine months of 2007, resulting in a decrease of $3.4 million, or 3.5%. This decrease in investment income primarily resulted from a decline in the average invested asset balances and overall decline in
interest rates during the first nine months 2008 as compared to the same period in 2007, partially offset by an increase of $2.2 million in amortization of net capital gains from the interest maintenance reserve.

Policy and Contract Benefits.Policy and contract benefits totaled $115.1 million for the first nine months of 2008, compared to $188.3 million for the first nine
months of 2007, a decrease of $73.2 million, or 38.9%. This decrease was primarily attributable to a $79.9 million decline in surrenders on our individual annuity products in part driven by a reduction in internal tax-free exchanges, partially
offset by a $6.7 million increase in benefit payments.

The $79.9 million year-over-year decline in surrenders of individual annuity products was primarily
driven by reduced surrender activity of $99.8 million on one of our variable annuity products with fixed account options. During the first nine months of 2008, the portfolio rate on this variable annuity product became more competitive as interest
rates became more competitive relative to other market returns, resulting in a decrease in customer outflows. Partially offsetting the reduced surrenders on this variable annuity product was an increase in surrenders of $19.9 million on our variable
annuity products without fixed account options due to the volatile equity market conditions and the recent economic slowdown.

The increase in benefit
payments of $6.7 million was primarily due to increases in term life, fixed universal life and annuity benefit payments.

Change in Policy and Contract
Reserve.Policy and contract reserves increased $30.5 million during first nine months of 2008, compared to a decrease of $113.7 million during the first nine months of 2007, which resulted in a year-over-year increase of $144.2 million. This
increase was primarily attributable to an increase in reserves on one of our variable annuity products with fixed account options, compared to a release of reserves during the first nine months of 2007. This change was due to the decline in
surrender activity for this variable annuity product, which is discussed in Policy and Contract Benefits above.

Net Transfers to Separate
Accounts.Net transfers to the Separate Accounts of $5.4 million for the first nine months of 2008, compared to $78.9 million for the same prior year period, resulted in a decrease of $73.5 million. The year-over-year decline was the result of
discretionary contract-holder activity and reflected the volatility and continued negative returns of the equity markets during the first nine months of 2008.

Net Realized Capital Losses.Net realized capital losses (after the transfer to the IMR of interest-related capital gains of $2.1 million and losses of $3.3 million for the first nine months of 2008 and 2007,
respectively) increased by $44.6 million, to $46.4 million for the first nine months of 2008, from $1.8 million for the same prior year period. This increase was primarily due to a $33.6 million increase in other-than-temporary impairment
write-downs associated with our invested asset portfolios resulting from the deteriorating conditions in the financial and credit markets. Also contributing to the increase in net realized losses was a $5.6 million increase in losses from the sales
and redemptions of investments.



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FINANCIAL CONDITION

The following table sets forth our statutory-basis statements of admitted assets, liabilities and capital and surplus (in millions, except percentages):



|                                                                               |  |                   |         |                  |   |                     |   |   |        |   |  |        |   
|------------------------------------------------------------------------------ |  | ----------------- | ------- | ---------------- | - | ------------------- | - | - | ------ | - |  | ------ | --
|                                                                               |  | September 30,2008 |         | December 31,2007 |   | Increase/(decrease) |  
|                                                                               |  |                   |         | $                |   |                     | % |  
|ADMITTED ASSETS                                                                |  |                   |         |                  |   |                     |   |   |        |   |  |        |   
|Bonds                                                                          |  | $                 | 2,153.9 |                  | $ | 2,164.6             |   | $ | (10.7  | ) |  | (0.5   | %)
|Preferred stocks                                                               |  |                   | 47.9    |                  |   | 62.8                |   |   | (14.9  | ) |  | (23.7  | %)
|Mortgages                                                                      |  |                   | 81.1    |                  |   | 87.1                |   |   | (6.0   | ) |  | (6.9   | %)
|Other long term investments                                                    |  |                   | 5.8     |                  |   | 1.9                 |   |   | 3.9    |   |  | 205.3  | % 
|Cash, cash equivalents and short-term investments                              |  |                   | 65.7    |                  |   | 61.6                |   |   | 4.1    |   |  | 6.7    | % 
|Investment income due and accrued                                              |  |                   | 29.2    |                  |   | 28.2                |   |   | 1.0    |   |  | 3.5    | % 
|                                                                               |  |                   |         |                  |   |                     |   |   |        |   |  |        |   
|Invested Assets                                                                |  |                   | 2,383.6 |                  |   | 2,406.2             |   |   | (22.6  | ) |  | (0.9   | %)
|Federal income tax recoverable from TIAA                                       |  |                   |        |                  |   | 0.8                 |   |   | (0.8   | ) |  | (100.0 | %)
|Net deferred federal income tax asset                                          |  |                   | 2.2     |                  |   | 2.5                 |   |   | (0.3   | ) |  | (12.0  | %)
|Other assets                                                                   |  |                   | 10.6    |                  |   | 10.4                |   |   | 0.2    |   |  | 1.9    | % 
|                                                                               |  |                   |         |                  |   |                     |   |   |        |   |  |        |   
|Total general account assets                                                   |  |                   | 2,396.4 |                  |   | 2,419.9             |   |   | (23.5  | ) |  | (1.0   | %)
|Separate account assets                                                        |  |                   | 601.1   |                  |   | 695.5               |   |   | (94.4  | ) |  | (13.6  | %)
|                                                                               |  |                   |         |                  |   |                     |   |   |        |   |  |        |   
|TOTAL ADMITTED ASSETS                                                          |  | $                 | 2,997.5 |                  | $ | 3,115.4             |   | $ | (117.9 | ) |  | (3.8   | %)
|                                                                               |  |                   |         |                  |   |                     |   |   |        |   |  |        |   
|LIABILITIES                                                                    |  |                   |         |                  |   |                     |   |   |        |   |  |        |   
|Reserves for life and health, annuities and deposit-type contracts             |  | $                 | 2,080.9 |                  | $ | 2,043.7             |   | $ | 37.2   |   |  | 1.8    | % 
|Asset valuation reserve                                                        |  |                   | 13.7    |                  |   | 10.3                |   |   | 3.4    |   |  | 33.0   | % 
|Interest maintenance reserve                                                   |  |                   | 1.7     |                  |   | 1.2                 |   |   | 0.5    |   |  | 41.7   | % 
|Federal income tax payable to TIAA                                             |  |                   | 2.4     |                  |   |                    |   |   | 2.4    |   |  |       |   
|Other liabilities                                                              |  |                   | 26.2    |                  |   | 34.0                |   |   | (7.8   | ) |  | (22.9  | %)
|                                                                               |  |                   |         |                  |   |                     |   |   |        |   |  |        |   
|Total general account liabilities                                              |  |                   | 2,124.9 |                  |   | 2,089.2             |   |   | 35.7   |   |  | 1.7    | % 
|Separate account liabilities                                                   |  |                   | 581.3   |                  |   | 694.1               |   |   | (112.8 | ) |  | (16.3  | %)
|                                                                               |  |                   |         |                  |   |                     |   |   |        |   |  |        |   
|TOTAL LIABILITIES                                                              |  |                   | 2,706.2 |                  |   | 2,783.3             |   |   | (77.1  | ) |  | (2.8   | %)
|                                                                               |  |                   |         |                  |   |                     |   |   |        |   |  |        |   
|CAPITAL AND SURPLUS                                                            |  |                   |         |                  |   |                     |   |   |        |   |  |        |   
|Capital (2,500 shares of $1,000 par value common stock issued and outstanding) |  |                   | 2.5     |                  |   | 2.5                 |   |   |       |   |  | 0.0    | % 
|Additional paid-in capital                                                     |  |                   | 287.5   |                  |   | 287.5               |   |   |       |   |  | 0.0    | % 
|Surplus                                                                        |  |                   | 1.3     |                  |   | 42.1                |   |   | (40.8  | ) |  | (96.9  | %)
|                                                                               |  |                   |         |                  |   |                     |   |   |        |   |  |        |   
|TOTAL CAPITAL AND SURPLUS                                                      |  |                   | 291.3   |                  |   | 332.1               |   |   | (40.8  | ) |  | (12.3  | %)
|                                                                               |  |                   |         |                  |   |                     |   |   |        |   |  |        |   
|TOTAL LIABILITIES, CAPITAL AND SURPLUS                                         |  | $                 | 2,997.5 |                  | $ | 3,115.4             |   | $ | (117.9 | ) |  | (3.8   | %)
|                                                                               |  |                   |         |                  |   |                     |   |   |        |   |  |        |   

Admitted Assets

Total Admitted Assets.Total admitted assets of $2,997.5 million as of September 30, 2008, decreased $117.9 million, or 3.8%, from $3,115.4 million as of December 31, 2007. This decrease was primarily due to a $94.4 million
decline in Separate Account assets and a $23.5 million decrease in General Account assets. The $94.4 million decline in the Separate Account assets during the first nine months of 2008 was primarily driven by depreciation in the underlying
investments due to negative equity market performance partially offset by seed money contributed for the new annuity product that guarantees principal and a stated interest rate if premiums are held to a maturity date.

Bonds. As of September 30, 2008, bonds totaled $2,153.9 million compared to $2,164.6 million as of December 31, 2007, a decrease of $10.7 million, or
0.5%. Bonds represented 91.5% of our invested asset portfolio, excluding investment income due and accrued, at September 30, 2008. The portfolio consisted of publicly traded bonds of $1,684.9 million and privately placed bonds of $469.0 million
as of September 30, 2008. During the first nine months of 2008, write-downs on bonds resulting from impairments that are considered to be other-than-temporary were $26.3 million.



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The following table sets forth our bond portfolio by industry (in millions, except percentages):



|                                       |  |                    |         |           |                   |   |               |   |           |  |      |  
|-------------------------------------- |  | ------------------ | ------- | --------- | ----------------- | - | ------------- | - | --------- |  | ---- | -
|                                       |  | September 30, 2008 |         |           | December 31, 2007 |  
|Industry Category                      |  | CarryingValue      |         | % ofTotal |                   |   | CarryingValue |   | % ofTotal | 
|Finance and financial services         |  | $                  | 381.8   |           | 17.7              | % |               | $ | 479.0     |  | 22.1 | %
|Public utilities                       |  |                    | 317.7   |           | 14.8              | % |               |   | 274.0     |  | 12.7 | %
|Residential mortgage-backed securities |  |                    | 227.8   |           | 10.6              | % |               |   | 242.7     |  | 11.2 | %
|Manufacturing                          |  |                    | 259.7   |           | 12.1              | % |               |   | 243.3     |  | 11.2 | %
|Commercial mortgage-backed securities  |  |                    | 168.3   |           | 7.8               | % |               |   | 195.7     |  | 9.0  | %
|Communications                         |  |                    | 126.9   |           | 5.9               | % |               |   | 163.9     |  | 7.6  | %
|Asset-backed securities                |  |                    | 180.5   |           | 8.4               | % |               |   | 133.8     |  | 6.2  | %
|Oil and gas                            |  |                    | 147.5   |           | 6.9               | % |               |   | 122.0     |  | 5.6  | %
|Services                               |  |                    | 93.4    |           | 4.3               | % |               |   | 81.2      |  | 3.7  | %
|Retail and wholesale trade             |  |                    | 69.7    |           | 3.2               | % |               |   | 73.6      |  | 3.4  | %
|Transportation                         |  |                    | 63.1    |           | 2.9               | % |               |   | 58.0      |  | 2.7  | %
|U.S., Canada and other government      |  |                    | 33.2    |           | 1.5               | % |               |   | 35.9      |  | 1.7  | %
|REIT                                   |  |                    | 41.3    |           | 1.9               | % |               |   | 29.8      |  | 1.4  | %
|Mining                                 |  |                    | 29.9    |           | 1.4               | % |               |   | 17.0      |  | 0.8  | %
|Revenue and special obligations        |  |                    | 13.1    |           | 0.6               | % |               |   | 14.7      |  | 0.7  | %
|                                       |  |                    |         |           |                   |   |               |   |           |  |      |  
|Total                                  |  | $                  | 2,153.9 |           | 100.0             | % |               | $ | 2,164.6   |  | 100  | %
|                                       |  |                    |         |           |                   |   |               |   |           |  |      |  

The table below sets forth the NAIC Securities Valuation Office (SVO) credit quality ratings for our
bond portfolio (in millions, except percentages):



|                       |  |                    |         |           |                   |   |               |   |           |  |       |  
|---------------------- |  | ------------------ | ------- | --------- | ----------------- | - | ------------- | - | --------- |  | ----- | -
|                       |  | September 30, 2008 |         |           | December 31, 2007 |  
|NAIC Classes           |  | CarryingValue      |         | % ofTotal |                   |   | CarryingValue |   | % ofTotal | 
|1                      |  | $                  | 1,346.0 |           | 62.5              | % |               | $ | 1,234.4   |  | 57.0  | %
|2                      |  |                    | 753.1   |           | 35.0              | % |               |   | 876.9     |  | 40.5  | %
|                       |  |                    |         |           |                   |   |               |   |           |  |       |  
|Investment grade       |  |                    | 2,099.1 |           | 97.5              | % |               |   | 2,111.3   |  | 97.5  | %
|                       |  |                    |         |           |                   |   |               |   |           |  |       |  
|3                      |  |                    | 23.3    |           | 1.1               | % |               |   | 38.4      |  | 1.8   | %
|4                      |  |                    | 11.1    |           | 0.5               | % |               |   | 8.2       |  | 0.4   | %
|5                      |  |                    |        |           | 0.0               | % |               |   |          |  | 0.0   | %
|6                      |  |                    | 20.4    |           | 0.9               | % |               |   | 6.7       |  | 0.3   | %
|                       |  |                    |         |           |                   |   |               |   |           |  |       |  
|Below investment grade |  |                    | 54.8    |           | 2.5               | % |               |   | 53.3      |  | 2.5   | %
|                       |  |                    |         |           |                   |   |               |   |           |  |       |  
|Total                  |  | $                  | 2,153.9 |           | 100.0             | % |               | $ | 2,164.6   |  | 100.0 | %
|                       |  |                    |         |           |                   |   |               |   |           |  |       |  

Preferred Stock. As of September 30, 2008, the preferred stock portfolio balance of $47.9 million
declined $14.9 million, or 23.7%, from the December 31, 2007 balance of $62.8 million. As of September 30, 2008, preferred stocks represented approximately 2.0% of our invested asset portfolio. Approximately 98.2% of the portfolio was
classified as investment grade, and approximately 54.9% of the portfolio was comprised of publicly traded securities. Approximately 53.3% of the September 30, 2008, portfolio balance was comprised of foreign securities. We had no emerging
market securities in the portfolio at September 30, 2008. During the first nine months of 2008, write-downs on preferred stock resulting from impairments that are considered to be other-than-temporary were $12.2 million.

Mortgages. Mortgages decreased $6.0 million, or 6.9%, to $81.1 million at September 30, 2008, from $87.1 million at December 31, 2007. There were no new
acquisitions or impairments in the mortgage loan portfolio during the first nine months of 2008. The decrease was primarily the result of the maturity of one mortgage during the second quarter of 2008, of $4.8 million, and scheduled principal
payments of $1.2 million.



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Cash, Cash Equivalents and Short-Term Investments. These investments totaled $65.7 million as of
September 30, 2008, compared to $61.6 million as of December 31, 2007, an increase of $4.1 million, or 6.7%. The increase in cash, cash equivalents and short-term investments was driven by a combination of higher maturities and restrained
investment activity. During the third quarter of 2008, we made the tactical decision to maintain increased liquidity in response to extremely high market volatility and as a hedge against increased and/or unexpected liquidations/redemptions.

Separate Account Assets.Total Separate Account assets of $601.1 million as of September 30, 2008, compared to $695.5 million as of
December 31, 2007, resulted in a decrease of $94.4 million, or 13.6%. Contributing to the decrease was the depreciation of the underlying investment accounts, driven by negative returns in the equity markets during the first nine months of
2008, of $115.6 million. This decrease was partially offset by $5.6 million of net discretionary new premiums exceeding withdrawals and net contribution of seed money of $18.8 million.

Liabilities, Capital and Surplus

Total Liabilities.Total liabilities of $2,706.2 million as of
September 30, 2008, compared to $2,783.3 million as of December 31, 2007, resulted in a decrease of $77.1 million, or 2.8%. This decrease was due to a decline in Separate Account liabilities of $112.8 million offset by an increase in
General Account liabilities of $35.7 million. The decline in Separate Account liabilities resulted primarily from negative performance in the equity markets during the first nine months of 2008. The increase in General Account liabilities was
primarily caused by an increase in reserves on individual annuity contracts and individual life.

Policy and Contract Reserves.Policy and contract
reserves of $2,080.9 million as of September 30, 2008, compared to $2,043.7 million as of December 31, 2007, increased $37.2 million, primarily due to increases in policyholders reserves of $30.5 million and deposit-type contract
liabilities of $6.7 million. The $30.5 million increase in policyholders reserves was driven by interest credited on reserves partially offset by policyholder benefit payments exceeding net premiums. The $6.7 million increase in deposit-type
liabilities was driven by deposits and investment earnings exceeding redemptions during the first nine months of 2008.

Asset Valuation
Reserve(AVR).The AVR of $13.7 million as of September 30, 2008, compared to $10.3 million as of December 31, 2007, increased $3.4 million. This increase was primarily due to voluntary contributions during the first nine
months of 2008 to achieve the AVR reserve objective based on NAIC prescribed statutory accounting guidance.

Interest Maintenance Reserve
(IMR).The IMR of $1.7 million as of September 30, 2008, increased approximately $0.5 million from December 31, 2007, primarily due to the amortization of net realized interest-related losses previously transferred
to IMR.

Separate Account Liabilities.These liabilities, totaling $581.3 million as of September 30, 2008, compared to
$694.1 million as of December 31, 2007, decreased $112.8 million, or 16.3%, due to customer transfers and depreciation of the underlying investment accounts, both due to negative returns in the equity markets.

Other Liabilities.Other liabilities consist mainly of inter-company payables, which change primarily due to increased payments made to TIAA for expenses
allocated to us.

Capital and Surplus.Capital and surplus totaled $291.3 million as of September 30, 2008, compared to $332.1 million as of
December 31, 2007. The $40.8 million decrease in capital and surplus was primarily due to our net loss of $36.2 million during the first nine months of 2008.

LIQUIDITY AND CAPITAL RESOURCES

We have a financial support agreement with TIAA, and, under this agreement, TIAA will provide financial
support so that we will have the greater of (a) capital and surplus of $250.0 million, (b) the amount of capital and surplus necessary to maintain our capital and surplus at a level not less than 150% of the NAIC Risk Based Capital model
or (c) such other amount as necessary to maintain our financial strength rating at least the same as TIAAs rating at all times. This agreement is not an evidence of indebtedness or an obligation or liability of TIAA and does not provide
any contract owner with recourse to TIAA.

We also maintain a $100.0 million unsecured 364-day revolving line of credit arrangement with TIAA. As of
September 30, 2008, $30.0 million of this facility was maintained on a committed basis for which we paid a commitment fee of 3.0 basis points on the unused committed amount. During the first nine months of 2008, we made 14 draw downs under this
line of credit arrangement, which totaled approximately $34.0 million, of which no amount was outstanding at September 30, 2008. We have no material off-balance sheet arrangements for financing or other purposes.



23



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##### Table of Contents

The following table presents our total adjusted capital, which, as defined by the NAIC, includes the AVR, by period (in
millions).



|                          |  |                   |       |                  |   |      
|------------------------- |  | ----------------- | ----- | ---------------- | - | -----
|                          |  | September 30,2008 |       | December 31,2007
|Total Adjusted Capital    |  |                   |       |                  |   |      
|Total Capital and Surplus |  | $                 | 291.3 |                  | $ | 332.1
|Asset Valuation Reserve   |  |                   | 13.7  |                  |   | 10.3 
|                          |  |                   |       |                  |   |      
|Total Adjusted Capital    |  | $                 | 305.0 |                  | $ | 342.4
|                          |  |                   |       |                  |   |      

Our total adjusted capital declined by $37.4 million from $342.4 million at December 31, 2007, to $305.0
million at September 30, 2008. The decrease was primarily due to other-than-temporary impairment write-downs on our bond and preferred stock portfolios, which contributed to our net loss of $36.2 million.

Our financial strength (i.e., claims-paying ability) ratings are AAA (Extremely Strong) from Standard and Poors, A++ (Superior) from A.M. Best Company, AAA
(Exceptionally Strong) from Fitch Ratings, and Aaa (Excellent) from Moodys Investors Service. Each rating agency independently assigns a rating based on its own independent review and takes into account a variety of factors, which are subject
to change, in making its decision. Accordingly, there can be no assurance of the ratings that will be afforded to us in the future. These ratings do not apply to the unit investment trust Separate Accounts because the underlying assets have been
allocated to specific Separate Account liabilities and are not available to fund the needs of our General Account.

A significant portion of our General
Account investments consist of investment grade publicly-traded bonds, which can be readily converted to cash. We carefully review our liquidity position on an ongoing basis.

The following table illustrates our cash flows provided by or used in operating, investing and financing activities for the following periods (in millions, except percentages):



|                                                                |  |                                         |       |   |      |   |       |                     |  |   |        |   |  |       |  
|--------------------------------------------------------------- |  | --------------------------------------- | ----- | - | ---- | - | ----- | ------------------- |  | - | ------ | - |  | ----- | -
|                                                                |  | For the nine months ended September 30, |      
|                                                                |  |                                         |       |   |      |   |       | Increase/(decrease) | 
|                                                                |  | 2008                                    |       |   | 2007 |   |       | $                   |  |   | %      |  
|Net cash provided by (used in) operations                       |  | $                                       | 75.2  |   |      | $ | (41.1 | )                   |  | $ | 116.3  |   |  | 283.0 | %
|Net cash (used in ) provided by investments                     |  |                                         | (49.2 | ) |      |   | 108.2 |                     |  |   | (157.4 | ) |  | 145.5 | %
|Net cash used in financing and other                            |  |                                         | (21.8 | ) |      |   | (98.5 | )                   |  |   | 76.7   |   |  | 77.9  | %
|                                                                |  |                                         |       |   |      |   |       |                     |  |   |        |   |  |       |  
|Net change in cash, cash equivalents and short term investments |  | $                                       | 4.2   |   |      | $ | (31.4 | )                   |  | $ | 35.6   |   |  | 113.4 | %
|                                                                |  |                                         |       |   |      |   |       |                     |  |   |        |   |  |       |  

Total net cash flow provided by operations includes premiums and investment income received less benefit payments,
expenses and net transfers to (from) Separate Accounts. Cash flow from operations is affected by the level of premiums from the sale of our individual annuity and life insurance products, investment income received, expenses paid and customer
decisions to move funds into or out of Separate Accounts. As an insurance entity, the positive cash flows generated from premiums received and net investment income earned are often offset by benefits and surrenders paid and customers net
transfers to Separate Accounts.

The net cash provided by operations was $75.2 million for the first nine months of 2008 compared to net cash used by
operations of $41.1 million for the first nine months of 2007. The $116.3 million increase in net cash provided by operations was primarily due to decreases in surrenders on individual annuity contracts and decreases in net transfers to Separate
Accounts, partially offset by decreases in premium income and net investment income.

Net cash used by investments increased $157.4 million to net cash
used of $49.2 million for the first nine months of 2008 from net cash provided of $108.2 million for the same period in 2007. The increase in cash used by investments primarily resulted from net increases in purchases of investments of $162.0
million and net miscellaneous applications of $5.6 million partially offset by a net increase in proceeds from long-term investments sold, matured or repaid of $10.0 million.



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The $76.7 million decline in net cash used in financing and other between the first nine months of 2008 and the first
nine months of 2007 was primarily due to a $72.2 million decrease in net withdrawal activity on deposit-type contracts and a decline of $4.5 million in other cash applied.



|Item 3. | Quantitative and Qualitative Disclosure about Market Risk
|------- | ---------------------------------------------------------

We are
primarily exposed to market risk through our investment and insurance activities; however, the majority of our investments are carried at amortized cost and not at fair value. The notes to our audited statutory-basis financial statements for the
year ended December 31, 2007, included in our Registration Statement contain disclosures about how we determine the carrying values for each major category of investments in our portfolio. Because our investment balances do not generally
reflect current fair values, the market risk factors discussed below do not generally have a significant direct impact on our financial position or results of operations unless investment positions are determined to have other-than-temporary
impairment.

Our financial position and earnings are indirectly subject to various market risks, including changes in interest rates, changes in the yield
curve, changes in spreads between risk-adjusted and risk-free interest rates, changes in foreign currency rates and equity price risks. These market risks may impact our prospective earnings on future investments, which may, in turn, affect the
interest that we will prospectively credit on our General Account products. We analyze and manage the risks arising from market exposures of financial instruments, as well as other risks, through an integrated asset/liability management process. Our
asset/liability management programs and procedures involve the monitoring of asset and liability durations for various product lines, cash flow testing under various interest rate scenarios, and the continuous rebalancing of assets and liabilities
with respect to yield, risk, and cash flow characteristics. The primary focus of our asset/liability program is the management of interest rate risk within our insurance operations. This includes monitoring the duration of both investments and
insurance liabilities to maintain an appropriate balance between risk and surplus generation for each product category and for our company as a whole.

We
believe our asset/liability management programs and procedures and certain product features provide protection against the effects of changes in interest rates under various scenarios. Additionally, we believe our asset/liability management programs
and procedures provide sufficient liquidity to enable us to fulfill our obligation to pay benefits under our various insurance and deposit contracts. However, our asset/liability management programs and procedures incorporate assumptions about the
relationship between short-term and long-term interest rates (i.e., the slope of the yield curve), relationships between risk-adjusted and risk-free interest rates, market liquidity and other factors and the effectiveness of our asset/liability
management programs and procedures may be negatively affected whenever actual results differ from those assumptions.

Our investments in bonds, preferred
stocks and mortgages are also subject to the following general risks:



| |  |  | Financial Risk  The risk, for debt securities, that the issuer will not be able to pay principal and interest when due and, for preferred stock, that the
issuers current earnings will fall or that its overall financial soundness will decline, reducing the securitys value.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Market Risk  The risk that our investments will experience price volatility due to changing conditions in the financial markets and, particularly for debt
securities, changes in overall interest rates.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Interest Rate Volatility  The risk that interest rate volatility may affect our investment income from future investments.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------

In addition, mortgage-backed securities, which are included in our bond category, are subject to prepayment risk or extension risk (i.e., the risk that borrowers will
repay the loans earlier or later than anticipated). Included in these mortgage-backed securities are some interest-only securities. If the underlying mortgage assets experience faster than anticipated repayments of principal, we could fail to recoup
some or all of our initial investment in these securities, since the original price paid by us was based in part on assumptions regarding the receipt of interest payments. Note that the potential for appreciation, which could otherwise be expected
to result from a decline in interest rates, may be limited by any increased prepayments. If the underlying mortgage assets are repaid later than anticipated, we could lose the opportunity to reinvest the anticipated cash flows at a time when
interest rates might be rising. The rate of prepayment depends on a variety of geographic, social and other functions, including prevailing market interest rates and general economic factors. The fair value of these securities is also highly
sensitive to changes in interest rates. These securities may also be harder to sell than other securities.



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As noted in the Accounting for Investments in our Critical Accounting Policies included in our
Registration Statement, the determination of investment impairments utilizes, but is not limited to, a screening process based on the fair values of the investments.



|Item 4. | Controls and Procedures
|------- | -----------------------

a) Disclosure Controls and Procedures.We maintain a system of disclosure controls and procedures that are designed to provide reasonable assurance that the information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the Exchange
Act), is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer
(CEO) and the Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosure.

Under the
supervision and participation of the registrants management, including our CEO and CFO, we conducted an evaluation of the design effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act as of
September 30, 2008. Based upon the managements review, our CEO and CFO concluded that our disclosure controls and procedures were designed effectively as of September 30, 2008.

(b) Changes in internal control over financial reporting.There were no changes to our internal controls over financial reporting during the quarter ended
September 30, 2008, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

There are no material pending legal proceedings,
other than ordinary routine litigation incidental to our business, to which we or any of our subsidiaries are a party or of which any of our properties is the subject.



|Item 1A. | Risk Factors
|-------- | ------------

Information concerning certain risks and
uncertainties appears under the heading Forward-Looking Statements in Part I, Item 2 of this report and Potential Risk Factors That May Affect Future Results and Known Trends and Uncertainties in the
Companys Registration Statement filed with the SEC on July 18, 2008. Such risks and uncertainties could materially adversely affect our business, financial condition or operating results.

During the period covered by this report, there have been no material changes from the risk factors previously disclosed in our Registration Statement.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

Not
applicable.



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

Not applicable.



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

Not
applicable.



|Item 5. | Other Information
|------- | -----------------

Changes to Board of Directors

Effective November 13, 2008, Russell Noles and Patrick Kennedy were appointed by TIAA-CREF Life to serve on its Board of Directors and as members of the
Boards Audit Committee, with Mr. Noles to act as Chairman of the Audit Committee.



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##### Table of Contents

Russell Noles, 50, was appointed by Teachers Insurance and Annuity Association of America (TIAA), TIAA-CREF
Lifes parent company, as Senior Vice President of Product Development and Management in October 2008. From July 2006 to September 2008, Mr. Noles served as Senior Vice President, Head of Corporate Internal Audit for TIAA. From May 2005 to
June 2006, he served as Vice President and Acting Chief Financial Officer of TIAA. From July 2004 to April 2005, he served as Vice President, Head of Corporate Internal Audit for TIAA. Prior to joining TIAA, Mr. Noles was a Vice President,
Internal Audit with the St. Paul Companies from November 2001 to June 2004.

Patrick Kennedy, 53, has served as Vice President and Head of the Shared
Resource Group in Client Services of TIAA since August 2008. From April 2004 to August 2008, Mr. Kennedy served as the Vice President and Head of Wealth Management Services of TIAA. Prior to joining TIAA, Mr. Kennedy worked as an
independent consultant from November 2003 to April 2004 after working at Deutsche Asset Management as Director of Managed Account Services from June 2002 to November 2003.

Furthermore, on November 13, 2008, Brian Browdie, Stephen Gruppo, Padel Lattimer, and Susan Tannehill resigned from their positions on the Board of TIAA-CREF Life.

Officer Changes

Effective November 13, 2008, Edward D. Van
Dolsen was appointed as Vice President of TIAA-CREF Life. Mr. Van Dolsen, 50, has served as Executive Vice President, Product Development and Management of TIAA since August 2008. Mr. Van Dolsen was Executive Vice President of
Institutional Client Services of TIAA from March 2006 to September 2008. From July 2003 to February 2006, Mr. Van Dolsen served as TIAAs Senior Vice President of Pension Products and from July 1998 to June 2003, Mr. Van Dolsen served
as Vice President of Support Services of TIAA.

Additionally, on November 13, 2008, Mary (Maliz) Beams resigned from her position as Vice President of
TIAA-CREF Life.



|Item 6. | Exhibits
|------- | --------



|              |  |                                                                                                                                                                                                                                   
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                       
|              | 
|1.0           |  | Amended and Restated Distribution Agreement for the TIAA-CREF Investment Horizon Annuity Contracts between TIAA-CREF Life Insurance Company and TIAA-CREF Individual & Institutional Services,
LLC                                
|              | 
|3.1           |  | Charter of TIAA-CREF Life Insurance Company1                                                                                                                                                                                      
|              | 
|3.2           |  | Bylaws of TIAA-CREF Life Insurance Company2                                                                                                                                                                                       
|              | 
|4.1           |  | TIAA-CREF Investment Horizon Annuity Contract3                                                                                                                                                                                    
|              | 
|4.2           |  | TIAA-CREF Investment Horizon Annuity Application2                                                                                                                                                                                 
|              | 
|10.1          |  | Investment Management Agreement dated December 10, 1996, by and between Teachers Insurance and Annuity Association of America and TIAA Life Insurance Company2                                                                    
|              | 
|10.2          |  | Amended and Restated Service Agreement by and between Teachers Insurance and Annuity Association of America and TIAA-CREF Life Insurance Company dated as of January 1, 19992                                                     
|              | 
|10.3          |  | Financial Support Agreement between Teachers Insurance and Annuity Association of America on behalf of TIAA-CREF Life Insurance Company dated November 2, 19982                                                                   
|              | 
|10.4          |  | Tax Allocation Agreement dated January 1, 1998 by and among TIAA Board of Overseers, Teachers Insurance and Annuity Association of America and the direct and indirect subsidiaries of TIAA listed
on Schedule A to the Agreement2
|              | 
|10.5          |  | Master Independent Contractor Agreement between Teachers Insurance and Annuity Association of America and McCamish Systems, L.L.C. dated March 4, 20052                                                                           
|              | 
|31.1          |  | Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted under Section 302 of the
Sarbanes-Oxley Act of 2002.                 



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|     |  |                                                                                                                                                                                                                  
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.2 |  | Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted under Section 302 of the
Sarbanes-Oxley Act of 2002.
|     | 
|32.1 |  | Certification of the Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                       
|     | 
|32.2 |  | Certification of the Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                       



|1 | Incorporated by reference to the Pre-Effective Amendment No. 1 to the Registration Statement on Form N-4, filed
December 9, 1998 (File No. 333-61761).
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------



|2 | Incorporated by reference to the Pre-Effective Amendment No. 1 to the Registration Statement on Form S-1, filed
June 13, 2008 (File No. 333-149714).
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------



|3 | Incorporated by reference to the Pre-Effective Amendment No. 2 to the Registration Statement on Form S-1,
filed July 18, 2008 (File No. 333-149714).
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.



|                        |  |  |  |                                  |  |                                                
|----------------------- |  |  |  | -------------------------------- |  | -----------------------------------------------
|                        |  |  |  | TIAA-CREF LIFE INSURANCE COMPANY
|                        |  |  | 
|Date: November 13, 2008 |  |  |  | By:                              |  | /s/ ERIC T. JONES                              
|                        |  |  |  |                                  |  | Eric T. Jones                                  
|                        |  |  |  |                                  |  | Chairman, President and Chief Executive Officer
|                        |  |  |  |                                  |  | (principal executive officer)                  
|                        |  |  | 
|Date: November 13, 2008 |  |  |  | By:                              |  | /s/ LINDA S. DOUGHERTY                         
|                        |  |  |  |                                  |  | Linda S. Dougherty                             
|                        |  |  |  |                                  |  | Vice President and Chief Financial Officer     
|                        |  |  |  |                                  |  | (principal financial officer)                  



28