# EDGAR Filing Document

**Accession Number:** 0000810579
**File Stem:** 0001193125-26-159278
**Filing Date:** 2026-4
**Character Count:** 477389
**Document Hash:** ee6119845cec4826d4c710fe2e6e1396
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-26-159278.hdr.sgml**: 20260416

**ACCESSION NUMBER**: 0001193125-26-159278

**CONFORMED SUBMISSION TYPE**: N-VPFS

**PUBLIC DOCUMENT COUNT**: 16

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260416

**DATE AS OF CHANGE**: 20260416

**EFFECTIVENESS DATE**: 20260416

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** PENN MUTUAL VARIABLE LIFE ACCOUNT I
- **CENTRAL INDEX KEY:** 0000810579

**ORGANIZATION NAME:**
- **EIN:** 230952300
- **STATE OF INCORPORATION:** PA
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** N-VPFS
- **SEC ACT:** 1940 Act
- **SEC FILE NUMBER:** 811-05006
- **FILM NUMBER:** 26868402

**BUSINESS ADDRESS:**
- **STREET 1:** 161 WASHINGTON STREET, SUITE 1111
- **CITY:** CONSHOCKEN
- **STATE:** PA
- **ZIP:** 19428
- **BUSINESS PHONE:** 2159568000

**MAIL ADDRESS:**
- **STREET 1:** 161 WASHINGTON STREET, SUITE 1111
- **CITY:** CONSHOCKEN
- **STATE:** PA
- **ZIP:** 19428

## Series and Classes Contracts Data

### PENN MUTUAL VARIABLE LIFE ACCOUNT I (Series ID: S000010922)

| Class ID   | Class Name                          | Ticker Symbol   |
|:---|:---|:---|
| C000030248 | PENN MUTUAL VARIABLE LIFE ACCOUNT I |  |
| C000030261 | Cornerstone VUL I                   |  |
| C000030262 | Cornerstone VUL II                  |  |
| C000030263 | Cornerstone VUL III                 |  |
| C000030264 | Cornerstone VUL IV                  |  |
| C000030265 | Variable Estate Maximizer I         |  |
| C000030266 | Variable Estate Maximizer II        |  |
| C000030267 | Variable Estate Maximizer III       |  |
| C000030268 | Momentum Builder                    |  |
| C000066187 | Diversified Growth VUL              |  |
| C000078335 | Survivorship Growth VUL             |  |
| C000214935 | Diversified Advantage VUL           |  |

##### [**Table of Contents**](#toc)
![LOGO](g47358g68g22.jpg)

## The Penn Mutual Life Insurance Company

## Variable Life Account I
Audited Financial Statements

as of December 31, 2025

and for the periods presented

------

##### [**Table of Contents**](#toc)
![LOGO](g47358g74r95.jpg)

**PricewaterhouseCoopers LLP,**<br> 2001 Market Street, Suite 1800,<br>Philadelphia, PA 19103<br>+1 (267) 330 3000<br> www.pwc.com<br>

**Report of Independent Registered Public Accounting Firm** 

To the Board of Trustees of The Penn Mutual Life Insurance Company

and the Contract Owners of Penn Mutual Variable Life Account I

***Opinions on the Financial Statements***

We have audited the accompanying statements of assets and liabilities of Money Market Fund, Limited Maturity Bond Fund, Quality Bond Fund, High Yield Bond Fund, Flexibly Managed Fund, Balanced Fund, Large Growth Stock Fund, Large Cap Growth Fund, Large Core Growth Fund, Large Cap Value Fund, Large Core Value Fund, Index 500 Fund, Mid Cap Growth Fund, Mid Cap Value Fund, Mid Core Value Fund, SMID Cap Growth Fund, SMID Cap Value Fund, Small Cap Growth Fund, Small Cap Value Fund, Small Cap Index Fund, Developed International Index Fund, International Equity Fund, Emerging Markets Equity Fund, Real Estate Securities Fund, Aggressive Allocation Fund, Moderately Aggressive Allocation Fund, Moderate Allocation Fund, Moderately Conservative Allocation Fund, and Conservative Allocation Fund (hereafter collectively referred to as the "subaccounts") of Penn Mutual Variable Life Account I as of December 31, 2025, the related statements of operations for the year then ended, and the statements of changes in net assets for each of the two years in the period ended December 31, 2025, including the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the subaccounts of Penn Mutual Variable Life Account I as of December 31, 2025, the results of each of their operations for the year then ended, and the changes in each of their net assets for each of the two years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America.

***Basis for Opinions***

These financial statements are the responsibility of The Penn Mutual Life Insurance Company's management. Our responsibility is to express an opinion on the financial statements of each of the subaccounts of Penn Mutual Variable Life Account I based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to each of the subaccounts of Penn Mutual Variable Life Account I in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant

------

##### [**Table of Contents**](#toc)
![LOGO](g47358g74r95.jpg)

estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of investments owned as of December 31, 2025 by correspondence with the custodians and the transfer agents of the investee mutual funds. We believe that our audits provide a reasonable basis for our opinions.

![LOGO](g47358g99a01.jpg)

Philadelphia, PA

April 15, 2026

We have served as the auditor of one or more of the subaccounts of Penn Mutual Variable Life Account I since 2004.

------

##### [**Table of Contents**](#toc)
**PENN MUTUAL VARIABLE LIFE ACCOUNT I** 

**STATEMENTS OF ASSETS AND LIABILITIES — DECEMBER 31, 2025** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Money<br>Market Fund** | **Limited<br>Maturity<br>Bond Fund** | **Quality<br>Bond Fund** | **High Yield<br>Bond Fund** | **Flexibly<br>Managed<br>Fund** |
|  **Assets:** | | | | |  |
|  Investments at fair value | $25030053 | $9615406 | $33635179 | $19117383 | $444258421 |
|  Dividends receivable |  |  |  |  |  |
|  Receivable for securities sold | 5323 |  | 7472 | 16197 |  |
|  **Liabilities:** |  |  |  |  |  |
|  Due to The Penn Mutual Life Insurance Company | $— | $— | $— | $— | $— |
|  Payable for securities purchased |  | 14239 |  |  | 362960 |
|  **Total Net Assets** | $**25035376** | $**9601167** | $**33642651** | $**19133580** | $**443895461** |
|  **TOTAL NET ASSETS REPRESENTED BY:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net Assets of Contract owners: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL | $861079 | $130200 | $1421023 | $1487402 | $33428123 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL II/Variable Estate Max/ Variable Estate Max II | 3994265 | 2051259 | 5329537 | 4627393 | 85399399 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL III | 524549 | 596743 | 1483149 | 1209431 | 24254535 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL IV/Variable Estate Max III/Diversified Growth VUL/Survivorship Growth VUL/Diversified Advantage VUL | 19655483 | 6822965 | 25408942 | 11109335 | 298956299 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Momentum Builder |  |  |  | 700019 | 1857105 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Net Assets** | $**25035376** | $**9601167** | $**33642651** | $**19133580** | $**443895461** |
|  **Accumulation of Unit Values:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL | $16.36 | $23.07 | $34.12 | $70.74 | $242.61 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL II/Variable Estate Max/ Variable Estate Max II | $15.54 | $22.06 | $32.42 | $65.25 | $199.80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL III | $14.04 | $19.64 | $26.00 | $46.81 | $126.50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL IV/Variable Estate Max III/Diversified Growth VUL/Survivorship Growth VUL/Diversified Advantage VUL | $14.43 | $19.92 | $25.24 | $51.55 | $115.16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Momentum Builder | $23.05 | $— | $59.98 | $125.51 | $464.19 |
|  Number of Shares | 25035376 | 626299 | 1921339 | 928364 | 3709329 |
|  Cost of Investments | $25035376 | $8514545 | $31531691 | $13354930 | $175208507 |

---

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

------

##### [**Table of Contents**](#toc)
**PENN MUTUAL VARIABLE LIFE ACCOUNT I** 

**STATEMENTS OF ASSETS AND LIABILITIES — DECEMBER 31, 2025** 

**(continued)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Balanced<br>Fund** | **Large<br>Growth Stock<br>Fund** | **Large Cap<br>Growth<br>Fund** | **Large Core**<br>**Growth**<br>**Fund** | **Large Cap<br>Value<br>Fund** |
|  **Assets:** | | | | |  |
|  Investments at fair value | $26907421 | $85773026 | $18148125 | $63830047 | $51893441 |
|  Dividends receivable |  |  |  |  |  |
|  Receivable for securities sold | 9005 |  | 25220 |  | 100517 |
|  **Liabilities:** |  |  |  |  |  |
|  Due to The Penn Mutual Life Insurance Company | $— | $— | $— | $— | $— |
|  Payable for securities purchased |  | 64392 |  | 104082 |  |
|  **Total Net Assets** | $**26916426** | $**85708634** | $**18173345** | $**63725965** | $**51993958** |
|  **TOTAL NET ASSETS REPRESENTED BY:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net Assets of Contract owners: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL | $1967004 | $6258810 | $244540 | $3878957 | $5376470 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL II/Variable Estate Max/ Variable Estate Max II | 9040435 | 19745586 | 1402234 | 27846374 | 20854338 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL III | 3169655 | 10138309 | 1058005 | 9827021 | 3945332 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL IV/Variable Estate Max III/Diversified Growth VUL/Survivorship Growth VUL/Diversified Advantage VUL | 12739332 | 48899632 | 15468566 | 22173613 | 21781761 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Momentum Builder |  | 666297 |  |  | 36057 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Net Assets** | $**26916426** | $**85708634** | $**18173345** | $**63725965** | $**51993958** |
|  **Accumulation of Unit Values:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL | $37.05 | $125.82 | $48.53 | $35.60 | $111.30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL II/Variable Estate Max/ Variable Estate Max II | $37.99 | $110.22 | $49.29 | $36.51 | $92.35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL III | $39.03 | $42.76 | $52.10 | $37.51 | $45.75 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL IV/Variable Estate Max III/Diversified Growth VUL/Survivorship Growth VUL/Diversified Advantage VUL | $42.20 | $68.80 | $57.95 | $40.56 | $52.02 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Momentum Builder | $— | $176.71 | $— | $— | $188.25 |
|  Number of Shares | 663947 | 777403 | 370431 | 1575815 | 926643 |
|  Cost of Investments | $14241111 | $38590389 | $11164430 | $35781737 | $24950191 |

---

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

------

##### [**Table of Contents**](#toc)
**PENN MUTUAL VARIABLE LIFE ACCOUNT I** 

**STATEMENTS OF ASSETS AND LIABILITIES — DECEMBER 31, 2025** 

**(continued)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Large Core**<br>**Value<br>Fund** | **Index 500<br>Fund** | **Mid Cap<br>Growth<br>Fund** | **Mid Cap<br>Value<br>Fund** | **Mid Core<br>Value<br>Fund** |
|  **Assets:** | | | | |  |
|  Investments at fair value | $45928839 | $221488405 | $36098994 | $29505995 | $11651493 |
|  Dividends receivable |  |  |  |  |  |
|  Receivable for securities sold | 358769 | 211309 |  | 31295 |  |
|  **Liabilities:** |  |  |  |  |  |
|  Due to The Penn Mutual Life Insurance Company | $— | $— | $— | $— | $— |
|  Payable for securities purchased |  |  | 357989 |  | 37742 |
|  **Total Net Assets** | $**46287608** | $**221699714** | $**35741005** | $**29537290** | $**11613751** |
|  **TOTAL NET ASSETS REPRESENTED BY:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net Assets of Contract owners: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL | $2098104 | $5762258 | $2094168 | $860654 | $254237 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL II/Variable Estate Max/ Variable Estate Max II | 15549619 | 50404201 | 7142585 | 8855566 | 1673760 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL III | 4431587 | 20837401 | 4935633 | 2913526 | 938482 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL IV/Variable Estate Max III/Diversified Growth VUL/Survivorship Growth VUL/Diversified Advantage VUL | 24208298 | 144695854 | 21568619 | 16907544 | 8747272 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Momentum Builder |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Net Assets** | $**46287608** | $**221699714** | $**35741005** | $**29537290** | $**11613751** |
|  **Accumulation of Unit Values:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL | $33.56 | $108.40 | $71.69 | $71.86 | $50.92 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL II/Variable Estate Max/ Variable Estate Max II | $34.42 | $109.28 | $60.88 | $72.44 | $51.72 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL III | $35.36 | $65.43 | $34.77 | $52.57 | $54.66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL IV/Variable Estate Max III/Diversified Growth VUL/Survivorship Growth VUL/Diversified Advantage VUL | $38.23 | $87.74 | $60.76 | $56.34 | $60.81 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Momentum Builder | $— | $— | $— | $— | $— |
|  Number of Shares | 1223245 | 3552880 | 911993 | 839366 | 280255 |
|  Cost of Investments | $24662863 | $91590975 | $21482803 | $19196837 | $7610017 |

---

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

------

##### [**Table of Contents**](#toc)
**PENN MUTUAL VARIABLE LIFE ACCOUNT I** 

**STATEMENTS OF ASSETS AND LIABILITIES — DECEMBER 31, 2025** 

**(continued)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **SMID Cap<br>Growth<br>Fund** | **SMID Cap<br>Value<br>Fund** | **Small Cap<br>Growth<br>Fund** | **Small Cap**<br>**Value<br>Fund** | **Small Cap<br>Index**<br>**Fund** |
|  **Assets:** | | | | |  |
|  Investments at fair value | $8369441 | $4660223 | $34678469 | $52096324 | $8629467 |
|  Dividends receivable |  |  |  |  |  |
|  Receivable for securities sold | 22613 |  | 200079 | 178641 | 9018 |
|  **Liabilities:** |  |  |  |  |  |
|  Due to The Penn Mutual Life Insurance Company | $— | $— | $— | $— | $— |
|  Payable for securities purchased |  | 4463 |  |  |  |
|  **Total Net Assets** | $**8392054** | $**4655760** | $**34878548** | $**52274965** | $**8638485** |
|  **TOTAL NET ASSETS REPRESENTED BY:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net Assets of Contract owners: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL | $65341 | $111951 | $1240560 | $2058834 | $17801 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL II/Variable Estate Max/ Variable Estate Max II | 867883 | 571903 | 10693637 | 13552798 | 522696 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL III | 106965 | 412915 | 7457868 | 5573312 | 114969 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL IV/Variable Estate Max III/Diversified Growth VUL/Survivorship Growth VUL/Diversified Advantage VUL | 7351865 | 3558991 | 15486483 | 31090021 | 7983019 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Momentum Builder |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Net Assets** | $**8392054** | $**4655760** | $**34878548** | $**52274965** | $**8638485** |
|  **Accumulation of Unit Values:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL | $46.21 | $37.94 | $95.85 | $127.58 | $34.61 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL II/Variable Estate Max/ Variable Estate Max II | $47.39 | $38.91 | $96.63 | $128.23 | $35.49 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL III | $48.68 | $39.97 | $33.36 | $88.28 | $36.46 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL IV/Variable Estate Max III/Diversified Growth VUL/Survivorship Growth VUL/Diversified Advantage VUL | $52.64 | $43.22 | $40.54 | $90.15 | $39.43 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Momentum Builder | $— | $— | $— | $— | $— |
|  Number of Shares | 159424 | 108299 | 464552 | 903786 | 220482 |
|  Cost of Investments | $7827647 | $4201339 | $19179726 | $30015266 | $7028853 |

---

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

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##### [**Table of Contents**](#toc)
**PENN MUTUAL VARIABLE LIFE ACCOUNT I** 

**STATEMENTS OF ASSETS AND LIABILITIES — DECEMBER 31, 2025** 

**(continued)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Developed<br>International<br>Index Fund** | **International<br>Equity Fund** | **Emerging<br>Markets Equity<br>Fund** | **Real Estate**<br>**Securities**<br>**Fund** | **Aggressive**<br>**Allocation<br>Fund** |
|  **Assets:** | | | | |  |
|  Investments at fair value | $8596239 | $66958409 | $17655658 | $20016078 | $5179801 |
|  Dividends receivable |  |  |  |  |  |
|  Receivable for securities sold | 5059 |  | 172182 |  | 477 |
|  **Liabilities:** |  |  |  |  |  |
|  Due to The Penn Mutual Life Insurance Company | $— | $— | $— | $— | $— |
|  Payable for securities purchased |  | 733226 |  | 198143 |  |
|  **Total Net Assets** | $**8601298** | $**66225183** | $**17827840** | $**19817935** | $**5180278** |
|  **TOTAL NET ASSETS REPRESENTED BY:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net Assets of Contract owners: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL | $28184 | $3852683 | $320501 | $280812 | $7210 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL II/Variable Estate Max/ Variable Estate Max II | 881630 | 16796922 | 3546956 | 2898350 | 68941 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL III | 283210 | 5900691 | 1493021 | 1412195 | 66050 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL IV/Variable Estate Max III/Diversified Growth VUL/Survivorship Growth VUL/Diversified Advantage VUL | 7408274 | 39674887 | 12467362 | 15226578 | 5038077 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Momentum Builder |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Net Assets** | $**8601298** | $**66225183** | $**17827840** | $**19817935** | $**5180278** |
|  **Accumulation of Unit Values:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL | $20.66 | $79.07 | $11.95 | $53.05 | $29.87 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL II/Variable Estate Max/ Variable Estate Max II | $21.18 | $69.47 | $12.25 | $53.88 | $30.63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL III | $21.76 | $40.48 | $12.58 | $56.95 | $31.47 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL IV/Variable Estate Max III/Diversified Growth VUL/Survivorship Growth VUL/Diversified Advantage VUL | $23.53 | $51.92 | $13.61 | $63.35 | $34.02 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Momentum Builder | $— | $— | $— | $— | $— |
|  Number of Shares | 367106 | 1457420 | 1315708 | 579811 | 154728 |
|  Cost of Investments | $6160507 | $44352932 | $16133017 | $15172698 | $3776442 |

---

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

------

##### [**Table of Contents**](#toc)
**PENN MUTUAL VARIABLE LIFE ACCOUNT I** 

**STATEMENTS OF ASSETS AND LIABILITIES — DECEMBER 31, 2025** 

**(continued)** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Moderately<br>Aggressive<br>Allocation<br>Fund** | **Moderate<br>Allocation<br>Fund** | **Moderately<br>Conservative<br>Allocation<br>Fund** | **Conservative<br>Allocation<br>Fund** |
|  **Assets:** | | | | |
|  Investments at fair value | $19412900 | $12567344 | $2802672 | $3423503 |
|  Dividends receivable |  |  |  |  |
|  Receivable for securities sold | 141120 |  | 14 |  |
|  **Liabilities:** |  |  |  |  |
|  Due to The Penn Mutual Life Insurance Company | $— | $— | $— | $— |
|  Payable for securities purchased |  | 953 |  | 431 |
|  **Total Net Assets** | $**19554020** | $**12566391** | $**2802686** | $**3423072** |
|  **TOTAL NET ASSETS REPRESENTED BY:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net Assets of Contract owners: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL | $68999 | $53893 | $127967 | $37072 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL II/Variable Estate Max/ Variable Estate Max II | 612286 | 1182648 | 1914330 | 1305997 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL III | 235266 | 447683 | 56915 | 59128 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL IV/Variable Estate Max III/Diversified Growth VUL/Survivorship Growth VUL/Diversified Advantage VUL | 18637469 | 10882167 | 703474 | 2020875 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Momentum Builder |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Net Assets** | $**19554020** | $**12566391** | $**2802686** | $**3423072** |
|  **Accumulation of Unit Values:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL | $30.36 | $25.34 | $21.54 | $17.73 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL II/Variable Estate Max/ Variable Estate Max II | $31.13 | $25.98 | $22.09 | $18.18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL III | $31.98 | $26.69 | $22.69 | $18.68 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cornerstone VUL IV/Variable Estate Max III/Diversified Growth VUL/Survivorship Growth VUL/Diversified Advantage VUL | $34.58 | $28.86 | $24.54 | $20.19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Momentum Builder | $— | $— | $— | $— |
|  Number of Shares | 576985 | 446091 | 117661 | 175004 |
|  Cost of Investments | $13631036 | $8391324 | $2288273 | $2792847 |

---

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

------

##### [**Table of Contents**](#toc)
**PENN MUTUAL VARIABLE LIFE ACCOUNT I** 

**STATEMENTS OF OPERATIONS — FOR THE YEAR ENDED DECEMBER 31, 2025** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Money<br>Market Fund** | **Limited**<br>**Maturity**<br>**Bond Fund** | **Quality**<br>**Bond Fund** | **High Yield<br>Bond Fund** | **Flexibly<br>Managed**<br>**Fund** |
|  **Net Investment Income (Loss):** |  |  |  |  |  |
|  Dividends | $830220 | $— | $— | $— | $— |
|  **Expense:** |  |  |  |  |  |
|  Mortality and expense risk charges | 21842 | 11497 | 37387 | 38889 | 702742 |
|  Net investment income (loss) | 808378 | (11497) | (37387) | (38889) | (702742) |
|  **Net Realized and Unrealized Gains (Losses) on Investments:** |  |  |  |  |  |
|  Realized gain (loss) from redemption of fund shares |  | 146117 | 105629 | 885473 | 23617117 |
|  Net change in unrealized gain (loss) of investments |  | 401692 | 2256773 | 691039 | 24785467 |
|  Net realized and unrealized gain (loss) on investments |  | 547809 | 2362402 | 1576512 | 48402584 |
|  **Net increase (decrease) in net assets resulting from operations** | $**808378** | $**536312** | $**2325015** | $**1537623** | $**47699842** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Balanced<br>Fund** | **Large<br>Growth Stock<br>Fund** | **Large Cap<br>Growth<br>Fund** | **Large Core<br>Growth<br>Fund** | **Large Cap<br>Value<br>Fund** |
|  **Net Investment Income (Loss):** |  |  |  |  |  |
|  Dividends | $— | $— | $— | $— | $— |
|  **Expense:** |  |  |  |  |  |
|  Mortality and expense risk charges | 62244 | 170431 | 11755 | 179880 | 137948 |
|  Net investment income (loss) | (62244) | (170431) | (11755) | (179880) | (137948) |
|  **Net Realized and Unrealized Gains (Losses) on Investments:** |  |  |  |  |  |
|  Realized gain (loss) from redemption of fund shares | 1376560 | 6996269 | 1994615 | 3890995 | 2980145 |
|  Net change in unrealized gain (loss) of investments | 1847924 | 4862331 | (259609) | 1299081 | 1849922 |
|  Net realized and unrealized gain (loss) on investments | 3224484 | 11858600 | 1735006 | 5190076 | 4830067 |
|  **Net increase (decrease) in net assets resulting from operations** | $**3162240** | $**11688169** | $**1723251** | $**5010196** | $**4692119** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Large Core<br>Value<br>Fund** | **Index 500<br>Fund** | **Mid Cap<br>Growth<br>Fund** | **Mid Cap<br>Value<br>Fund** | **Mid Core**<br>**Value<br>Fund** |
|  **Net Investment Income (Loss):** |  |  |  |  |  |
|  Dividends | $— | $— | $— | $— | $— |
|  **Expense:** |  |  |  |  |  |
|  Mortality and expense risk charges | 92814 | 315801 | 67561 | 53567 | 16117 |
|  Net investment income (loss) | (92814) | (315801) | (67561) | (53567) | (16117) |
|  **Net Realized and Unrealized Gains (Losses) on Investments:** |  |  |  |  |  |
|  Realized gain (loss) from redemption of fund shares | 2498747 | 10883223 | 2107501 | 1195267 | 1080681 |
|  Net change in unrealized gain (loss) of investments | 2519501 | 22662937 | (1770108) | 720810 | (61359) |
|  Net realized and unrealized gain (loss) on investments | 5018248 | 33546160 | 337393 | 1916077 | 1019322 |
|  **Net increase (decrease) in net assets resulting from operations** | $**4925434** | $**33230359** | $**269832** | $**1862510** | $**1003205** |

---

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

------

##### [**Table of Contents**](#toc)
**PENN MUTUAL VARIABLE LIFE ACCOUNT I** 

**STATEMENTS OF OPERATIONS — FOR THE YEAR ENDED DECEMBER 31, 2025** 

**(continued)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **SMID Cap<br>Growth<br>Fund** | **SMID Cap<br>Value<br>Fund** | **Small Cap<br>Growth<br>Fund** | **Small Cap<br>Value<br>Fund** | **Small Cap<br>Index<br>Fund** |
|  **Net Investment Income (Loss):** |  |  |  |  |  |
|  Dividends | $— | $— | $— | $— | $— |
|  **Expense:** |  |  |  |  |  |
|  Mortality and expense risk charges | 4835 | 5320 | 82756 | 93349 | 3049 |
|  Net investment income (loss) | (4835) | (5320) | (82756) | (93349) | (3049) |
|  **Net Realized and Unrealized Gains (Losses) on Investments:** |  |  |  |  |  |
|  Realized gain (loss) from redemption of fund shares | 33064 | 407647 | 2079226 | 3554501 | 144232 |
|  Net change in unrealized gain (loss) of investments | 88095 | (255388) | 794526 | 1732296 | 802163 |
|  Net realized and unrealized gain (loss) on investments | 121159 | 152259 | 2873752 | 5286797 | 946395 |
|  **Net increase (decrease) in net assets resulting from operations** | $**116324** | $**146939** | $**2790996** | $**5193448** | $**943346** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Developed<br>International<br>Index Fund** | **International<br>Equity Fund** | **Emerging<br>Markets Equity<br>Fund** | **Real**<br>**Estate<br>Securities<br>Fund** | **Aggressive**<br>**Allocation**<br>**Fund** |
|  **Net Investment Income (Loss):** |  |  |  |  |  |
|  Dividends | $— | $— | $— | $— | $— |
|  **Expense:** |  |  |  |  |  |
|  Mortality and expense risk charges | 5388 | 127523 | 21263 | 20682 | 3361 |
|  Net investment income (loss) | (5388) | (127523) | (21263) | (20682) | (3361) |
|  **Net Realized and Unrealized Gains (Losses) on Investments:** |  |  |  |  |  |
|  Realized gain (loss) from redemption of fund shares | 431477 | 4418970 | 226913 | 1013968 | 581888 |
|  Net change in unrealized gain (loss) of investments | 1594577 | 1117450 | 3826002 | (567883) | 91399 |
|  Net realized and unrealized gain (loss) on investments | 2026054 | 5536420 | 4052915 | 446085 | 673287 |
|  **Net increase (decrease) in net assets resulting from operations** | $**2020666** | $**5408897** | $**4031652** | $**425403** | $**669926** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Moderately<br>Aggressive<br>Allocation Fund** | **Moderate<br>Allocation<br>Fund** | **Moderately<br>Conservative**<br>**Allocation Fund** | **Conservative<br>Allocation<br>Fund** |
|  **Net Investment Income (Loss):** |  |  |  |  |
|  Dividends | $— | $— | $— | $— |
|  **Expense:** |  |  |  |  |
|  Mortality and expense risk charges | 3868 | 6467 | 8666 | 6045 |
|  Net investment income (loss) | (3868) | (6467) | (8666) | (6045) |
|  **Net Realized and Unrealized Gains (Losses) on Investments:** |  |  |  |  |
|  Realized gain (loss) from redemption of fund shares | 890685 | 519178 | 56295 | 105217 |
|  Net change in unrealized gain (loss) of investments | 1221560 | 747253 | 196413 | 171232 |
|  Net realized and unrealized gain (loss) on investments | 2112245 | 1266431 | 252708 | 276449 |
|  **Net increase (decrease) in net assets resulting from operations** | $**2108377** | $**1259964** | $**244042** | $**270404** |

---

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

------

##### [**Table of Contents**](#toc)
**PENN MUTUAL VARIABLE LIFE ACCOUNT I** 

**STATEMENTS OF CHANGES IN NET ASSETS — FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Money Market Fund** | **Money Market Fund** | **Limited Maturity Bond Fund** | **Limited Maturity Bond Fund** | **Quality Bond Fund** | **Quality Bond Fund** |
|  | **2025** | **2024** | **2025** | **2024** | **2025** | **2024** |
|  **Operations:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income (loss) | $808378 | $1369171 | $(11497) | $(12161) | $(37387) | $(38920) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net realized gain (loss) from investment transactions |  |  | 146117 | 85706 | 105629 | 130741 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net change in unrealized gain (loss) of investments |  |  | 401692 | 380171 | 2256773 | 622220 |
|  Net increase (decrease) in net assets resulting from operations | 808378 | 1369171 | 536312 | 453716 | 2325015 | 714041 |
|  **Variable Life Activities:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase payments | 2533802 | 4569537 | 477503 | 562390 | 1402413 | 1728772 |
| &nbsp;&nbsp;&nbsp;&nbsp; Death benefits | (165022) | (573835) | (63005) | (68103) | (207712) | (114414) |
| &nbsp;&nbsp;&nbsp;&nbsp; Cost of insurance | (1846592) | (1945413) | (391450) | (381343) | (1266361) | (1377365) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net transfers | 1643792 | (8838841) | 413604 | 641949 | 141720 | 2356948 |
| &nbsp;&nbsp;&nbsp;&nbsp; Transfer of policy loans | 475599 | 170447 | 56526 | 23356 | 169226 | 195134 |
| &nbsp;&nbsp;&nbsp;&nbsp; Mortality and expense risk charges | (116594) | (196884) | (30279) | (38685) | (101945) | (115132) |
| &nbsp;&nbsp;&nbsp;&nbsp; Contract administration charges | (29495) | (39997) | (9235) | (9829) | (36048) | (47205) |
| &nbsp;&nbsp;&nbsp;&nbsp; Surrender benefits | (1152450) | (4023830) | (572501) | (170153) | (899286) | (1471769) |
|  Net increase (decrease) in net assets resulting from variable life activities | 1343040 | (10878816) | (118837) | 559582 | (797993) | 1154969 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total increase (decrease) in net assets | 2151418 | (9509645) | 417475 | 1013298 | 1527022 | 1869010 |
|  **Net Assets:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Beginning of year | 22883958 | 32393603 | 9183692 | 8170394 | 32115629 | 30246619 |
| &nbsp;&nbsp;&nbsp;&nbsp; **End of year** | $**25035376** | $**22883958** | $**9601167** | $**9183692** | $**33642651** | $**32115629** |
|  | **High Yield Bond Fund** | **High Yield Bond Fund** | **Flexibly Managed Fund** | **Flexibly Managed Fund** | **Balanced Fund** | **Balanced Fund** |
|  | **2025** | **2024** | **2025** | **2024** | **2025** | **2024** |
|  **Operations:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income (loss) | $(38889) | $(37971) | $(702742) | $(686767) | $(62244) | $(59777) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net realized gain (loss) from investment transactions | 885473 | 627902 | 23617117 | 23731666 | 1376560 | 1965480 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net change in unrealized gain (loss) of investments | 691039 | 732921 | 24785467 | 23421460 | 1847924 | 1455572 |
|  Net increase (decrease) in net assets resulting from operations | 1537623 | 1322852 | 47699842 | 46466359 | 3162240 | 3361275 |
|  **Variable Life Activities:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase payments | 694377 | 778816 | 13526136 | 15146276 | 1210933 | 1064632 |
| &nbsp;&nbsp;&nbsp;&nbsp; Death benefits | (150730) | (42812) | (3986298) | (4069373) | (263886) | (175014) |
| &nbsp;&nbsp;&nbsp;&nbsp; Cost of insurance | (797041) | (794319) | (12807474) | (12558662) | (1435188) | (1264113) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net transfers | (333464) | 255698 | (6862232) | (5600269) | 67015 | (711063) |
| &nbsp;&nbsp;&nbsp;&nbsp; Transfer of policy loans | 150485 | 60848 | 2017072 | 2534134 | 90109 | 90282 |
| &nbsp;&nbsp;&nbsp;&nbsp; Mortality and expense risk charges | (53556) | (56824) | (1630728) | (1761844) | (69284) | (73618) |
| &nbsp;&nbsp;&nbsp;&nbsp; Contract administration charges | (23597) | (24694) | (443293) | (446710) | (27827) | (29361) |
| &nbsp;&nbsp;&nbsp;&nbsp; Surrender benefits | (429353) | (449183) | (8923778) | (10839258) | (412585) | (606451) |
|  Net increase (decrease) in net assets resulting from variable life activities | (942879) | (272470) | (19110595) | (17595706) | (840713) | (1704706) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total increase (decrease) in net assets | 594744 | 1050382 | 28589247 | 28870653 | 2321527 | 1656569 |
|  **Net Assets:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Beginning of year | 18538836 | 17488454 | 415306214 | 386435561 | 24594899 | 22938330 |
| &nbsp;&nbsp;&nbsp;&nbsp; **End of year** | $**19133580** | $**18538836** | $**443895461** | $**415306214** | $**26916426** | $**24594899** |

---

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

------

##### [**Table of Contents**](#toc)
**PENN MUTUAL VARIABLE LIFE ACCOUNT I** 

**STATEMENTS OF CHANGES IN NET ASSETS — FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024** 

**(continued)** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Large Growth Stock Fund** | **Large Growth Stock Fund** | **Large Cap Growth Fund** | **Large Cap Growth Fund** | **Large Core Growth Fund** | **Large Core Growth Fund** |
|  | **2025** | **2024** | **2025** | **2024** | **2025** | **2024** |
|  **Operations:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income (loss) | $(170431) | $(155866) | $(11755) | $(11689) | $(179880) | $(174631) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net realized gain (loss) from investment transactions | 6996269 | 5991431 | 1994615 | 1356014 | 3890995 | 4348755 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net change in unrealized gain (loss) of investments | 4862331 | 12486448 | (259609) | 1212129 | 1299081 | 7746462 |
|  Net increase (decrease) in net assets resulting from operations | 11688169 | 18322013 | 1723251 | 2556454 | 5010196 | 11920586 |
|  **Variable Life Activities:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase payments | 2434201 | 2540551 | 678332 | 813446 | 2083818 | 2370507 |
| &nbsp;&nbsp;&nbsp;&nbsp; Death benefits | (574802) | (337642) | (34297) | (35341) | (415957) | (521974) |
| &nbsp;&nbsp;&nbsp;&nbsp; Cost of insurance | (2806894) | (2619234) | (412817) | (419897) | (2615209) | (2655038) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net transfers | (3212372) | 55972 | (1903552) | 211152 | (616909) | (1956448) |
| &nbsp;&nbsp;&nbsp;&nbsp; Transfer of policy loans | 441513 | 434193 | 73538 | 212459 | 298994 | 319561 |
| &nbsp;&nbsp;&nbsp;&nbsp; Mortality and expense risk charges | (319218) | (344818) | (115142) | (131117) | (182838) | (205926) |
| &nbsp;&nbsp;&nbsp;&nbsp; Contract administration charges | (80216) | (91126) | (20880) | (19583) | (88891) | (93529) |
| &nbsp;&nbsp;&nbsp;&nbsp; Surrender benefits | (1782022) | (1747465) | (369631) | (389928) | (1933047) | (1659743) |
|  Net increase (decrease) in net assets resulting from variable life activities | (5899810) | (2109569) | (2104449) | 241191 | (3470039) | (4402590) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total increase (decrease) in net assets | 5788359 | 16212444 | (381198) | 2797645 | 1540157 | 7517996 |
|  **Net Assets:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Beginning of year | 79920275 | 63707831 | 18554543 | 15756898 | 62185808 | 54667812 |
| &nbsp;&nbsp;&nbsp;&nbsp; **End of year** | $**85708634** | $**79920275** | $**18173345** | $**18554543** | $**63725965** | $**62185808** |
|  | **Large Cap Value Fund** | **Large Cap Value Fund** | **Large Core Value Fund** | **Large Core Value Fund** | **Index 500 Fund** | **Index 500 Fund** |
|  | **2025** | **2024** | **2025** | **2024** | **2025** | **2024** |
|  **Operations:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income (loss) | $(137948) | $(139627) | $(92814) | $(92071) | $(315801) | $(287551) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net realized gain (loss) from investment transactions | 2980145 | 3171629 | 2498747 | 2177355 | 10883223 | 8951639 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net change in unrealized gain (loss) of investments | 1849922 | 2700909 | 2519501 | 2277781 | 22662937 | 28479274 |
|  Net increase (decrease) in net assets resulting from operations | 4692119 | 5732911 | 4925434 | 4363065 | 33230359 | 37143362 |
|  **Variable Life Activities:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase payments | 1489984 | 1684161 | 1421229 | 1595252 | 8736598 | 8417535 |
| &nbsp;&nbsp;&nbsp;&nbsp; Death benefits | (501332) | (272011) | (285851) | (141950) | (682372) | (481106) |
| &nbsp;&nbsp;&nbsp;&nbsp; Cost of insurance | (1919713) | (1994910) | (1589751) | (1600101) | (5215216) | (4833342) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net transfers | (360970) | (330464) | 1487260 | (415177) | 1862934 | 1031413 |
| &nbsp;&nbsp;&nbsp;&nbsp; Transfer of policy loans | 171186 | 255677 | 179508 | 199491 | 678426 | 736620 |
| &nbsp;&nbsp;&nbsp;&nbsp; Mortality and expense risk charges | (122326) | (135829) | (124376) | (135020) | (1300579) | (1287376) |
| &nbsp;&nbsp;&nbsp;&nbsp; Contract administration charges | (58336) | (73629) | (50794) | (52858) | (158166) | (160954) |
| &nbsp;&nbsp;&nbsp;&nbsp; Surrender benefits | (1515429) | (1759838) | (1241958) | (1297772) | (4796579) | (3346004) |
|  Net increase (decrease) in net assets resulting from variable life activities | (2816936) | (2626843) | (204733) | (1848135) | (874954) | 76786 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total increase (decrease) in net assets | 1875183 | 3106068 | 4720701 | 2514930 | 32355405 | 37220148 |
|  **Net Assets:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Beginning of year | 50118775 | 47012707 | 41566907 | 39051977 | 189344309 | 152124161 |
| &nbsp;&nbsp;&nbsp;&nbsp; **End of year** | $**51993958** | $**50118775** | $**46287608** | $**41566907** | $**221699714** | $**189344309** |

---

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

------

##### [**Table of Contents**](#toc)
**PENN MUTUAL VARIABLE LIFE ACCOUNT I** 

**STATEMENTS OF CHANGES IN NET ASSETS — FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024** 

**(continued)** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Mid Cap Growth Fund** | **Mid Cap Growth Fund** | **Mid Cap Value Fund** | **Mid Cap Value Fund** | **Mid Core Value Fund** | **Mid Core Value Fund** |
|  | **2025** | **2024** | **2025** | **2024** | **2025** | **2024** |
|  **Operations:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income (loss) | $(67561) | $(71669) | $(53567) | $(54437) | $(16117) | $(16839) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net realized gain (loss) from investment transactions | 2107501 | 2368958 | 1195267 | 2002299 | 1080681 | 619585 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net change in unrealized gain (loss) of investments | (1770108) | (1551154) | 720810 | 1714351 | (61359) | 370732 |
|  Net increase (decrease) in net assets resulting from operations | 269832 | 746135 | 1862510 | 3662213 | 1003205 | 973478 |
|  **Variable Life Activities:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase payments | 1312469 | 1514855 | 1155856 | 1219650 | 418893 | 498149 |
| &nbsp;&nbsp;&nbsp;&nbsp; Death benefits | (185758) | (184926) | (222191) | (181064) | (188779) | (77118) |
| &nbsp;&nbsp;&nbsp;&nbsp; Cost of insurance | (1128126) | (1240115) | (1164173) | (1238722) | (359913) | (352528) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net transfers | 92566 | (67137) | (577970) | (1829451) | (1365768) | (55078) |
| &nbsp;&nbsp;&nbsp;&nbsp; Transfer of policy loans | 249375 | 199137 | 507646 | 132387 | 124560 | 46669 |
| &nbsp;&nbsp;&nbsp;&nbsp; Mortality and expense risk charges | (134801) | (154523) | (78054) | (92100) | (53360) | (54402) |
| &nbsp;&nbsp;&nbsp;&nbsp; Contract administration charges | (44456) | (48964) | (36721) | (40613) | (14102) | (14787) |
| &nbsp;&nbsp;&nbsp;&nbsp; Surrender benefits | (1014893) | (1112373) | (835713) | (1005210) | (217181) | (433843) |
|  Net increase (decrease) in net assets resulting from variable life activities | (853624) | (1094046) | (1251320) | (3035123) | (1655650) | (442938) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total increase (decrease) in net assets | (583792) | (347911) | 611190 | 627090 | (652445) | 530540 |
|  **Net Assets:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Beginning of year | 36324797 | 36672708 | 28926100 | 28299010 | 12266196 | 11735656 |
| &nbsp;&nbsp;&nbsp;&nbsp; **End of year** | $**35741005** | $**36324797** | $**29537290** | $**28926100** | $**11613751** | $**12266196** |
|  | **SMID Cap Growth Fund** | **SMID Cap Growth Fund** | **SMID Cap Value Fund** | **SMID Cap Value Fund** | **Small Cap Growth Fund** | **Small Cap Growth Fund** |
|  | **2025** | **2024** | **2025** | **2024** | **2025** | **2024** |
|  **Operations:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income (loss) | $(4835) | $(5140) | $(5320) | $(4969) | $(82756) | $(83370) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net realized gain (loss) from investment transactions | 33064 | 288726 | 407647 | 467161 | 2079226 | 2028670 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net change in unrealized gain (loss) of investments | 88095 | 500443 | (255388) | (74234) | 794526 | 1919779 |
|  Net increase (decrease) in net assets resulting from operations | 116324 | 784029 | 146939 | 387958 | 2790996 | 3865079 |
|  **Variable Life Activities:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase payments | 672692 | 686255 | 246471 | 208923 | 1060003 | 1231410 |
| &nbsp;&nbsp;&nbsp;&nbsp; Death benefits | (32133) | (61711) | (55296) | (60161) | (278058) | (164370) |
| &nbsp;&nbsp;&nbsp;&nbsp; Cost of insurance | (236692) | (205253) | (165197) | (144652) | (1214024) | (1259406) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net transfers | (1824273) | 2443458 | (1527072) | 1327458 | (523887) | (311980) |
| &nbsp;&nbsp;&nbsp;&nbsp; Transfer of policy loans | 260153 | 20648 | 23075 | 29255 | 413204 | 151268 |
| &nbsp;&nbsp;&nbsp;&nbsp; Mortality and expense risk charges | (137318) | (156982) | (40982) | (45215) | (65481) | (70442) |
| &nbsp;&nbsp;&nbsp;&nbsp; Contract administration charges | (9849) | (15900) | (7154) | (6162) | (50183) | (53134) |
| &nbsp;&nbsp;&nbsp;&nbsp; Surrender benefits | (343336) | (73429) | (67043) | (186425) | (1106208) | (1216143) |
|  Net increase (decrease) in net assets resulting from variable life activities | (1650756) | 2637086 | (1593198) | 1123021 | (1764634) | (1692797) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total increase (decrease) in net assets | (1534432) | 3421115 | (1446259) | 1510979 | 1026362 | 2172282 |
|  **Net Assets:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Beginning of year | 9926486 | 6505371 | 6102019 | 4591040 | 33852186 | 31679904 |
| &nbsp;&nbsp;&nbsp;&nbsp; **End of year** | $**8392054** | $**9926486** | $**4655760** | $**6102019** | $**34878548** | $**33852186** |

---

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

------

##### [**Table of Contents**](#toc)
**PENN MUTUAL VARIABLE LIFE ACCOUNT I** 

**STATEMENTS OF CHANGES IN NET ASSETS — FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024** 

**(continued)** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Small Cap Value Fund** | **Small Cap Value Fund** | **Small Cap Index Fund** | **Small Cap Index Fund** | **Developed International<br>Index Fund** | **Developed International<br>Index Fund** |
|  | **2025** | **2024** | **2025** | **2024** | **2025** | **2024** |
|  **Operations:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income (loss) | $(93349) | $(97152) | $(3049) | $(3011) | $(5388) | $(4931) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net realized gain (loss) from investment transactions | 3554501 | 3978419 | 144232 | 205568 | 431477 | 186751 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net change in unrealized gain (loss) of investments | 1732296 | (88663) | 802163 | 456054 | 1594577 | (66029) |
|  Net increase (decrease) in net assets resulting from operations | 5193448 | 3792604 | 943346 | 658611 | 2020666 | 115791 |
|  **Variable Life Activities:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase payments | 1671698 | 1819745 | 738510 | 782086 | 398541 | 411998 |
| &nbsp;&nbsp;&nbsp;&nbsp; Death benefits | (400164) | (293843) |  | (3578) |  | (6615) |
| &nbsp;&nbsp;&nbsp;&nbsp; Cost of insurance | (1666045) | (1736749) | (168126) | (150929) | (157877) | (143865) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net transfers | (2321992) | (1909479) | 39577 | 307025 | (181290) | 909850 |
| &nbsp;&nbsp;&nbsp;&nbsp; Transfer of policy loans | 425495 | 252636 | 11788 | 26674 | 30373 | 45275 |
| &nbsp;&nbsp;&nbsp;&nbsp; Mortality and expense risk charges | (129197) | (142736) | (127551) | (134396) | (66411) | (66090) |
| &nbsp;&nbsp;&nbsp;&nbsp; Contract administration charges | (57015) | (61905) | (5394) | (5638) | (4736) | (4836) |
| &nbsp;&nbsp;&nbsp;&nbsp; Surrender benefits | (1300619) | (1836671) | (170172) | (228958) | (182841) | (279476) |
|  Net increase (decrease) in net assets resulting from variable life activities | (3777839) | (3909002) | 318632 | 592286 | (164241) | 866241 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total increase (decrease) in net assets | 1415609 | (116398) | 1261978 | 1250897 | 1856425 | 982032 |
|  **Net Assets:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Beginning of year | 50859356 | 50975754 | 7376507 | 6125610 | 6744873 | 5762841 |
| &nbsp;&nbsp;&nbsp;&nbsp; **End of year** | $**52274965** | $**50859356** | $**8638485** | $**7376507** | $**8601298** | $**6744873** |
|  | **International Equity Fund** | **International Equity Fund** | **Emerging Markets<br>Equity Fund** | **Emerging Markets<br>Equity Fund** | **Real Estate<br>Securities Fund** | **Real Estate<br>Securities Fund** |
|  | **2025** | **2024** | **2025** | **2024** | **2025** | **2024** |
|  **Operations:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income (loss) | $(127523) | $(125408) | $(21263) | $(21447) | $(20682) | $(20832) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net realized gain (loss) from investment transactions | 4418970 | 3305091 | 226913 | 49308 | 1013968 | 1271296 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net change in unrealized gain (loss) of investments | 1117450 | 401585 | 3826002 | (617305) | (567883) | (14650) |
|  Net increase (decrease) in net assets resulting from operations | 5408897 | 3581268 | 4031652 | (589444) | 425403 | 1235814 |
|  **Variable Life Activities:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase payments | 2015901 | 2186130 | 816479 | 880097 | 741810 | 699779 |
| &nbsp;&nbsp;&nbsp;&nbsp; Death benefits | (590780) | (442317) | (161345) | (59656) | (210178) | (218755) |
| &nbsp;&nbsp;&nbsp;&nbsp; Cost of insurance | (2183164) | (2183397) | (598281) | (581126) | (607002) | (597323) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net transfers | (181235) | (504851) | (1091415) | 470735 | (416995) | 238525 |
| &nbsp;&nbsp;&nbsp;&nbsp; Transfer of policy loans | 664715 | 361292 | 428017 | 151831 | 224290 | 125536 |
| &nbsp;&nbsp;&nbsp;&nbsp; Mortality and expense risk charges | (132663) | (145447) | (55087) | (59399) | (60431) | (70496) |
| &nbsp;&nbsp;&nbsp;&nbsp; Contract administration charges | (71472) | (74941) | (21379) | (21299) | (21883) | (23317) |
| &nbsp;&nbsp;&nbsp;&nbsp; Surrender benefits | (2005937) | (2055562) | (649186) | (595305) | (402846) | (824213) |
|  Net increase (decrease) in net assets resulting from variable life activities | (2484635) | (2859093) | (1332197) | 185878 | (753235) | (670264) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total increase (decrease) in net assets | 2924262 | 722175 | 2699455 | (403566) | (327832) | 565550 |
|  **Net Assets:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Beginning of year | 63300921 | 62578746 | 15128385 | 15531951 | 20145767 | 19580217 |
| &nbsp;&nbsp;&nbsp;&nbsp; **End of year** | $**66225183** | $**63300921** | $**17827840** | $**15128385** | $**19817935** | $**20145767** |

---

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

------

##### [**Table of Contents**](#toc)
**PENN MUTUAL VARIABLE LIFE ACCOUNT I** 

**STATEMENTS OF CHANGES IN NET ASSETS — FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024** 

**(continued)** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Aggressive Allocation<br>Fund** | **Aggressive Allocation<br>Fund** | **Moderately Aggressive<br>Allocation Fund** | **Moderately Aggressive<br>Allocation Fund** | **Moderate Allocation Fund** | **Moderate Allocation Fund** |
|  | **2025** | **2024** | **2025** | **2024** | **2025** | **2024** |
|  **Operations:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income (loss) | $(3361) | $(4168) | $(3868) | $(3394) | $(6467) | $(7553) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net realized gain (loss) from investment transactions | 581888 | 177823 | 890685 | 800460 | 519178 | 736689 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net change in unrealized gain (loss) of investments | 91399 | 431075 | 1221560 | 1025555 | 747253 | 368055 |
|  Net increase (decrease) in net assets resulting from operations | 669926 | 604730 | 2108377 | 1822621 | 1259964 | 1097191 |
|  **Variable Life Activities:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase payments | 383914 | 410179 | 1181012 | 1314281 | 436090 | 470036 |
| &nbsp;&nbsp;&nbsp;&nbsp; Death benefits | (442914) | (1578) | (5175) | (1557) | (14663) | (450742) |
| &nbsp;&nbsp;&nbsp;&nbsp; Cost of insurance | (94706) | (101727) | (456438) | (468894) | (387581) | (410184) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net transfers | (391166) | 92872 | (787976) | (602387) | 48355 | (557269) |
| &nbsp;&nbsp;&nbsp;&nbsp; Transfer of policy loans | 62359 | 23782 | 15579 | 14835 | 55136 | 26963 |
| &nbsp;&nbsp;&nbsp;&nbsp; Mortality and expense risk charges | (47776) | (55158) | (167557) | (167722) | (47336) | (59422) |
| &nbsp;&nbsp;&nbsp;&nbsp; Contract administration charges | (11149) | (11845) | (21020) | (22697) | (11898) | (12884) |
| &nbsp;&nbsp;&nbsp;&nbsp; Surrender benefits | (602885) | (303137) | (521729) | (206441) | (801908) | (520082) |
|  Net increase (decrease) in net assets resulting from variable life activities | (1144323) | 53388 | (763304) | (140582) | (723805) | (1513584) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total increase (decrease) in net assets | (474397) | 658118 | 1345073 | 1682039 | 536159 | (416393) |
|  **Net Assets:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Beginning of year | 5654675 | 4996557 | 18208947 | 16526908 | 12030232 | 12446625 |
| &nbsp;&nbsp;&nbsp;&nbsp; **End of year** | $**5180278** | $**5654675** | $**19554020** | $**18208947** | $**12566391** | $**12030232** |
|  | **Moderately Conservative<br>Allocation Fund** | **Moderately Conservative<br>Allocation Fund** | **Conservative<br>Allocation Fund** | **Conservative<br>Allocation Fund** |  |  |
|  | **2025** | **2024** | **2025** | **2024** |  |  |
|  **Operations:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income (loss) | $(8666) | $(8415) | $(6045) | $(6667) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net realized gain (loss) from investment transactions | 56295 | 67685 | 105217 | 87999 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net change in unrealized appreciation (depreciation) of investments | 196413 | 118948 | 171232 | 105490 |  |  |
|  Net increase (decrease) in net assets resulting from operations | 244042 | 178218 | 270404 | 186822 |  |  |
|  **Variable Life Activities:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase payments | 101535 | 158537 | 110420 | 86801 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Death benefits | (36347) | (50047) |  | (4258) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cost of insurance | (157096) | (164907) | (131473) | (124321) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net transfers | (64948) | 134586 | (287821) | 113461 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Transfer of policy loans | 46 | 143 | 55 | 1776 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Mortality and expense risk charges | (6026) | (5837) | (5382) | (5680) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Contract administration charges | (2424) | (2610) | (4516) | (4663) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Surrender benefits | (2655) | (168929) | (1255) | (322484) |  |  |
|  Net increase (decrease) in net assets resulting from variable life activities | (167915) | (99064) | (319972) | (259368) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Total increase (decrease) in net assets | 76127 | 79154 | (49568) | (72546) |  |  |
|  **Net Assets:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Beginning of year | 2726559 | 2647405 | 3472640 | 3545186 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; **End of year** | $**2802686** | $**2726559** | $**3423072** | $**3472640** |  |  |

---

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

------

##### [**Table of Contents**](#toc)
**PENN MUTUAL VARIABLE LIFE ACCOUNT I** 

**Notes to Financial Statements —** December 31, 2025

**Note 1. Organization**

Penn Mutual Variable Life Account I ("Account I") was established by The Penn Mutual Life Insurance Company ("Penn Mutual") under the provisions of the Pennsylvania Insurance Law. Account I is registered under the Investment Company Act of 1940, as amended, as a unit investment trust. Account I offers units to variable life contract owners to provide for the accumulation of value and for the payment of benefits. Account I contains contracts of the Cornerstone VUL, Cornerstone VUL II, Cornerstone VUL III, Cornerstone VUL IV, Diversified Growth VUL, Variable EstateMax, Variable EstateMax II, Variable EstateMax III, Survivorship Growth VUL and Momentum Builder variable life products. Contract owners may borrow up to a specified amount depending on the policy value at any time by submitting a written request for a policy loan. Under applicable insurance law, the assets and liabilities of Account I are legally segregated from Penn Mutual's other assets and liabilities.

**Note 2. Significant Accounting Policies** 

The preparation of the accompanying financial statements and notes in accordance with accounting principles generally accepted in the United States of America, which requires management to make estimates and assumptions that affect the reported values of assets and liabilities and the reported amounts from operations and variable life activities during the reporting period. Actual results could differ significantly with those estimates.

The significant accounting policies of Account I are as follows:

**Investments** — Assets of Account I are invested into subaccounts, which invest in the shares of Penn Series Funds, Inc. ("Penn Series"), an affiliate of Penn Mutual: Money Market, Limited Maturity Bond, Quality Bond, High Yield Bond, Flexibly Managed, Balanced, Large Growth Stock, Large Cap Growth, Large Core Growth, Large Cap Value, Large Core Value, Index 500, Mid Cap Growth, Mid Cap Value, Mid Core Value, SMID Cap Growth, SMID Cap Value, Small Cap Growth, Small Cap Value, Small Cap Index, Developed International Index, International Equity, Emerging Markets Equity, Real Estate Securities, Aggressive Allocation, Moderately Aggressive Allocation, Moderate Allocation, Moderately Conservative Allocation and Conservative Allocation.

Penn Series is an open-end diversified management investment company.

The investment in shares of these funds or portfolios is carried at fair market value as determined by the underlying net asset value of the respective funds or portfolios. Investment transactions are accounted for on a trade date basis. The resulting net unrealized gains (losses) are reflected in the Statements of Operations. Realized gains (losses) from securities transactions are determined for federal income tax and for financial reporting purposes on the FIFO cost basis.

The amounts shown as receivable for securities sold and payable for securities purchased on the Statements of Assets and Liabilities reflect transactions that occurred on the last business day of the reporting period. These amounts will be deposited to or withdrawn from the separate account in accordance with the contract owners' instructions on the first business day subsequent to the close of the period presented.

All dividend distributions received from the underlying Penn Series Funds are reinvested in additional shares of these Funds and are recorded by Account I on the ex-dividend date. The Penn Series Funds have utilized consent dividends to effectively distribute income for income tax purposes. Account I consents to treat these amounts as dividend income for tax purposes although they are not paid by the underlying Penn Series Funds. Therefore, no dividend income is recorded in the Statements of Operations related to such consent dividends.

For the year ended December 31, 2025, consent dividends in Account I were:

---

| | | |
|:---|:---|:---|
|  | **Consent Dividends** | **Consent Dividends** |
|  Money Market Fund |  |  |
|  Limited Maturity Bond Fund |  | 405534 |
|  Quality Bond Fund |  | 1436577 |
|  High Yield Bond Fund |  | 1154058 |
|  Flexibly Managed Fund |  | 66857116 |

---

------

##### [**Table of Contents**](#toc)
**Note 2. Significant Accounting Policies (continued)** 

---

| | |
|:---|:---|
|  | **Consent Dividends** |
|  Balanced Fund | 4104670 |
|  Large Growth Stock Fund | 11628251 |
|  Large Cap Growth Fund | 882906 |
|  Large Core Growth Fund |  |
|  Large Cap Value Fund | 3629448 |
|  Large Core Value Fund | 1540192 |
|  Index 500 Fund | 17970659 |
|  Mid Cap Growth Fund | 271523 |
|  Mid Cap Value Fund | 1365220 |
|  Mid Core Value Fund | 930484 |
|  SMID Cap Growth Fund | 126105 |
|  SMID Cap Value Fund | 211719 |
|  Small Cap Growth Fund | 3608882 |
|  Small Cap Value Fund | 4398669 |
|  Small Cap Index Fund | 551324 |
|  Developed International Index Fund | 600211 |
|  International Equity Fund | 7527105 |
|  Emerging Markets Equity Fund | 176632 |
|  Real Estate Securities Fund | 1027437 |
|  Aggressive Allocation Fund | 859517 |
|  Moderately Aggressive Allocation Fund | 3039737 |
|  Moderate Allocation Fund | 1735139 |
|  Moderately Conservative Allocation Fund | 307200 |
|  Conservative Allocation Fund | 314249 |

---

**Federal Income Taxes** — The operations of Account I are included in the federal income tax return of Penn Mutual, which is taxed as a life insurance company under the provision of the Internal Revenue Code ("IRC"). Under the current provisions of the IRC, Penn Mutual does not expect to incur federal income taxes on the earnings of Account I to the extent the earnings are credited under contracts. Based on this, there is no charge to Account I for federal income taxes. Penn Mutual will review, as needed, the status of this policy in the event of changes in the tax law. A charge may be made in future years for any federal income taxes that would be attributable to the contracts.

Under the provisions of Section 817(h) of the IRC, a variable life contract will not be treated as a life contract for federal tax purposes for any period unless the investments of the segregated asset account on which the contract is based are adequately diversified. The IRC provides that the "adequately diversified" requirement may be met if the underlying investments satisfy either a statutory safe harbor test or diversification requirements set forth in regulations issued by the Secretary of Treasury. Account I satisfies the current requirements of the regulations, and Penn Mutual intends that Account I will continue to meet such requirements.

**Fair Value Measurement** — Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement is based on assumptions market participants would make in pricing an asset or liability. The inputs to valuation techniques used to measure fair value are prioritized by establishing a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to prices derived from unobservable inputs. An asset or liability's classification within the fair value hierarchy is based on the lowest level of significant input to its fair value measurement. Account I has categorized its assets and liabilities into the three-level fair value hierarchy based upon the priority of the inputs. The following summarizes the types of assets and liabilities included within the three-level hierarchy:

Level 1 — Fair value is based on unadjusted quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date. These generally provide the most reliable evidence and are used to measure fair value whenever available. Active markets are defined as having the following for the measured asset/liability: i) many transactions, ii) current prices, iii) price quotes not varying substantially among market makers, iv) narrow bid/ask spreads and v) most information publicly available. Prices are obtained from readily available sources for market transactions involving identical assets or liabilities.

------

##### [**Table of Contents**](#toc)
**Note 2. Significant Accounting Policies (continued)** 

Level 2 — Fair value is based on significant inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability through corroboration with observable market data. In circumstances where prices from pricing services are reviewed for reasonability but cannot be validated to observable market data as noted above, these security values are recorded in Level 3 in our fair value hierarchy.

Level 3 — Fair value is based on significant inputs that are unobservable for the asset or liability. These are typically less liquid fixed maturity securities with very limited trading activity. Prices are determined using valuation methodologies such as option pricing models, discounted cash flow models and other similar techniques. Prices may also be based upon non-binding quotes from brokers or other market makers that are reviewed for reasonableness, based on the Penn Mutual's understanding of the market.

The fair value of all the investments in Account I are at net asset values and the investments are considered actively traded and fall within Level 1.

**Note 3. Purchases and Sales of Investments** 

The following table shows aggregate cost of shares purchased and proceeds of shares sold for each fund or portfolio for the period ended December 31, 2025:

---

| | | |
|:---|:---|:---|
|  | **Purchases** | **Sales** |
|  Money Market Fund | $8467988 | $7146790 |
|  Limited Maturity Bond Fund | 1157233 | 1287566 |
|  Quality Bond Fund | 2333549 | 3168928 |
|  High Yield Bond Fund | 867278 | 1849046 |
|  Flexibly Managed Fund | 6502805 | 26316141 |
|  Balanced Fund | 1002716 | 1905671 |
|  Large Growth Stock Fund | 2413490 | 8483731 |
|  Large Cap Growth Fund | 748191 | 2864395 |
|  Large Core Growth Fund | 1222230 | 4872150 |
|  Large Cap Value Fund | 1079578 | 4034461 |
|  Large Core Value Fund | 3372341 | 3669890 |
|  Index 500 Fund | 10616366 | 11807122 |
|  Mid Cap Growth Fund | 1803017 | 2724202 |
|  Mid Cap Value Fund | 1040454 | 2345341 |
|  Mid Core Value Fund | 457927 | 2129694 |
|  SMID Cap Growth Fund | 863098 | 2518689 |
|  SMID Cap Value Fund | 288693 | 1887210 |
|  Small Cap Growth Fund | 990152 | 2837542 |
|  Small Cap Value Fund | 1531210 | 5402398 |
|  Small Cap Index Fund | 997050 | 681467 |
|  Developed International Index Fund | 904668 | 1074298 |
|  International Equity Fund | 5102527 | 7714684 |
|  Emerging Markets Equity Fund | 762403 | 2115865 |
|  Real Estate Securities Fund | 1294616 | 2068533 |
|  Aggressive Allocation Fund | 614439 | 1762123 |
|  Moderately Aggressive Allocation Fund | 985727 | 1752899 |
|  Moderate Allocation Fund | 470552 | 1200824 |
|  Moderately Conservative Allocation Fund | 86501 | 263081 |
|  Conservative Allocation Fund | 90719 | 416737 |

---

**Note 4. Related Party Transactions and Contract Charges** 

Penn Mutual received $53,237,075 and $53,292,976 from Account I for mortality and risk expense, cost of insurance, contract administration and certain other charges for the years ended December 31, 2025 and 2024. These amounts charged include those assessed through a reduction in unit value, as well as those assessed through redemption of units.

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##### [**Table of Contents**](#toc)
**Note 4. Related Party Transactions and Contract Charges (continued)** 

The following products assess mortality and expense charges as a reduction in the unit values. These are stated as a percentage of the account value as follows:

---

| | | |
|:---|:---|:---|
| **Products** | **Mortality & Risk Expense** | **Guaranteed Maximum Rate** |
|  Cornerstone VUL | 0.75%of value of the subaccounts. | 0.90%of value of the subaccounts. |
|  Cornerstone VUL II | 0.90%of value of the subaccounts. The rate has been lowered on a non-guaranteed basis to 0.40% of value of the subaccounts. | 0.90% of value of the subaccounts. |
|  Cornerstone VUL III | 0.45%of account value. | 0.90%of account value. |
|  Momentum Builder | 0.65%of account value. | 0.65%of account value. |
|  Variable Estate Max | 0.90%of value of the subaccounts. The rate has been lowered on a non-guaranteed basis to 0.40% of value of the subaccounts. | 0.90% of value of the subaccounts. |
|  Variable Estate Max II | 0.90%of value of the subaccounts. The rate has been lowered on a non-guaranteed basis to 0.40% of value of the subaccounts. | 0.90% of value of the subaccounts. |

---

The following products assess mortality and expense charges as a redemption of units held by the contract owner. They are as follows:

---

| | | |
|:---|:---|:---|
| **Products** | **Mortality & Risk Expense** | **Guaranteed Maximum Rate** |
|  Cornerstone VUL IV | 0.45% on the first $25,000 of account value; 0.15% on account value in excess of $25,000; and a monthly expense charge per $1,000 of specified amount during the first 10 years varying by issue age, sex (if applicable), and rate class. The same load will apply for the first 10 years following an increase in specified amount. | 0.60% on the first $50,000 of account value; 0.30% on account value in excess of $50,000; and a monthly expense charge per $1,000 of specified amount during the first 10 years varying by issue age, sex (if applicable), and rate class. The same load will apply for the first 10 years following an increase in specified amount. |
|  Diversified Advantage VUL | 0% of the subaccounts; and a monthly expense charge per $1,000 of specified amount during the first 10 years varying by issue age, sex (if applicable), and rate class. The same load will apply for the first 10 years following an increase in specified amount. | 0.60% of the first $50,000 of value of the subaccounts, plus an annual rate of 0.30% of the value in excess of $50,000 of the subaccounts; and a monthly expense charge per $1,000 of specified amount during the first 10 years varying by issue age, sex (if applicable), and rate class. The same load will apply for the first 10 years following an increase in specified amount. |
|  Diversified Growth VUL | During the first 120 months after the policy date 0.35% on the first $25,000 of policy value; 0.05% on policy value in excess of $25,000; and a monthly expense charge per $1,000 of specified amount during the first 10 years varying by issue age, sex (if applicable), and rate class. The same load will apply for the first 10 years following an increase in specified amount. | 0.60% on the first $50,000 of policy value; 0.30% on policy value in excess of $50,000; and a monthly expense charge per $1,000 of specified amount during the first 10 years varying by issue age, sex (if applicable), and rate class. The same load will apply for the first 10 years following an increase in specified amount. |

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##### [**Table of Contents**](#toc)
**Note 4. Related Party Transactions and Contract Charges (continued)** 

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| | | |
|:---|:---|:---|
| **Products** | **Mortality & Risk Expense** | **Guaranteed Maximum Rate** |
|  Survivorship Growth VUL | 0.60% of account value (policy years 1 – 10); 0.05% of account value thereafter; and a monthly expense charge per $1,000 of specified amount during the first 10 years. The same load will apply for the first 10 years following an increase in specified amount. | 0.90% of account value (policy years 1 – 10); 0.35% of account value thereafter; and a monthly expense charge per $1,000 of specified amount during the first 10 years. The same load will apply for the first 10 years following an increase in specified amount. |
|  Variable Estate Max III | 0.60% of account value (policy years 1 – 10); 0.05% of account value thereafter; and a monthly expense charge per $1,000 of specified amount during the first 10 years. The same load will apply for the first 10 years following an increase in specified amount. | 0.90% of account value (policy years 1 – 10); 0.35% of account value thereafter; and a monthly expense charge per $1,000 of specified amount during the first 10 years. The same load will apply for the first 10 years following an increase in specified amount. |

---

Certain charges of the products are reflected as a redemption of units held by the policyholder. These are as follows:

A surrender charge may be charged on full surrender of the policy depending on the policy year of the surrender and whether there has been an increase in the Specified Amount. The amount of the surrender charge if any, will in no event exceed the maximum allowed by state or federal law. For Diversified Advantage VUL, a surrender charge will also be charged if the Specified Amount is decreased in the first five policy years.

A charge equal to the lesser of 2% of the amount withdrawn and $25 will be charged on a partial withdrawal. The charge will be deducted from the available Net Cash Surrender Value and will be considered part of the partial withdrawal.

Premium charges on purchase payments are withdrawn from payments prior to the purchase of units. Currently, state premium taxes on purchase payments range from 0.00% to 4.00%. Premium charges on purchase payments range from 2.25% to 8.00%, except for Survivorship Growth VUL and Variable EstateMax III in the first year, which has a charge of 30% for premiums below the Maximum Surrender Charge Premium.

For each Cornerstone VUL, Cornerstone VUL II, Cornerstone VUL III, Cornerstone VUL IV, Variable Estate Max, Variable EstateMax II, Variable EstateMax III, Survivorship Growth VUL, Diversified Growth VUL, and Diversified Advantage VUL policy, on the date of issue and each monthly anniversary, a monthly deduction is made from the policy value. The monthly deduction consists of cost of insurance charges, administrative charges and any charges for additional benefits added by supplemental agreement to a policy.

For each Momentum Builder policy, each month on the date specified in the contract (or on the date the contract is withdrawn in full if other than the date specified), a $4 contract administration charge, or a lesser amount under state insurance laws, is deducted from the contract value as well as a cost of insurance charge.

Additionally, Penn Series pays Penn Mutual and its affiliates fees for investment advisory and administrative services.

**Note 5. Accumulation Units** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
| **Subaccount** | **Units<br>Issued** | **Units<br>Redeemed** | **Ending Unit<br>Balance** | **Units<br>Issued** | **Units<br>Redeemed** | **Ending Unit<br>Balance** |
|  Money Market Fund | 584844 | (497783) | 1708800 | 373301 | (1160525) | 1621739 |
|  Limited Maturity Bond Fund | 59105 | (65738) | 471562 | 93170 | (62731) | 478195 |
|  Quality Bond Fund | 93168 | (124147) | 1269703 | 216491 | (160513) | 1300682 |
|  High Yield Bond Fund | 17025 | (35090) | 338866 | 24689 | (29856) | 356931 |
|  Flexibly Managed Fund | 60112 | (199439) | 3356893 | 91554 | (233610) | 3496220 |
|  Balanced Fund | 27890 | (51216) | 674087 | 30417 | (80352) | 697413 |
|  Large Growth Stock Fund | 39410 | (137007) | 1180477 | 96049 | (130238) | 1278074 |
|  Large Cap Growth Fund | 14486 | (52696) | 320714 | 43004 | (38052) | 358924 |
|  Large Core Growth Fund | 35656 | (132645) | 1680380 | 26307 | (164283) | 1777369 |

---

------

##### [**Table of Contents**](#toc)
**Note 5. Accumulation Units (continued)** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
| **Subaccount** | **Units<br>Issued** | **Units<br>Redeemed** | **Ending Unit<br>Balance** | **Units<br>Issued** | **Units<br>Redeemed** | **Ending Unit<br>Balance** |
|  Large Cap Value Fund | 20571 | (64636) | 779255 | 30060 | (73327) | 823320 |
|  Large Core Value Fund | 96549 | (105838) | 1272842 | 35222 | (94590) | 1282131 |
|  Index 500 Fund | 137977 | (139476) | 2482047 | 140193 | (136677) | 2483546 |
|  Mid Cap Growth Fund | 32315 | (48643) | 643492 | 33077 | (53786) | 659820 |
|  Mid Cap Value Fund | 19323 | (40716) | 489758 | 23050 | (78228) | 511151 |
|  Mid Core Value Fund | 8066 | (38599) | 198377 | 13609 | (22108) | 228910 |
|  SMID Cap Growth Fund | 17852 | (51085) | 161588 | 68583 | (17463) | 194821 |
|  SMID Cap Value Fund | 7142 | (44577) | 110332 | 52262 | (26333) | 147767 |
|  Small Cap Growth Fund | 25185 | (63637) | 729199 | 29561 | (66510) | 767651 |
|  Small Cap Value Fund | 18934 | (58195) | 529812 | 21692 | (66363) | 569073 |
|  Small Cap Index Fund | 28567 | (19549) | 220867 | 35526 | (18745) | 211849 |
|  Developed International Index Fund | 43376 | (53485) | 370818 | 84686 | (38168) | 380927 |
|  International Equity Fund | 94434 | (142253) | 1200470 | 62328 | (117923) | 1248289 |
|  Emerging Markets Equity Fund | 65453 | (184254) | 1351301 | 169843 | (154181) | 1470102 |
|  Real Estate Securities Fund | 20780 | (33487) | 324233 | 32902 | (44496) | 336940 |
|  Aggressive Allocation Fund | 19260 | (57303) | 152674 | 16114 | (14167) | 190717 |
|  Moderately Aggressive Allocation Fund | 30280 | (54755) | 568233 | 51109 | (55191) | 592708 |
|  Moderate Allocation Fund | 17767 | (45390) | 441490 | 14295 | (76503) | 469113 |
|  Moderately Conservative Allocation Fund | 4116 | (11684) | 123787 | 12926 | (18198) | 131355 |
|  Conservative Allocation Fund | 4806 | (22999) | 177182 | 9770 | (24794) | 195375 |

---

**Note 6. Financial Highlights** 

Account I is a funding vehicle for a number of variable life products, which have unique combinations of features and fees that are charged against the contract owner's account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns. The Net Assets calculation in the table below excludes the accrual balance related to the "Due to The Penn Mutual Life Insurance Company" line in the Statement of Assets and Liabilities.

The following table was developed by determining which products offered within Account I have the lowest and highest total return. Only product designs within each subaccount that had units outstanding during the respective periods were considered when determining the lowest and highest total return. The summary may not reflect the minimum and maximum contract charges offered within Account I as contract owners may not have selected all available and applicable contract options.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **January 1, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **For the Year ended December 31, 2025** | **For the Year ended December 31, 2025** | **For the Year ended December 31, 2025** |
| **Subaccount** | **Unit Value** | **Units** | **Unit Value** | **Net Assets** | **Investment<br>Income<br>Ratio\* (%)** | **Expense**<br> **Ratio\*\* (%)** | **Total<br>Return\*\*\* (%)** |
|  Money Market Fund | 13.6 to 22.38 | 1708800 | 14.04 to 23.05 | 25035376 | 3.62 | 0.40 to 0.90 | 2.91 to 3.68 |
|  Limited Maturity Bond Fund | 18.59 to 21.89 | 471562 | 19.64 to 23.07 | 9601167 |  | 0.40 to 0.90 | 5.37 to 6.16 |
|  Quality Bond Fund | 23.47 to 56.13 | 1269703 | 25.24 to 59.98 | 33642651 |  | 0.40 to 0.90 | 6.75 to 7.56 |
|  High Yield Bond Fund | 43.19 to 116.03 | 338866 | 46.81 to 125.51 | 19133580 |  | 0.40 to 0.90 | 8.06 to 8.87 |
|  Flexibly Managed Fund | 102.85 to 417.28 | 3356893 | 115.16 to 464.19 | 443895461 |  | 0.40 to 0.90 | 11.13 to 11.97 |
|  Balanced Fund | 32.93 to 37.23 | 674087 | 37.05 to 42.2 | 26916426 |  | 0.40 to 0.90 | 12.52 to 13.37 |
|  Large Growth Stock Fund | 37.26 to 154.3 | 1180477 | 42.76 to 176.71 | 85708634 |  | 0.40 to 0.90 | 14.42 to 15.28 |
|  Large Cap Growth Fund | 44.53 to 52.78 | 320714 | 48.53 to 57.95 | 18173345 |  | 0.40 to 0.90 | 8.98 to 9.8 |
|  Large Core Growth Fund | 33.02 to 37.33 | 1680380 | 35.6 to 40.56 | 63725965 |  | 0.40 to 0.90 | 7.84 to 8.65 |
|  Large Cap Value Fund | 41.78 to 172.26 | 779255 | 45.75 to 188.25 | 51993958 |  | 0.40 to 0.90 | 9.18 to 10 |
|  Large Core Value Fund | 30.14 to 34.08 | 1272842 | 33.56 to 38.23 | 46287608 |  | 0.40 to 0.90 | 11.35 to 12.18 |
|  Index 500 Fund | 55.95 to 93.4 | 2482047 | 65.43 to 109.28 | 221699714 |  | 0.40 to 0.90 | 16.59 to 17.47 |
|  Mid Cap Growth Fund | 34.63 to 71.62 | 643492 | 34.77 to 71.69 | 35741005 |  | 0.40 to 0.90 | 0.1 to 0.85 |
|  Mid Cap Value Fund | 49.45 to 68.1 | 489758 | 52.57 to 72.44 | 29537290 |  | 0.40 to 0.90 | 6 to 6.8 |
|  Mid Core Value Fund | 47.2 to 55.95 | 198377 | 50.92 to 60.81 | 11613751 |  | 0.40 to 0.90 | 7.87 to 8.68 |
|  SMID Cap Growth Fund | 45.65 to 51.61 | 161588 | 46.21 to 52.64 | 8392054 |  | 0.40 to 0.90 | 1.23 to 2 |
|  SMID Cap Value Fund | 37.26 to 42.12 | 110332 | 37.94 to 43.22 | 4655760 |  | 0.40 to 0.90 | 1.83 to 2.6 |
|  Small Cap Growth Fund | 30.84 to 89.29 | 729199 | 33.36 to 96.63 | 34878548 |  | 0.40 to 0.90 | 7.84 to 8.65 |

---

------

##### [**Table of Contents**](#toc)
**Note 6. Financial Highlights (continued)** 

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **January 1, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **For the Year ended December 31, 2025** | **For the Year ended December 31, 2025** | **For the Year ended December 31, 2025** |
| **Subaccount** | **Unit Value** | **Units** | **Unit Value** | **Net Assets** | **Investment<br>Income<br>Ratio\* (%)** | **Expense**<br> **Ratio\*\* (%)** | **Total<br>Return\*\*\* (%)** |
|  Small Cap Value Fund | 80.05 to 116.21 | 529812 | 88.28 to 128.23 | 52274965 |  | 0.40 to 0.90 | 9.96 to 10.78 |
|  Small Cap Index Fund | 31.14 to 35.2 | 220867 | 34.61 to 39.43 | 8638485 |  | 0.40 to 0.90 | 11.17 to 12.01 |
|  Developed International Index Fund | 15.94 to 18.02 | 370818 | 20.66 to 23.53 | 8601298 |  | 0.40 to 0.90 | 29.63 to 30.6 |
|  International Equity Fund | 37.35 to 73.18 | 1200470 | 40.48 to 79.07 | 66225183 |  | 0.40 to 0.90 | 8.05 to 8.86 |
|  Emerging Markets Equity Fund | 9.38 to 10.6 | 1351301 | 11.95 to 13.61 | 17827840 |  | 0.40 to 0.90 | 27.36 to 28.31 |
|  Real Estate Securities Fund | 52.24 to 61.92 | 324233 | 53.05 to 63.35 | 19817935 |  | 0.40 to 0.90 | 1.54 to 2.3 |
|  Aggressive Allocation Fund | 26.75 to 30.24 | 152674 | 29.87 to 34.02 | 5180278 |  | 0.40 to 0.90 | 11.66 to 12.5 |
|  Moderately Aggressive Allocation Fund | 27.31 to 30.88 | 568233 | 30.36 to 34.58 | 19554020 |  | 0.40 to 0.90 | 11.16 to 12 |
|  Moderate Allocation Fund | 22.96 to 25.96 | 441490 | 25.34 to 28.86 | 12566391 |  | 0.40 to 0.90 | 10.34 to 11.17 |
|  Moderately Conservative Allocation Fund | 19.82 to 22.4 | 123787 | 21.54 to 24.54 | 2802686 |  | 0.40 to 0.90 | 8.7 to 9.52 |
|  Conservative Allocation Fund | 16.46 to 18.61 | 177182 | 17.73 to 20.19 | 3423072 |  | 0.40 to 0.90 | 7.68 to 8.49 |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **January 1, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **For the Year ended December 31, 2024** | **For the Year ended December 31, 2024** | **For the Year ended December 31, 2024** |
| **Subaccount** | **Unit Value** | **Units** | **Unit Value** | **Net Assets** | **Investment<br>Income<br>Ratio\* (%)** | **Expense**<br> **Ratio\*\* (%)** | **Total<br>Return\*\*\* (%)** |
|  Money Market Fund | 13.05 to 21.52 | 1621739 | 13.6 to 22.38 | 22883958 | 4.60 | 0.40 to 0.90 | 3.88 to 4.67 |
|  Limited Maturity Bond Fund | 17.67 to 20.88 | 478195 | 18.59 to 21.89 | 9183692 |  | 0.40 to 0.90 | 4.84 to 5.63 |
|  Quality Bond Fund | 22.92 to 55.18 | 1300682 | 23.47 to 56.13 | 32115629 |  | 0.40 to 0.90 | 1.62 to 2.39 |
|  High Yield Bond Fund | 40.22 to 108.27 | 356931 | 43.19 to 116.03 | 18538836 |  | 0.40 to 0.90 | 7.05 to 7.86 |
|  Flexibly Managed Fund | 91.47 to 373.53 | 3496220 | 102.85 to 417.28 | 415306214 |  | 0.40 to 0.90 | 11.6 to 12.45 |
|  Balanced Fund | 28.8 to 32.31 | 697413 | 32.93 to 37.23 | 24594899 |  | 0.40 to 0.90 | 14.34 to 15.21 |
|  Large Growth Stock Fund | 28.98 to 120.25 | 1278074 | 37.26 to 154.3 | 79920275 |  | 0.40 to 0.90 | 28.19 to 29.16 |
|  Large Cap Growth Fund | 38.65 to 45.47 | 358924 | 44.53 to 52.78 | 18554543 |  | 0.40 to 0.90 | 15.21 to 16.08 |
|  Large Core Growth Fund | 27.05 to 30.36 | 1777369 | 33.02 to 37.33 | 62185808 |  | 0.40 to 0.90 | 22.04 to 22.96 |
|  Large Cap Value Fund | 37.29 to 154.05 | 823320 | 41.78 to 172.26 | 50118775 |  | 0.40 to 0.90 | 11.71 to 12.56 |
|  Large Core Value Fund | 27.23 to 30.55 | 1282131 | 30.14 to 34.08 | 41566907 |  | 0.40 to 0.90 | 10.7 to 11.54 |
|  Index 500 Fund | 45.1 to 75.26 | 2483546 | 55.95 to 93.4 | 189344309 |  | 0.40 to 0.90 | 23.67 to 24.61 |
|  Mid Cap Growth Fund | 34.03 to 70.6 | 659820 | 34.63 to 71.62 | 36324797 |  | 0.40 to 0.90 | 1.44 to 2.21 |
|  Mid Cap Value Fund | 43.84 to 60.35 | 511151 | 49.45 to 68.1 | 28926100 |  | 0.40 to 0.90 | 12.46 to 13.31 |
|  Mid Core Value Fund | 43.88 to 51.62 | 228910 | 47.2 to 55.95 | 12266196 |  | 0.40 to 0.90 | 7.57 to 8.39 |
|  SMID Cap Growth Fund | 41 to 46 | 194821 | 45.65 to 51.61 | 9926486 |  | 0.40 to 0.90 | 11.35 to 12.2 |
|  SMID Cap Value Fund | 34.28 to 38.46 | 147767 | 37.26 to 42.12 | 6102019 |  | 0.40 to 0.90 | 8.69 to 9.51 |
|  Small Cap Growth Fund | 27.44 to 79.43 | 767651 | 30.84 to 89.29 | 33852186 |  | 0.40 to 0.90 | 12.02 to 12.87 |
|  Small Cap Value Fund | 74.57 to 108.42 | 569073 | 80.05 to 116.21 | 50859356 |  | 0.40 to 0.90 | 7.02 to 7.83 |
|  Small Cap Index Fund | 28.32 to 31.78 | 211849 | 31.14 to 35.2 | 7376507 |  | 0.40 to 0.90 | 9.93 to 10.77 |
|  Developed International Index Fund | 15.65 to 17.57 | 380927 | 15.94 to 18.02 | 6744873 |  | 0.40 to 0.90 | 1.8 to 2.57 |
|  International Equity Fund | 35.47 to 69.7 | 1248289 | 37.35 to 73.18 | 63300921 |  | 0.40 to 0.90 | 4.98 to 5.78 |
|  Emerging Markets Equity Fund | 9.82 to 11.02 | 1470102 | 9.38 to 10.6 | 15128385 |  | 0.40 to 0.90 | -4.46 to - 3.74 |
|  Real Estate Securities Fund | 49.47 to 58.2 | 336940 | 52.24 to 61.92 | 20145767 |  | 0.40 to 0.90 | 5.6 to 6.4 |
|  Aggressive Allocation Fund | 24.05 to 26.98 | 190717 | 26.75 to 30.24 | 5654675 |  | 0.40 to 0.90 | 11.25 to 12.09 |
|  Moderately Aggressive Allocation Fund | 24.78 to 27.81 | 592708 | 27.31 to 30.88 | 18208947 |  | 0.40 to 0.90 | 10.21 to 11.05 |
|  Moderate Allocation Fund | 21.2 to 23.79 | 469113 | 22.96 to 25.96 | 12030232 |  | 0.40 to 0.90 | 8.31 to 9.13 |
|  Moderately Conservative Allocation Fund | 18.6 to 20.87 | 131355 | 19.82 to 22.4 | 2726559 |  | 0.40 to 0.90 | 6.55 to 7.35 |
|  Conservative Allocation Fund | 15.69 to 17.6 | 195375 | 16.46 to 18.61 | 3472640 |  | 0.40 to 0.90 | 4.95 to 5.75 |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **January 1, 2023** | **December 31, 2023** | **December 31, 2023** | **December 31, 2023** | **For the Year ended December 31, 2023** | **For the Year ended December 31, 2023** | **For the Year ended December 31, 2023** |
| **Subaccount** | **Unit Value** | **Units** | **Unit Value** | **Net Assets** | **Investment<br>Income<br>Ratio\* (%)** | **Expense**<br> **Ratio\*\* (%)** | **Total<br>Return\*\*\* (%)** |
|  Money Market Fund | $12.55 to 20.73 | 2408963 | 13.05 to 21.52 | 32393740 | 4.39 | 0.40 to 0.90 | 3.71 to 4.49 |
|  Limited Maturity Bond Fund | 16.6 to 19.67 | 447756 | 17.67 to 20.88 | 8170460 |  | 0.40 to 0.90 | 6.17 to 6.96 |
|  Quality Bond Fund | 21.46 to 52.01 | 1244704 | 22.92 to 55.18 | 30246838 |  | 0.40 to 0.90 | 5.99 to 6.78 |
|  High Yield Bond Fund | 36.33 to 97.99 | 362098 | 40.22 to 108.27 | 17488656 |  | 0.40 to 0.90 | 10.39 to 11.22 |
|  Flexibly Managed Fund | 77.14 to 317.06 | 3638276 | 91.47 to 373.53 | 386439176 |  | 0.40 to 0.90 | 17.69 to 18.58 |
|  Balanced Fund | 24.62 to 27.42 | 747348 | 28.8 to 32.31 | 22938640 |  | 0.40 to 0.90 | 16.97 to 17.84 |

---

------

##### [**Table of Contents**](#toc)
**Note 6. Financial Highlights (continued)** 

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **January 1, 2023** | **December 31, 2023** | **December 31, 2023** | **December 31, 2023** | **For the Year ended December 31, 2023** | **For the Year ended December 31, 2023** | **For the Year ended December 31, 2023** |
| **Subaccount** | **Unit Value** | **Units** | **Unit Value** | **Net Assets** | **Investment<br>Income<br>Ratio\* (%)** | **Expense**<br> **Ratio\*\* (%)** | **Total<br>Return\*\*\* (%)** |
|  Large Growth Stock Fund | $19.76 to 82.16 | 1312263 | 28.98 to 120.25 | 63708587 |  | 0.40 to 0.90 | 46.21 to 47.3 |
|  Large Cap Growth Fund | 31.44 to 36.71 | 353972 | 38.65 to 45.47 | 15756957 |  | 0.40 to 0.90 | 22.92 to 23.84 |
|  Large Core Growth Fund | 20.13 to 22.42 | 1915345 | 27.05 to 30.36 | 54668689 |  | 0.40 to 0.90 | 34.37 to 35.38 |
|  Large Cap Value Fund | 33.54 to 138.83 | 866587 | 37.29 to 154.05 | 47013424 |  | 0.40 to 0.90 | 10.85 to 11.68 |
|  Large Core Value Fund | 25.33 to 28.21 | 1341499 | 27.23 to 30.55 | 39052457 |  | 0.40 to 0.90 | 7.5 to 8.31 |
|  Index 500 Fund | 36 to 60.18 | 2480030 | 45.1 to 75.26 | 152125576 |  | 0.40 to 0.90 | 24.93 to 25.86 |
|  Mid Cap Growth Fund | 28.51 to 59.32 | 680529 | 34.03 to 70.6 | 36673098 |  | 0.40 to 0.90 | 19.01 to 19.9 |
|  Mid Cap Value Fund | 39.54 to 54.53 | 566329 | 43.84 to 60.35 | 28299293 |  | 0.40 to 0.90 | 10.55 to 11.37 |
|  Mid Core Value Fund | 41.73 to 48.73 | 237409 | 43.88 to 51.62 | 11735747 |  | 0.40 to 0.90 | 5.14 to 5.93 |
|  SMID Cap Growth Fund | 36.24 to 40.36 | 143701 | 41 to 46 | 6505397 |  | 0.40 to 0.90 | 13.13 to 13.97 |
|  SMID Cap Value Fund | 29.6 to 32.96 | 121838 | 34.28 to 38.46 | 4591065 |  | 0.40 to 0.90 | 15.81 to 16.68 |
|  Small Cap Growth Fund | 23.24 to 67.37 | 804600 | 27.44 to 79.43 | 31680345 |  | 0.40 to 0.90 | 17.76 to 18.64 |
|  Small Cap Value Fund | 67.24 to 98.04 | 613744 | 74.57 to 108.42 | 50976289 |  | 0.40 to 0.90 | 10.58 to 11.41 |
|  Small Cap Index Fund | 24.55 to 27.34 | 195068 | 28.32 to 31.78 | 6125627 |  | 0.40 to 0.90 | 15.37 to 16.23 |
|  Developed International Index Fund | 13.45 to 14.98 | 334409 | 15.65 to 17.57 | 5762868 |  | 0.40 to 0.90 | 16.35 to 17.23 |
|  International Equity Fund | 30.92 to 60.94 | 1303884 | 35.47 to 69.7 | 62579413 |  | 0.40 to 0.90 | 14.39 to 15.25 |
|  Emerging Markets Equity Fund | 9.73 to 10.84 | 1454440 | 9.82 to 11.02 | 15532075 |  | 0.40 to 0.90 | 0.91 to 1.67 |
|  Real Estate Securities Fund | 44.59 to 52.06 | 348534 | 49.47 to 58.2 | 19580333 |  | 0.40 to 0.90 | 10.95 to 11.78 |
|  Aggressive Allocation Fund | 21 to 23.38 | 188770 | 24.05 to 26.98 | 4996578 |  | 0.40 to 0.90 | 14.53 to 15.38 |
|  Moderately Aggressive Allocation Fund | 21.82 to 24.3 | 596790 | 24.78 to 27.81 | 16526926 |  | 0.40 to 0.90 | 13.6 to 14.45 |
|  Moderate Allocation Fund | 18.94 to 21.09 | 531321 | 21.2 to 23.79 | 12446672 |  | 0.40 to 0.90 | 11.93 to 12.77 |
|  Moderately Conservative Allocation Fund | 16.93 to 18.85 | 136627 | 18.6 to 20.87 | 2647452 |  | 0.40 to 0.90 | 9.89 to 10.71 |
|  Conservative Allocation Fund | 14.5 to 16.15 | 210399 | 15.69 to 17.6 | 3545223 |  | 0.40 to 0.90 | 8.2 to 9.02 |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **January 1, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **For the Year ended December 31, 2022** | **For the Year ended December 31, 2022** | **For the Year ended December 31, 2022** |
| **Subaccount** | **Unit Value** | **Units** | **Unit Value** | **Net Assets** | **Investment<br>Income<br>Ratio\* (%)** | **Expense**<br> **Ratio\*\* (%)** | **Total<br>Return\*\*\* (%)** |
|  Money Market Fund | $12.57 to 20.81 | 2539168 | 12.55 to 20.73 | 32666887 | 0.31 | 0.40 to 0.90 | -0.48 to 0.27 |
|  Limited Maturity Bond Fund | 17.38 to 20.75 | 476085 | 16.6 to 19.67 | 8128057 |  | 0.40 to 0.90 | -5.2 to -4.48 |
|  Quality Bond Fund | 24.85 to 60.61 | 1228061 | 21.46 to 52.01 | 28060638 |  | 0.40 to 0.90 | -14.28 to -13.63 |
|  High Yield Bond Fund | 38.94 to 105.25 | 381811 | 36.33 to 97.99 | 16600482 |  | 0.40 to 0.90 | -6.99 to -6.29 |
|  Flexibly Managed Fund | 87.78 to 363.16 | 3729076 | 77.14 to 317.06 | 336301571 |  | 0.40 to 0.90 | -12.78 to -12.12 |
|  Balanced Fund | 29.73 to 32.87 | 793816 | 24.62 to 27.42 | 20712912 |  | 0.40 to 0.90 | -17.19 to -16.57 |
|  Large Growth Stock Fund | 32.82 to 136.72 | 1350498 | 19.76 to 82.16 | 44708900 |  | 0.40 to 0.90 | -39.97 to -39.51 |
|  Large Cap Growth Fund | 39.2 to 45.43 | 367371 | 31.44 to 36.71 | 13178366 |  | 0.40 to 0.90 | -19.79 to -19.19 |
|  Large Core Growth Fund | 43.62 to 48.22 | 1994627 | 20.13 to 22.42 | 42133845 |  | 0.40 to 0.90 | -53.84 to -53.49 |
|  Large Cap Value Fund | 35.18 to 145.93 | 919052 | 33.54 to 138.83 | 44900045 |  | 0.40 to 0.90 | -4.96 to -4.25 |
|  Large Core Value Fund | 26.37 to 29.15 | 1437020 | 25.33 to 28.21 | 38729686 |  | 0.40 to 0.90 | -3.95 to -3.22 |
|  Index 500 Fund | 44.25 to 74.2 | 2420581 | 36 to 60.18 | 118528143 |  | 0.40 to 0.90 | -18.9 to -18.29 |
|  Mid Cap Growth Fund | 41.31 to 86.22 | 711199 | 28.51 to 59.32 | 32013676 |  | 0.40 to 0.90 | -31.19 to -30.67 |
|  Mid Cap Value Fund | 42.09 to 58.22 | 565380 | 39.54 to 54.53 | 25588295 |  | 0.40 to 0.90 | -6.34 to -5.64 |
|  Mid Core Value Fund | 42.68 to 49.46 | 250159 | 41.73 to 48.73 | 11693061 |  | 0.40 to 0.90 | -2.22 to -1.48 |
|  SMID Cap Growth Fund | 51.05 to 56.43 | 140684 | 36.24 to 40.36 | 5574824 |  | 0.40 to 0.90 | -29.01 to -28.48 |
|  SMID Cap Value Fund | 35.49 to 39.23 | 127231 | 29.6 to 32.96 | 4116418 |  | 0.40 to 0.90 | -16.59 to -15.97 |
|  Small Cap Growth Fund | 30.81 to 89.6 | 865641 | 23.24 to 67.37 | 28588819 |  | 0.40 to 0.90 | -24.81 to -24.24 |
|  Small Cap Value Fund | 79.21 to 115.85 | 619408 | 67.24 to 98.04 | 46448122 |  | 0.40 to 0.90 | -15.37 to -14.73 |
|  Small Cap Index Fund | 31.34 to 34.64 | 153426 | 24.55 to 27.34 | 4135369 |  | 0.40 to 0.90 | -21.65 to -21.06 |
|  Developed International Index Fund | 16.01 to 17.7 | 299604 | 13.45 to 14.98 | 4405128 |  | 0.40 to 0.90 | -15.96 to -15.32 |
|  International Equity Fund | 39.72 to 78.52 | 1373364 | 30.92 to 60.94 | 57379108 |  | 0.40 to 0.90 | -22.39 to -21.81 |
|  Emerging Markets Equity Fund | 12.8 to 14.15 | 1431170 | 9.73 to 10.84 | 15036241 |  | 0.40 to 0.90 | -23.99 to -23.42 |
|  Real Estate Securities Fund | 60.18 to 69.75 | 353272 | 44.59 to 52.06 | 17751891 |  | 0.40 to 0.90 | -25.91 to -25.35 |
|  Aggressive Allocation Fund | 25.03 to 27.67 | 179805 | 21 to 23.38 | 4124140 |  | 0.40 to 0.90 | -16.13 to -15.5 |
|  Moderately Aggressive Allocation Fund | 25.7 to 28.41 | 584975 | 21.82 to 24.3 | 14153793 |  | 0.40 to 0.90 | -15.11 to -14.48 |
|  Moderate Allocation Fund | 22.14 to 24.47 | 562762 | 18.94 to 21.09 | 11703186 |  | 0.40 to 0.90 | -14.46 to -13.81 |
|  Moderately Conservative Allocation Fund | 19.22 to 21.25 | 76961 | 16.93 to 18.85 | 1388699 |  | 0.40 to 0.90 | -11.96 to -11.29 |
|  Conservative Allocation Fund | 16.2 to 17.91 | 220375 | 14.5 to 16.15 | 3406665 |  | 0.40 to 0.90 | -10.53 to -9.86 |

---

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##### [**Table of Contents**](#toc)
**Note 6. Financial Highlights (continued)** 

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **January 1, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **For the Year ended December 31, 2021** | **For the Year ended December 31, 2021** | **For the Year ended December 31, 2021** |
| **Subaccount** | **Unit Value** | **Units** | **Unit Value** | **Net Assets** | **Investment<br>Income<br>Ratio\* (%)** | **Expense**<br> **Ratio\*\* (%)** | **Total<br>Return\*\*\* (%)** |
|  Money Market Fund | $12.63 to 20.94 | 1410727 | $12.57 to 20.81 | 18288667 | 0.01 | 0.40 to 0.90 | -0.74 to 0.01 |
|  Limited Maturity Bond Fund | 17.32 to 20.83 | 512431 | 17.38 to 20.75 | 9211124 |  | 0.40 to 0.90 | -0.37 to 0.38 |
|  Quality Bond Fund | 25.03 to 61.43 | 1311274 | 24.85 to 60.61 | 34737389 |  | 0.40 to 0.90 | -1.43 to -0.69 |
|  High Yield Bond Fund | 37.21 to 100.78 | 425643 | 38.94 to 105.25 | 19788564 |  | 0.40 to 0.90 | 4.33 to 5.12 |
|  Flexibly Managed Fund | 74.22 to 309.02 | 3844879 | 87.78 to 363.16 | 397879316 |  | 0.40 to 0.90 | 17.4 to 18.28 |
|  Balanced Fund | 25.88 to 28.39 | 871775 | 29.73 to 32.87 | 27364422 |  | 0.40 to 0.90 | 14.9 to 15.77 |
|  Large Growth Stock Fund | 28.32 to 118.19 | 1369402 | 32.82 to 136.72 | 75010474 |  | 0.40 to 0.90 | 15.56 to 16.43 |
|  Large Cap Growth Fund | 31.32 to 36.1 | 368049 | 39.2 to 45.43 | 16338529 |  | 0.40 to 0.90 | 24.91 to 25.85 |
|  Large Core Growth Fund | 45.75 to 50.19 | 1985421 | 43.62 to 48.22 | 90362407 |  | 0.40 to 0.90 | -4.65 to -3.94 |
|  Large Cap Value Fund | 27.64 to 114.86 | 984181 | 35.18 to 145.93 | 50298850 |  | 0.40 to 0.90 | 26.93 to 27.88 |
|  Large Core Value Fund | 21.35 to 23.42 | 1533069 | 26.37 to 29.15 | 42775613 |  | 0.40 to 0.90 | 23.53 to 24.46 |
|  Index 500 Fund | 34.65 to 58.27 | 2443409 | 44.25 to 74.2 | 146900109 |  | 0.40 to 0.90 | 27.33 to 28.29 |
|  Mid Cap Growth Fund | 35.58 to 74.46 | 741305 | 41.31 to 86.22 | 48140929 |  | 0.40 to 0.90 | 15.78 to 16.65 |
|  Mid Cap Value Fund | 35.45 to 49.18 | 605852 | 42.09 to 58.22 | 29129751 |  | 0.40 to 0.90 | 18.38 to 19.27 |
|  Mid Core Value Fund | 34.85 to 40.16 | 274083 | 42.68 to 49.46 | 13040199 |  | 0.40 to 0.90 | 22.24 to 23.16 |
|  SMID Cap Growth Fund | 47.74 to 52.38 | 147181 | 51.05 to 56.43 | 8147884 |  | 0.40 to 0.90 | 6.93 to 7.73 |
|  SMID Cap Value Fund | 26.37 to 28.93 | 150894 | 35.49 to 39.23 | 5812494 |  | 0.40 to 0.90 | 34.57 to 35.58 |
|  Small Cap Growth Fund | 28.48 to 83.06 | 912492 | 30.81 to 89.6 | 39749636 |  | 0.40 to 0.90 | 7.87 to 8.68 |
|  Small Cap Value Fund | 62.72 to 92.15 | 674510 | 79.21 to 115.85 | 59406493 |  | 0.40 to 0.90 | 25.72 to 26.67 |
|  Small Cap Index Fund | 27.61 to 30.29 | 140845 | 31.34 to 34.64 | 4784724 |  | 0.40 to 0.90 | 13.5 to 14.35 |
|  Developed International Index Fund | 14.59 to 16.01 | 279987 | 16.01 to 17.7 | 4852296 |  | 0.40 to 0.90 | 9.71 to 10.54 |
|  International Equity Fund | 35.55 to 70.49 | 1407141 | 39.72 to 78.52 | 75365146 |  | 0.40 to 0.90 | 11.39 to 12.22 |
|  Emerging Markets Equity Fund | 13.67 to 14.99 | 1449297 | 12.8 to 14.15 | 19902097 |  | 0.40 to 0.90 | -6.33 to -5.63 |
|  Real Estate Securities Fund | 42.41 to 48.88 | 367191 | 60.18 to 69.75 | 24765437 |  | 0.40 to 0.90 | 41.64 to 42.7 |
|  Aggressive Allocation Fund | 21.66 to 23.77 | 161250 | 25.03 to 27.67 | 4369805 |  | 0.40 to 0.90 | 15.55 to 16.42 |
|  Moderately Aggressive Allocation Fund | 22.45 to 24.63 | 595410 | 25.7 to 28.41 | 16847745 |  | 0.40 to 0.90 | 14.47 to 15.33 |
|  Moderate Allocation Fund | 20.04 to 21.99 | 607732 | 22.14 to 24.47 | 14685616 |  | 0.40 to 0.90 | 10.49 to 11.32 |
|  Moderately Conservative Allocation Fund | 17.83 to 19.56 | 102122 | 19.22 to 21.25 | 2066841 |  | 0.40 to 0.90 | 7.82 to 8.64 |
|  Conservative Allocation Fund | 15.62 to 17.14 | 216087 | 16.2 to 17.91 | 3708769 |  | 0.40 to 0.90 | 3.74 to 4.52 |

---

\* These ratios represent the dividends, excluding distributions of capital gains, received by the subaccounts within Account I from the underlying mutual funds, net of management fees and expenses assessed by the fund manager, divided by the average net assets of the respective subaccounts. These ratios exclude those expenses, such as mortality and expense charges, that result in direct reductions in the unit values. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying funds in which the subaccount invests and, to the extent the underlying fund utilizes consent dividend rather than paying dividends in cash or reinvested shares, Account I does not record investment income. 

\*\* These ratios represent the annualized contract expenses of the subaccount, consisting primarily of mortality and expense charges, for the period indicated. The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying subaccount are excluded, as in Cornerstone VUL IV, Variable Estate Max III, Diversified Growth VUL and Survivorship Growth VUL (which would have an expense ratio of 0.00% since all contract charges are assessed through a reduction in units held). 

\*\*\* These ratios represent the total return for the periods indicated, including changes in the value of the underlying subaccount, and reflect deductions for all items included in the expense ratio. The total return also includes any expenses assessed through the redemption of units. The total return is calculated for the period indicated or from the effective date through the end of the reporting period. 

**Note 7. Subsequent Events** 

Management has evaluated events subsequent to December 31, 2025 and through the Account I Financial Statement date of issuance of April 15, 2026.

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**PM8674 05/26** 

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![LOGO](g46902g68g22.jpg)

## The Penn Mutual Life Insurance Company
![LOGO](g46902g25s52.jpg) 2025 Statutory Financial Statements

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![LOGO](g46902g02p01.jpg)

**PricewaterhouseCoopers LLP,**<br> 2001 Market Street, Suite 1800,<br> Philadelphia, PA 19103<br> +1 (267) 330 3000<br> www.pwc.com<br>

**Report of Independent Auditors** 

To the Board of Trustees of

The Penn Mutual Life Insurance Company

***Opinions***

We have audited the accompanying statutory financial statements of The Penn Mutual Life Insurance Company (the "Company"), which comprise the statutory statements of admitted assets, liabilities and surplus as of December 31, 2025 and 2024, and the related statutory statements of operations, of changes in surplus, and of cash flows for the years then ended, including the related notes (collectively referred to as the "financial statements").

***Unmodified Opinion on Statutory Basis of Accounting***

In our opinion, the accompanying financial statements present fairly, in all material respects, the admitted assets, liabilities and surplus of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in accordance with the accounting practices prescribed or permitted by the Pennsylvania Insurance Department described in Note 1.

***Adverse Opinion on U.S. Generally Accepted Accounting Principles***

In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles section of our report, the accompanying financial statements do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Company as of December 31, 2025 and 2024, or the results of its operations or its cash flows for the years then ended.

***Basis for Opinions***

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

***Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles***

As described in Note 1 to the financial statements, the financial statements are prepared by the Company on the basis of the accounting practices prescribed or permitted by the Pennsylvania Insurance Department, which is a basis of accounting other than accounting principles generally accepted in the United States of America.

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![LOGO](g46902g02p01.jpg)

The effects on the financial statements of the variances between the statutory basis of accounting described in Note 1 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material.

***Responsibilities of Management for the Financial Statements***

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the accounting practices prescribed or permitted by the Pennsylvania Insurance Department. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date the financial statements are available to be issued.

***Auditors' Responsibilities for the Audit of the Financial Statements***

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with US GAAS, we:

• Exercise professional judgment and maintain professional skepticism throughout the audit.

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and
design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.

• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluate the overall presentation of the financial statements.

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![LOGO](g46902g02p01.jpg)

• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial
doubt about the Company's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

![LOGO](g46902g03p01.jpg)

Philadelphia, Pennsylvania

February 18, 2026

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##### [**Table of Contents**](#toc)
***Table of Contents***

---

| | |
|:---|:---|
|  | ***Page*** |
|  [Statements of Admitted Assets, Liabilities and Surplus](#toc46902_1) | 1 |
|  [Statements of Operations](#toc46902_2) | 2 |
|  [Statements of Changes in Surplus](#toc46902_3) | 3 |
|  [Statements of Cash Flows](#toc46902_4) | 4 |
|  ***Notes to Financial Statements*** |  |
|  [Note 1. Nature of Operations and Basis of Presentation](#toc46902_5) | 5 |
|  [Note 2. Summary of Significant Accounting Policies](#toc46902_6) | 6 |
|  [Note 3. Investments](#toc46902_7) | 15 |
|  [Note 4. Separate Accounts](#toc46902_8) | 23 |
|  [Note 5. Derivatives](#toc46902_9) | 24 |
|  [Note 6. Fair Value of Financial Instruments and Off-Balance Sheet Risk](#toc46902_10) | 27 |
|  [Note 7. Life Reserves by Withdrawal Characteristics](#toc46902_11) | 34 |
|  [Note 8. Reserves and Funds for Payment of Annuity Benefits](#toc46902_12) | 35 |
|  [Note 9. Benefit Plans](#toc46902_13) | 38 |
|  [Note 10. Federal Income Taxes](#toc46902_14) | 43 |
|  [Note 11. Reinsurance](#toc46902_15) | 48 |
|  [Note 12. Related Parties](#toc46902_16) | 50 |
|  [Note 13. Commitments, Contingencies and Uncertainties](#toc46902_17) | 51 |
|  [Note 14. Subsequent Events](#toc46902_18) | 52 |

---

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##### [**Table of Contents**](#toc)
*($ in Thousands)* 

Statements of Admitted Assets, Liabilities and Surplus

---

| | | |
|:---|:---|:---|
| **As of December 31,** | **2025** | **2024** |
|  **ADMITTED ASSETS** |  |  |
|  Bonds | $19095858 | $18137108 |
|  Stocks: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Preferred | 52416 | 57988 |
| &nbsp;&nbsp;&nbsp;&nbsp; Common — affiliated | 1352785 | 1095726 |
| &nbsp;&nbsp;&nbsp;&nbsp; Common — unaffiliated | 18836 | 15494 |
|  Real estate | 10205 | 10350 |
|  Policy loans | 1453509 | 1136960 |
|  Cash, cash equivalents and short-term investments | 627612 | 387909 |
|  Alternative assets | 1110211 | 1089817 |
|  Derivatives | 1014436 | 1350153 |
|  Other invested assets | 811089 | 636611 |
|  TOTAL INVESTMENTS | 25546957 | 23918116 |
|  Investment income due and accrued | 239286 | 212366 |
|  Premiums due and deferred | 168590 | 167669 |
|  Deferred tax asset | 163691 | 213512 |
|  Corporate owned life insurance | 323257 | 299426 |
|  Amounts recoverable from reinsurers | 26651 | 9955 |
|  Other assets | 426734 | 430826 |
|  Separate account assets | 8613768 | 8774945 |
|  **TOTAL ASSETS** | $**35508934** | $**34026815** |
|  **LIABILITIES** |  |  |
|  Reserves and funds for payment of insurance and annuity benefits | $17357374 | $16842581 |
|  Dividends to policyholders payable in the following year | 302971 | 267090 |
|  Policy claims in process | 120425 | 117402 |
|  Asset valuation reserve | 371339 | 327038 |
|  Drafts outstanding | 59734 | 42438 |
|  Funds held under coinsurance | 2550398 | 1643193 |
|  Federal income taxes payable |  | 83803 |
|  Other liabilities | 773398 | 613581 |
|  Derivatives | 1155341 | 1422829 |
|  Separate account liabilities | 8613768 | 8774945 |
|  TOTAL LIABILITIES | **31304748** | **30134900** |
|  **SURPLUS** |  |  |
|  Surplus notes | 892185 | 891807 |
|  Unassigned surplus | 3312002 | 3000109 |
|  TOTAL SURPLUS | **4204187** | **3891916** |
|  **TOTAL LIABILITIES AND SURPLUS** | $**35508935** | $**34026816** |

---

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

*2025 Statutory Financial Statements* *Page 1* 

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##### [**Table of Contents**](#toc)
*($ in Thousands)* 

Statements of Operations

---

| | | |
|:---|:---|:---|
| **For the Years Ended December 31,** | **2025** | **2024** |
|  **REVENUE** |  |  |
|  Premium and annuity considerations | $613182 | $834127 |
|  Net investment income | 1181851 | 1214685 |
|  Reserve adjustments on reinsurance ceded | 379881 | 1426117 |
|  Other revenue | 394352 | 687643 |
|  TOTAL REVENUE | 2569266 | 4162572 |
|  **BENEFITS AND EXPENSES** |  |  |
|  Benefits paid to policyholders and beneficiaries | 1811669 | 1874530 |
|  Increase in reserves for payment of future insurance and annuity benefits | 507679 | 2316184 |
|  Commissions | 155807 | 229714 |
|  Operating expenses | 387497 | 324595 |
|  Other expenses | 99200 | 144118 |
|  Net transfers from separate accounts | (871801) | (862984) |
|  TOTAL BENEFITS AND EXPENSES | 2090051 | 4026157 |
|  GAIN FROM OPERATIONS BEFORE DIVIDENDS AND FEDERAL INCOME TAX BENEFIT | 479215 | 136415 |
|  Dividends to policyholders | 313334 | 278121 |
|  GAIN/(LOSS) FROM OPERATIONS BEFORE FEDERAL INCOME TAX BENEFIT | 165881 | (141706) |
|  Federal income tax expense/(benefit) | 29810 | (52735) |
|  LOSS FROM OPERATIONS | 136071 | (88971) |
|  Net realized capital (losses)/ gains, net of tax | (42806) | 943872 |
|  **NET INCOME** | $**93265** | $**854901** |

---

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

*Page 2* *The Penn Mutual Life Insurance Company*

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*($ in Thousands)* 

Statements of Changes in Surplus

---

| | | |
|:---|:---|:---|
| **For the Years Ended December 31,** | **2025** | **2024** |
|  **SURPLUS** |  |  |
|  Beginning of Year | $3891916 | $2864542 |
|  SSAP 3 adjustment | (71199) |  |
|  Surplus, beginning of year | 3820717 | 2864542 |
|  Net income | 93265 | 854901 |
|  Change in: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Reinsurance | 195926 | (103817) |
| &nbsp;&nbsp;&nbsp;&nbsp; Asset valuation reserve | (44301) | 18004 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net unrealized capital gains, net of tax | 110826 | 159748 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net deferred income tax | 37845 | 99931 |
| &nbsp;&nbsp;&nbsp;&nbsp; Funded status of postretirement plans, net of tax | 7507 | 34933 |
| &nbsp;&nbsp;&nbsp;&nbsp; Surplus notes | 378 | 351 |
|  Change in valuation basis |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Valuation basis |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Nonadmitted assets | (17976) | (36677) |
|  Change in surplus | 383470 | 1027374 |
|  **Surplus, end of year** | $**4204187** | $**3891916** |

---

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

*2025 Statutory Financial Statements* *Page 3* 

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*($ in Thousands)* 

Statements of Cash Flows

---

| | | |
|:---|:---|:---|
| **For the Years Ended December 31,** | **2025** | **2024** |
|  **OPERATIONS** |  |  |
|  Premium and annuity considerations | $2188840 | $2437609 |
|  Net investment income | 1250563 | 1311250 |
|  Other revenue | 275505 | 278396 |
|  CASH PROVIDED BY OPERATIONS | 3714908 | 4027255 |
|  Benefits paid | 2229215 | 2308034 |
|  Commissions and operating expenses | 683734 | 613338 |
|  Net transfers from separate accounts | (889980) | (848158) |
|  Dividends to policyholders | 19960 | 17006 |
|  Taxes refunded on operating income and realized investment losses | 163986 | 47177 |
|  CASH USED IN OPERATIONS | 2206915 | 2137397 |
|  **NET CASH PROVIDED BY OPERATIONS** | **1507993** | **1889858** |
|  **INVESTMENT ACTIVITIES** |  |  |
|  Investments sold, matured or repaid: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bonds | 4423444 | 5162763 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Preferred and common stocks | 48204 | 119009 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Alternative assets, real estate and other invested assets | (1267725) | 169865 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 2360000 | 2360000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivatives | 70303 | 385899 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Miscellaneous proceeds | (65690) | (373899) |
|  NET PROCEEDS FROM INVESTMENTS SOLD, MATURED OR REPAID | 5568536 | 7823637 |
|  Cost of investments acquired: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bonds | 5359824 | 9080289 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Preferred and common stock | 187616 | 146392 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Alternative assets, real estate and other invested assets | 937944 | 388911 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivatives | 0 | (6446) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Miscellaneous applications | 241153 | 403866 |
|  TOTAL COST OF INVESTMENTS ACQUIRED | 6726537 | 10013012 |
|  Net increase in policy loans | (285529) | (251235) |
|  **NET CASH USED IN INVESTMENT ACTIVITIES** | **(1443530)** | **(2440610)** |
|  **FINANCING AND MISCELLANEOUS** |  |  |
|  Net deposits on deposit-type contracts | 54812 | 390704 |
|  Other cash applied, net | 120428 | 83716 |
|  **NET CASH PROVIDED BY FINANCING AND MISCELLANEOUS** | **175240** | **474420** |
|  **NET CHANGE IN CASH AND SHORT-TERM INVESTMENTS** | **239703** | **(76332)** |
|  Cash, cash equivalents and short-term investments: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Beginning of year | 387909 | 464241 |
| &nbsp;&nbsp;&nbsp;&nbsp; **End of year** | $**627612** | $**387909** |
|  **Supplemental Disclosure of Cash Flow Information for Non-Cash Transactions:** |  |  |
|  Non-cash acquisitions | $— | $(42029) |
|  Premiums paid from benefits, dividends, policy loans and waivers | $306595 | $262938 |
|  Common stock acquired as a return of capital/dividend | $22096 | $8697 |
|  Non-cash disposals | $194929 | $46140 |
|  Reinsurance emerging earnings | $— | $269798 |

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

*Page 4* *The Penn Mutual Life Insurance Company*

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Notes to Financial Statements

***Note 1.*NATURE OF OPERATIONS AND BASIS OF PRESENTATION** 

**NATURE OF OPERATIONS** The Penn Mutual Life Insurance Company (the "Company") is a mutual life insurance company domiciled in Pennsylvania, that concentrates primarily on the sale of individual life insurance and annuity products. The primary products that the Company currently markets are traditional whole life, one year non-renewable and level term, variable universal life, immediate annuities and deferred annuities, both fixed and variable. The Company markets its products through a network of closely affiliated and independent financial professionals. The Company is licensed to write business in forty-nine states and the District of Columbia.

**BASIS OF PRESENTATION** The accompanying financial statements of the Company have been prepared in conformity with the National Association of Insurance Commissioner's ("NAIC") Practices and Procedures manual and with statutory accounting practices prescribed or permitted by the Pennsylvania Insurance Department (collectively "SAP" or "statutory accounting principles"). Prescribed statutory accounting practices include publications of the NAIC, state laws, regulations and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed. The Company currently has no permitted practices.

Statutory accounting principles are different in some respects from U.S. Generally Accepted Accounting Principles ("GAAP"). The more significant differences between statutory accounting principles and GAAP are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) under SAP, policy acquisition costs, such as commissions, and other costs incurred in connection with acquiring new
insurance contracts, are expensed when incurred; under GAAP, such costs are generally deferred and amortized over the expected life of the underlying insurance contracts on a constant-level basis at a grouped contract level that approximates
straight-line amortization on an individual contract basis;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) statutory policy reserves are based upon the methods prescribed in the Valuation Manual, whereas GAAP reserves would
generally be based upon the net level premium method, with estimates of future mortality, morbidity and interest assumptions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) bonds are generally carried at amortized cost, whereas GAAP would generally report bonds at fair value;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) undistributed earnings from alternative assets are included in unrealized gains and losses, whereas GAAP would reflect
these changes as net investment income;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) deferred income taxes, which provide for book versus tax temporary differences, are subject to limitation and are charged
to surplus, whereas GAAP would generally include the change in deferred taxes in net income;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) payments received for universal and variable life insurance products and variable annuities are reported as premium
income and changes in reserves, whereas GAAP would treat these payments as deposits to policyholders' account balances;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) assets are reported at "admitted asset" value and "nonadmitted assets" are excluded through a
charge against surplus, whereas GAAP would record these assets net of any valuation allowance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) majority-owned subsidiaries are accounted for using the equity method. The Penn Insurance and Annuity Company
("PIA"), Vantis Life Insurance Company ("Vantis"), The Penn Insurance and Annuity Company of New York ("PIANY"), Janney Montgomery Scott, LLC ("JMS") through November 29, 2024, Hornor
Townsend & Kent, LLC ("HTK") through August 1, 2025, Penn Mutual Asset Management, LLC ("PMAM"), 1847 Financial, LLC ("1847FIN") and 1847 Insurance Captive, LLC ("1847IC") are admitted
assets. 1847 Select Ventures, LLC ("1847SV"), and MyWorth LLC ("MyWorth") are non-admitted assets. Under GAAP, these majority-owned subsidiaries would be consolidated;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the Company's investment in Penn Mutual Asset Management Multi-Series Funds Series A and B and the Penn Mutual AM
Strategic Income Fund (collectively "PMAM's Private Funds/PMUBX") is accounted for using the equity method. Under GAAP, the Company's investment would be treated as a variable interest entity and consolidated, with
noncontrolling interest portions separately reported.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) surplus notes are reported in surplus, whereas GAAP would report these notes as debt. Costs associated with the issuance
of these notes are expensed, whereas GAAP would capitalize these expenses and amortize them into income over the life of the notes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) reinsurance reserve credits are reported as a reduction of policyholders' reserves and liabilities for deposit-type
contracts, whereas GAAP would report these balances as an asset;

*2025 Statutory Financial Statements* *Page 5* 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) an asset valuation reserve ("AVR") is reported as a contingency reserve to stabilize surplus against
fluctuations in the carrying value of stocks, real estate investments, partnerships, limited liability companies ("LLCs"), low income housing tax credit ("LIHTC") investments and certain credit related derivative instruments
as well as credit-related declines in the value of bonds, whereas under U.S. GAAP, a separate reserve like the AVR is not established; instead, credit-related declines are recognized through impairment charges or fair value adjustments that directly
affect earnings or other comprehensive income;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) changes in the fair value of unaffiliated common stock are recorded as changes in unrealized gains/(losses) in surplus,
whereas GAAP recognizes the changes through realized capital gains/(losses);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) changes in the fair value of perpetual preferred stock are recorded as changes in unrealized gains/(losses) in surplus,
whereas GAAP recognizes the changes through realized capital gains/(losses);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) after-tax realized capital gains and losses that result from changes in the
overall level of interest rates for all types of fixed-income investments and interest-related hedging activities are deferred into the interest maintenance reserve ("IMR") and amortized into investment income over the remaining life of
the investment sold, whereas GAAP would report these gains and losses in income as a component of revenue when the related securities are sold or called;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) changes in the fair value of derivative financial instruments are recorded as changes in surplus, unless deemed an
effective hedge when it is carried at amortized cost with no resulting changes in fair value. Changes in fair value for GAAP would be reported as income for ineffective cash flow hedges and fair value hedges; changes in fair value for GAAP would be
reported as other comprehensive income for effective cash flow hedges;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) comprehensive income is not presented, whereas GAAP would present changes in unrealized capital gains and losses, changes
in funded status of pension and postretirement plans and foreign currency translations as other comprehensive income;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) embedded derivatives are recorded as part of the underlying contract, whereas GAAP would identify and bifurcate certain
embedded derivatives and market risk benefits from the underlying contract or security and account for them separately;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) policyholder dividends are recognized when declared, whereas GAAP would recognize these over the term of the related
policies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) investments in Federal Home Loan Bank stock are reported as an investment in common stock, unaffiliated, whereas GAAP
would report these within other invested assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) identification of other-than-temporary impairment ("OTTI") uses an "intent and ability to hold"
criteria, whereas GAAP would use and "intent and ability not to sell" criteria.

**CORRECTION OF ERRORS** The Company identified an overstatement in prior years' deferred tax asset related to its reinsurance transactions. The correction of the error was recorded in accordance with SSAP No. 3 – *Accounting Changes and Corrections of Error* and is reflected as a decrease in unassigned funds of $71,199 on the Statements of Changes in Surplus*.*

**RECLASSIFICATIONS** Certain prior year amounts have been reclassified to conform to current year presentation. These reclassifications had no impact on capital and surplus or net income in the prior year.

***Note 2.* SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** 

**USE OF ESTIMATES** The preparation of financial statements requires management to make estimates and assumptions that impact the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Those estimates are inherently subject to change and actual results could differ from those estimates. Included among the material reported amounts and disclosures that require extensive use of estimates are:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◇ Carrying value of certain invested assets and derivatives

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◇ Liabilities for reserves and funds for the payment of insurance and annuity benefits

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◇ Accounting for income taxes and valuation of deferred income tax assets and liabilities and unrecognized tax benefits

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◇ Litigation and other contingencies

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◇ Pension and other postretirement and postemployment benefits

*Page 6* *The Penn Mutual Life Insurance Company*

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**INVESTMENTS** *Bonds* with an NAIC designation of 1 to 5 are valued at amortized cost. All other bonds are valued at the lower of cost or fair value. Fair value is determined using an external pricing service or management's pricing models.

For fixed income securities that do not have a fixed schedule of payment, including asset-backed and mortgage-backed securities, the effect on amortization or accretion is revalued three times a year based on the current estimated cash flows. Prepayment assumptions are based on borrower constraints and economic incentives such as original term, age and coupon of the loan as affected by the interest rate environment. Cash flow assumptions for structured securities are obtained from broker dealer survey values or internal estimates. These assumptions are consistent with the current interest rate and economic environment.

The Company has adopted a principles-based definition of a bond for the classification and reporting of its investments. A security is classified as a bond if it represents a creditor relationship, contains a fixed schedule for future payments and is either an issuer credit obligation or an asset-backed security. To determine whether a security meets the principles-based definition of a bond, management performs a qualitative assessment focusing on the security's underlying economic characteristics including but not limited to creditor relationship, fixed payments and source of repayment. The adoption of this guidance did not have a significant impact on the Company's financial statements.

*Preferred Stock* Highest-quality, high-quality or medium quality redeemable preferred stock (NAIC designations 1 to 3) shall be valued at amortized cost. All other redeemable preferred stocks (NAIC designations 4 to 6) shall be reported at the lower of amortized cost or fair value. Perpetual preferred stock shall be valued at fair value, not to exceed any currently effective call price. Fair value is determined using an external pricing service or management's pricing model.

*Common Stock* of the Company's insurance affiliates are carried at their underlying audited statutory surplus on the Statements of Admitted Assets, Liabilities, and Surplus.

Unaffiliated common stock is carried at fair value. The investment in capital stock of the Federal Home Loan Bank of Pittsburgh ("FHLB-PGH") is carried at par, which approximates fair value.

Dividends are recognized in net investment income on the ex-dividend date. Other changes in carrying value are recognized as changes in unrealized gains or losses in surplus.

*Real Estate* is carried at depreciated cost. Depreciated cost is adjusted for impairments whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable, with the impairment being included in realized capital losses. Depreciation is calculated using the straight-line method over the estimated useful life of the real estate holding, not to exceed 40 years. Depreciation expense is included in net investment income.

*Policy Loans* are carried at the aggregate balance of unpaid principal and capitalized interest.

*Cash, Cash Equivalents and Short-Term Investments* Cash equivalents include investments purchased with maturities of three months or less and money market mutual funds. Short-term investments, which are carried at amortized cost and approximate fair value, consist of investments purchased with maturities greater than three months, and less than or equal to 12 months.

*Alternative Assets* consist primarily of limited partnerships. The Company accounts for the value of its investments at their underlying GAAP equity. Dividends and income distributions from limited partnerships are recorded as investment income. Undistributed earnings are included in the unrealized gains and losses balance and are reflected in surplus, net of deferred taxes. Distributions that are recorded as a return of capital reduce the carrying value of the limited partnership investment. Due to the timing of the valuation data received from the partnership, these investments are reported in accordance with the most recent valuations received, which are primarily on a one quarter lag.

*Derivatives* The Company may utilize derivative financial instruments in the normal course of business to manage risk, in conjunction with its management of assets and liabilities and interest rate risk. The accounting treatment of

*2025 Statutory Financial Statements* *Page 7* 

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specific derivatives depends on whether the financial instrument is designated and qualifies as a highly effective hedge. Derivatives used in hedging transactions that meet the criteria of a highly effective hedge are reported and valued in a manner that is consistent with the instrument being hedged. These derivatives are carried at amortized cost with no resulting changes in fair value. Derivatives used in risk management transactions that do not meet the criteria of an effective hedge are accounted for at fair value, with changes in fair value recorded in unrealized capital gains/(losses). Derivatives with a positive fair value or carrying value are reported as admitted assets. Derivatives with a negative fair value or carrying value are reported as liabilities. Realized gains and losses that are recognized upon termination or maturity of the derivatives used in economic hedges of interest rate and currency risk of the fixed income portfolio, regardless of accounting treatment, are transferred, net of taxes, to the IMR. All other realized gains and losses are recognized in net income upon maturity or termination of the derivative contracts.

The Company entered into certain interest rate swaps that qualify for hedge accounting. These swaps are used to hedge the impact of changing interest rates on the value of specific municipal bonds.

The Company may enter into interest rate swaps, total return swaps, inflation swaps, financial futures and equity options to hedge risks associated with the offering of equity market-based guarantees in the Company's annuity and indexed universal life insurance product portfolio that do not meet the criteria of an effective hedge.

The Company may enter into interest rate caps, credit default swaps, and interest rate swaps, that are carried at fair value. The Company may use interest rate caps and payer swaps, a type of interest rate swap, to manage risk associated with rising interest rates. Credit default swaps protect the Company from a decline in credit quality of a specified security. Receiver swaps, a type of interest rate swap, protect the Company from credit risk in the fixed income portfolio. These do not meet the criteria of an effective hedge.

Investment income is recorded on an accrual basis. Amounts payable or receivable under total return, currency, credit default, interest rate and inflation swap agreements are recognized as investment income or expense when incurred.

The Company does not engage in derivative financial instrument transactions for speculative purposes.

*Other Invested Assets* The Company invests in LIHTC investments, which generate tax credits for investing in affordable housing projects. Investments in LIHTC are included in other invested assets and are accounted for under the proportional amortized cost method. The delayed equity contributions for these investments are unconditional and legally binding and therefore, have been recognized as a liability. LIHTC investments are reviewed for OTTI, which is accounted for as a realized loss.

The Company invests in tax equity credit investments, which generate tax credits for investing in renewable energy projects. Investments in tax equity credit investments are included in other invested assets and are accounted for under the proportional amortized cost method.

Other invested assets also include an investment in an unaffiliated mortgage fund, notes receivable carried at book value from PMAM and 1847SV, receivables for unsettled investment transactions and debt securities that do not meet the definition of a bond valued at the lower of cost or fair value.

**OTTI EVALUATION** *Bonds, mortgage-backed and asset-backed securities* The Company considers an impairment to be OTTI if: (a) the Company's intent is to sell, (b) the Company will more likely than not be required to sell, (c) the Company does not have the intent and ability to hold the security for a period of time sufficient to recover the amortized cost basis or (d) the Company does not expect to recover the entire amortized cost basis. The Company conducts a periodic management review of all bonds including those in default, not-in-good standing or otherwise designated by management. The Company also considers other qualitative and quantitative factors in determining the existence of OTTI including, but not limited to, unrealized loss trend analysis and significant short-term changes in value, default rates, delinquency rates, percentage of nonperforming loans, prepayments and severities. If the impairment is other-than-temporary, the non-interest loss portion of the impairment is recorded through realized losses and the interest related portion of the loss is disclosed in the notes to the financial statements.

*Page 8* *The Penn Mutual Life Insurance Company*

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The non-interest portion is determined based on the Company's "best estimate" of future cash flows discounted to a present value using the appropriate yield. The difference between the present value of the best estimate of cash flows and the amortized cost is the non-interest loss. The remaining difference between the amortized cost and the fair value is the interest loss.

*Equity Securities* OTTI *—* Equity securities with market value to book value ratio below 80% are further evaluated; while *t*he Company will impair any lot of equity securities in an unrealized loss position for more than 12 consecutive months by more than 10% without further evaluation. Any such impairments are accounted for as a realized loss.

*Alternative Assets* OTTI — The Company's evaluation for OTTI takes into consideration the remaining life of a partnership and the performance of the underlying assets when evaluating the facts and circumstances surrounding the recovery of the cost for a partnership. Any such impairments are accounted for as a realized loss.

*LIHTC* OTTI — For LIHTC investments, OTTI is determined by comparing the book value of the investment with the present value of future tax benefits. The investment is written down if the book value is higher than the present value and the impairment is accounted for as a realized loss.

**INVESTMENT INCOME DUE AND ACCRUED** Investment income due and accrued consists primarily of interest and dividends. Interest is recognized on an accrual basis and dividends are recorded as earned on the ex-dividend date. Due and accrued income is not recorded on: (a) bonds in default; (b) bonds delinquent more than 90 days or where collection of interest is improbable; and (c) policy loan interest due and accrued in excess of the cash surrender value of the underlying contract.

**PREMIUMS DUE AND DEFERRED** Deferred premium is the portion of premium not earned at the reporting date, net of loading. Loading is an amount obtained by subtracting the net premium from the gross premium and generally includes allowances for acquisition costs and other expenses. Deferred premium adjusts for the overstatement created in the calculation of reserves as the reserve computation assumes the entire year's net premium is collected annually at the beginning of the policy year and does not take into account installment or modal payments.

Uncollected premium is gross premium that is due and unpaid as of the reporting date, net of loading and nonadmitted receivables that are greater than 90 days in age. Net premium is the amount used in the calculation of reserves. The change in loading is included as an expense and is not shown as a reduction to premium income. The deferred and uncollected amounts and loading were as follows at December 31:

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **2025** | **2025** | **2025** | **2025** | **2024** | **2024** | **2024** | **2024** |
|  | **New** | **Renewal** | **Group** | **Total** | **New** | **Renewal** | **Group** | **Total** |
|  Uncollected premium | $192 | $47017 | NA |  | $141 | $49174 | NA |  |
|  Uncollected loading | (189) | (16657) | NA |  | (139) | (14103) | NA |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net uncollected | $3 | $30360 | $65 | $30428 | $2 | $35071 | $78 | $35151 |
|  Deferred premium | $13048 | $161259 | NA |  | $13296 | $157267 | NA |  |
|  Deferred loading | (12644) | (18878) | NA |  | (12901) | (20466) | NA |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net deferred | $404 | $142381 | $2 | $142787 | $395 | $136801 | $2 | $137198 |
|  Subtotal — net deferred and uncollected | Subtotal — net deferred and uncollected | Subtotal — net deferred and uncollected | Subtotal — net deferred and uncollected | 173215 |  |  |  | 172349 |
|  Nonadmitted | Nonadmitted |  |  | (4625) |  |  |  | (4680) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premiums due and deferred , net | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premiums due and deferred , net | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premiums due and deferred , net | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premiums due and deferred , net | $168590 |  |  |  | $167669 |

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**FEDERAL INCOME TAX** The Company files a consolidated federal income tax return with its insurance and non-insurance subsidiaries. Each subsidiary's tax liability or refund is accrued on a benefits for loss basis. The Company reimburses subsidiaries for losses utilized in the consolidated return based on inter-company tax

*2025 Statutory Financial Statements* *Page 9* 

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allocation agreements. The provision for federal income taxes is computed in accordance with the section of the Internal Revenue Code applicable to life insurance companies and is based on income that is currently taxable.

Uncertain tax positions ("UTPs") are established when the merits of a tax position are evaluated against certain measurement and recognition tests. UTP changes are reflected as a component of income taxes. The Company currently has no UTPs.

Deferred income tax assets and liabilities are established to reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes. These deferred tax assets or liabilities are measured by using the enacted tax rates expected to apply to taxable income in the period in which the deferred tax liabilities or assets are expected to be settled or realized. Changes in the deferred tax balances are reported as adjustments to surplus. Deferred tax assets, after the consideration of any necessary valuation allowance, in excess of statutory limits are treated as nonadmitted assets and charged to surplus.

**CORPORATE OWNED LIFE INSURANCE** The Company purchases life insurance policies on certain officers and employees on which the Company is designated as the beneficiary. The Company recognizes the cash surrender value of the policies as an asset on the Statements of Admitted Assets, Liabilities and Surplus. Changes in the cash surrender value of the policies are recorded as an adjustment to the premiums paid for the insurance coverage, which is recognized as part of interest credited to policyholders within Benefits paid to policyholders and beneficiaries on the Statements of Operations.

Included in the total corporate owned life insurance owned by the Company are a block of policies issued by PIA. As of December 31, 2025 and 2024, the cash surrender values of those policies held by the Company were $19,973 and $20,404, respectively.

The cash surrender values for investments in the corporate owned life insurance are as follows at December 31:

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| | | |
|:---|:---|:---|
| | **2025** | **2024** |
|  Equity funds | $223396 | $119774 |
|  Money market funds | 77849 | 157231 |
|  Other | 22013 | 22421 |
|  **Total** | $**323258** | $**299426** |

---

**REINSURANCE** In the normal course of business, the Company seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding reinsurance to other insurance enterprises or reinsurers under excess coverage and coinsurance contracts. The Company has set its retention limit for acceptance of risk on life insurance policies at various levels up to $10,000 for single life and $20,000 for joint lives effective March 1, 2024. Prior to March 1, 2024, these limits were $7,500 for single life and $10,000 for joint lives.

In addition to excess coverage and coinsurance contracts, the Company also utilizes other forms of reinsurance such as coinsurance funds withheld and coinsurance/modified coinsurance. As of December 31, 2025 and 2024, the Company had $2,550,398 and $1,643,193 of funds held under coinsurance liabilities, respectively.

Reinsurance does not relieve the Company of its primary liability and, as such, failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the risk transfer of its reinsurance contracts as well as the financial strength of potential reinsurers. The Company regularly monitors the financial condition and ratings of its existing reinsurers to ensure that amounts due from reinsurers are collectible.

Insurance liabilities are reported net of the effects of reinsurance. Estimated reinsurance recoverables are recognized in a manner consistent with the liabilities related to the underlying reinsured contracts.

**OTHER ASSETS** Computer equipment and packaged software is reported at a cost of $89,692 and $83,072, less accumulated depreciation of $83,155 and $81,117 at December 31, 2025 and 2024, respectively. Computer

*Page 10* *The Penn Mutual Life Insurance Company*

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equipment and packaged software is depreciated using the straight-line method over the lesser of its useful life or three years. Depreciation expense on computer equipment and packaged software charged to operations in 2025 and 2024 was $2,190 and $2,063, respectively. Furniture is depreciated on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are depreciated over the remaining life of the lease. Building and property improvements are depreciated in accordance with the expected useful life.

Other assets also includes receivables related to federal income taxes, centrally cleared derivative transactions, receivables for collateral remitted to counterparties and amounts due from affiliates under the terms of service agreements.

As of December 31, 2025 and 2024, the Company had $217,105 and $288,464 of negative (disallowed) IMR in aggregate and in the general account, respectively.

As of December 31, 2025 and 2024, the Company had $217,105 and $288,464 of negative (disallowed) IMR admitted in the general account, respectively.

As of December 31, 2025 and 2024, the Company's calculated adjusted capital and surplus was $3,632,970 and $3,387,984, respectively.

As of December 31, 2025 and 2024, the percentage of adjusted general capital and surplus for which the admitted disallowed IMR represents was 6% and 9%, respectively.

The following represents allocated gains/(losses) deferred to the IMR from derivatives as of :

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| | | |
|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2024** |
|  Realized capital gains | $— | $— |
|  Realized capital (losses) | (309593) | (293830) |
|  **Total allocated (losses) to IMR from derivatives** | $**(309593)** | $**(293830)** |

---

**SEPARATE ACCOUNT ASSETS AND LIABILITIES** The Company has separate account assets and liabilities representing segregated funds administered and invested by the Company primarily for the benefit of variable life insurance policyholders and variable annuity contractholders. The assets of each account are legally segregated and are generally not subject to claims that arise out of any other business of the Company. The separate accounts have varying investment objectives.

Separate account assets are stated at the fair value of the underlying assets, which are shares of mutual funds. The value of the assets in the separate accounts reflects the actual investment performance of the respective accounts and is not guaranteed by the Company. The liability is reported at contract value and represents the policyholders' interest in the account and includes accumulated net investment income and realized and unrealized capital gains/(losses) on the assets. The investment income and realized capital gains/(losses) from separate account assets accrue to the policyholders and are not included in the Statements of Operations. Mortality, policy administration, surrender charges assessed and asset management fees charged against the accounts are included in Other revenue in the accompanying Statements of Operations.

The Company has variable annuity contracts in the separate accounts in which the Company provides various forms of guarantees to benefit the related contract holders called Guaranteed Minimum Death Benefits ("GMDB"), Guaranteed Minimum Accumulated Benefits ("GMAB"), GMAB/Guaranteed Minimum Withdrawal Benefits ("GMWB") and GMWB with inflation protection. In accordance with guarantees provided, if the investment proceeds in the separate accounts are insufficient to cover the guarantees for the product, the policyholder proceeds will be remitted by the general account.

**NONADMITTED ASSETS** Assets designated as nonadmitted by the NAIC include furniture, certain electronic data processing equipment, unamortized software, the amount of the deferred tax asset that is in excess of limits

*2025 Statutory Financial Statements* *Page 11* 

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prescribed by SAP, benefit plan assets, certain investments in partnerships for which financial audits are not performed, certain other receivables, advances and prepayments and uncollected premiums greater than 90 days from the due date. Such amounts are excluded from the Statements of Admitted Assets, Liabilities and Surplus.

**RESERVES AND FUNDS FOR THE PAYMENT OF INSURANCE AND ANNUITY BENEFITS** Policyholders' reserves provide amounts adequate to discharge estimated future obligations in excess of estimated future premium on policies in-force. Any adjustments that are made to the reserve balances are reflected in the Statements of Operations in the year in which such adjustments are made, with the exception of changes in valuation bases that are accounted for as charges or credits to surplus.

Reserves and funds for the payment of future life and annuity benefits are developed using actuarial methods based on statutory mortality and interest requirements. Reserves for life insurance contracts are developed using accepted actuarial methods computed principally on the net level, modified preliminary term or CRVM methods using the 1941, 1958, 1980, 2001, and 2017 Commissioners' Standard Ordinary ("CSO") Mortality and American Experience Tables and assumed interest rates ranging from 2.25% to 4.50%. Reserves for substandard policies are computed using multiples of the respective underlying mortality tables. The Company has universal life contracts with secondary guarantee features. The Company establishes reserves according to Actuarial Guideline XXXVIII, unless otherwise noted.

Reserves for Term and Single Life UL with secondary guarantee features are based on the methodology specified by the Life Principle-Based Reserve approach ("VM-20"), starting with 2017 policy issue years. Reserves for Single and Joint Life IUL are based on the same VM-20 methodology starting with 2018 policy issue years. Reserves for all other life insurance products are based on the same VM-20 methodology starting with 2020 policy issue years. VM-20 specifies the final reserve as the greater of the Net Premium Reserve ("NPR"), Deterministic Reserve ("DR") and Stochastic Reserve ("SR"). The NPR is a formulaic reserve with prescribed assumptions, including the 2017 CSO Mortality Tables. The DR is based on a single path, deterministic projection with prudent estimate assumptions, including margins for uncertainty. The SR is based on the Conditional Tail Expectation 70 ("CTE70") of 1,000 stochastically generated interest rate return scenarios with prudent estimate assumptions, including margins for uncertainty.

Reserves for fixed individual annuity contracts are developed using accepted actuarial methods computed principally under the Commissioners' Annuity Reserve Valuation Method using applicable interest rates and mortality tables, primarily on the 1949, 1971, 1983, 2000, and 2012 Individual Annuity Mortality Tables and rates ranging from 1.00% to 13.25%.

The Company waives deduction of deferred fractional premium at death and returns any portion of the final premium beyond the date of death. Reserves are computed using continuous functions to reflect these practices. Surrender values are not promised in excess of the legally computed reserves.

The Company also has deferred variable annuity contracts containing GMDB, GMAB and GMWB features. The Company establishes reserves according to the methodology specified by Principle-Based Reserves for Variable Annuities ("VM-21").

Reserves for group annuity contracts are developed using accepted actuarial methods computed principally on the 1971 and 1983 Group Annuity Mortality Tables and 1994 Group Annuity Reserving Tables with assumed interest rates ranging from 5.00% to 11.25%. Approximately 1% of reserves use an assumed interest rate greater than 10%.

The Company had $2,071,977 and $2,042,420 as of December 31, 2025 and 2024, respectively, of insurance in force for which the gross premiums are less than the net premiums according to the standards of valuation set by the Commonwealth of Pennsylvania.

The tabular interest has been determined from the basic data for the calculation of policy reserves. The tabular less actual reserves released have been determined by formula.

**LIABILITIES FOR DEPOSIT-TYPE CONTRACTS** Reserves for funding agreements, dividend accumulations, premium deposit funds, investment-type contracts such as supplementary contracts not involving life contingencies and

*Page 12* *The Penn Mutual Life Insurance Company*

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certain structured settlement annuities are based on account value or accepted actuarial methods using applicable interest rates. Fair value is estimated by discounting future cash flows using current market rate.

The tabular interest for funds not involving life contingencies is determined as the change in reserves less funds added during the year less other increases plus funds withdrawn during the year.

**POLICYHOLDERS' DIVIDENDS** The liability for policyholders' dividends includes the estimated amount of annual dividends and settlement dividends to be paid to policyholders in the following year. Policyholders' dividends incurred are recorded in the Statements of Operations. Dividends expected to be paid to policyholders in the following year are approved annually by the Company's Board of Trustees. The allocation of these dividends to policyholders reflects the relative contribution of each group of participating policies to surplus and considers, among other factors, investment returns, mortality and morbidity experience, expenses and income tax charges.

**POLICY CLAIMS IN PROCESS** Policy claims in process include provisions for payments to be made on reported claims and claims incurred but not reported.

**INTEREST MAINTENANCE RESERVE** The IMR captures the realized capital gains/(losses) that result from changes in the overall level of interest rates and amortizes them into income over the calendar years to expected maturity. As of December 31, 2025 and 2024, the Company maintained a negative IMR of $217,105 and $288,464, respectively, an admitted asset in accordance with the NAIC's INT 23-01T guidance, which provides limited-time exception guidance to SSAP No. 7.

**ASSET VALUATION RESERVE** The AVR is a contingency reserve to stabilize surplus against fluctuations in the statement value of common stocks, real estate investments, partnerships, LIHTC investments, and LLCs as well as non-interest related declines in the value of bonds and certain derivatives. The AVR is reported in the Statements of Admitted Assets, Liabilities and Surplus and the change in AVR is reported in the Statements of Changes in Surplus.

**DRAFTS OUTSTANDING** Drafts outstanding that have not been presented for payment are recorded as a liability.

**OTHER LIABILITIES** Other liabilities primarily include accruals for general and operating expenses, life insurance premiums received in advance of the due date, net transfers due from the separate accounts and liabilities related to postretirement benefit plans in an underfunded position.

**BENEFIT PLANS** The Company recognizes a liability for the funded status of defined benefit pension (2024) and postretirement (2025 and 2024) plans where the projected benefit obligation exceeds plan assets (underfunded). With the termination of the funded qualified non-contributory defined benefit pension plan in 2024, the excess plan assets are now funding the Company's defined contribution plan and are recognized as nonadmitted assets.

**CONTINGENCIES** Amounts related to contingencies are accrued if it is probable that a liability has been incurred and an amount is reasonably estimable. Regarding litigation, management evaluates whether there are incremental legal or other costs directly associated with the ultimate resolution of the matter that are reasonably estimable and, if so, includes these costs in the accrual.

**RISK-BASED CAPITAL** Life insurance companies are subject to certain risk-based capital ("RBC") requirements as specified by the NAIC. Under those requirements, minimum amounts of statutory surplus are required to be maintained based on various risk factors related to it. At December 31, 2025, the Company's surplus exceeds these minimum levels.

**SURPLUS NOTES** On April 29, 2021, the Company issued a Surplus Note ("2021 Note") at par with a principal balance of $500,000. The 2021 Note bears interest at 3.80% and has a maturity date of April 29, 2061. The 2021 Note was issued pursuant to Rule 144A under the Securities Act of 1933, as amended and are administered by a U.S. bank as registrar/paying agent. Interest on the 2021 Note is scheduled to be paid semiannually on June 15 and December 15 of each year. Interest paid on the 2021 Note was $19,000 and $19,000 for the years ended December 31, 2025 and 2024, respectively. Total interest paid since the issuance of the 2021 Note is $87,928.

On July 1, 2010, the Company issued a Surplus Note ("2010 Note") with a principal balance of $200,000, at a discount of $8,440. The 2010 Note bears interest at 7.625%, and has a maturity date of June 15, 2040. The 2010 Note

*2025 Statutory Financial Statements* *Page 13* 

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was issued pursuant to Rule 144A under the Securities Act of 1933, as amended and are administered by a U.S. bank as registrar/paying agent. Interest on the 2010 Note is scheduled to be paid semiannually on March 31 and September 30 of each year. At December 31, 2025 and 2024, the amortized cost basis of the 2010 Note was $193,780 and $193,542, respectively. Interest paid on the 2010 Note was $15,250 and $15,250 for the years ended December 31, 2025 and 2024, respectively. Total interest paid since the issuance of the 2010 Note is $247,813.

On June 23, 2004, the Company issued a Surplus Note ("2004 Note") with a principal balance of $200,000, at a discount of $3,260. The 2004 Note bears interest at 6.65%, and has a maturity date of June 15, 2034. The 2004 Note was issued pursuant to Rule 144A under the Securities Act of 1933, as amended and are administered by a U.S. bank as registrar/paying agent. Interest on the 2004 Note is scheduled to be paid semiannually on April 1 and October 1 of each year. At December 31, 2025 and 2024, the amortized cost basis of the 2004 Note was $198,405 and $198,265, respectively. Interest paid on the 2004 Note was $13,300 and $13,300 for the years ended December 31, 2025 and 2024, respectively. Total interest paid since the issuance of the 2004 Note is $296,220.

The recognition of interest expense on surplus notes requires prior approval for payment from the Pennsylvania Insurance Department.

**PREMIUM AND RELATED EXPENSE RECOGNITION** Life insurance premium revenue is generally recognized as revenue on the gross basis when due from the policyholders under the terms of the insurance contract. Annuity premium on policies with life contingencies is recognized as revenue when received. Both premium and annuity considerations are recorded net of reinsurance premiums. Commissions and other costs related to issuance of new policies, and policy maintenance and settlement costs are charged to current operations when incurred. Surrender fee charges on certain life and annuity products are recorded as a reduction of benefits. Benefit payments are reported net of the amounts received from reinsurers.

The Company accounts for deposit-type contracts (those that do not subject the Company to mortality or morbidity risk) under the deposit method. Amounts received from and payments to policyholders related to these contracts are recorded directly against the related policy reserves. Interest credited to policyholder accounts is reflected in Benefits paid to policyholders and beneficiaries. Fees charged to policyholder accounts are reflected in Other revenue.

**RESERVE ADJUSTMENTS ON REINSURANCE CEDED** Reserve adjustments on reinsurance ceded represent the difference between the reserve increases received from reinsurers and the investment income earned on the assets backing the reserves under reinsurance agreements structured as coinsurance/modified coinsurance reinsurance ("co/modco").

**OTHER REVENUE** Other revenue includes commission and expense allowances recognized by the Company pursuant to reinsurance agreements, deferred reinsurance gains as well as miscellaneous income relating to coinsurance/modified coinsurance/funds withheld reinsurance agreements entered into with third parties. Other revenue also includes fees charged to policyholders.

**OPERATING EXPENSES** Operating expenses, including costs of acquiring new insurance policies, are generally charged to expense as incurred.

**OTHER EXPENSES** Other expenses primarily includes amounts paid to reinsurers relating to interest earned on the funds withheld assets held by the Company under reinsurance agreements structured as funds withheld and co/modco reinsurance.

**REALIZED AND UNREALIZED CAPITAL GAINS AND LOSSES** Realized capital gains and losses, net of taxes, exclude gains and losses transferred to the IMR. Realized capital gains and losses are recognized in net income and are determined using the specific identification method.

All after-tax realized capital gains and losses that result from changes in the overall level of interest rates for all types of fixed-income investments and interest-related derivative activities for derivatives backing assets are transferred to the IMR and amortized into net investment income using the grouped method over the remaining life of the investment sold or, in the case of derivative financial instruments, over the remaining life of the underlying asset.

*Page 14* *The Penn Mutual Life Insurance Company*

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Unrealized capital gains and losses, net of deferred federal income taxes, are recorded as a change in surplus.

**FEDERAL HOME LOAN BANK BORROWINGS** The Company is a member of the FHLB-PGH, which provides access to collateralized advances, collateralized funding agreements and other FHLB-PGH products. Collateralized advances from the FHLB-PGH are classified as borrowed money, and Other liabilities on the Statements of Admitted Assets, Liabilities and Surplus. Collateralized funding agreements issued to the FHLB-PGH are classified as liabilities for deposit-type funds and are recorded within Reserves and funds for payment of insurance and annuity benefits. FHLB-PGH is a first-priority secured creditor.

The Company's membership in FHLB-PGH requires the ownership of member stock, and borrowings from FHLB-PGH require the purchase of FHLB-PGH activity based stock in an amount equal to 4% of the outstanding borrowings. All FHLB-PGH stock purchased by the Company is classified as restricted general account investments within Common stock — unaffiliated. The Company's borrowing capacity is determined by the lesser of the assets available to be pledged as collateral to FHLB-PGH or 10% of the Company's prior period admitted general account assets. The fair value of the qualifying assets pledged as collateral by the Company must be maintained at certain specified levels of the borrowed amount, which can vary, depending on the nature of the assets pledged. The Company's agreement allows for the substitution of assets and the advances are pre-payable. Current borrowings are subject to prepayment penalties.

Borrowings from the FHLB-PGH are classified as funding agreements. As of December 31, 2025, there were $300,000 in outstanding borrowings and the maximum borrowed during the year was $1,250,000. As of December 31, 2024, there were $300,000 in outstanding borrowings and the maximum borrowed during the year was $1,450,000.

**NEW ACCOUNTING STANDARDS** 

In August 2023, the NAIC adopted INT 23-01T, *Disallowed IMR* ("INT 23-01T"). INT 23-01T provides optional, limited-term guidance for the assessment of disallowed IMR for up to 10% of adjusted general account capital and surplus. An insurer's capital and surplus must first be adjusted to exclude certain "soft assets" including net positive goodwill, electronic data processing equipment and operating system software, net deferred tax assets and admitted disallowed IMR. An insurer will only be able to admit the negative IMR if the insurer's risk-based capital is over 300% authorized control level after adjusting to remove the assets described above.

As adopted, negative IMR may be admitted first in the insurer's general account and then, if all disallowed IMR in the general account is admitted and the percentage limit is not reached, to the separate account proportionately between insulated and noninsulated accounts. If the insurer can demonstrate historical practice in which acquired gains from derivatives were also revered to IMR (as liabilities) and amortized, there is no exclusion for derivative losses. To the extent the Company's IMR balance is a net negative, the effects of INT 23-01T will be reflected in the Company's financial position, results of operations and financial statement disclosures. The Company has adopted this guidance, and the adoption resulted in an admitted disallowed IMR of $217,105 and $288,464 as of December 31, 2025 and 2024, respectively.

The Company has adopted SSAP No. 94, *State and Federal Tax Credits*. This guidance, effective as of January 1, 2025, expanded the scope of SSAP No. 94R to include all state and federal tax credits and provides new guidance on the accounting, recognition, and reporting for state and federal tax credits. The adoption of this guidance did not have a significant impact on the Company's financial statements.

The Company has adopted the updated SSAP No. 26R, *Bonds*, which introduces a principles-based definition for what constitutes a bond for statutory accounting purposes. Under the revised guidance, a bond is defined as any security that: (1) represents a creditor relationship, and (2) has a fixed schedule for one or more future payments. These securities are further categorized as either an issuer credit obligation or an asset-backed security. The adoption of this guidance did not have a significant impact on the Company's financial statements.

***Note 3*. INVESTMENTS** 

The Company maintains a diversified investment portfolio. Investment policies limit concentration in any asset class (except for U.S. Treasury and U.S. Government guaranteed securities), geographic region, industry group, economic characteristic, investment quality or individual investment.

*2025 Statutory Financial Statements* *Page 15* 

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**BONDS AND PREFERRED STOCK** The following summarizes the admitted value and estimated fair value of the Company's investment in bonds and preferred stock as of December 31:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Gross Unrealized<br>Capital** | **Gross Unrealized<br>Capital** | |
| **2025** |<br>**Admitted<br>Value** | **Gains** | **Losses** |<br>**Estimated<br>Fair Value** |
|  Issuer Credit Obligation (ICO): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. Governments | $81255 | $83 | $1259 | $80079 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other U.S. Governments | 16580 | 202 | 41 | 16741 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign Sovereign | 74082 | 2424 | 1812 | 74694 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Municipal — General | 207381 | 1834 | 13332 | 195883 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Municipal — Special Revenue | 972227 | 9308 | 68930 | 912605 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Project Finance | 76315 | 1019 | 5593 | 71741 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Industrial and Miscellaneous | 9171167 | 138544 | 482472 | 8827239 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Single Entity-Backed | 175616 | 2177 | 9042 | 168751 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SVO-Identified Bond ETFs | 85309 |  |  | 85309 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; BDCs, Closed-End Funds & REITs | 176142 | 1671 | 9060 | 168753 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bank Loans | 47038 | 2 | 556 | 46484 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other Credit Obligations | 66520 | 672 | 2591 | 64601 |
|  **Total ICO** | 11149632 | 157936 | 594688 | 10712880 |
|  Asset-backed Securities (ABS): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Residential Mortgage-Backed Securities | 3139341 | 55258 | 27379 | 3167220 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial Mortgage-Backed Securities | 2647109 | 38679 | 31850 | 2653938 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; CLOs, CBOs, and CDOs | 989945 | 1847 | 3474 | 988318 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other Financial Asset-Backed Securities | 1139242 | 21268 | 30949 | 1129561 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease-Backed Securities | 30589 | 893 | 1860.00 | 29622 |
|  **Total ABS** | 7946226 | 117945 | 95512 | 7968659 |
|  **Preferred Stock** | 52416 | 4907 | 6775 | 50548 |
|  **Total Bonds and Preferred Stocks** | $**19148274** | $**280788** | $**696975** | $**18732087** |

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| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Gross Unrealized<br>Capital** | **Gross Unrealized<br>Capital** | |
| **2024** |<br>**Admitted<br>Value** | **Gains** | **Losses** |<br>**Estimated<br>Fair Value** |
|  US Governments | $1231301 | $5404 | $25811 | $1210894 |
|  Other Governments | 30429 |  | 1771 | 28658 |
|  States, Territories and Possessions | 33142 | 343 | 829 | 32656 |
|  Political Subdivisions | 200805 | 587 | 19899 | 181493 |
|  Special Revenue | 916313 | 4284 | 81791 | 838806 |
|  Industrial and Miscellaneous | 7960107 | 72091 | 592733 | 7439465 |
|  Residential Mortgage-backed Securities | 2061811 | 7649 | 58724 | 2010736 |
|  Commercial Mortgage-backed Securities | 2299701 | 15430 | 47986 | 2267145 |
|  Asset-backed Securities | 2898484 | 12644 | 59665 | 2851463 |
|  Hybrid Securities | 484675 | 7327 | 10119 | 481883 |
|  Total Bonds | 18137108 | 125776 | 899328 | 17363556 |
|  Preferred Stock | 57988 | 4311 | 6202 | 56097 |
|  **Total Bonds and Preferred Stock** | $**18195096** | $**130087** | $**905530** | $**17419653** |

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*Page 16* *The Penn Mutual Life Insurance Company*

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Included in the December 31, 2025 and 2024 amounts above in admitted value and estimated fair value for Residential Mortgage-Back Securities are $226 and $229, respectively, of subprime mortgages.

The following table summarizes the admitted value and estimated fair value of debt securities as of December 31, 2025 by contractual maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties. Securities that are not due on a single maturity are included as of the final maturity.

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| | | |
|:---|:---|:---|
| | **Admitted<br>Value** | **Estimated<br>Fair Value** |
|  Due in one year or less | $178817 | $179566 |
|  Due after one year through five years | 985947 | 1008230 |
|  Due after five years through ten years | 1654482 | 1688649 |
|  Due after ten years | 8330386 | 7836435 |
|  Asset-backed Securities (ABS): |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Residential Mortgage-Backed Securities<sup>(1)</sup> | 3139341 | 3167220 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial Mortgage-Backed Securities<sup>(1)</sup> | 2647109 | 2653938 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; CLOs, CBOs, and CDOs<sup>(1)</sup> | 989945 | 988318 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other Financial Asset-Backed Securities<sup>(1)</sup> | 1139242 | 1129561 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease-Backed Securities<sup>(1)</sup> | 30589 | 29622 |
|  Total Bonds | 19095858 | 18681539 |
|  Preferred Stock | 52416 | 50548 |
|  **Total Bonds and Preferred Stock** | $**19148274** | $**18732087** |
| <br> (1) Includes U.S. Agency structured securities |  |  |

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Asset-backed securities consist of commercial and residential mortgage pass-through holdings and securities backed by various forms of collateral, with the largest being collateralized loan obligations. These securities follow a structured principal repayment schedule and are rated investment grade, other than $1,070,362 primarily in asset-backed securities that do not follow a structured principal repayment schedule. The mortgage and other asset-backed securities portfolios are presented separately in the maturity schedule due to the potential for prepayment. The weighted average life of this portfolio is 11.9 years.

At December 31, 2025, the largest industry concentration of the Company's portfolio was investments in the Electric-Integrated sector of $829,145, representing 4% of the total debt securities portfolio.

**UNREALIZED LOSSES ON INVESTMENTS** Management has determined that the unrealized losses on the Company's investments in equity and fixed maturity securities at December 31, 2025 are temporary in nature.

*2025 Statutory Financial Statements* *Page 17* 

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The following tables are an analysis of the fair values and gross unrealized losses aggregated by bond category and length of time that the securities were in a continuous unrealized loss position as of December 31:

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Less than 12 months** | **Less than 12 months** | **Greater than<br>12 months** | **Greater than<br>12 months** | **Total** | **Total** | **Total** |
| **2025** | **Fair<br>Value** | **Gross<br>Unrealized<br>Capital<br>Loss** | **Fair<br>Value** | **Gross<br>Unrealized<br>Capital<br>Loss** | **Fair<br>Value** | **Gross<br>Unrealized<br>Capital<br>Loss** | **Number<br>of<br>Securities** |
|  Issuer Credit Obligation (ICO): |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. Governments | $66858 | $1059 | $1668 | $200 | $68526 | $1259 | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other U.S. Governments | 4959 | 41 |  |  | 4959 | 41 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign Sovereign | 7477 | 286 | 9712 | 1526 | 17189 | 1812 | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Municipal — General | 16085 | 107 | 80228 | 13225 | 96313 | 13332 | 31 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Municipal — Special Revenue | 172903 | 1290 | 334529 | 67640 | 507432 | 68930 | 151 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Project Finance | 11443 | 78 | 27611 | 5515 | 39054 | 5593 | 17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Industrial and Miscellaneous | 1622135 | 35851 | 3184242 | 446621 | 4806377 | 482472 | 1420 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Single Entity-Backed | 14732 | 795 | 98426 | 8247 | 113158 | 9042 | 44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SVO-Identified Bond ETFs | 85309 |  |  |  | 85309 |  | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; BDCs, Closed-End Funds & REITs | 2991 | 1 | 72634 | 9059 | 75625 | 9060 | 24 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bank Loans | 7412 | 556 |  |  | 7412 | 556 | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other Credit Obligations | 24757 | 1669 | 14172 | 922 | 38929 | 2591 | 11 |
|  **Total ICO** | 2037061 | 41733 | 3823222 | 552955 | 5860283 | 594688 | 1717 |
|  Asset-backed Securities (ABS): |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Residential Mortgage-Backed Securities | 544695 | 2022 | 491650 | 25357 | 1036345 | 27379 | 201 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial Mortgage-Backed Securities | 350590 | 4993 | 573865 | 26857 | 924455 | 31850 | 265 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; CLOs, CBOs, and CDOs | 270116 | 1168 | 112226 | 2306 | 382342 | 3474 | 55 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other Financial Asset-Backed Securities | 153754 | 3088 | 298633 | 27861 | 452387 | 30949 | 128 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease-Backed Securities |  |  | 18603 | 1860 | 18603 | 1860 | 13 |
|  **Total ABS** | 1319155 | 11271 | 1494977 | 84241 | 2814132 | 95512 | 662 |
|  Preferred Stock | 5335 | 180 | 33670 | 6595 | 39005 | 6775 | 15 |
|  **Total Bonds and<br>Preferred Stock** | $**3361551** | $**53184** | $**5351869** | $**643791** | $**8713420** | $**696975** | **2394** |

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*Page 18* *The Penn Mutual Life Insurance Company*

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **interest portion** | **interest portion** | **Greater than<br>12 months** | **Greater than<br>12 months** | **Total** | **Total** | **Total** |
| **2024** | **Fair<br>Value** | **Gross<br>Unrealized<br>Capital<br>Loss** | **Fair<br>Value** | **Gross<br>Unrealized<br>Capital<br>Loss** | **Fair<br>Value** | **Gross<br>Unrealized<br>Capital<br>Loss** | **Number<br>of<br>Securities** |
|  US Governments | $703975 | $21134 | $20846 | $4677 | $724821 | $25811 | 162 |
|  Other Governments | 23210 | 1219 | 5448 | 552 | 28658 | 1771 | 7 |
|  States, Territories and Possessions | 16405 | 717 | 1346 | 112 | 17751 | 829 | 9 |
|  Political Subdivisions | 72551 | 3514 | 62859 | 16385 | 135410 | 19899 | 46 |
|  Special Revenue | 377167 | 13131 | 283457 | 68660 | 660624 | 81791 | 232 |
|  Industrial and Miscellaneous | 3620331 | 160146 | 2003843 | 432587 | 5624174 | 592733 | 2380 |
|  Residential Mortgage-backed Securities | 1271808 | 29116 | 325753 | 29608 | 1597561 | 58724 | 341 |
|  Commercial Mortgage-backed Securities | 964831 | 19299 | 482010 | 28687 | 1446841 | 47986 | 672 |
|  Asset-backed Securities | 672230 | 11363 | 613664 | 48302 | 1285894 | 59665 | 604 |
|  Hybrid Securities | 155287 | 3693 | 101705 | 6426 | 256992 | 10119 | 140 |
|  Total Bonds | 7877795 | 263332 | 3900931 | 635996 | 11778726 | 899328 | 4593 |
|  Preferred Stock | 25623 | 3011 | 16456 | 3191 | 42079 | 6202 | 20 |
|  **Total Bonds and Preferred Stock** | $**7903418** | $**266343** | $**3917387** | $**639187** | $**11820805** | $**905530** | **4613** |

---

interest portion

Included in the December 31, 2025 and 2024 amounts above is the interest portion of impairments which were taken during the year, on securities of $216 and $166, respectively.

**COMMON STOCK — UNAFFILIATED** The following summarizes the cost and estimated fair value of the Company's investment in unaffiliated common stock:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Gross Unrealized<br>Capital** | **Gross Unrealized<br>Capital** | |
| |<br>**Cost** | **Gains** | **Losses** |<br>**Estimated<br>Fair Value** |
|  December 31, 2025 | $18731 | $243 | $138 | $18836 |
|  December 31, 2024 | $15677 | $— | $183 | $15494 |

---

The following presents the gross unrealized capital losses and fair values for unaffiliated common stock with unrealized capital losses.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Less than 12 months** | **Less than 12 months** | **Greater than<br>12 Months** | **Greater than<br>12 Months** | **Total** | **Total** |
| | **Fair<br>Value** | **Gross<br>Unrealized<br>Capital<br>Losses** | **Fair<br>Value** | **Gross<br>Unrealized<br>Capital<br>Losses** | **Fair<br>Value** | **Gross<br>Unrealized<br>Capital<br>Losses** |
|  December 31, 2025 | $1301 | $138 | $— | $— | $1301 | $138 |
|  December 31, 2024 | $408 | $183 | $— | $— | $408 | $183 |

---

*2025 Statutory Financial Statements* *Page 19* 

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*($ in Thousands)* 

The amount of unrealized capital losses on the Company's investment in unaffiliated common stock is attributable to 2 individual securities. As of December 31, 2025, there were no unaffiliated common stock securities impairments.

*Federal Home Loan Bank* The Company's investment in the FHLB-PGH Class B Membership Capital Stock as of December 31, 2025 and 2024 was $4,701 and $3,086, respectively. The Company also invested $12,000 and $12,000 in FHLB-PGH Activity Stock as of December 31, 2025 and 2024, respectively. The Class B Membership Capital Stock held by the Company is subject to written notices of requests for redemption followed by a five year waiting period.

The Company's borrowing capacity with the FHLB-PGH was $2,525,187 and $2,097,075, as of December 31, 2025 and 2024 respectively.

The following represents the amount of collateral required to be pledged to the FHLB-PGH, and the maximum amount of collateral pledged as of:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31,**<br> **2025** | **Maximum<br>during 2025** | **December 31,**<br> **2024** | **Maximum<br>during 2024** |
|  Carrying value | $2214341 | $2524011 | $1200222 | $1947346 |
|  Fair value | 2233289 | 2530293 | 1185471 | 1928758 |

---

The amount of interest expense on borrowings classified as funding agreements for the years ended December 31, 2025 and 2024 was $32,619 and $31,332, respectively.

**RESTRICTED ASSETS AND SPECIAL DEPOSITS** The Company maintains assets on deposit with governmental authorities or trustees as required by certain state insurance laws. The Company also receives and pledges collateral for derivative contracts and FHLB in the form of cash and securities. Capital stock was purchased as a requirement to participate in the FHLB lending program.

---

| | | | |
|:---|:---|:---|:---|
| **Balance Sheet Classification** | **Type** | **2025** | **2024** |
|  Bonds | Collateral — FHLB | $2214341 | $1200222 |
|  Bonds | Reinsurance — Funds Withheld | 2398360 | 1578725 |
|  Bonds | Reinsurance — Modified Coinsurance | 6246726 | 5725649 |
|  Bonds | New York 109 trust agreement | 4115113 | 4123039 |
|  Bonds | Collateral — Derivatives | 73416 | 219883 |
|  Bonds | State deposit | 3305 | 3318 |
|  Preferred stocks | Reinsurance — Funds Withheld | 7847 | 15086 |
|  Preferred stocks | Reinsurance — Modified Coinsurance | 38198 |  |
|  Common stocks unaffiliated | FHLB Stock | 16701 |  |
|  Alternative Assets | Reinsurance — Modified Coinsurance | 190094 |  |
|  Cash, cash equivalents and short-term investments | Reinsurance — Funds Withheld | 93605 |  |
|  Cash, cash equivalents and short-term investments | State deposit | 927 | 927 |
|  **Total Restricted Assets** |  | $**15398633** | $**12866849** |

---

**OTHER THAN TEMPORARY IMPAIRMENTS** For the years ended December 31, 2025 and 2024, other than temporary investment losses amounted to $17,979 and $0, respectively.

**REAL ESTATE** Investments in real estate consist of the Company's home office property. During 2024, based on an independent appraisal for its home office property, the Company recorded an impairment loss of $11,425. This loss

*Page 20* *The Penn Mutual Life Insurance Company*

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*($ in Thousands)* 

was reflected in the net realized capital (losses)/gains on the Statements of Income. No impairment losses were recorded in 2025. As of December 31, 2025 and 2024, accumulated depreciation on real estate amounted to $6,235 and $6,090, respectively.

**ALTERNATIVE ASSETS** The investment values of alternative assets are provided per the partnerships' capital account statements. The Company's interest cannot be redeemed; instead the Company's distributions from each fund result from the liquidation of the underlying assets. The period over which unredeemable investments are expected to be liquidated ranges from 5 to 10 years.

As of December 31, 2025, none of these investments exceed 10% of the Company's admitted assets. The Company recognized realized losses of $27,216 and $8,343 for the years ended December 31, 2025 and 2024, respectively, associated with other-than-temporary impairments of certain alternative assets.

Unfunded commitments for alternative assets were $821,782 and $588,775 for the years ended December 31, 2025 and 2024, respectively.

The Company recognized $(22) and $11 realized gains/(losses) for the years ended December 31, 2025 and 2024 associated with liquidations of the Company's interest in alternative assets.

**OTHER INVESTED ASSETS** The components of other invested assets as of December 31, 2025 and 2024 were as follows:

---

| | | |
|:---|:---|:---|
| **December 31,** | **2025** | **2024** |
|  LIHTC | $93879 | $103074 |
|  Tax Credit Fund | 9772 |  |
|  Receivable for securities | 241249 | 97 |
|  Notes receivable — affiliates | 65039 | 279015 |
|  Investments in affiliates | 193333 | 125918 |
|  PMAM's Private Funds/PMUBX |  | 127125 |
|  Investment in unaffiliated mortgage fund | 206435 |  |
|  Other | 1382 | 1382 |
|  **Total Other Invested Assets** | $**811089** | $**636611** |

---

Other invested assets include notes receivable carried at book value from PMAM and 1847SV, investments in HTK, PMAM, 1847IC, 1847FIN, and PMAM's Private Funds/PMUBX, receivables for unsettled investment transactions as well as an investment in an unaffiliated mortgage fund.

Unfunded commitments for unaffiliated mortgage fund were $75,000 and $0 for the years ended December 31, 2025 and 2024, respectively.

*Low Income Housing Tax Credits* The Company has no LIHTC properties under regulatory review at December 31, 2025 and 2024. There were no write-downs due to forfeiture of eligibility and there were no impairments for 2025 or 2024.

Commitments of $37,362 and $63,759 for the years ended December 31, 2025 and 2024, respectively, have been recorded in Other liabilities related to unconditional and legally binding delayed equity contributions associated with investments in LIHTC.

The Company's LIHTC activity for the years ended December 31, 2025 and 2024 is as follows:

---

| | | |
|:---|:---|:---|
| **December 31,** | **2025** | **2024** |
|  LIHTC Tax Credits | $12383 | $7989 |
|  LIHTC Investments Balance | 179486 | 199503 |
|  LIHTC Amortization | (85607) | (96429) |
|  LIHTC Other Returns |  |  |

---

*2025 Statutory Financial Statements* *Page 21* 

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*($ in Thousands)* 

The aggregate schedule of tax credits expected to be generated in each of the subsequent five years and thereafter is as follows:

---

| | | |
|:---|:---|:---|
| **December 31,** | **Transferable<br>Tax Credits** | **Non-transferable<br>Tax Credits** |
| 2026 | $— | $14403 |
| 2027 |  | 14695 |
| 2028 |  | 14128 |
| 2029 |  | 13037 |
| 2030 |  | 13105 |
|  Thereafter |  | 51744 |
|  **Total** | $**—** | $**121112** |

---

*Tax Equity Credit Investment* The Company has no investments under regulatory review as of December 31, 2025. There were no impairments and all commitments were recognized as of December 31, 2025.

The Company's Tax Equity Investment activity for the years ended December 31, 2025 and 2024 is as follows:

---

| | | |
|:---|:---|:---|
| **December 31,** | **2025** | **2024** |
|  Tax Equity Investment Credits | $69414 | $— |
|  Tax Equity Investment Balance | 9772 |  |
|  Tax Equity Amortization | 65210 |  |
|  Tax Equity Other Returns |  |  |

---

There are no tax equity investment credits in subsequent years.

**NET INVESTMENT INCOME AND REALIZED CAPITAL GAINS/(LOSSES)** The following table summarizes the major categories of net investment income for the years ended:

---

| | | |
|:---|:---|:---|
| **December 31,** | **2025** | **2024** |
|  Income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bonds and preferred stock | $1077096 | $852984 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock — unaffiliated | 3630 | 1967 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Real estate |  | 3588 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Policy loans | 66478 | 58543 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Alternative assets | 97515 | 110466 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other invested assets | 24118 | 272212 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tax credits | (65210) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 36517 | 20934 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivatives | 35859 | (16887) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IMR amortization | (16770) | (20183) |
|  Total investment income | 1259233 | 1283624 |
|  Expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Surplus note interest | 47928 | 47901 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation of real estate | 145 | 1279 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other investment expenses | 29309 | 19759 |
|  Total investment expenses | 77382 | 68939 |
|  **Net Investment Income** | $**1181851** | $**1214685** |

---

*Page 22* *The Penn Mutual Life Insurance Company*

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*($ in Thousands)* 

There was no nonadmitted accrued investment income at December 31, 2025 and 2024.

Included in the table above (Bonds and preferred stock) for 2025 is $8,305 of investment income attributable to securities disposed of as a result of a callable feature, spread over 20 securities.

Proceeds from the sale of bonds, preferred stock and common stock, and related gross realized gains and losses on those sales were as follows for the years ended December 31:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | | **2025** | | | **2024** | |
| | **Proceeds<br>From Sales** | **Gross<br>Realized<br>Gains** | **Gross<br>Realized<br>Losses** | **Proceeds<br>From Sales** | **Gross<br>Realized<br>Gains** | **Gross<br>Realized<br>Losses** |
|  Bonds | $2420325 | $80928 | $7599 | $3347824 | $8257 | $424894 |
|  Preferred stock |  |  |  | 1050 |  | 54 |
|  Common stock | 7204 | 465 | 25 | 70364 | 4624 | 6922 |

---

Realized capital gains/(losses) are reported net of federal income taxes and amounts transferred to the IMR as follows for the years ended:

---

| | | |
|:---|:---|:---|
| **December 31,** | **2025** | **2024** |
|  Realized capital gains | $28612 | $833174 |
|  Less amount transferred to IMR | 69101 | (405865) |
|  Less Taxes: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Transferred to IMR | (14511) | 85232 |
| &nbsp;&nbsp;&nbsp;&nbsp; Capital gains | 16828 | 209935 |
|  **Net Realized Capital (Losses)/Gains** | $**(42806)** | $**943872** |

---

Portions of realized capital gains and losses that were determined to be interest related were transferred to the IMR.

On July 19, 2024, the Company entered into a Securities Purchase Agreement ("the Agreement") with a non-affiliated entity for the sale of JMS. As part of the transaction, the purchasing entity assumed $615,000 in subordinated loans and the $50,000 line of credit with the Company. The sale closed on November 29, 2024 with a pre-tax realized capital gain of $1,596,534, which is recognized in Net realized capital gains on the Statements of Operations. Pre-tax earnings for JMS at the time of sale were $157,736. In 2025, pursuant to the terms of the Agreement, the company recognized an additional $29,259 in net realized capital gains on the Statements of Operations.

There were no NAIC designation 3 or below, or unrated securities sold during the year ended December 31, 2025 and reacquired within 30 days of the sale date.

***Note 4.* SEPARATE ACCOUNTS** 

**Separate Accounts Registered with the SEC** The Company maintains separate accounts that are registered with the Securities and Exchange Commission ("SEC") for its individual variable life and annuity products with assets of $8,612,384 and $8,771,606 at December 31, 2025 and 2024, respectively. The assets for these separate accounts, which are carried at fair value, represent investments in shares of the Company's Penn Series Funds and other non-proprietary funds.

**Separate Accounts Not Registered with the SEC** The Company also maintains separate accounts, which are not registered with the SEC, with assets of $1,384 and $3,339 at December 31, 2025 and 2024, respectively. While the product itself is not registered with the SEC, the underlying assets are comprised of SEC registered mutual funds. The assets in these separate accounts are carried at fair value.

*2025 Statutory Financial Statements* *Page 23* 

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*($ in Thousands)* 

Information regarding the Separate accounts of the Company, all of which are nonguaranteed, is as follows:

---

| | | |
|:---|:---|:---|
| **Years Ended December 31,** | **2025** | **2024** |
|  Premiums, considerations and deposits | $148656 | $231604 |
|  Reserves at December 31, at market value | 8495550 | 8638549 |
|  Subject to discretionary withdrawal at market value | 8495550 | 8638549 |

---

The following table reconciles the amounts transferred to and from the separate accounts as reported in the financial statements of the separate accounts to the amount reported in the Statements of Operations:

---

| | | |
|:---|:---|:---|
| **Years Ended December 31,** | **2025** | **2024** |
|  Transfers as reported in the financial statements of the separate accounts: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfers to separate accounts | $148656 | $231604 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfers from separate accounts | (1020457) | (1094588) |
|  **Transfers as reported in the Statements of Operations** | $**(871801)** | $**(862984)** |

---

The Company utilizes separate accounts to record and account for assets and liabilities for particular lines of business and transactions. The Company reports assets and liabilities from variable life and annuity product lines into a separate account.

The assets of the separate accounts, which are legally insulated from the general account, are comprised of the following product mix as of December 31:

---

| | | |
|:---|:---|:---|
| **Product Description** | **2025** | **2024** |
|  Enhanced Deferred Individual Annuity | $6873438 | $7128596 |
|  Single Life Variable Universal Life | 1070911 | 991048 |
|  Basic Deferred Individual Annuity | 351401 | 345649 |
|  Joint Life Variable Universal Life | 316634 | 306313 |
|  Deferred Group Annuity | 1384 | 3339 |
|  **Total** | $**8613768** | $**8774945** |

---

Certain separate account liabilities are guaranteed by the general account. To compensate the general account for the risk taken on a direct basis, the separate account paid risk charges to the general account totaling $75,525 and $78,529 for the years ended December 31, 2025 and 2024, respectively and $384,597 for the five-year period between 2021 and 2025.

For the years ended December 31, 2025 and 2024, the general account of the Company has paid $1,714 and $1,438, respectively, towards separate account guarantees on a direct basis, and $7,798 cumulatively over the last five years.

***Note 5*. DERIVATIVES** 

The Company utilizes derivatives to achieve its risk management goals. Exposure to risk is monitored and analyzed as part of the Company's asset/liability management process, which focuses on risks that impact liquidity, capital and income. The Company may enter into derivative transactions to hedge exposure to interest rate, credit, liability, currency and cash flow risks.

If entered into, the Company's use of interest rate caps is designed to manage risk associated with rising interest rates. Credit default swaps protect the Company from a decline in credit quality of a specified security resulting in bankruptcy or the failure to pay. The Company may use "to be announced" forward contracts to gain exposure to the investment risk and return of mortgage-backed securities.

*Page 24* *The Penn Mutual Life Insurance Company*

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*($ in Thousands)* 

The Company uses currency swaps to reduce market risks from changes in foreign exchange rates.

The Company uses interest rate swaps, interest rate futures, treasury swaps, treasury forwards and swaptions to reduce market risks from changes in interest rates; the Company uses inflation swaps as an economic hedge to reduce inflation risk associated with inflation-indexed liabilities.

Total return swaps, equity options and equity futures are used to hedge the Company's liability risk exposure to declines in the equity markets.

When entering into a derivative transaction, there are several risks, including but not limited to basis risk, credit risk and market risk. Basis risk is the exposure to loss from imperfectly matched positions, and is monitored and minimized by modifying or terminating the transaction. Credit risk is the exposure to loss as a result of default or a decline in credit rating of a counterparty. Credit risk is addressed by establishing and monitoring guidelines on the amount of exposure to any particular counterparty. Market risk is the adverse effect that a change in interest rates, currency rates, implied volatility rates or a change in certain equity indexes or instruments has on the value of a financial instrument. The Company manages the market risk by establishing and monitoring limits as to the types and degree of risk that may be undertaken. Also, the Company requires that an International Swaps and Derivatives Association Master Agreement govern all Over-the-Counter ("OTC") derivative contracts. In addition, certain swaps are traded through a central clearing house to effectively manage counterparty risk.

The Company does not enter into financing-type derivative premium arrangements; premiums are paid or received upfront.

**Derivative Instruments Designated and Qualifying as Hedging Instruments** 

The Company purchased certain interest rate swaps that qualify for hedge accounting. These swaps are used to hedge the impact of changing interest rates on the value of specific municipal bonds. As these are derivatives in a highly effective hedge, they are carried at cost. At termination/expiration, a realized gain/(loss) amount, net of the cost basis, is recognized. In the event that the hedge fails to qualify as being highly effective at any of the accounting measurement points, the hedge will be considered ineffective and the derivative will be marked to market and the associated change will be recognized as an unrealized gain/(loss).

The following table presents the notional values, fair values and carrying values of derivative instruments designated and qualifying as hedging instruments. Derivative instruments with carrying values showing a gain are reported as admitted assets and Derivative instruments with carrying values showing a loss are reported in Other liabilities.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **December 31,** | **2025** | **2025** | **2025** | **2024** | **2024** | **2024** |
|  | **Notional**<br> **Value** | **Fair Value** | **Fair Value** | **Notional**<br> **Value** | **Fair Value** | **Fair Value** |
|  | **Notional**<br> **Value** | **Gain** | **(Loss)** | **Notional**<br> **Value** | **Gain** | **(Loss)** |
|  Interest rate swaps | $33500 | $1865 | $— | $33500 | $1842 | $— |
|  **Total designated and qualifying as hedges** | $**33500** | $**1865** | $**—** | $**33500** | $**1842** | $**—** |

---

The impact of these derivative instruments reported on the Statements of Operations for the years ended December 31, 2025 and 2024 is reported in the table below:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Years Ended December 31,** | **2025** | **2025** | **2024** | **2024** |
|  | **Net Investment<br>Income** | **Realized Capital<br>Losses** | **Net Investment<br>Income** | **Realized Capital<br>Gains/(Losses)** |
|  Interest rate swaps | $221 | $— | $543 | $— |
|  **Total** | $**221** | $**—** | $**543** | $**—** |

---

*2025 Statutory Financial Statements* *Page 25* 

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*($ in Thousands)* 

**Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments** 

The following table presents the notional and fair values of derivative financial instruments not designated and not qualifying as hedging instruments. Derivative instruments with carrying values showing a gain are reported as admitted assets and Derivative instruments with carrying values showing a loss are reported as liabilities. For the derivative instruments shown below, fair values equal carrying values except for futures. The carrying value for futures is the initial margin, which was $27,728 and $20,982 at December 31, 2025 and 2024, respectively.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **December 31,** | **2025** | **2025** | **2025** | **2024** | **2024** | **2024** |
|  | **Notional**<br> **Value** | **Fair Value** | **Fair Value** | **Notional**<br> **Value** | **Fair Value** | **Fair Value** |
|  | **Notional**<br> **Value** | **Gain** | **(Loss)** | **Notional**<br> **Value** | **Gain** | **(Loss)** |
|  Currency swaps | $23263 | $373 | $(48) | $23263 | $3187 | $— |
|  Equity futures | 456651 | 244 |  | 404245 | 22 |  |
|  Equity options | 341795 | 3035 | (76124) | 516629 | 10336 | (60711) |
|  Inflation swaps | 115000 | 1148 | (1148) | 215000 | 1531 | (1545) |
|  Interest rate swaps | 12177900 | 981908 | (964177) | 11028300 | 1065113 | (1010969) |
|  Swaptions |  |  |  | 290000 | 3949 | (3727) |
|  Total return swaps | 203809 |  | (110355) | 2865280 | 245033 | (345043) |
|  Treasury forwards | 200000 |  | (3489) | 20000 |  | (834) |
|  **Total** | $**13518418** | $**986708** | $**(1155341)** | $**15362717** | $**1329171** | $**(1422829)** |

---

The impact of these derivative instruments reported on the Statements of Operations for the years ended December 31, 2025 and 2024 is reported in the table below:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Years Ended December 31,** | **2025** |  | **2024** |  |
|  | **Net Investment<br>Income** | **Realized Capital<br>Gains/(Losses)<sup>(1)</sup>** | **Net Investment<br>Income** | **Realized Capital<br>Gains/(Losses)<sup>(1)</sup>** |
|  Currency swaps | $651 | $(73) | $808 | $(7) |
|  Equity options |  | 54076 |  | 54263 |
|  Equity futures |  | (3547) |  | (35983) |
|  Inflation swaps | 1294 |  |  | 1304 |
|  Interest rate futures |  | (1) |  | 254 |
|  Interest rate swaps | 19036 | 6886 | (26722) | (102298) |
|  Swaptions |  | (65) |  | 7649 |
|  Total return swaps | 14657 | (77590) | 8484 | (240338) |
|  Treasury forwards |  | 401 |  | (4703) |
|  **Total** | $**35638** | $**(19913)** | $**(17430)** | $**(319859)** |

---

---

| | |
|:---|:---|
| 1 | $74 and (6119) of the realized capital gains/(losses) were transferred to the IMR for the years ended December 31, 2025 and 2024, respectively.  |

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*Page 26* *The Penn Mutual Life Insurance Company*

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The change in unrealized capital gains/(losses) for derivative instruments are as follows for the years ended December 31:

---

| | | |
|:---|:---|:---|
| | **2025** | **2024** |
|  Currency swaps | $(2862) | $846 |
|  Equity futures | 11404 | (13133) |
|  Equity options | (19167) | (18535) |
|  Inflation swaps | 14 | 2769 |
|  Interest rate futures |  | (100) |
|  Interest rate swaps | (36412) | 151234 |
|  Swaptions | (158) | (393) |
|  Total return swaps | (10345) | 114658 |
|  Treasury forwards | (2654) | 1175 |
|  **Total** | $**(60180)** | $**238521** |

---

The Company offers a variety of variable annuity contracts with GMAB or GMWB (described further in Note 4). The contractholders may elect to invest in equity funds. Adverse changes in the equity markets expose the Company to losses if the changes result in contractholder's account balances falling below the guaranteed minimum. To mitigate the risk associated with these liabilities, the Company enters into various derivative instruments. The changes in value of the derivative instruments will offset a portion of the changes in the annuity accounts relative to changes in the equity market.

**CREDIT RISK** The Company is exposed to credit related losses in the event of non-performance by counterparties to derivative financial instruments. In order to minimize credit risk, the Company and its derivative counterparties require collateral to be posted in the amount owed under each transaction, subject to minimum transfer amounts that are functions of the counterparty's credit rating. As of December 31, 2025 and 2024, the Company was fully collateralized thereby eliminating the potential for a loss. Additionally, certain agreements with counterparties allow for contracts in a positive position to be offset by contracts in a negative position. This right of offset also reduces the Company's exposure. As of December 31, 2025 and 2024, the Company pledged net collateral of $187,808 and $309,103, respectively, in the form of securities and cash. The cash received from held collateral that is not invested in an interest bearing money market fund is invested mainly in fixed income securities.

As of December 31, 2025 and 2024, the Company pledged collateral for futures contracts of $27,728 and $20,982, respectively, in the form of cash. Notional or contractual amounts of derivative financial instruments provide a measure of involvement in these types of transactions and do not represent the amounts exchanged between the parties engaged in the transaction. The amounts exchanged are determined by reference to the notional amounts and other terms of the derivative financial instruments.

***Note 6*. FAIR VALUE OF FINANCIAL INSTRUMENTS AND OFF-BALANCE SHEET RISK** 

**FAIR VALUE MEASUREMENT** Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement is based on assumptions market participants would make in pricing an asset or liability. Inputs to valuation techniques to measure fair value are prioritized by establishing a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to prices derived from unobservable inputs. An asset or liability's classification within the fair value hierarchy is based on the lowest level of significant input to its fair value measurement.

The Company has categorized its assets and liabilities into the three-level fair value hierarchy based upon the priority of the inputs. The following summarizes the types of assets and liabilities included within the three-level hierarchy:

Level 1 Fair value is based on unadjusted quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date. These generally provide the most reliable evidence and are used to measure fair value whenever available. Active markets are defined as

*2025 Statutory Financial Statements* *Page 27* 

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having the following for the measured asset/liability: i) many transactions, ii) current prices, iii) price quotes not varying substantially among market makers, iv) narrow bid/ask spreads and v) most information publicly available. Prices are obtained from readily available sources for market transactions involving identical assets and liabilities. <br>

---

| | |
|:---|:---|
| Level 2  | Fair value is based on significant inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability through corroboration with observable market data. Prices for assets classified as Level 2 are primarily provided by an independent pricing service or are internally priced using observable inputs. In circumstances where prices from pricing services are reviewed for reasonability but cannot be corroborated to observable market data as noted above, these security values are recorded in Level 3 in the fair value hierarchy. |

---

---

| | |
|:---|:---|
| Level 3  | Fair value is based on significant inputs that are unobservable for the asset or liability. These inputs reflect the Company's assumptions about the assumptions market participants would use in pricing the asset or liability. These are typically less liquid fixed maturity securities with very limited trading activity. Prices are determined using valuation methodologies such as option pricing models, discounted cash flow models, market approach and other similar techniques. Prices may be based upon non-binding quotes from brokers or other market makers that are reviewed for reasonableness, based on the Company's understanding of the market but are not further corroborated with other additional observable market information. |

---

The determination of fair value, which for certain assets and liabilities is dependent on the application of estimates and assumptions, can have a significant impact on the Company's results of operations. The following sections describe the valuation methodologies used to determine fair values as well as the key estimates and assumptions surrounding certain assets and liabilities, measured at fair value on a recurring basis that could have a significant impact on the Company's results of operations or involve the use of significant unobservable inputs.

The fair value process is monitored on a monthly basis by financial and investment professionals who utilize additional subject matter experts as applicable. The purpose is to monitor the Company's asset valuation policies and procedures by ensuring objective and reliable valuation practices and pricing of financial instruments, as well as addressing fair valuation issues, changes to valuation methodologies and pricing sources. To assess the continuing appropriateness of third party pricing service security valuations, the Company regularly monitors the prices and reviews price variance reports. In addition, the Company performs an initial and ongoing review of the third party pricing services methodologies and reviews inputs and assumptions used for a sample of securities on a periodic basis. Pricing challenges are raised on valuations considered not reflective of market and are monitored by the Company.

**BONDS** The fair values of the Company's debt securities are generally based on quoted market prices or prices obtained from independent pricing services or internally developed pricing.

Consistent with the fair value hierarchy described above, securities with quoted market prices or corroborated valuations from pricing services are generally reflected within Level 2. Inputs considered to be standard for valuations by the independent pricing service include: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data and industry and economic events.

In order to validate reasonability of valuations received from independent pricing services, prices are reviewed by investment professionals through comparison with directly observed recent market trades or color or by comparison of significant inputs used by the pricing service to the Company's observations of those inputs in the market. In circumstances where prices from independent pricing services are reviewed for reasonability but cannot be corroborated to observable market data as noted above, these security values are recorded in Level 3 in the Company's fair value hierarchy. Under certain conditions, the Company may conclude pricing information received from third party pricing services is not reflective of market activity and may over-ride that information with a valuation that utilizes market information and activity. These securities are recorded in Level 2 in the Company's fair value hierarchy. As of December 31, 2025, there were 6 debt securities priced in this manner, which are carried at amortized cost of $26,503 and have a fair value of 24,926. As of December 31, 2024, there were no debt securities priced in this manner.

*Page 28* *The Penn Mutual Life Insurance Company*

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In circumstances where market data such as quoted market prices or vendor pricing is not available, estimated fair value is calculated using internal estimates based on significant observable inputs are used to determine fair value. Inputs considered in developing internal pricing vary by type of security; however generally include: public debt, industrial comparables, underlying assets, credit ratings, yield curves, type of deal structure, collateral performance, loan characteristics and various indices, as applicable. Internally priced securities using significant observable inputs are classified within Level 2 of the fair value hierarchy which generally include the Company's investments in privately-placed corporate securities and investments in certain structured securities that are priced using observable market data. Inputs considered for these securities generally include: public corporate bond spreads, industry sectors, average life, internal ratings, security structure, liquidity spreads, credit spreads and yield curves, as applicable. If the discounted cash flow model incorporates significant unobservable inputs, these securities would be reflected within Level 3 in the Company's fair value hierarchy.

In circumstances where significant observable inputs are not available, estimated fair value is calculated by using unobservable inputs. These inputs reflect the Company's assumptions about the inputs market participants would use in pricing the asset, and are therefore included in Level 3 in the Company's fair value hierarchy. Circumstances where observable market data is not available may include events such as market illiquidity and credit events related to the security.

**EQUITY SECURITIES** Equity securities consist principally of investments in common and preferred stock of publicly traded companies, exchange traded funds, closed-end funds and FHLB-PGH capital stock.

*Common Stock* The fair values of most publicly traded common stock are based on quoted market prices in active markets for identical assets and are classified within Level 1 in the Company's fair value hierarchy. Fair value for the FHLB capital stock approximates par value and is classified within Level 3 of the Company's fair value hierarchy.

*Preferred Stock* The fair values of publicly traded preferred stock are based on quoted market prices in active markets for identical assets and are classified within Level 1 in the Company's fair value hierarchy. The fair values of non-exchange traded preferred equity securities are based on prices obtained from independent pricing services. Accordingly, these securities are classified within Level 2 of the Company's fair value hierarchy. Preferred stock that is priced using less observable inputs are generally classified within Level 3 of the fair value hierarchy.

**CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS** Short-term investments and cash equivalents carried at Level 1 consist of money market funds and investments purchased with maturities less than or equal to 12 months. These are carried at amortized cost and approximate fair value.

**DERIVATIVE INSTRUMENTS** The fair values of derivative contracts are determined based on quoted prices in active exchanges or prices provided by counterparties, exchanges or clearing members as applicable, utilizing valuation models. The fair values of derivative contracts can be affected by changes in interest rates, foreign exchange rates, commodity prices, credit spreads, market volatility, expected returns and liquidity as well as other factors.

Derivative positions traded in the OTC and cleared OTC derivative markets, where fair value is determined by third party independent services, are classified within Level 2. These investments include: interest rate swaps, currency swaps, Treasury swaps, interest rate caps, total return swaps, swaptions, equity options, futures, inflation swaps, forward contracts and credit default swaps. OTC derivatives classified within Level 2 are valued using models generally accepted in the financial services industry that use actively quoted or observable market input values from external market data providers, broker-dealer quotations, third-party pricing vendors, discounted cash flow models and/or recent trading activity. Prices are reviewed by investment professionals through comparison with directly observed recent market trades, comparison with valuations estimated through use of valuation models maintained on an industry standard analytical and valuation platform or comparison of all significant inputs used by the pricing service to observations of those inputs in the market.

**SEPARATE ACCOUNT ASSETS** Separate account assets primarily consist of mutual funds. The fair value of mutual funds is based upon quoted prices in an active market, resulting in classification within Level 1 of the Company's fair value hierarchy.

*2025 Statutory Financial Statements* *Page 29* 

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The following table presents the financial instruments carried at fair value by caption on the Statements of Admitted Assets, Liabilities and Surplus and by valuation hierarchy (as described above).

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2025** | **FV**<br> **Level 1** | **FV**<br> **Level 2** | **FV**<br> **Level 3** | **Total** |
|  Assets: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Bonds: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate | $— | $3303 | $— | $3303 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial MBS |  | 273 |  | 273 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset-backed securities |  | 1611 |  | 1611 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SVO Identified Funds | 85309 |  |  | 85309 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Bonds | 85309 | 5187 |  | 90496 |
| &nbsp;&nbsp;&nbsp;&nbsp; Preferred Stock | 20482 |  | 6078 | 26560 |
| &nbsp;&nbsp;&nbsp;&nbsp; Common stock — unaffiliated | 2135 |  | 16701 | 18836 |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivatives: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Futures |  | 27972 |  | 27972 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Options |  | 3035 |  | 3035 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Swaps |  | 983429 |  | 983429 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total derivatives |  | 1014436 |  | 1014436 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total investments | 107926 | 1019623 | 22779 | 1150328 |
| &nbsp;&nbsp;&nbsp;&nbsp; Separate account assets<sup>(1)</sup> | 8613768 |  |  | 8613768 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $8721694 | $1019623 | $22779 | $9764096 |
|  Liabilities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivatives: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Options | $— | $(76124) | $— | $(76124) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forwards |  | (3488) |  | (3488) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Swaps |  | (1075729) |  | (1075729) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | $— | $(1155341) | $— | $(1155341) |

---

(1) Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated
with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract
value and not fair value in the Company's Statements of Admitted Assets, Liabilities and Surplus.

*Page 30* *The Penn Mutual Life Insurance Company*

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| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2024** | **FV**<br> **Level 1** | **FV**<br> **Level 2** | **FV**<br> **Level 3** | **Total** |
|  Assets: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Bonds: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Residential MBS | $— | $51 | $— | $51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset-backed securities |  | 1061 |  | 1061 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Bonds |  | 1112 |  | 1112 |
| &nbsp;&nbsp;&nbsp;&nbsp; Preferred Stock | 25936 |  | 6196 | 32132 |
| &nbsp;&nbsp;&nbsp;&nbsp; Common stock — unaffiliated | 408 |  | 15086 | 15494 |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivatives: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Futures |  | 22 |  | 22 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Options |  | 14285 |  | 14285 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Swaps |  | 1335846 |  | 1335846 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total derivatives |  | 1350153 |  | 1350153 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total investments | 26344 | 1351265 | 21282 | 1398891 |
| &nbsp;&nbsp;&nbsp;&nbsp; Separate account assets<sup>(1)</sup> | 8774945 |  |  | 8774945 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $8801289 | $1351265 | $21282 | $10173836 |
|  Liabilities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivatives: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Options | $— | $(64437) | $— | $(64437) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forwards |  | (834) |  | (834) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Swaps |  | (1357558) |  | (1357558) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | $— | $(1422829) | $— | $(1422829) |

---

(1) Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated
with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract
value and not fair value in the Company's Statements of Admitted Assets, Liabilities and Surplus.

**CHANGES IN LEVEL 3 RECURRING FAIR VALUE MEASUREMENTS** When a determination is made to classify a financial instrument within Level 3, the determination is based upon the significance of the unobservable parameters to the overall fair value measurement. However, Level 3 financial instruments typically include, in addition to the unobservable or Level 3 components, observable components (that is, components that are actively quoted and can be validated to external sources); accordingly, the gains and losses in the table below include changes in fair value due in part to observable factors that are part of the valuation methodology.

The Company recognizes transfers into Level 3 as of the end of the period in which the circumstances leading to the transfer occurred. The Company recognizes transfers out of Level 3 at the beginning of a period in which the circumstances leading to the transfer occurred.

There were no financial instruments transferred into or out of Level 3 for the years ended December 31, 2025 and 2024.

*2025 Statutory Financial Statements* *Page 31* 

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The tables below include a rollforward of the Statements of Admitted Assets, Liabilities and Surplus amounts for the years ended December 31, 2025 and 2024 (including the change in fair value), for financial instruments classified by the Company within Level 3 of the valuation hierarchy.

---

| | | | |
|:---|:---|:---|:---|
| | **Preferred<br>Stock** | **Common<br>Stock** | **Total** |
|  Balance January 1, 2025 | $6196 | $15086 | $21282 |
| &nbsp;&nbsp;&nbsp;&nbsp; Transfers in |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Transfers out |  |  |  |
|  Total gains or losses (realized/ unrealized) included in: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Income/(loss) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Surplus |  |  |  |
|  Amortization/accretion |  |  |  |
|  Purchases/(sales): |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchases |  | 37615 | 37615 |
| &nbsp;&nbsp;&nbsp;&nbsp;(Sales) | (118) | (36000) | (36118) |
|  **Balance, December 31, 2025** | $**6078** | $**16701** | $**22779** |

---

---

| | | | |
|:---|:---|:---|:---|
| | **Preferred<br>Stock** | **Common<br>Stock** | **Total** |
|  Balance January 1, 2024 | $— | $3075 | $3075 |
| &nbsp;&nbsp;&nbsp;&nbsp; Transfers in | 6196 |  | 6196 |
| &nbsp;&nbsp;&nbsp;&nbsp; Transfers out |  |  |  |
|  Total gains or losses (realized/ unrealized) included in: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Income/(loss) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Surplus |  |  |  |
|  Amortization/accretion |  |  |  |
|  Purchases/(sales): |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchases |  | 12011 | 12011 |
| &nbsp;&nbsp;&nbsp;&nbsp;(Sales) |  |  |  |
|  **Balance, December 31, 2024** | $**6196** | $**15086** | $**21282** |

---

The following summarizes the fair value, valuation techniques and significant unobservable inputs of the Level 3 fair value measurements that were developed as of December 31, 2025:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Fair Value** | **Valuation Technique** | **Significant<br>Unobservable Inputs** | **Significant<br>Unobservable Inputs** | **Rate/Range or /<br>weighted avg.** | **Rate/Range or /<br>weighted avg.** | |
|  Assets: |  |  |  |  |  |  |  |
|  Investments |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Preferred stock | $6078 | Independent pricing source | | *Not available* | | *N/A* | |
| &nbsp;&nbsp;&nbsp;&nbsp; Common stock: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; FHLB Stock | 16701 | Set by issuer-FHLB-PGH<sup>(1)</sup> | | *Not available* | | *N/A* | |
|  **Total investments** | $**22779** |  |  |  |  |  |  |

---

(1) Fair Value approximates carrying value. The par value of the FHLB capital stock is $100 and set by the FHLB. The capital
stock is issued, redeemed and repurchased at par.

*Page 32* *The Penn Mutual Life Insurance Company*

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The following tables summarizes the aggregate fair value for all financial instruments and the level within the fair value hierarchy in which the fair value measurements in their entirety fall, for which it is practicable to estimate fair value, at December 31:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **2025** | **Aggregate<br>Fair Value** | **Admitted<br>Value** | **Level 1** | **Level 2** | **Level 3** |
|  Financial Assets: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Bonds | $18681539 | $19095858 | $152771 | $18324047 | $204721 |
| &nbsp;&nbsp;&nbsp;&nbsp; Preferred stock | 50548 | 52416 | 44470 |  | 6078 |
| &nbsp;&nbsp;&nbsp;&nbsp; Common stock-unaffiliated | 18836 | 18836 | 2135 |  | 16701 |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash and short-term investments | 627612 | 627612 | 627612 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivatives | 1014436 | 1014436 |  | 1014436 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Separate account assets | 8613768 | 8613768 | 8613768 |  |  |
|  Financial Liabilities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Investment-type contracts |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Individual annuities | $3240546 | $3305640 | $— | $— | $3240546 |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivatives | 1155341 | 1155341 |  | 1155341 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Separate account liabilities | 8613768 | 8613768 | 8613768 |  |  |
| **2024** | **Aggregate<br>Fair Value** | **Admitted<br>Value** | **Level 1** | **Level 2** | **Level 3** |
|  Financial Assets: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Bonds | $17363556 | $18137108 | $386355 | $16764113 | $213088 |
| &nbsp;&nbsp;&nbsp;&nbsp; Redeemable preferred stock | 56097 | 57988 | 49901 |  | 6196 |
| &nbsp;&nbsp;&nbsp;&nbsp; Common stock-unaffiliated | 15494 | 15494 | 408 |  | 15086 |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash and short-term investments | 387909 | 387909 | 387909 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivatives | 1350153 | 1350153 |  | 1350153 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Separate account assets | 8774945 | 8774945 | 8774945 |  |  |
|  Financial Liabilities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Investment-type contracts |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Individual annuities | $3055111 | $3182028 | $— | $— | $3055111 |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivatives | 1422829 | 1422829 |  | 1422829 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Separate Account liabilities | 8774945 | 8774945 | 8774945 |  |  |

---

*2025 Statutory Financial Statements* *Page 33* 

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***Note 7.* LIFE RESERVES BY WITHDRAWAL CHARACTERISTICS** 

The withdrawal characteristics of the Company's life reserves are illustrated below as of December 31:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **General Account** | **General Account** | **General Account** | **Separate Account** | **Separate Account** | **Separate Account** |
| **2025** | **Account<br>Value** | **Cash<br>Value** | **Reserve** | **Account<br>Value** | **Cash<br>Value** | **Reserve** |
|  Subject to Discretionary Withdrawal, Surrender Values, or Policy Loans: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Universal Life | $234851 | $233745 | $235624 | $— | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp; Universal Life with Secondary Guarantees | 1932420 | 1892492 | 5164467 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Indexed Universal Life with Secondary Guarantees | 1633950 | 1630260 | 1841546 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Other Permanent Cash Value Life Insurance |  | 10112151 | 11274815 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Variable Universal Life | 433624 | 413315 | 411960 | 1387544 | 1368163 | 1368163 |
| &nbsp;&nbsp;&nbsp;&nbsp; Miscellaneous Reserves |  |  | 23693 |  |  |  |
|  Not Subject to Discretionary Withdrawal or No Cash Values: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Term Policies without Cash Value |  |  | 410863 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Accidental Death Benefits |  |  | 274 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Disability — Active Lives |  |  | 32386 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Disability — Disabled Lives |  |  | 13225 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Miscellaneous Reserves |  |  | 154135 |  |  |  |
|  Total | 4234845 | 14281963 | 19562988 | 1387544 | 1368163 | 1368163 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Reinsurance ceded | 3134998 | 3102307 | 6116064 |  |  |  |
|  **Net** | $**1099847** | $**11179656** | $**13446924** | $**1387544** | $**1368163** | $**1368163** |

---

*Page 34* *The Penn Mutual Life Insurance Company*

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Life reserves of $387,965 with surrender charges of 5% or more as of December 31, 2025 will have less than a 5% surrender charge in 2026.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **General Account** | **General Account** | **General Account** | **Separate Account** | **Separate Account** | **Separate Account** |
| **2024** | **Account<br>Value** | **Cash**<br> **Value** | **Reserve** | **Account<br>Value** | **Cash**<br> **Value** | **Reserve** |
|  Subject to Discretionary Withdrawal, Surrender Values, or Policy Loans: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Universal Life | $247985 | $246837 | $248960 | $— | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp; Universal Life with Secondary Guarantees | 1957443 | 1907817 | 5020443 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Indexed Universal Life with Secondary Guarantees | 1552926 | 1546179 | 1745301 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Other Permanent Cash Value Life Insurance |  | 8823112 | 9874756 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Variable Universal Life | 384255 | 366306 | 364455 | 1297360 | 1279737 | 1279737 |
| &nbsp;&nbsp;&nbsp;&nbsp; Miscellaneous Reserves |  |  | 23406 |  |  |  |
|  Not Subject to Discretionary Withdrawal or No Cash Values: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Term Policies without Cash Value |  |  | 396563 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Accidental Death Benefits |  |  | 282 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Disability — Active Lives |  |  | 31400 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Disability — Disabled Lives |  |  | 13017 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Miscellaneous Reserves |  |  | 174016 |  |  |  |
|  Total | 4142609 | 12890251 | 17892599 | 1297360 | 1279737 | 1279737 |
| &nbsp;&nbsp;&nbsp;&nbsp; Less: Reinsurance ceded | 2642112 | 2609910 | 4859083 |  |  |  |
|  **Net** | $**1500497** | $**10280341** | $**13033516** | $**1297360** | $**1279737** | $**1279737** |

---

***Note 8.* RESERVES AND FUNDS FOR PAYMENT OF ANNUITY BENEFITS** 

The Company's separate accounts are non-guaranteed. The withdrawal characteristics of the Company's annuity actuarial reserves and deposit-type contracts are illustrated below as of December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **2025** | **General<br>Account** | **Separate<br>Account** | **Total** | **% of<br>Total** |
|  Subject to discretionary withdrawal-with adjustments: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; With fair value adjustment | $— | $— | $— | —% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; At book value less surrender charges | 218994 |  | 218994 | 2% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; At fair value |  | 7127387 | 7127387 | 64% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 218994 | 7127387 | 7346381 | 66% |
|  At book value — without adjustment | 1818313 |  | 1818313 | 16% |
|  Not subject to discretionary withdrawal | 1990301 |  | 1990301 | 18% |
|  Total annuity reserves and deposit liabilities gross | 4027608 | 7127387 | 11154995 | 100% |
|  Less: Reinsurance ceded | 125820 |  | 125820 |  |
|  **Total Annuity Reserves and Deposit Liabilities, Net** | $**3901788** | $**7127387** | $**11029175** |  |

---

*2025 Statutory Financial Statements* *Page 35* 

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*($ in Thousands)* 

Annuity and deposit-type contract reserves of $7,440 with surrender charges of 5% or more as of December 31, 2025 will have less than a 5% surrender charge in 2026.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **2024** | **General<br>Account** | **Separate<br>Account** | **Total** | **% of<br>Total** |
|  Subject to discretionary withdrawal-with adjustments: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; With fair value adjustment | $— | $— | $— | —% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; At book value less surrender charges | 235501 |  | 235501 | 2% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; At fair value |  | 7358795 | 7358795 | 65% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 235501 | 7358795 | 7594296 | 67% |
|  At book value — without adjustment | 1847652 |  | 1847652 | 16% |
|  Not subject to discretionary withdrawal | 1852214 | 17 | 1852231 | 16% |
|  Total annuity reserves and deposit liabilities gross | 3935367 | 7358812 | 11294179 | 100% |
|  Less: Reinsurance ceded | 135407 |  | 135407 |  |
|  **Total Annuity Reserves and Deposit Liabilities, Net** | $**3799960** | $**7358812** | $**11158772** |  |

---

The following summarizes total annuity actuarial reserves and liabilities for deposit-type contracts at December 31:

---

| | | |
|:---|:---|:---|
| | **2025** | **2024** |
|  Statutory Statements of Admitted Assets, Liabilities and Surplus: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Policyholders' reserves — group annuities | $114981 | $126705 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Policyholders' reserves — individual annuities | 2732679 | 2665237 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Liabilities for deposit-type contracts | 1049068 | 994257 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; VM-21 reserves | 5060 | 13761 |
|  Subtotal | 3901788 | 3799960 |
|  Separate Account Annual Statement: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Annuities | 7127387 | 7358812 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Supplementary contracts with life contingencies |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other annuity contract-deposit-funds |  |  |
|  Subtotal | 7127387 | 7358812 |
|  **Total Reserves** | $**11029175** | $**11158772** |

---

As of December 31, 2025 and 2024, the Company has recorded reserves of $302,676 and $302,637, respectively, related to outstanding borrowings from the FHLB-PGH classified as funding agreements.

The Company has variable annuity contracts containing GMDB provisions that provide a specified minimum return upon death as follows:

**RETURN OF PREMIUM** provides the greater of the account value or total deposits made to the contract less any partial withdrawals and assessments, which is referred to as "net purchase payments." This guarantee is a standard death benefit on all individual variable annuity products.

**STEP-UP** provides a variable death benefit equal to the greater of the account value and the highest variable account value adjusted for withdrawals and transfers from any prior contract anniversary date.

**RISING FLOOR** provides a variable death benefit equal to the greater of the current account value and the variable purchase payments accumulated at a set rate and adjusted for withdrawals and transfers.

*Page 36* *The Penn Mutual Life Insurance Company*

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*($ in Thousands)* 

The following table summarizes the account values and net amount at risk (death benefit in excess of account value), net of reinsurance for variable annuity contracts with guarantees invested in the separate account as of December 31:

---

| | | |
|:---|:---|:---|
| | **2025** | **2024** |
|  Account value | $6751691 | $6975138 |
|  Net amount at risk | 15402 | 30304 |

---

The Company has variable annuity contracts that have GMAB, GMWB, and GMAB/GMWB Rider options. The Company also has fixed indexed annuity contracts that have GMWB Rider options. The GMAB provides for a return of principal at the end of a specified period. The GMAB/GMWB combination rider allows for guaranteed withdrawals from a benefit base after a selected waiting period. The GMWB riders are also available with inflation or death benefit protection. The benefit base is calculated as the maximum of principal increase at a roll up rate less any partial withdrawals during the accumulation phase, the current account value and the highest anniversary value over the first ten years. The withdrawal amount is stated as a percentage of the benefit base and varies based on whether the annuitant selects lifetime withdrawals or a specified period. One version of this rider has an inflation adjustment applied to the Guaranteed Withdrawal Amount.

The following table summarizes the account values for the different benefit types as of December 31, 2025:

---

| | | | |
|:---|:---|:---|:---|
| **Rider Type** | **Contracts** | **Fund<br>Value** | **Cash<br>Value** |
|  GMAB | 1428 | $304317 | $295475 |
|  GMWB | 9589 | 2732524 | 2687948 |
|  GMWB w/ DB | 847 | 223998 | 218971 |
|  GMWB w/ inflation | 8385 | 2105161 | 2079808 |
|  GMWB w/ inflation w/ DB | 259 | 61414 | 60611 |
|  GMAB/GMWB | 1611 | 319271 | 317900 |
|  **Total** | **22119** | $**5746685** | $**5660713** |

---

The following table summarizes the account values for the different benefit types as of December 31, 2024:

---

| | | | |
|:---|:---|:---|:---|
| **Rider Type** | **Contracts** | **Fund<br>Value** | **Cash<br>Value** |
|  GMAB | 1555 | $299700 | $289142 |
|  GMWB | 10583 | 2874573 | 2819408 |
|  GMWB w/ DB | 944 | 229641 | 223333 |
|  GMWB w/ inflation | 9120 | 2180922 | 2151599 |
|  GMWB w/ inflation w/ DB | 278 | 62768 | 61707 |
|  GMAB/GMWB | 1766 | 345117 | 343598 |
|  **Total** | **24246** | $**5992721** | $**5888787** |

---

Variable annuity reserves for living and death benefits are based on the methodology specified in Valuation Manual – 21: Requirements for Principle-Based Reserves for Variable Annuities ("VM-21"), which specifies the reserve as the Company Stochastic Reserve plus the Additional Standard Projection Amount. The individual policy reserve is floored at cash surrender value. The Company Stochastic Reserve is based on the Conditional Tail Expectation ("CTE") 70% of 1,000 stochastically generated interest rate and equity return scenarios. Prudent estimate assumptions including margins for uncertainty are used to calculate the Company Stochastic Reserve. Key assumptions needed in valuing the liability include full withdrawals, partial withdrawals, mortality, the Consumer Price Index, investment management fees and revenue sharing, expenses, fund allocations and other policyholder behavior. The Additional Standard Projection Amount requires prescribed assumptions to be used in place of

*2025 Statutory Financial Statements* *Page 37* 

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*($ in Thousands)* 

Company assumptions for most key assumptions. The reserve also requires the projection of in-force general account assets and assets from reinvested cash flows. The key assumptions needed in valuing the assets, including the maximum reinvestment earned rate spreads and default rates, are prescribed. In addition, the method for projecting interest rates and equity returns is prescribed for both the Company Stochastic Reserve calculation and the Additional Standard Projection Amount calculation. The final reserve balance for policies that fall within the scope of VM-21, which covers both Living and Death Benefit guarantees, is $6,660,049 and $6,872,854, as of December 31, 2025 and 2024, respectively. During 2025 and 2024, there were $400 and $(900), respectively, in reserves released as a result of the annual assumption review.

Fixed indexed annuity reserves for living benefits are based on the methodology specified in Actuarial Guideline XXXV, which specifies the reserve as the sum of the non-elective benefit reserve and the elective benefit reserve. The elective benefit reserve is calculated using the elective benefit path that results in the highest present value of future benefits. The final reserve balance for policies that fall within the scope of Actuarial Guideline XXXV is $50,189 and $54,174, as of December 31, 2025 and 2024, respectively.

***Note 9.* BENEFIT PLANS** 

The Company has maintained both funded and unfunded non-contributory defined benefit pension plans covering eligible employees. The Company also maintains other postretirement benefit plans (health care plans) covering eligible existing retirees. The Company uses a measurement date of December 31 for all plans.

**QUALIFIED PENSION PLAN** The Company sponsored a funded qualified non-contributory defined benefit pension plan covering eligible employees. The Company's policy was to fund qualified pension costs in accordance with the Employee Retirement Income Security Act ("ERISA") of 1974 and maintained the option to increase its contribution above the minimum based upon an evaluation of the Company's tax and cash positions and the funded status of the plan.

The Company approved the freezing of benefits under its qualified pension plan effective December 31, 2005. Therefore, no further benefits were accrued for participants.

The Company's Board of Trustees approved the termination of its frozen qualified pension plan on May 31, 2024. The Company offered the option of receiving a lump sum payment to certain participants with vested qualified benefits in lieu of receiving monthly annuity payments. The Company transferred the remainder of the Plan's pension obligation to a third-party insurance provider by purchasing a group annuity contract which was fully funded directly by plan assets. The third-party insurance provider assumed the obligation to pay future pension benefits and to provide administrative services beginning on January 1, 2025.

**NONQUALIFIED PENSION PLANS** The Company also sponsored unfunded nonqualified pension plans covering eligible employees.

The Company approved the freezing of benefits under its nonqualified Tax Equity and Fiscal Responsibility Act ("TEFRA") plan effective December 31, 2005. Therefore, no further benefits were accrued for participants under this plan.

On December 30, 2024, the Company approved amendments to terminate the unfunded nonqualified pension plans. The remaining participants were paid in compliance with United States Internal Revenue Code Section 409A during December, 2025.

**OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS** The Company provides certain life insurance and health care benefits ("other postretirement healthcare plans") for its existing retired employees and financial professionals, and their beneficiaries and covered dependents.

On December 5, 2023, the Company approved an amendment to close the other postretirement healthcare plans to new retirees effective December 31, 2023. Therefore, no new retired employees or financial professionals are eligible to join the plan.

**OTHER PLANS** The Company has non-qualified deferred compensation plans that permit eligible key employees, financial professionals and trustees to defer portions of their compensation to these plans. Certain Company

*Page 38* *The Penn Mutual Life Insurance Company*

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*($ in Thousands)* 

contributions in excess of allowable qualified plan limits may also be credited to these plans. Company contributions are recorded as expenses and earnings/(losses) on investments are recorded to interest credited to policyholder funds in the Statements of Income and Changes in Surplus.

**BENEFIT OBLIGATIONS** Accumulated benefit obligations represent the present value of pension benefits earned as of the measurement date based on service and compensation and do not take into consideration future salary increases.

Projected benefit obligations for defined benefit plans represent the present value of pension benefits earned as of the measurement date projected for estimated salary increases to an assumed date with respect to retirement, termination, disability or death.

The following table sets forth the plans' change in projected benefit obligation of the defined benefit pension and other postretirement healthcare plans as of December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pension Plans** | **Pension Plans** | **Other Postretirement<br>Healthcare Plans** | **Other Postretirement<br>Healthcare Plans** |
| | **2025** | **2024** | **2025** | **2024** |
|  **Change in projected benefit obligation** |  |  |  |  |
|  Projected benefit obligation at beginning of year | $15949 | $148759 | $7335 | $12905 |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest cost | 705 | 6166 | 352 | 383 |
| &nbsp;&nbsp;&nbsp;&nbsp; Actuarial loss/(gain) | 9523 | 3190 | 11 | (2144) |
| &nbsp;&nbsp;&nbsp;&nbsp; Benefits paid | (2196) | (11680) | (784) | 1051 |
| &nbsp;&nbsp;&nbsp;&nbsp; Plan amendment |  |  |  | (4860) |
| &nbsp;&nbsp;&nbsp;&nbsp; Settlements | (23981) | (130486) |  |  |
|  **Projected benefit obligation at end of year** | $**—** | $**15949** | $**6914** | $**7335** |

---

The weighted-average assumption used to measure the actuarial present value of the projected benefit obligation was as follows as of December 31:

---

| | | |
|:---|:---|:---|
|  | **Other Postretirement<br>Healthcare Plans** | **Other Postretirement<br>Healthcare Plans** |
| | **2025** | **2024** |
|  Discount rate | 5.11% | 5.52% |

---

The discount rate is determined at the annual measurement date of the plans and is therefore subject to change each year. The rate reflects prevailing market rates for high quality fixed-income debt instruments with maturities corresponding to expected duration of the benefit obligations on the measurement date. The rate is used to discount the future cash flows of benefits obligations back to the measurement date.

The assumed health care cost trend rates used in determining the benefit obligation for the other postretirement healthcare plans were as follows as of December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2024** | **2024** |
| | **Pre-65** | **Post-65** | **Pre-65** | **Post-65** |
|  Health care cost trend rate assumed for next year | 6.50% | 6.50% | 6.50% | 6.50% |
|  Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | 5.00% | 5.00% | 5.00% | 5.00% |
|  Year that the rate reaches the ultimate trend rate | 2033 | 2033 | 2031 | 2031 |

---

**PLAN ASSETS** The change in plan assets of the benefit plans and other postretirement healthcare plans represents a reconciliation of beginning and ending balances of the fair value of the plan assets used to fund future benefit payments.

*2025 Statutory Financial Statements* *Page 39* 

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*($ in Thousands)* 

The following table sets forth the change in plan assets as of December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pension Plans** | **Pension Plans** | **Other Postretirement<br>Healthcare Plans** | **Other Postretirement<br>Healthcare Plans** |
| | **2025** | **2024** | **2025** | **2024** |
|  **Change in plan assets:** |  |  |  |  |
|  Fair value of plans assets at beginning of year | $— | $207399 | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp; Actual return on plan assets |  | 3877 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Employer contribution | 26178 | 2202 | 784 | (1051) |
| &nbsp;&nbsp;&nbsp;&nbsp; Benefits paid | (2196) | (11680) | (784) | 1051 |
| &nbsp;&nbsp;&nbsp;&nbsp; Settlements | (23982) | (130486) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Transfer of excess assets |  | (71312) |  |  |
|  **Fair value of plan assets at end of year** | $**—** | $**—** | $**—** | $**—** |

---

With the termination of the Company's qualified pension plan during 2024, the excess plan assets were transferred directly to the Company's defined contribution plan administrator to be used for future non-elective contributions.

**AMOUNTS RECOGNIZED IN THE STATEMENTS OF ADMITTED ASSETS, LIABILITIES AND SURPLUS** 

The funded status of the defined benefit pension plans and other postretirement healthcare plans is a comparison of the projected benefit obligations to the assets related to the respective plan, if any. The difference between the two represents amounts that have been appropriately recognized as expenses in prior periods that appear as the net amount recognized or represent amounts that will be recognized as expenses in the future through the amortization of the unrecognized net actuarial gains or losses and unrecognized prior service costs or credits.

The following table sets forth the funded status of the plans as of December 31, 2025 and 2024 as of the measurement date:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pension Plans** | **Pension Plans** | **Other Postretirement<br>Healthcare Plans** | **Other Postretirement<br>Healthcare Plans** |
| | **2025** | **2024** | **2025** | **2024** |
|  Benefit obligation | $— | $(15949) | $(6914) | $(7335) |
|  **Funded status** | $**—** | $**(15949)** | $**(6914)** | $**(7335)** |

---

The funded status reconciles to amounts reported in the Statement of Admitted Assets, Liabilities and Surplus as follows as of December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pension Plans** | **Pension Plans** | **Other Postretirement<br>Healthcare Plans** | **Other Postretirement<br>Healthcare Plans** |
| | **2025** | **2024** | **2025** | **2024** |
|  Accrued benefit cost and liability for benefits recognized (other liabilities) | $— | (15949) | (6914) | (7335) |
|  **Funded status** | $**—** | $**(15949)** | $**(6914)** | $**(7335)** |

---

*Page 40* *The Penn Mutual Life Insurance Company*

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*($ in Thousands)* 

The breakout of the fair value of plan assets, projected benefit obligation and accumulated benefit obligation for plans in an underfunded status, where the projected benefit obligation exceeded the fair value of plan assets was as follows as of December 31:

---

| | | |
|:---|:---|:---|
|  | **Underfunded<br>Pension Plans** | **Underfunded<br>Pension Plans** |
| | **2025** | **2024** |
|  Projected benefit obligation | $— | $(15949) |
|  Funded status |  | (15949) |
|  **Accumulated benefit obligation** | $**—** | $**(15949)** |

---

**SURPLUS ITEMS NOT YET RECOGNIZED** The amounts in surplus that have not yet been recognized as part of net periodic benefit cost/(credit) were as follows as of December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pension Plans** | **Pension Plans** | **Other Postretirement<br>Healthcare Plans** | **Other Postretirement<br>Healthcare Plans** |
| | **2025** | **2024** | **2025** | **2024** |
|  Unrecognized prior service cost | $— | $— | $(3837) | $(4349) |
|  Unrecognized actuarial (gain)/loss |  | 6734 | (4276) | (4656) |
|  **Total** | $**—** | $**6734** | $**(8113)** | $**(9005)** |

---

The following represents activity relating to amounts recognized in surplus or included in the remaining unrecognized transition liability from the adoption of SSAP No. 92, Accounting for Postretirement Benefits Other Than Pensions, during the years ended December 31, 2025 and 2024, including reclassification adjustments for those amounts recognized as components of net periodic benefit cost/(credit), for the years ended December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pension Benefits** | **Pension Benefits** | **Other Postretirement<br>Healthcare Plans** | **Other Postretirement<br>Healthcare Plans** |
|  | **2025** | **2024** | **2025** | **2024** |
|  Items not yet recognized as a component of net periodic benefit cost/(credit) — prior year | $6734 | $44842 | $(9005) | $(2858) |
|  Net prior service cost arising during the period |  |  |  | (4860) |
|  Net prior service (cost)/credit recognized to net periodic benefit cost/(credit) |  | (17) | 511 | 511 |
|  Net prior service cost (credit) from Plan Termination recognized to net periodic benefit cost |  | (67) |  |  |
|  Net actuarial loss/(gain) arising during the period | 9523 | 10140 | 11 | (2144) |
|  Net actuarial (loss) recognized to net periodic benefit cost/(credit) | (406) | (1576) | 370 | 346 |
|  Net actuarial gains (losses) from Settlement recognized to net periodic benefit cost | (15851) | (46588) |  |  |
|  **Items not yet recognized as a component of net periodic benefit cost — current year** | $**—** | $**6734** | $**(8113)** | $**(9005)** |

---

*2025 Statutory Financial Statements* *Page 41* 

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*($ in Thousands)* 

**NET PERIODIC BENEFIT COST/(CREDIT)** The components of net periodic benefit cost/(credit) were as follows for the years ended December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pension Plans** | **Pension Plans** | **Other Postretirement<br>Healthcare Plans** | **Other Postretirement<br>Healthcare Plans** |
| | **2025** | **2024** | **2025** | **2024** |
|  Interest cost | $705 | $6166 | $352 | $383 |
|  Expected return on plan assets |  | (10826) |  |  |
|  Amortization of prior service cost/(credit) |  | 17 | (511) | (511) |
|  Amortization of actuarial losses/(gains) | 406 | 1576 | (370) | (346) |
|  Settlements | 15851 | 46655 |  |  |
|  **Total net periodic benefit cost/(credit)** | $**16962** | $**43588** | $**(529)** | $**(474)** |

---

The weighted-average assumptions used to determine net periodic benefit cost/(credit) were as follows for the years ended December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pension Plans** | **Pension Plans** | **Other Postretirement<br>Healthcare Plans** | **Other Postretirement<br>Healthcare Plans** |
| | **2025** | **2024** | **2025** | **2024** |
|  Discount rate for benefit obligations | N/A | N/A | 5.11% | 5.52% |
|  Expected return on plan assets | N/A | 6.00% |  |  |

---

The assumed health care cost trend rates used in determining net periodic benefit cost were as follows for the years ended December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2024** | **2024** |
| | **Pre-65** | **Post-65** | **Pre-65** | **Post-65** |
|  Health care cost trend rate assumed for next year | 6.50% | 6.50% | 6.50% | 6.50% |
|  Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | 5.00% | 5.00% | 5.00% | 5.00% |
|  Year that the rate reaches the ultimate trend rate | 2033 | 2033 | 2031 | 2031 |

---

**ACTUAL CONTRIBUTIONS AND BENEFITS** The contributions made and the benefits paid from the plans at December 31 were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pension Benefits** | **Pension Benefits** | **Other Benefits** | **Other Benefits** |
| | **2025** | **2024** | **2025** | **2024** |
|  Employer Contributions | $26178 | $2202 | $784 | $(1051) |
|  Benefits Paid | (2196) | (11680) | (784) | 1051 |
|  Settlements | (23982) | (130486) |  |  |

---

**CASH FLOWS** With the termination of the Company's qualified pension plan during 2024, there are no funding requirements under ERISA.

In 2026, the Company expects to contribute to the other postretirement healthcare plans in amounts equal to the expected benefit costs of approximately $816.

*Page 42* *The Penn Mutual Life Insurance Company*

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The estimated future benefit payments are based on the same assumptions as used to measure the benefit obligations as of December 31, 2025 and 2024. The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

---

| | |
|:---|:---|
| | **Other Post<br>Retirement<br>Healthcare Plans** |
| 2026 | $816 |
| 2027 | 776 |
| 2028 | 719 |
| 2029 | 681 |
| 2030 | 634 |
|  Years 2031-2033 | 2580 |

---

**DEFINED CONTRIBUTION PLANS** The Company maintains three defined contribution pension plans for substantially all of its employees and full-time financial professionals. For two plans, designated contributions of up to 6% of annual compensation are eligible to be matched by the Company. Contributions for the third plan are based on tiered earnings of full-time financial professionals. For the years ended December 31, 2025, and 2024, the expense recognized for these plans was $7,920 and $9,665, respectively.

With the termination of the Company's qualified pension plan during 2024, the excess plan assets were transferred directly to the Company's defined contribution plan administrator to be used for future non-elective contributions. These assets are non-admitted and are excluded from the Statements of Admitted Assets, Liabilities and Surplus.

***Note 10*. FEDERAL INCOME TAXES** 

The Company follows SSAP No. 101 — Income Taxes, A Replacement of SSAP No. 10R and SSAP No. 10 ("SSAP 101"). SSAP 101 includes a calculation for the limitation of gross deferred tax assets for insurers that maintain a minimum of 300% of their authorized control level RBC computed without net deferred tax assets. The Company exceeded the 300% minimum RBC requirement at December 31, 2025, and 2024.

The Company is required to evaluate the recoverability of deferred tax assets and to establish a valuation allowance if necessary to reduce the deferred tax asset to an amount which is more likely than not to be realized. Considerable judgment is required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance, the Company considers many factors, including: (1) the nature of the deferred tax assets and liabilities; (2) whether they are ordinary or capital; (3) the timing of their reversal; (4) taxable income in prior carryback years as well as projected taxable income exclusive of reversing temporary differences and carryforwards; (5) the length of time that carryovers can be utilized; (6) unique tax rules that would impact the utilization of the deferred tax assets; and (7) any tax planning strategies that the Company would employ to avoid a tax benefit from expiring unused; although the realization is not assured, management believes it is more likely than not that the deferred tax assets, will be realized. The Company has not recorded a valuation allowance as of December 31, 2025, and 2024.

The components of deferred tax assets ("DTA") and deferred tax liabilities ("DTL") recognized by the Company are as follows as of December 31:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Description** |  | **2025** |  |  | **2024** |  |
|  | **Ordinary** | **Capital** | **Total** | **Ordinary** | **Capital** | **Total** |
|  Gross DTAs | $467717 | $14351 | $482068 | $503519 | $9941 | $513460 |
|  Statutory valuation allowance |  |  |  |  |  |  |
|  Adjusted gross DTAs | 467717 | 14351 | 482068 | 503519 | 9941 | 513460 |
|  DTAs nonadmitted | (144385) |  | (144385) | (114312) |  | (114312) |
|  Subtotal admitted adjusted DTA | 323332 | 14351 | 337683 | 389207 | 9941 | 399148 |
|  Gross DTLs | (112701) | (61291) | (173992) | (109745) | (75891) | (185636) |
|  **Net admitted DTA/(DTL)** | $**210631** | $**(46940)** | $**163691** | $**279462** | $**(65950)** | $**213512** |

---

*2025 Statutory Financial Statements* *Page 43* 

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*($ in Thousands)* 

The changes in components of DTAs and DTLs recognized by the Company are as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Description** | **Changes During 2025** | **Changes During 2025** | **Changes During 2025** |
|  | **Ordinary** | **Capital** | **Total** |
|  Gross DTAs | $(35802) | $4410 | $(31392) |
|  Statutory valuation allowance |  |  |  |
|  Adjusted gross DTAs | (35802) | 4410 | (31392) |
|  DTAs nonadmitted | (30073) |  | (30073) |
|  Subtotal admitted adjusted DTA | (65875) | 4410 | (61465) |
|  Gross DTLs | (2956) | 14600 | 11644 |
|  **Net admitted DTA/(DTL)** | $**(68831)** | $**19010** | $**(49821)** |

---

Admitted DTAs are comprised of the following admission components based on paragraph 11 of SSAP No. 101 as of December 31:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Description** |  | **2025** |  |  | **2024** |  |
|  | **Ordinary** | **Capital** | **Total** | **Ordinary** | **Capital** | **Total** |
|  Admitted DTA 3 Years: |  |  |  |  |  |  |
|  Federal income taxes that can be recovered: |  |  |  |  |  |  |
|  Remaining adjusted gross DTAs expected to be realized in 3 years (lesser of 1 or 2): | $149340 | $14351 | $163691 | $203571 | $9941 | $213512 |
| &nbsp;&nbsp;&nbsp;&nbsp;1. Adjusted gross DTA expected to be realized | 149340 | 14351 | 163691 | 203571 | 9941 | 213512 |
| &nbsp;&nbsp;&nbsp;&nbsp;2. Adjusted gross DTA allowed per limitation threshold |  |  | 602725 |  |  | 548880 |
|  Adjusted gross DTA offset by existing DTLs | 173992 |  | 173992 | 185636 |  | 185636 |
|  **Total admitted DTA realized within 3 years** | $**323332** | $**14351** | $**337683** | $**389207** | $**9941** | $**399148** |

---

---

| | | | |
|:---|:---|:---|:---|
| **Description** | **Changes during 2025** | **Changes during 2025** | **Changes during 2025** |
|  | **Ordinary** | **Capital** | **Total** |
|  Admitted DTA 3 years: |  |  |  |
|  Federal income taxes that can be recovered: |  |  |  |
|  Remaining adjusted gross DTAs expected to be realized within 3 years (lesser of 1 or 2): | $(54229) | $4410 | $(49819) |
| &nbsp;&nbsp;&nbsp;&nbsp;1. Adjusted gross DTA expected to be realized | (54229) | 4410 | (49819) |
| &nbsp;&nbsp;&nbsp;&nbsp;2. Adjusted gross DTA allowed per limitation threshold |  |  |  |
|  Adjusted gross DTA offset by existing DTLs | (11644) |  | (11644) |
|  **Total admitted DTA realized within 3 years** | $**(65873)** | $**4410** | $**(61463)** |

---

The authorized control level RBC and total adjusted capital computed without net deferred tax assets utilized when determining the amount of admissible net deferred tax assets was as follows:

---

| | | |
|:---|:---|:---|
| **December 31** | **2025** | **2024** |
|  Ratio percentage used to determine recovery period and threshold limitation amount | 606% | 605% |
|  Amount of adjusted capital and surplus used to determine recovery period and threshold limitation | $4682912 | $4245118 |

---

*Page 44* *The Penn Mutual Life Insurance Company*

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*($ in Thousands)* 

The impact of tax planning strategies on the determination of adjusted gross DTAs and net admitted DTAs is as follows:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **Change** | **Change** | **Change** |
| | **Ordinary** | **Capital** | **Total** | **Ordinary** | **Capital** | **Total** | **Ordinary** | **Capital** | **Total** |
|  Adjusted gross DTAs | —% | 100% | 40% | —% | 100% | 40% | —% | —% | —% |
|  Net admitted DTAs | —% | 100% | 46% | —% | 100% | 46% | —% | —% | —% |

---

The Company's tax planning strategies do not include the use of reinsurance. There are no temporary differences for which a DTL has not been established.

**Significant components of income taxes incurred** 

Current income taxes incurred consist of the following major components for the years ended December 31:

---

| | | |
|:---|:---|:---|
| **Description** | **2025** | **2024** |
|  Current federal income tax expense/(benefit) | $29810 | $(52735) |
|  Income tax effect on realized capital gains | 16828 | 209935 |
|  **Federal and foreign income taxes incurred** | $**46638** | $**157200** |

---

As reported in Capital gains and losses, net of tax within the Statements of Operations, the Company's accounting policy is to record tax expense or benefit as calculated pursuant to the Internal Revenue Code, adjusted for taxes transferred to the IMR reserve.

*2025 Statutory Financial Statements* *Page 45* 

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*($ in Thousands)* 

The tax effects of temporary differences that give rise to significant portions of the DTAs and DTLs are as follows as of December 31:

---

| | | | |
|:---|:---|:---|:---|
| | **2025** | **2024** | **Change** |
|  **DTAs resulting in book/tax differences in:** |  |  |  |
|  Ordinary: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Future policy benefits | $151677 | $154296 | $(2619) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DAC | 223472 | 202121 | 21351 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred compensation | 63834 | 45192 | 18642 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Nonadmitted assets | 18583 | 21320 | (2737) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; PML reserve financing |  | 36343 | (36343) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; PML reinsurance |  | 34856 | (34856) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other — ordinary | 10151 | 9391 | 760 |
|  Subtotal — Gross ordinary DTAs | 467717 | 503519 | (35802) |
|  Statutory valuation allowance |  |  |  |
|  Nonadmitted ordinary DTAs | (144385) | (114312) | (30073) |
|  Admitted ordinary DTAs | 323332 | 389207 | (65875) |
|  Capital: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; OTTI on investments | 14351 | 9941 | 4410 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other — Capital |  |  |  |
|  Subtotal — Gross capital DTAs | 14351 | 9941 | 4410 |
|  Statutory valuation allowance |  |  |  |
|  Nonadmitted capital DTAs |  |  |  |
|  Admitted capital DTAs | 14351 | 9941 | 4410 |
|  Admitted DTAs | 337683 | 399148 | (61465) |
|  **DTLs resulting in book/tax differences in:** |  |  |  |
|  Ordinary: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investments — ordinary | (98493) | (83733) | (14760) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Future policy benefits — 8 year spread |  | (6097) | 6097 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | (14208) | (19915) | 5707 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ordinary DTLs | (112701) | (109745) | (2956) |
|  Capital: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Alternative asset investments | (60106) | (58133) | (1973) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net unrealized investment gains | (1185) | (17758) | 16573 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Capital DTLs | (61291) | (75891) | 14600 |
|  DTLs | (173992) | (185636) | 11644 |
|  **Net deferred tax asset** | $**163691** | $**213512** | $**(49821)** |

---

*Page 46* *The Penn Mutual Life Insurance Company*

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*($ in Thousands)* 

The change in deferred income taxes is comprised of the following (this analysis is exclusive of nonadmitted assets), as the Change in nonadmitted assets is reported separately from the Change in net deferred income taxes within the Statements of Changes in Surplus:

---

| | | | |
|:---|:---|:---|:---|
| | **2025** | **2024** | **Change** |
|  Total deferred tax assets | $482068 | $513460 | $(31392) |
|  Total deferred tax liabilities | (173992) | (185636) | 11644 |
|  Statutory valuation allowance |  |  |  |
|  **Net deferred tax asset** | $**308076** | $**327824** | $**(19748)** |
|  Tax effect of unrealized gains/(losses) |  |  | (15602) |
|  Tax effect of postretirement liability |  |  | 1996 |
|  SSAP 3 Adjustment |  |  | 71199 |
|  **Change in net deferred income tax** |  |  | $**37845** |

---

The provision for federal income taxes incurred is different from that which would be obtained by applying the statutory federal income tax rate to income before income taxes. The significant items causing the differences as of December 31, 2025 are as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Description** | **Amount** | **Tax<br>Effect** | **Effective<br>Tax Rate** |
|  Income before taxes | $194491 | $40843 | 21.00% |
|  Separate account dividend received deduction | (17028) | (3576) | -1.84% |
|  LIHTC |  | (10306) | -5.30% |
|  Executive benefits | (27679) | (5813) | -2.99% |
|  IMR amortization | 16770 | 3522 | 1.81% |
|  Dividends received deduction | (967) | (203) | -0.10% |
|  Reinsurance | 195926 | 41145 | 21.15% |
|  Other | 65680 | 13796 | 7.10% |
|  Federal Tax Credits |  | (70615) | -36.31% |
| **Total** | $**427193** | $**8793** | **4.52%** |
|  Federal income tax expense incurred |  | $29810 | 15.33% |
|  FIT expense/(benefit) on realized capital gains/losses |  | 2317 | 1.19% |
|  FIT in IMR gains/losses |  | 14511 | 7.46% |
|  Change in net deferred income tax |  | (37845) | -19.46% |
|  **Total statutory taxes** |  | $**8793** | **4.52%** |

---

The effective tax rate is primarily driven by the following components: (1) the separate account dividends received deduction, (2) low income housing tax credits and (3) federal tax credits (4) reinsurance (5) executive benefits.

The Company utilized $118,211 of the total credits available at December 31, 2025. The Company has no LIHTC credits available as of December 31, 2025.

The Company has $254,000 in carryback capacity for 2025, 2024 and 2023 that is available for recoupment in the event of future net capital losses.

The Company has not made any deposits regarding the suspension of running interest (protective deposits) pursuant to Internal Revenue Code Section 6603.

The Company's federal income tax return is consolidated with its majority owned subsidiaries listed below. The method of tax allocation among the companies is subject to a written agreement, whereby the tax allocation is made on a benefits for loss basis. The tax share agreement allows for each direct Subsidiary of Parent that owns stock of another Subsidiary to be treated as the Intermediate Parent of the Intermediate Parent Group.

*2025 Statutory Financial Statements* *Page 47* 

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*($ in Thousands)* 

A listing of the companies included in the consolidated return is as follows:

Penn Insurance & Annuity Company

PIA Reinsurance Company of Delaware I

Vantis Life Insurance Company

Penn Insurance and Annuity Company of New York

Tax years 2022 and subsequent are subject to audit by the Internal Revenue Service.

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits, as a component of tax expense. During the years ended December 31, 2025 and 2024, the Company did not recognize or accrue penalties or interest.

The Company has no tax loss contingencies for which it is reasonably possible that the total liability will significantly increase within the next twelve months of the reporting date.

On August 16, 2022, the Inflation Reduction Act of 2022 ("Act") was passed by the US Congress and signed into law by President Biden. The Act includes a new corporate alternative minimum tax ("CAMT") for tax years beginning after December 31, 2022. The Company has determined that they are a non-applicable reporting entity in 2025.

The Company early adopted SSAP94 as of December 31, 2024. These revisions expanded the scope of SSAP No. 94R to include all state and federal tax credits and provide new guidance on the accounting recognition and reporting for the state and federal tax credits.

On July 4, 2025, the One Big Beautiful Bill Act ("2025 Act") was enacted into law for tax years beginning in 2025. There was no material impact on the Company's financial statements as a result of this new act.

***Note 11.* REINSURANCE** 

The Company has assumed and ceded reinsurance on certain life and annuity contracts under various agreements. Reinsurance ceded permits recovery of a portion of losses from reinsurers.

The table below highlights the reinsurance amounts shown in the accompanying financial statements.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Direct** | **Assumed** | **Ceded** | **Net<br>Amount** |
|  **December 31, 2025:** |  |  |  |  |
|  Premium and annuity considerations | $2747899 | $14383 | $2149100 | $613182 |
|  Reserves and funds for payment of insurance and annuity benefits | 23797461 | 2950 | 6443037 | 17357374 |
|  **December 31, 2024:** |  |  |  |  |
|  Premium and annuity considerations | $2912515 | $15239 | $2093627 | $834127 |
|  Reserves and funds for payment of insurance and annuity benefits | 22044721 | 2051 | 5204191 | 16842581 |

---

The Company entered into a coinsurance funds withheld agreement with a certified, non-affiliated reinsurer, effective June 30, 2020, and amended October 1, 2020, to coinsure an existing block of Term and Universal Life policies on a quota share basis. In addition, this agreement reinsured on a YRT basis, certain Universal Life policies on a quota share basis.

The agreement generated an after-tax gain of $238,580, that was a direct increase to surplus. This agreement was recaptured on October 1, 2024 with a resulting loss of $151,327, inclusive of emerging earnings of $238,580.

The Company entered into a coinsurance funds withheld agreement with an authorized, non-affiliated reinsurer, effective September 30, 2017, to coinsure an existing block of whole life policies on a 20% quota share basis. In addition to the whole life policies, this agreement reinsured on a YRT basis, certain Universal Life policies on an 85% quota share basis. The agreement generated an after-tax gain of $61,750, that was a direct increase to surplus. The

*Page 48* *The Penn Mutual Life Insurance Company*

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*($ in Thousands)* 

agreement was amended on April 1, 2020 and generated an additional after-tax gain of $19,750, that was a direct increase to surplus. This agreement was recaptured on October 1, 2024 with a resulting loss of $12,794, inclusive of emerging earnings of $16,632.

The Company has entered into an indemnity reinsurance agreement with a single non-affiliated reinsurer, whereby the Company cedes its risk associated with the Disability Income line of business. Under the agreement, 95% of the assets and liabilities were transferred to the reinsurer, and the assets were placed in a trust that names the Company as beneficiary. As of December 31, 2025 and 2024, the Company had a related reserve credit of $163,057 and $168,619, respectively, which was secured by investment grade securities with a market value of $279,151 and $259,390, respectively, held in trust.

The Company entered into a coinsurance funds withheld agreement with a certified, non-affiliated reinsurer, effective December 31, 2025, to coinsure an existing block of Term and Universal Life policies on a quota share basis. The agreement generated an after-tax gain of $160,376, that was a direct increase to surplus.

**INTERCOMPANY REINSURANCE** The Company maintains various reinsurance agreements with affiliates. The following table summarizes premium and reserves balances associated with such agreements as of and for the years ended December 31:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | **Assumed/(Ceded)** | **Assumed/(Ceded)** | **Assumed/(Ceded)** | **Assumed/(Ceded)** |
|  | | **2025** | **2025** | **2024** | **2024** |
| |<br>**Affiliate** | **Premium** | **Reserves** | **Premium** | **Reserves** |
|  Coinsurance modified coinsurance | PIANY | $(9022) | $(217631) | $(10878) | $(216662) |
|  YRT — Over retention | PIANY | 4976 | 1794 | 4248 | 1321 |
|  Coinsurance funds withheld | PIA | (39040) | (2417361) | (731255) | (2347132) |
|  Coinsurance — Inforce | PIA | (11927) | (643251) | (17959) | (617324) |
|  Coinsurance | PIA | (57926) | (1425272) | (56769) | (1344814) |
|  YRT — Over retention | PIA | 6436 | 864 | 5626 | 790 |
|  YRT — Over retention | Vantis | 133 | 98 | 93 | 86 |
| &nbsp;&nbsp;&nbsp;&nbsp; **Total** |  | $**(106370)** | $**(4700759)** | $**(806894)** | $**(4523735)** |

---

*Coinsurance modified coinsurance* The Company ceded to PIANY an inforce block of New York issued variable universal life and variable deferred annuity policies. The Company ceded 100% of the insurance risk, gross of inuring reinsurance. 

*YRT — Over retention* The Company assumes from PIANY the policies that result in retention greater than $300 per life, up to $10,000. 

*Coinsurance funds withheld* At December 31, 2014, the Company entered into a contract to cede reserves pursuant to transactions subject to the requirements of Section 7 of the NAIC XXX and AXXX Reinsurance Model Regulation. PIA contemporaneously reinsured the policies to PIAre I, an authorized, affiliated reinsurer. The agreement generated an after-tax gain of $173,062, that was a direct increase to surplus and is amortized into income as earnings emerge. 

Effective October 1, 2024, this agreement was amended and restated to increase the ceded reserves for this in-force block. PIA contemporaneously reinsured the increased ceded reserves to PIAre I, an authorized, affiliated reinsurer. The amended and restated agreement generated an additional after-tax gain of $165,981, that was a direct increase to surplus and is amortized into income as earnings emerge.

*Coinsurance — Inforce* Effective January 1, 2015, the Company ceded to PIA an inforce block of single life index universal life policies. The Company ceded 100% of the risk, net of inuring reinsurance. The after-tax gain of $20,814 was a direct increase to surplus and has been fully amortized into income. 

*2025 Statutory Financial Statements* *Page 49* 

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*($ in Thousands)* 

*Coinsurance* The Company cedes certain insurance risks to PIA on a coinsurance basis. 

*YRT — Over retention* The Company assumed from PIA policies issued after October 1, 2006 and before October 1, 2014 that resulted in retention greater than $1,000 per life. 

*YRT — Over retention* Effective April 12, 2021, the Company assumed from Vantis a quota share of 90% for term policies and 50% for whole life policies. If Vantis reaches its retention limit of $300 per life, the Company's share is 100% of the excess up to $10,000. 

***Note 12.* RELATED PARTIES** 

The Company holds revolving loan agreements with affiliates.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Affiliate** | **Effective Date** | **Maturity Date** | **Maximum<br>Dollar<br>Amount** | **Current Interest Rate** |
| PMAM | July 1, 2019 | July 2039 | $100000 | Market Based at time of draw |
| PMAM | August 31, 2021 | August 2041 | $100000 | Market Based at time of draw |
| PMAM | June 22, 2022 | June 2042 | $100000 | Market Based at time of draw |
| PMAM | November 4, 2024 | November 2044 | $300000 | Market Based at time of draw |
| HTK | July 31, 2023 | July 2042 | $20000 | Market Based at time of draw |
| 1847SV | May 15, 2024 | April 2029 | $100000 | Market Based at time of draw |

---

The Company recorded $30,825 and $67,529 in interest income on these notes for the years ended December 31, 2025 and 2024, respectively. At December 31, 2025 and 2024, the Company had outstanding principal receivables of $65,039 and $279,015 and interest receivables of $5,794 and $6,788, respectively, relating to these agreements.

1847IC currently provides Fidelity Bond, Cyber and Medical Stop Loss insurance coverages to the Company and its affiliates.

1847SV was established in 2024 to make select capital investments.

1847FIN was established in 2024 as a distribution entity within the Company's enterprise.

The Company entered into Selling and Sales Support Agreements with 1847FIN, a wholly-owned subsidiary of the Company, in 2025 for the distribution of annuity and life insurance contracts. During 2025, the Company recorded $131,611 in expense associated with this agreement. At December 31, 2025 the Company reported $4,606 as amount due to 1847FIN.

The Company's investment in PMAM's Private Funds/PMUBX at December 31, 2025 and 2024 of $0 and $127,125, respectively, represents a significant influence, and are considered affiliates.

The Company's unconsolidated subsidiaries had combined assets of $18,242,580 and $15,911,253 and combined liabilities of $16,696,173 and $14,694,155 as of December 31, 2025 and 2024, respectively. There was no goodwill or intangible assets in the admitted value of the Company's subsidiaries at December 31, 2025 and 2024, respectively.

The Company's unconsolidated subsidiaries had combined net income of $107,060 and $48,573 for the years ended December 31, 2025 and 2024, respectively.

The Company's non-insurance subsidiaries had combined balance sheet values (gross, admitted and non-admitted) of $193,324, $193,346 and $22, respectively at December 31, 2025 and $125,937, $125,919 and $18, respectively at December 31, 2024.

*Page 50* *The Penn Mutual Life Insurance Company*

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*($ in Thousands)* 

The Company made the following capital contributions and returns of capital for 2025 and 2024, respectively:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31** | **2025** | **2025** | **2024** | **2024** |
|  | **Capital<br>Contributions** | **Return of<br>Capital** | **Capital<br>Contributions** | **Return of<br>Capital** |
|  PIA | $150000 | $— | $70000 |  |
|  myWorth | 25 |  |  |  |
|  1847Fin | 331772 | 308700 | 10 |  |
|  1847SV |  |  | 10 |  |

---

With the exception of the Company's contribution of its investment in HTK to 1847FIN of $21,772, all capital contributions and returns of capital were in the form of cash.

Under a variety of intercompany agreements, the Company provides its subsidiaries with administrative services, leases, and accounting services. For 2025 and 2024, the total expenses incurred by subsidiaries under these agreements were $117,284 and $98,149, respectively. The net amount due to the Company was $80,282 and $21,776 at December 31, 2025 and December 31, 2024, respectively. Under the terms of an investment management agreement, the Company incurred expenses from PMAM of $26,002 and $21,786 for 2025 and 2024, respectively.

***Note 13.* COMMITMENTS, CONTINGENCIES AND UNCERTAINTIES** 

**LITIGATION** The Company and its subsidiaries are involved in litigation arising in and out of the normal course of business, which seek both compensatory and punitive damages. In addition, the regulators within the insurance and brokerage industries continue to focus on market conduct and compliance issues. While the Company is not aware of any actions or allegations that should reasonably give rise to a material adverse impact to the Company's financial position or liquidity, the outcome of litigation cannot be foreseen with certainty.

For some matters, the Company is able to estimate a possible range of loss. For such matters in which a loss is probable, an accrual has been made. For matters where the Company, however, believes a loss is reasonably possible, but not probable, no accrual is required. For matters for which an accrual has been made, but there remains a reasonably possible range of loss in excess of the amounts accrued or for matters where no accrual is required, the Company develops an estimate of the unaccrued amounts of the reasonably possible range of losses.

**GUARANTY FUNDS** The Company is subject to insurance guaranty fund laws in the states in which it does business. These laws assess insurance companies amounts to be used to pay benefits to policyholders and policy claimants of insolvent insurance companies. Many states allow these assessments to be credited against future premium taxes. The liability for estimated guaranty fund assessments net of applicable premium tax credits as December 31, 2025 and 2024 was $175, respectively. The Company monitors sales materials and compliance procedures and makes extensive efforts to minimize any potential liabilities in this area. The Company believes such assessments in excess of amounts accrued will not materially impact its financial statement position, results of operation or liquidity.

**LEASES** The Company has entered into leases, primarily for field offices.

As of December 31, 2025 future minimum payments under noncancellable leases are as follows:

---

| | |
|:---|:---|
| **For the year ending:** | **For the year ending:** |
| 2026 | $761 |
| 2027 | 379 |
| 2028 | 233 |
| 2029 | 119 |
| Thereafter |  |

---

Rent expense was $531 and $6,884 during the years ended December 31, 2025 and 2024, respectively.

*2025 Statutory Financial Statements* *Page 51* 

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*($ in Thousands)* 

**COMMITMENTS** In the normal course of business, the Company extends commitments relating to its investment activities. As of December 31, 2025 and 2024 the Company had outstanding commitments totaling $821,782 and $588,775, respectively, relating to these investment activities. The fair value of these commitments approximates their face amount.

***Note 14***. **SUBSEQUENT EVENTS** 

The Company has evaluated events subsequent to December 31, 2025 and through the financial statement issuance date of February 18, 2026 and has determined that there were no other significant events requiring recognition in the financial statements and no additional events requiring disclosure in the financial statements.

*Page 52* *The Penn Mutual Life Insurance Company*

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| | |
|:---|:---|
| ![LOGO](g46902g67z36.jpg) | **About The Penn Mutual Life Insurance Company**<br>For more than 175 years, Penn Mutual has been a trusted partner to financial professionals across the U.S., placing protection solutions at the center of building stronger financial futures for individuals, families, and businesses. Penn Mutual and its affiliates offer a comprehensive suite of competitive products and services to meet the unique needs of financial professionals and their clients, including life insurance, annuities, wealth management, and institutional asset management. To learn more, including current financial strength ratings, visit pennmutual.com.<br>![LOGO](g46902g58p58.jpg)  |

---

<sup>©</sup> 2026 The Penn Mutual Life Insurance Company, Philadelphia, PA 19172 \| pennmutual.com

PM9143 01/26

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![LOGO](g934200g68g22.jpg)

## The Penn Mutual Life Insurance Company
![LOGO](g934200g25s52.jpg) 2023 Statutory Financial Statements

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![LOGO](g934200g74r95.jpg)

**Report of Independent Auditors** 

To the Board of Trustees of

The Penn Mutual Life Insurance Company

***Opinions***

We have audited the accompanying statutory financial statements of The Penn Mutual Life Insurance Company (the "Company"), which comprise the statements of admitted assets, liabilities and surplus as of December 31, 2023 and 2022, and the related statements of income, changes in surplus and cash flows for the years then ended, including the related notes (collectively referred to as the "financial statements").

***Unmodified Opinion on Statutory Basis of Accounting***

In our opinion, the accompanying financial statements present fairly, in all material respects, the admitted assets, liabilities and surplus of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in accordance with the accounting practices prescribed or permitted by the Pennsylvania Insurance Department described in Note 1.

***Adverse Opinion on U.S. Generally Accepted Accounting Principles***

In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles section of our report, the accompanying financial statements do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Company as of December 31, 2023 and 2022, or the results of its operations or its cash flows for the years then ended.

***Basis for Opinions***

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

***Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles***

As described in Note 1 to the financial statements, the financial statements are prepared by the Company on the basis of the accounting practices prescribed or permitted by the Pennsylvania Insurance Department, which is a basis of accounting other than accounting principles generally accepted in the United States of America.

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The effects on the financial statements of the variances between the statutory basis of accounting described in Note 1 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material.

***Responsibilities of Management for the Financial Statements***

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the accounting practices prescribed or permitted by the Pennsylvania Insurance Department. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date the financial statements are available to be issued.

***Auditors' Responsibilities for the Audit of the Financial Statements***

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with US GAAS, we:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Exercise professional judgment and maintain professional skepticism throughout the audit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and
design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluate the overall presentation of the financial statements.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial
doubt about the Company's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

![LOGO](g934200g26a26.jpg)

Philadelphia, Pennsylvania

February 16, 2024

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***Table of Contents***

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| | |
|:---|:---|
|  | ***Page*** |
|  [Statements of Admitted Assets, Liabilities and Surplus](#toc934200_1) | 1 |
|  [Statements of Income](#toc934200_2) | 2 |
|  [Statements of Changes in Surplus](#toc934200_3) | 3 |
|  [Statements of Cash Flows](#toc934200_4) | 4 |
|  ***[Notes to Financial Statements](#toc934200_5)*** |  |
|  [Note 1. Nature of Operations and Basis of Presentation](#toc934200_6) | 6 |
|  [Note 2. Summary of Significant Accounting Policies](#toc934200_7) | 7 |
|  [Note 3. Investments](#toc934200_8) | 15 |
|  [Note 4. Separate Accounts](#toc934200_9) | 23 |
|  [Note 5. Derivatives](#toc934200_10) | 24 |
|  [Note 6. Fair Value of Financial Instruments and Off-Balance Sheet Risk](#toc934200_11) | 27 |
|  [Note 7. Life Reserves by Withdrawal Characteristics](#toc934200_12) | 33 |
|  [Note 8. Reserve for Payment of Annuity Benefits](#toc934200_13) | 34 |
|  [Note 9. Benefit Plans](#toc934200_14) | 37 |
|  [Note 10. Federal Income Taxes](#toc934200_15) | 43 |
|  [Note 11. Reinsurance](#toc934200_16) | 48 |
|  [Note 12. Related Parties](#toc934200_17) | 50 |
|  [Note 13. Commitments, Contingencies and Uncertainties](#toc934200_18) | 51 |
|  [Note 14. Subsequent Events](#toc934200_19) | 51 |

---

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*($ In Thousands)* 

Statements of Admitted Assets, Liabilities and Surplus

---

| | | |
|:---|:---|:---|
| **As of December 31,** | **2023** | **2022** |
|  **ADMITTED ASSETS** |  |  |
|  Bonds | $14731578 | $13672878 |
|  Stocks: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Preferred | 47867 | 51966 |
| &nbsp;&nbsp;&nbsp;&nbsp; Common — affiliated | 1004684 | 869747 |
| &nbsp;&nbsp;&nbsp;&nbsp; Common — unaffiliated | 70420 | 42557 |
|  Real estate | 28249 | 29654 |
|  Policy loans | 859986 | 553785 |
|  Cash and short-term investments | 464241 | 376029 |
|  Alternative assets | 1105180 | 1188539 |
|  Derivatives | 1271132 | 1172035 |
|  Other invested assets | 1231889 | 1024353 |
|  TOTAL INVESTMENTS | 20815226 | 18981543 |
|  Investment income due and accrued | 198372 | 155217 |
|  Premiums due and deferred | 160145 | 151969 |
|  Deferred tax asset | 203156 | 255575 |
|  Corporate owned life insurance | 244248 | 228074 |
|  Amounts recoverable from reinsurers | 51551 | 43359 |
|  Other assets | 253197 | 66746 |
|  Separate account assets | 8803569 | 8091620 |
|  **TOTAL ASSETS** | $**30729464** | $**27974103** |
|  **LIABILITIES** |  |  |
|  Reserves and funds for payment of insurance and annuity benefits | $14138339 | $12932817 |
|  Dividends to policyholders payable in the following year | 202919 | 165192 |
|  Policy claims in process | 116712 | 75682 |
|  Interest maintenance reserve | 11987 | 8726 |
|  Asset valuation reserve | 345042 | 339347 |
|  Drafts outstanding | 45991 | 41043 |
|  Funds held under coinsurance | 1894475 | 1769348 |
|  Other liabilities | 688887 | 582032 |
|  Derivatives | 1617001 | 1318483 |
|  Separate account liabilities | 8803569 | 8091620 |
|  TOTAL LIABILITIES | **27864922** | **25324290** |
|  **CAPITAL AND SURPLUS** |  |  |
|  Surplus notes | 891456 | 891130 |
|  Unassigned surplus | 1973086 | 1758683 |
|  TOTAL CAPITAL AND SURPLUS | **2864542** | **2649813** |
|  **TOTAL LIABILITIES AND CAPITAL AND SURPLUS** | $**30729464** | $**27974103** |

---

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

*2023 Statutory Financial Statements* *Page 1* 

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Statements of Income

---

| | | |
|:---|:---|:---|
| **For the Years Ended December 31,** | **2023** | **2022** |
|  **REVENUE** |  |  |
|  Premium and annuity considerations | $1568675 | $858958 |
|  Net investment income | 869516 | 820300 |
|  Reserve adjustments on reinsurance ceded | 502200 | 1119763 |
|  Other revenue | 473063 | 446534 |
|  TOTAL REVENUE | 3413454 | 3245555 |
|  **BENEFITS AND EXPENSES** |  |  |
|  Benefits paid to policyholders and beneficiaries | 1430834 | 1191034 |
|  Increase in reserves for payment of future insurance and annuity benefits | 1433743 | 1494697 |
|  Commissions | 227468 | 224991 |
|  Operating expenses | 344391 | 315381 |
|  Other expenses | 88463 | 73149 |
|  Net transfer from separate accounts | (442261) | (218319) |
|  TOTAL BENEFITS AND EXPENSES | 3082638 | 3080933 |
|  GAIN FROM OPERATIONS BEFORE DIVIDENDS AND FEDERAL INCOME TAX BENEFIT | 330816 | 164622 |
|  Dividends to policyholders | 207053 | 172848 |
|  GAIN/(LOSS) FROM OPERATIONS BEFORE FEDERAL INCOME TAX BENEFIT | 123763 | (8226) |
|  Federal income tax benefit | (30413) | (3579) |
|  GAIN/(LOSS) FROM OPERATIONS | 154176 | (4647) |
|  Net realized capital gains, net of tax | 8978 | 79808 |
|  **NET INCOME** | $**163154** | $**75161** |

---

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

*Page 2* *The Penn Mutual Life Insurance Company*

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Statements of Changes in Surplus

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| | | |
|:---|:---|:---|
| **For the Years Ended December 31,** | **2023** | **2022** |
|  **SURPLUS** |  |  |
|  Opening surplus adjustment | $— | $(1357) |
|  Surplus, beginning of year | 2649813 | 2570242 |
|  Net income | 163154 | 75161 |
|  Change in: |  |  |
|  Reinsurance | (19447) | (29101) |
|  Asset valuation reserve | (5695) | 163826 |
|  Net unrealized capital losses, net of tax | (29822) | (139650) |
|  Net deferred income tax | (74132) | 10631 |
|  Funded status of postretirement plans, net of tax | 1480 | 3381 |
|  Surplus notes | 326 | 303 |
|  Valuation basis | 216831 |  |
|  Nonadmitted assets | (37966) | (4980) |
|  **Surplus, end of year** | $**2864542** | $**2649813** |

---

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

*2023 Statutory Financial Statements* *Page 3* 

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Statements of Cash Flows

---

| | | |
|:---|:---|:---|
| **For the Years Ended December 31,** | **2023** | **2022** |
|  **OPERATIONS** |  |  |
|  Premium and annuity considerations | $2427959 | $2246744 |
|  Net investment income | 932334 | 882090 |
|  Other revenue | 267668 | 247308 |
|  CASH PROVIDED BY OPERATIONS | 3627961 | 3376142 |
|  Benefits paid | 1684407 | 1413880 |
|  Commissions and operating expenses | 620960 | 607042 |
|  Net transfers from separate accounts | (439498) | (216850) |
|  Dividends to policyholders | 15115 | 14912 |
|  Taxes refunded on operating income and realized investment losses | (28339) | (138888) |
|  CASH USED IN OPERATIONS | 1852645 | 1680096 |
|  **NET CASH PROVIDED BY OPERATIONS** | **1775316** | **1696046** |
|  **INVESTMENT ACTIVITIES** |  |  |
|  Investments sold, matured or repaid: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bonds | 1532520 | 1460296 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Preferred and common stocks | 36957 | 67724 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Alternative assets, real estate and other invested assets | 15849 | 300229 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivatives | 15363 | 139322 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Miscellaneous proceeds | 3937 | (16943) |
|  NET PROCEEDS FROM INVESTMENTS SOLD, MATURED OR REPAID | 1604626 | 1950628 |
|  Cost of investments acquired: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bonds | 2695461 | 3145343 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Preferred and common stock | 82384 | 149456 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Alternative assets, real estate and other invested assets | 152759 | 410701 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivatives | 35545 | 16942 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Miscellaneous applications | (34893) | (13914) |
|  TOTAL COST OF INVESTMENTS ACQUIRED | 2931256 | 3708528 |
|  Net increase in policy loans | (282531) | (76420) |
|  **NET CASH USED IN INVESTMENT ACTIVITIES** | **(1609161)** | **(1834320)** |
|  **FINANCING AND MISCELLANEOUS** |  |  |
|  Net (withdrawals)/deposits on deposit-type contracts | (24694) | 119502 |
|  Other cash applied, net | (53249) | (8952) |
|  **NET CASH (USED IN)/PROVIDED BY FINANCING AND MISCELLANEOUS** | **(77943)** | **110550** |
|  **NET CHANGE IN CASH AND SHORT-TERM INVESTMENTS** | **88212** | **(27724)** |
|  Cash and short-term investments: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Beginning of year | 376029 | 403753 |
| &nbsp;&nbsp;&nbsp;&nbsp; **End of year** | $**464241** | $**376029** |

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***…continued -***

*Page 4* *The Penn Mutual Life Insurance Company*

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Statements of Cash Flows (cont')

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| | | |
|:---|:---|:---|
| **For the Years Ended December 31,** | **2023** | **2022** |
|  Supplemental Disclosure of Cash Flow Information for Non-Cash Transactions: |  |  |
|  Non-cash acquisitions | $(4817) | $8588 |
|  Premiums paid from benefits, dividends, policy loans and waivers | $206092 | $163789 |
|  Common stock acquired as a return of capital/dividend | $8697 | $8697 |
|  Non-cash disposals | $23196 | $55995 |
|  Reinsurance emerging earnings | $19447 | $29100 |

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

*2023 Statutory Financial Statements* *Page 5* 

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Notes to Financial Statements

***Note 1.*NATURE OF OPERATIONS AND BASIS OF PRESENTATION** 

**NATURE OF OPERATIONS** The Penn Mutual Life Insurance Company (the "Company" or "PML") is a mutual life insurance company domiciled in Pennsylvania, that concentrates primarily on the sale of individual life insurance and annuity products. The primary products that the Company currently markets are traditional whole life, one year non-renewable and level term, variable universal life, immediate annuities and deferred annuities, both fixed and variable. The Company markets its products through a network of career and independent financial professionals. The Company is licensed to write business in forty-nine states and the District of Columbia.

**BASIS OF PRESENTATION** The accompanying financial statements of the Company have been prepared in conformity with the National Association of Insurance Commissioner's ("NAIC") Practices and Procedures manual and with statutory accounting practices prescribed or permitted by the Pennsylvania Insurance Department (collectively "SAP" or "statutory accounting principles"). Prescribed statutory accounting practices include publications of the NAIC, state laws, regulations, and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed. The Company currently has no permitted practices.

Statutory accounting principles are different in some respects from U.S. Generally Accepted Accounting Principles ("GAAP"). The more significant differences between statutory accounting principles and GAAP are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) certain acquisition costs, such as commissions and other variable costs, that are directly related to the successful
acquisition of new business, are charged to current operations as incurred, whereas GAAP would generally capitalize these expenses and amortize them based on profit emergence over the expected life of the policies or over premium payment period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) statutory policy reserves are based upon the Commissioners' Reserve Valuation Method ("CRVM") or net
level premium method and prescribed statutory mortality, morbidity and interest assumptions, whereas GAAP reserves would generally be based upon the net level premium method or the estimated gross margin method, with estimates of future mortality,
morbidity, and interest assumptions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) bonds are generally carried at amortized cost, whereas GAAP would generally report bonds at fair value;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) undistributed earnings from alternative assets are included in unrealized gains and losses, whereas GAAP would treat
these changes as net investment income;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) deferred income taxes, which provide for book versus tax temporary differences, are subject to limitation and are charged
to surplus, whereas GAAP would generally include the change in deferred taxes in net income;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) payments received for universal and variable life insurance products and variable annuities are reported as premium
income and changes in reserves, whereas GAAP would treat these payments as deposits to policyholders' account balances;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) assets are reported at "admitted asset" value, and "nonadmitted assets" are excluded through a
charge against surplus, whereas GAAP would record these assets net of any valuation allowance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) majority-owned subsidiaries are accounted for using the equity method. The Penn Insurance and Annuity Company
("PIA"), Vantis Life Insurance Company ("Vantis"), The Penn Insurance and Annuity Company of New York ("PIANY"), Janney Montgomery Scott ("JMS"), LLC, Hornor Townsend & Kent, LLC
("HTK"), Penn Mutual Asset Management, LLC ("PMAM"), and 1847 Insurance Captive, LLC ("1847") are admitted assets. Under GAAP, these majority-owned subsidiaries would be consolidated;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the Company's investment in Penn Mutual Asset Management Multi-Series Funds Series A and B and the Penn Mutual AM
Strategic Income Fund (collectively "PMAM's Private Funds/PMUBX") is accounted for using the equity method. Under GAAP, the Company's investment would be treated as a variable interest entity and consolidated, with
noncontrolling interest portions separately reported.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) surplus notes are reported in surplus, whereas GAAP would report these notes as debt. Costs associated with the issuance
of these notes are expensed, whereas GAAP would capitalize these expenses and amortize them into income over the life of the notes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) reinsurance reserve credits are reported as a reduction of policyholders' reserves and liabilities for deposit-type
contracts, whereas GAAP would report these balances as an asset;

*Page 6* *The Penn Mutual Life Insurance Company*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) an asset valuation reserve ("AVR") is reported as a contingency reserve to stabilize surplus against
fluctuations in the carrying value of stocks, real estate investments, partnerships, limited liability companies ("LLCs"), low income housing tax credit ("LIHTC") investments, and certain credit related derivative instruments
as well as credit-related declines in the value of bonds, whereas GAAP would not record this reserve;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) changes in the fair value of unaffiliated common stock are recorded as changes in surplus, whereas GAAP recognizes the
changes through realized capital gains/(losses);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) changes in fair value of perpetual preferred stock are recorded as changes in surplus, whereas GAAP recognizes the
changes through realized capital gains/(losses);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) after-tax realized capital gains and losses that result from changes in the
overall level of interest rates for all types of fixed-income investments and interest-related hedging activities are deferred into the interest maintenance reserve ("IMR") and amortized into investment income over the remaining life of
the investment sold, whereas GAAP would report these gains and losses as revenue at time of sale;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) changes in the fair value of the derivative financial instruments are recorded as changes in surplus, unless deemed an
effective hedge when it is carried at amortized cost with no resulting changes in fair value. Changes in fair value for GAAP would be reported as income for ineffective cash flow hedges and effective fair value hedges; changes in fair value for GAAP
would be reported as other comprehensive income for effective cash flow hedges;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) comprehensive income is not presented, whereas GAAP would present changes in unrealized capital gains and losses, changes
in funded status of pension and postretirement plans, and foreign currency translations as other comprehensive income;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) embedded derivatives are recorded as part of the underlying contract, whereas GAAP would identify and bifurcate certain
embedded derivatives from the underlying contract or security and account for them separately;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) policyholder dividends are recognized when declared, whereas GAAP would recognize these over the term of the related
policies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) investments in Federal Home Loan Bank stock are reported as an investment in common stock, unaffiliated, whereas GAAP
would report these within other invested assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) Changes in the cash surrender value of the policies are recorded as an adjustment to the premiums paid for the insurance
coverage, which is recognized as part of the interest credited to policyholders within Benefits paid to policyholders and beneficiaries.

**RECLASSIFICATIONS** Certain prior year amounts have been reclassified to conform to current year presentation. These reclassifications had no impact on capital and surplus or net income in the prior year.

***Note2.*SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** 

**USE OF ESTIMATES** The preparation of financial statements requires management to make estimates and assumptions that impact the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Those estimates are inherently subject to change and actual results could differ from those estimates. Included among the material reported amounts and disclosures that require extensive use of estimates are:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◇ Carrying value of certain invested assets and derivatives

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◇ Liabilities for reserves and funds for payment of insurance and annuity benefits

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◇ Accounting for income taxes and valuation of deferred income tax assets and liabilities and unrecognized tax benefits

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◇ Litigation and other contingencies

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◇ Pension and other postretirement and postemployment benefits

**INVESTMENTS** *Bonds* with an NAIC designation of 1 to 5 are valued at amortized cost. All other bonds are valued at the lower of cost or fair value. Fair value is determined using an external pricing service or management's pricing models.

For fixed income securities that do not have a fixed schedule of payments and where market valuations are not readily available, the effect on amortization or accretion is revalued periodically based on the current estimated

*2023 Statutory Financial Statements* *Page 7* 

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cash flows. Prepayment assumptions are based on borrower constraints and economic incentives such as original term, age, and coupon of the loan as affected by the interest rate environment. Cash flow assumptions for structured securities are obtained from broker dealer survey values or internal estimates. These assumptions are consistent with the current interest rate and economic environment.

*Preferred Stock* Highest-quality, high-quality or medium quality redeemable preferred stock (NAIC designations 1 to 3) shall be valued at amortized cost. All other redeemable preferred stocks (NAIC designations 4 to 6) shall be reported at the lower of amortized cost or fair value. Perpetual preferred stock shall be valued at fair value, not to exceed any currently effective call price. Fair value is determined using an external pricing service or management's pricing model.

*Common Stock* of the Company's insurance affiliates are carried at their underlying audited statutory surplus on the Statement of Admitted Assets, Liabilities, and Surplus.

Unaffiliated common stock is carried at fair value. The investment in capital stock of the Federal Home Loan Bank of Pittsburgh ("FHLB-PGH") is carried at par, which approximates fair value. See the "Federal Home Loan Bank Borrowings" caption within this footnote for additional information on FHLB-PGH.

Dividends are recognized in net investment income on the ex-dividend date. Other changes in the carrying value of affiliates are recognized as changes in unrealized gains or losses in surplus.

*Real Estate* Real Estate occupied by the Company is carried at depreciated cost. Depreciated cost is adjusted for impairments whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable, with the impairment being included in realized capital losses. Depreciation is calculated using the straight-line method over the estimated useful life of the real estate holding, not to exceed 40 years. Depreciation expense is included in net investment income.

*Policy Loans* Policy Loans are carried at the aggregate balance of unpaid principal and interest.

*Cash, Cash Equivalents and Short-term investments* Cash Equivalents include investments purchased with maturities of three months or less and money market mutual funds. Short-term investments, which are carried at amortized cost and approximate fair value, consist of investments purchased with maturities greater than three months and less than or equal to 12 months.

*Alternative Assets* Alternative Assets consists primarily of limited partnerships. The Company accounts for the value of its investments at their underlying GAAP equity. Dividends and income distributions from limited partnerships are recorded as investment income. Undistributed earnings are included in the unrealized gains and losses balance and are reflected in surplus, net of deferred taxes. Distributions that are recorded as a return of capital reduce the carrying value of the limited partnership investment. Due to the timing of the valuation data received from the partnership, these investments are reported in accordance with the most recent valuations received, which are primarily on a one quarter lag.

*Derivatives* The Company may utilize derivative financial instruments in the normal course of business to manage risk, in conjunction with its management of assets and liabilities and interest rate risk. The accounting treatment of specific derivatives depends on whether the financial instrument is designated and qualifies as a highly effective hedge. Derivatives used in hedging transactions that meet the criteria of a highly effective hedge are reported and valued in a manner that is consistent with the instrument being hedged. The change in fair value of these derivatives is recognized as an unrealized capital gain/(loss) until they are closed, at which time they are recorded in realized capital gains/(losses). Derivatives used in risk management transactions that do not meet the criteria of an effective hedge are accounted for at fair value, with changes in fair value recorded in unrealized capital gains/(losses). Derivatives with a positive fair value or carrying value are reported as admitted assets. Derivatives with a negative fair value or carrying value are reported in Other liabilities. Realized gains and losses that are recognized upon termination or maturity of the derivatives used in economic hedges of interest rate and currency risk of the fixed income portfolio, regardless of accounting treatment, are transferred, net of taxes, to the IMR. All other realized gains and losses are recognized in net income upon maturity or termination of the derivative contracts.

*Page 8* *The Penn Mutual Life Insurance Company*

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During 2023, the Company purchased certain interest rate swaps that qualify for hedge accounting. These swaps are used to hedge the impact of changing interest rates on the value of specific municipal bonds.

The Company may enter into interest rate swaps, total return swaps, inflation swaps, financial futures and equity options to hedge risks associated with the offering of equity market-based guarantees in the Company's annuity and indexed universal life insurance product portfolio that do not meet the criteria of an effective hedge.

The Company may enter into interest rate caps, credit default swaps, and interest rate swaps, that are carried at fair value. The Company may use interest rate caps and payer swaps, a type of interest rate swap, to manage risk associated with rising interest rates. Credit default swaps protect the Company from a decline in credit quality of a specified security. Receiver swaps, a type of interest rate swap, protect the Company from credit risk in the fixed income portfolio. These do not meet the criteria of an effective hedge.

Investment income is recorded on an accrual basis. Amounts payable or receivable under total return, currency, credit default, interest rate and inflation swap agreements are recognized as investment income or expense when incurred. The Company does not engage in derivative financial instrument transactions for speculative purposes.

*Other Invested Assets* The Company invests in LIHTC investments, which generate tax credits for investing in affordable housing projects. Investments in LIHTC are included in other invested assets and are accounted for under the proportional amortized cost method. The delayed equity contributions for these investments are unconditional and legally binding and therefore, have been recognized as a liability.

Other invested assets also include notes receivable carried at book value from PMAM, JMS, HTK, ISP, PMAM, 1847, PMAM's Private Funds/PMUBX and receivables for unsettled investment transactions. In 2022 changes in Private Funds/ PMUBX resulted in an opening surplus adjustment.

**OTTI EVALUATION** *Bonds, mortgage-backed and asset-backed securities* The Company considers an impairment to be other-than-temporary if: (a) the Company's intent is to sell, (b) the Company will more likely than not be required to sell, (c) the Company does not have the intent and ability to hold the security for a period of time sufficient to recover the amortized cost basis, or (d) the Company does not expect to recover the entire amortized cost basis. The Company conducts a periodic management review of all bonds including those in default, not-in-good standing, or otherwise designated by management. The Company also considers other qualitative and quantitative factors in determining the existence of OTTI including, but not limited to, unrealized loss trend analysis and significant short-term changes in value, default rates, delinquency rates, percentage of nonperforming loans, prepayments, and severities. If the impairment is other-than-temporary, the non-interest loss portion of the impairment is recorded through realized losses, and the interest related portion of the loss is disclosed in the notes to the financial statements.

The non-interest portion is determined based on the Company's "best estimate" of future cash flows discounted to a present value using the appropriate yield. The difference between the present value of the best estimate of cash flows and the amortized cost is the non-interest loss. The remaining difference between the amortized cost and the fair value is the interest loss.

*Equity Securities* OTTI — The Company will impair any lot of equity securities in an unrealized loss position for more than 12 consecutive months by more than 10%. Any such impairments are accounted for as a realized loss.

*Alternative Assets* OTTI — The Company's evaluation for OTTI takes into consideration the remaining life of a partnership and the performance of the underlying assets when evaluating the facts and circumstances surrounding the recovery of the cost for a partnership. Any such impairments are accounted for as a realized loss.

*LIHTC* OTTI — For LIHTC investments, OTTI is determined by comparing the book value of the investment with the present value of future tax benefits. The investment is written down if the book value is higher than the present value, and the impairment is accounted for as a realized loss.

**INVESTMENT INCOME DUE AND ACCRUED** Investment income due and accrued consists primarily of interest and dividends. Interest is recognized on an accrual basis and dividends are recorded as earned on the ex-dividend date.

*2023 Statutory Financial Statements* *Page 9* 

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Due and accrued income is not recorded on: (a) bonds in default; (b) bonds delinquent more than 90 days or where collection of interest is improbable; and (c) policy loan interest due and accrued in excess of the cash surrender value of the underlying contract.

**PREMIUMS DUE AND DEFERRED** Deferred premium is the portion of premium not earned at the reporting date, net of loading. Loading is an amount obtained by subtracting the net premium from the gross premium and generally includes allowances for acquisition costs and other expenses. Deferred premium adjusts for the overstatement created in the calculation of reserves as the reserve computation assumes the entire year's net premium is collected annually at the beginning of the policy year and does not take into account installment or modal payments.

Uncollected premium is gross premium that is due and unpaid as of the reporting date, net of loading and nonadmitted receivables that are greater than 90 days in age. Net premium is the amount used in the calculation of reserves. The change in loading is included as an expense and is not shown as a reduction to premium income. The deferred and uncollected amounts and loading were as follows at December 31:

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | | **2023** | | | | **2022** | | |
|  | **New** | **Renewal** | **Group** | **Total** | **New** | **Renewal** | **Group** | **Total** |
|  Uncollected premium | $1726 | $46757 | NA |  | $168 | $40671 | NA |  |
|  Uncollected loading | (1681) | (13722) | NA |  | (165) | (11304) | NA |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net uncollected | $45 | $33035 | $59 | $33139 | $3 | $29367 | $108 | $29478 |
|  Deferred premium | $20961 | $146579 | NA |  | $17080 | $133281 | NA |  |
|  Deferred loading | (20068) | (15962) | NA |  | (16310) | (8156) | NA |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net deferred | $893 | $130617 | $2 | $131512 | $770 | $125125 | $3 | $125898 |
|  Subtotal — gross deferred and uncollected | Subtotal — gross deferred and uncollected | Subtotal — gross deferred and uncollected | Subtotal — gross deferred and uncollected | 164651 |  |  |  | 155376 |
|  Nonadmitted | Nonadmitted | Nonadmitted | Nonadmitted | (4506) |  |  |  | (3407) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premiums due and deferred , net | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premiums due and deferred , net | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premiums due and deferred , net | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premiums due and deferred , net | $160145 |  |  |  | $151969 |

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**FEDERAL INCOME TAX** The Company files a consolidated federal income tax return with its insurance and non-insurance subsidiaries. Each subsidiary's tax liability or refund is accrued on a separate company basis. The Company reimburses subsidiaries for losses utilized in the consolidated return based on inter-company tax allocation agreements. The provision for federal income taxes is computed in accordance with the section of the Internal Revenue Code applicable to life insurance companies and is based on income that is currently taxable.

Uncertain tax positions ("UTPs") are established when the merits of a tax position are evaluated against certain measurement and recognition tests. UTP changes are reflected as a component of income taxes. The Company currently has no UTPs.

Deferred income tax assets and liabilities are established to reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes. These deferred tax assets or liabilities are measured by using the enacted tax rates expected to apply to taxable income in the period in which the deferred tax liabilities or assets are expected to be settled or realized. Changes in the deferred tax balances are reported as adjustments to surplus. Deferred tax assets in excess of the statutory limits are treated as nonadmitted assets and charged to surplus.

**CORPORATE OWNED LIFE INSURANCE** The Company purchases life insurance policies on certain officers and employees on which the Company is designated as the beneficiary. The Company recognizes the cash surrender value of the policies as an asset on the Statement of Admitted Assets, Liabilities and Surplus. Changes in the cash surrender value of the policies are recorded as an adjustment to the premiums paid for the insurance coverage, which is recognized as part of interest credited to policyholders within Benefits paid to policyholders and beneficiaries on the Statements of Income and Changes in Surplus.

*Page 10* *The Penn Mutual Life Insurance Company*

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Included in the total corporate owned life insurance owned by the Company are a block of policies issued by PIA. As of December 31, 2023 and 2022, the cash surrender values of those policies held by the Company were $21,625 and $21,436, respectively.

The cash surrender values for investments in the corporate owned life insurance are as follow at December 31:

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| | | |
|:---|:---|:---|
| | **2023** | **2022** |
|  Equity funds | $122182 | $156539 |
|  Bond funds | 1870 | 3171 |
|  Money market funds | 96601 | 43561 |
|  Other | 23595 | 24803 |
|  **Total** | $**244248** | $**228074** |

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**REINSURANCE** In the normal course of business, the Company seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding reinsurance to other insurance enterprises or reinsurers under excess coverage and coinsurance contracts. The Company has set its retention limit for acceptance of risk on life insurance policies at various levels up to $7,500 for single life and $10,000 for joint lives.

In addition to excess coverage and coinsurance contracts, the Company also utilizes other forms of reinsurance such as coinsurance funds withheld and coinsurance/modified coinsurance.

Reinsurance does not relieve the Company of its primary liability and, as such, failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the risk transfer of its reinsurance contracts and the financial strength of potential reinsurers. The Company regularly monitors the financial condition and ratings of its existing reinsurers to ensure that amounts due from reinsurers are collectible.

Insurance liabilities are reported net of the effects of reinsurance. Estimated reinsurance recoverables are recognized in a manner consistent with the liabilities related to the underlying reinsured contracts.

**OTHER ASSETS** Computer equipment and packaged software is reported at a cost of $82,556 and $82,353, less accumulated depreciation of $79,065 and $76,858 at December 31, 2023 and 2022, respectively. Computer equipment and packaged software is depreciated using the straight-line method over the lesser of its useful life or three years. Depreciation expense on computer equipment and packaged software charged to operations in 2023 and 2022 was $3,065 and $4,154, respectively. Furniture is depreciated on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are depreciated over the remaining life of the lease. Building and property improvements are depreciated in accordance with the expected useful life.

Other assets also includes receivables related to federal income taxes, centrally cleared derivative transactions, receivables for collateral remitted to counterparties, and amounts due from affiliates under the terms of service agreements.

**SEPARATE ACCOUNT ASSETS AND LIABILITIES** The Company has separate account assets and liabilities representing segregated funds administered and invested by the Company primarily for the benefit of variable life insurance policyholders and annuity and pension contractholders, including the Company's benefit plans. The assets of each account are legally segregated and are generally not subject to claims that arise out of any other business of the Company. The Separate accounts have varying investment objectives.

Separate account assets are stated at the fair value of the underlying assets, which are shares of mutual funds. The value of the assets in the Separate accounts reflects the actual investment performance of the respective accounts and is not guaranteed by the Company. The liability is reported at contract value and represents the policyholders' interest in the account and includes accumulated net investment income and realized and unrealized capital gains/(losses) on the assets. The investment income and realized capital gains/(losses) from separate account assets accrue to the policyholders and are not included in the Statements of Income. Mortality, policy administration, surrender charges assessed and asset management fees charged against the accounts are included in other revenue in the accompanying Statements of Income and Changes in Surplus.

*2023 Statutory Financial Statements* *Page 11* 

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The Company issues variable annuity contracts in the separate accounts in which the Company provides various forms of guarantees to benefit the related contract holders called Guaranteed Minimum Death Benefits ("GMDB"), Guaranteed Minimum Accumulated Benefits ("GMAB"), GMAB/Guaranteed Minimum Withdrawal Benefits ("GMWB"), and GMWB with inflation protection. In accordance with guarantees provided, if the investment proceeds in the separate accounts are insufficient to cover the guarantees for the product, the policyholder proceeds will be remitted by the general account.

**NONADMITTED ASSETS** Assets designated as nonadmitted by the NAIC include furniture, certain electronic data processing equipment, unamortized software, the amount of the deferred tax asset that is in excess of limits prescribed by SAP, the pension plan assets, certain investments in partnerships for which financial audits are not performed, certain other receivables, advances and prepayments, certain negative IMR balances, and uncollected premiums greater than 90 days from the due date. Such amounts are excluded from the Statements of Admitted Assets, Liabilities and Surplus.

**RESERVES AND FUNDS FOR THE PAYMENT OF INSURANCE AND ANNUITY BENEFITS** Policyholders' reserves provide amounts adequate to discharge estimated future obligations in excess of estimated future premium on policies in-force. Any adjustments that are made to the reserve balances are reflected in the Statements of Income in the year in which such adjustments are made, with the exception of changes in valuation bases that are accounted for as charges or credits to surplus.

Reserves and funds for the payment of future life and annuity benefits are developed using actuarial methods based on statutory mortality and interest requirements. Reserves for life insurance contracts are developed using accepted actuarial methods computed principally on the net level, modified preliminary term or CRVM methods using the 1941, 1958, 1980, 2001, and 2017 Commissioners' Standard Ordinary ("CSO") Mortality and American Experience Tables and assumed interest rates ranging from 2.25% to 4.50%. Reserves for substandard policies are computed using multiples of the respective underlying mortality tables. In 2023, The Company moved to the 2017 CSO mortality table as the underlying mortality basis for all Whole Life business issued from 2017 through 2019. As a result, the Company recognized a change in valuation basis through an adjustment to surplus for $216,831. The Company has universal life contracts with secondary guarantee features. The Company establishes reserves according to Actuarial Guideline XXXVIII, unless otherwise noted.

Reserves for Term and Single Life UL with secondary guarantee features are based on the methodology specified by the Life Principle-Based Reserve approach ("VM-20"), starting with 2017 policy issue years. Reserves for Single and Joint Life IUL are based on the same VM-20 methodology starting with 2018 policy issue years. Reserves for all other life insurance products are based on the same VM-20 methodology starting with 2020 policy issue years. VM-20 specifies the final reserve as the greater of the Net Premium Reserve ("NPR"), Deterministic Reserve ("DR") and Stochastic Reserve ("SR"). The NPR is a formulaic reserve with prescribed assumptions, including the 2017 CSO Mortality Tables. The DR is based on a single path, deterministic projection with prudent estimate assumptions, including margins for uncertainty. The SR is based on the Conditional Tail Expectation 70 ("CTE70") of 1000 stochastically generated interest rate return scenarios with prudent estimate assumptions, including margins for uncertainty.

Reserves for fixed individual annuity contracts are developed using accepted actuarial methods computed principally under the Commissioners' Annuity Reserve Valuation Method using applicable interest rates and mortality tables, primarily on the 1949, 1971, 1983, 2000, and 2012 Individual Annuity Mortality Tables and rates ranging from 1.00% to 13.25%.

The Company waives deduction of deferred fractional premium at death and returns any portion of the final premium beyond the date of death. Reserves are computed using continuous functions to reflect these practices. Surrender values are not promised in excess of the legally computed reserves.

The Company also has deferred variable annuity contracts containing GMDB, GMAB and GMWB features. The Company establishes reserves according to the methodology specified by Principle-Based Reserves for Variable Annuities ("VM-21").

*Page 12* *The Penn Mutual Life Insurance Company*

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Reserves for group annuity contracts are developed using accepted actuarial methods computed principally on the 1971 and 1983 Group Annuity Mortality Tables and 1994 Group Annuity Reserving Tables with assumed interest rates ranging from 4.50% to 11.25%. Approximately 1% of reserves use an assumed interest rate greater than 10%.

The Company had $1,991,791 and $2,180,642 as of December 31, 2023 and December 31, 2022, respectively, of insurance in force for which the gross premiums are less than the net premiums according to the standards of valuation set by the Commonwealth of Pennsylvania.

The tabular interest has been determined from the basic data for the calculation of policy reserves. The tabular less actual reserves released have been determined by formula.

**LIABILITIES FOR DEPOSIT-TYPE CONTRACTS** Reserves for funding agreements, dividend accumulations, premium deposit funds, investment-type contracts such as supplementary contracts not involving life contingencies, and certain structured settlement annuities are based on account value or accepted actuarial methods using applicable interest rates. Fair value is estimated by discounting future cash flows using current market rate.

The tabular interest for funds not involving life contingencies is determined as the change in reserves less funds added during the year less other increases, plus funds withdrawn during the year.

**POLICYHOLDERS' DIVIDENDS** The liability for policyholders' dividends includes the estimated amount of annual dividends and settlement dividends to be paid to policyholders in the following year. Policyholders' dividends incurred are recorded in the Statements of Income. Dividends expected to be paid to policyholders in the following year are approved annually by the Company's Board of Trustees. The allocation of these dividends to policyholders reflects the relative contribution of each group of participating policies to surplus and considers, among other factors, investment returns, mortality and morbidity experience, expenses, and income tax charges.

**POLICY CLAIMS IN PROCESS** Policy claims in process include provisions for payments to be made on reported claims and claims incurred but not reported.

**INTEREST MAINTENANCE RESERVE** The IMR captures the realized capital gains/(losses) that result from changes in the overall level of interest rates and amortizes them into income over the calendar years to expected maturity.

**ASSET VALUATION RESERVE** The AVR is a contingency reserve to stabilize surplus against fluctuations in the statement value of common stocks, real estate investments, partnerships, LIHTC investments, and LLCs as well as non-interest related declines in the value of bonds and certain derivatives. The AVR is reported in the Statements of Admitted Assets, Liabilities and Surplus, and the change in AVR is reported in the Statements of Income and Changes in Surplus.

**DRAFTS OUTSTANDING** Drafts outstanding that have not been presented for payment are recorded as a liability.

**OTHER LIABILITIES** Other liabilities primarily include accruals for general and operating expense, life insurance premiums received in advance of the due date, net transfers due from the separate accounts, and liabilities related to postretirement benefit plans in an underfunded position.

**BENEFIT PLANS** The Company recognizes a liability for the funded status of defined benefit pension and postretirement plans where the projected benefit obligation exceeds plan assets (underfunded) and nonadmits assets for the funded status of defined benefit pension and postretirement plans where the fair value of plan assets exceed the projected benefit obligation (overfunded).

**CONTINGENCIES** Amounts related to contingencies are accrued if it is probable that a liability has been incurred and an amount is reasonably estimable. Regarding litigation, management evaluates whether there are incremental legal or other costs directly associated with the ultimate resolution of the matter that are reasonably estimable and, if so, includes these costs in the accrual.

**RISK-BASED CAPITAL** Life insurance companies are subject to certain risk-based capital ("RBC") requirements as specified by the NAIC. Under those requirements, minimum amounts of statutory surplus are required to be

*2023 Statutory Financial Statements* *Page 13* 

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maintained based on various risk factors related to it. At December 31, 2023, the Company's surplus exceeds these minimum levels.

**SURPLUS NOTES** On April 29, 2021, the Company issued a Surplus Note ("2021 Note") at par with a principal balance of $500,000. The 2021 Note bears interest at 3.80%, and has a maturity date of April 29, 2061. The 2021 Note was issued pursuant to Rule 144A under the Securities Act of 1933, as amended and are administered by a U.S. bank as registrar/ paying agent. Interest on the 2021 Note is scheduled to be paid semiannually on June 15 and December 15 of each year. Interest paid on the 2021 Note was $19,000 and $19,000 for the year ended December 31, 2023 and December 31, 2022, respectively. Total interest paid since the issuance of the 2021 Note is $49,928.

On July 1, 2010, the Company issued a Surplus Note ("2010 Note") with a principal balance of $200,000, at a discount of $8,440. The 2010 Note bears interest at 7.625%, and has a maturity date of June 15, 2040. The 2010 Note was issued pursuant to Rule 144A under the Securities Act of 1933, as amended and are administered by a U.S. bank as registrar/ paying agent. Interest on the 2010 Note is scheduled to be paid semiannually on March 31 and September 30 of each year. At December 31, 2023 and December 31, 2022, the amortized cost basis of the 2010 Note was $193,322 and $193,119, respectively. Interest paid on the 2010 Note was $15,250 and $15,250 for the years ended December 31, 2023 and December 31, 2022, respectively. Total interest paid since the issuance of the 2010 Note is $217,313.

On June 23, 2004, the Company issued a Surplus Note ("2004 Note") with a principal balance of $200,000, at a discount of $3,260. The 2004 Note bears interest at 6.65%, and has a maturity date of June 15, 2034. The 2004 Note was issued pursuant to Rule 144A under the Securities Act of 1933, as amended and are administered by a U.S. bank as registrar/ paying agent. Interest on the 2004 Note is scheduled to be paid semiannually on April 1 and October 1 of each year. At December 31, 2023 and December 31, 2022, the amortized cost basis of the 2004 Note was $198,134 and $198,011, respectively. Interest paid on the 2004 Note was $13,300 and $13,300 for the years ended December 31, 2023 and December 31, 2022, respectively. Total interest paid since the issuance of the 2004 Note is $269,620.

The recognition of interest expense on surplus notes requires prior approval for payment from the Pennsylvania Insurance Department.

**PREMIUM AND RELATED EXPENSE RECOGNITION** Life insurance premium revenue is generally recognized as revenue on the gross basis when due from the policyholders under the terms of the insurance contract. Annuity premium on policies with life contingencies is recognized as revenue when received. Both premium and annuity considerations are recorded net of reinsurance premiums. Commissions and other costs related to issuance of new policies, and policy maintenance and settlement costs are charged to current operations when incurred. Surrender fee charges on certain life and annuity products are recorded as a reduction of benefits. Benefit payments are reported net of the amounts received from reinsurers.

The Company accounts for deposit-type contracts (those that do not subject the Company to mortality or morbidity risk) under the deposit method. Amounts received from and payments to policyholders related to these contracts are recorded directly against the related policy reserves. Interest credited to policyholder accounts is reflected in benefits paid to policyholders and beneficiaries. Fees charged to policyholder accounts are reflected in Other revenue.

**OTHER REVENUE** Other revenue includes commission and expense allowances recognized by the Company pursuant to reinsurance agreements, as well as reserve adjustments relating to coinsurance/modified coinsurance/funds withheld reinsurance agreements entered into with third parties. Other revenue also includes fees charged to policyholders.

**OTHER EXPENSES** Other expenses primarily includes amounts paid to reinsurers relating to interest earned on the funds withheld assets held by the Company under reinsurance agreements structured as funds withheld and coinsurance/ modified coinsurance ("co/modco") reinsurance.

*Page 14* *The Penn Mutual Life Insurance Company*

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**REALIZED AND UNREALIZED CAPITAL GAINS AND LOSSES** Realized capital gains and losses, net of taxes, excludes gains and losses transferred to the IMR. Realized capital gains and losses are recognized in net income and are determined using the specific identification method.

All after-tax realized capital gains and losses that result from changes in the overall level of interest rates for all types of fixed-income investments and interest-related derivative activities for derivatives backing assets are transferred to the IMR and amortized into net investment income using the grouped method over the remaining life of the investment sold or, in the case of derivative financial instruments, over the remaining life of the underlying asset.

Unrealized capital gains and losses, net of deferred federal income taxes, are recorded as a change in surplus.

**FEDERAL HOME LOAN BANK BORROWINGS** The Company is a member of the FHLB-PGH, which provides access to collateralized advances, collateralized funding agreements, and other FHLB-PGH products. Collateralized advances from the FHLB-PGH are classified as borrowed money. Collateralized funding agreements issued to the FHLB-PGH are classified as liabilities for deposit-type funds and are recorded within Reserves and funds for payment of insurance and annuity benefits. FHLB-PGH is a first-priority secured creditor.

The Company's membership in FHLB-PGH requires the ownership of member stock, and borrowings from FHLB-PGH require the purchase of FHLB-PGH activity based stock in an amount equal to 4% of the outstanding borrowings. All FHLB-PGH stock purchased by the Company is classified as restricted general account investments within Common stock — unaffiliated. The Company's borrowing capacity is determined by the lesser of the assets available to be pledged as collateral to FHLB-PGH or 10% of the Company's prior period admitted general account assets. The fair value of the qualifying assets pledged as collateral by the Company must be maintained at certain specified levels of the borrowed amount, which can vary, depending on the nature of the assets pledged. The Company's agreement allows for the substitution of assets and the advances are pre-payable. Current borrowings are subject to prepayment penalties.

Borrowings from the FHLB-PGH are classified as funding agreements. As of December 31, 2023, there were $- in outstanding borrowings and the maximum borrowed during the year was $100,000. As of December 31, 2022, there were $100,000 in outstanding borrowings and the maximum borrowed during the year was $350,000.

**NEW ACCOUNTING STANDARDS** 

The NAIC adopted INT 23-01T, which is an interpretation that prescribes limited-time, optional, statutory accounting guidance as an exception to the existing guidance detailed in SSAP No. 7 "Asset Valuation Reserve and Interest Maintenance Reserve". Under the INT, reporting entities are allowed to admit negative IMR if certain criteria are met. The Company did not admit any negative IMR at December 31, 2023 in its Statement of Admitted Assets, Liabilities and Capital and Surplus.

***Note 3.* INVESTMENTS** 

The Company maintains a diversified investment portfolio. Investment policies limit concentration in any asset class (except for U.S. Treasury and U.S. Government guaranteed securities), geographic region, industry group, economic characteristic, investment quality, or individual investment.

*2023 Statutory Financial Statements* *Page 15* 

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**BONDS AND PREFERRED STOCK** The following summarizes the admitted value and estimated fair value of the Company's investment in bonds and preferred stock as of December 31:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Gross Unrealized<br>Capital** | **Gross Unrealized<br>Capital** | |
| **2023** |<br>**Admitted<br>Value** | **Gains** | **Losses** |<br>**Estimated<br>Fair Value** |
|  US Governments | $743055 | $5629 | $28959 | $719725 |
|  Other Governments | 6000 |  | 421 | 5579 |
|  States, Territories and Possessions | 52024 | 795 | 1780 | 51039 |
|  Political Subdivisions | 333437 | 1916 | 39122 | 296231 |
|  Special Revenue | 1263235 | 12298 | 150093 | 1125440 |
|  Industrial and Miscellaneous | 6266287 | 96851 | 590260 | 5772878 |
|  Residential Mortgage-backed Securities | 1269830 | 11345 | 104693 | 1176482 |
|  Commercial Mortgage-backed Securities | 1646019 | 10254 | 89179 | 1567094 |
|  Asset-backed Securities | 2877937 | 12254 | 90820 | 2799371 |
|  Hybrid Securities | 273348 | 1523 | 19048 | 255823 |
|  SVO Identified Funds | 406 | 148 | 148 | 406 |
|  Total Bonds | 14731578 | 153013 | 1114523 | 13770068 |
|  Preferred Stock | 47867 | 3306 | 4799 | 46374 |
|  **Total Bonds and Preferred Stock** | $**14779445** | $**156319** | $**1119322** | $**13816442** |

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| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Gross Unrealized<br>Capital** | **Gross Unrealized<br>Capital** | |
| **2022** |<br>**Admitted<br>Value** | **Gains** | **Losses** |<br>**Estimated<br>Fair Value** |
|  US Governments | $986748 | $848 | $57713 | $929883 |
|  Other Governments | 6000 |  | 159 | 5841 |
|  States, Territories and Possessions | 49872 | 501 | 2970 | 47403 |
|  Political Subdivisions | 322436 | 1145 | 50207 | 273374 |
|  Special Revenue | 1129580 | 6395 | 184526 | 951449 |
|  Industrial and Miscellaneous | 5965201 | 53504 | 774515 | 5244190 |
|  Residential Mortgage-backed Securities | 940165 | 1412 | 112482 | 829095 |
|  Commercial Mortgage-backed Securities | 1682775 | 3650 | 124535 | 1561890 |
|  Asset-backed Securities | 2311423 | 7405 | 143669 | 2175159 |
|  Hybrid Securities | 275254 | 771 | 27733 | 248292 |
|  SVO Identified Funds | 388 |  |  | 388 |
|  Bank Loans | 3036 | 67 | 27 | 3076 |
|  Total Bonds | 13672878 | 75698 | 1478536 | 12270040 |
|  Preferred Stock | 51966 | 4354 | 8056 | 48264 |
|  **Total Bonds and Preferred Stock** | $**13724844** | $**80052** | $**1486592** | $**12318304** |

---

Included in admitted value and estimated fair value for Residential mortgage-backed securities above are $231 and $122, respectively, of subprime mortgages.

*Page 16* *The Penn Mutual Life Insurance Company*

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*($ In Thousands)* 

**RESTRICTED ASSETS AND SPECIAL DEPOSITS** The Company maintains assets on deposit with governmental authorities or trustees as required by certain state insurance laws. The Company also receives and pledges collateral for derivative contracts and FHLB in the form of cash and securities. Capital stock was purchased as a requirement to participate in the FHLB lending program.

---

| | | | |
|:---|:---|:---|:---|
| **Balance Sheet Classification** | **Type** | **2023** | **2022** |
|  Debt securities — Available for sale | Collateral — FHLB | $— | $489304 |
|  Debt securities — Available for sale | Reinsurance agreements | 6550200 | 5251909 |
|  Debt securities — Available for sale | New York 109 trust agreement | 4132960 | 4122950 |
|  Debt securities — Available for sale | Collateral — Derivatives | 345678 | 217127 |
|  Debt securities — Available for sale | State deposit | 3315 | 3345 |
|  Equity securities — Common stock unaffiliated | FHLB Stock | 3075 | 6753 |
|  Equity securities — Common stock unaffiliated | Reinsurance agreements | 14188 | 13324 |
|  Cash | State deposit | 927 | 927 |
|  **Total Restricted Assets** |  | $**11050343** | $**10105639** |

---

The following table summarizes the admitted value and estimated fair value of debt securities as of December 31, 2023 by contractual maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties. Securities that are not due on a single maturity are included as of the final maturity.

---

| | | |
|:---|:---|:---|
| | **Admitted<br>Value** | **Estimated<br>Fair Value** |
|  Due in one year or less | $152019 | $150408 |
|  Due after one year through five years | 1562259 | 1546257 |
|  Due after five years through ten years | 1348148 | 1333711 |
|  Due after ten years | 5875365 | 5196746 |
|  Residential Mortgage-backed Securities**<sup>(1)</sup>** | 1269830 | 1176482 |
|  Commercial Mortgage-backed Securities**<sup>(1)</sup>** | 1646019 | 1567094 |
|  Asset-backed Securities**<sup>(1)</sup>** | 2877937 | 2799370 |
|  Total Bonds | 14731578 | 13770068 |
|  Preferred Stock | 47867 | 46374 |
|  **Total Bonds and Preferred Stock** | $**14779445** | $**13816442** |
| (1) Includes U.S. Agency structured securities |  |  |

---

Mortgage and other asset-backed securities consist of commercial and residential mortgage pass-through holdings, securities backed by various forms of collateral, with the largest being collateralized loan obligations. These securities follow a structured principal repayment schedule and are rated investment grade, other than $104,660, primarily in asset-backed securities. The mortgage and other asset-backed securities portfolios are presented separately in the maturity schedule due to the potential for prepayment. The weighted average life of this portfolio is 5.5 years.

At December 31, 2023, the largest industry concentration of the Company's portfolio was investments in the Electric-Integrated sector of $675,870, representing 5% of the total debt securities portfolio.

*2023 Statutory Financial Statements* *Page 17* 

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*($ In Thousands)* 

**CREDIT LOSS ROLLFORWARD** The following represents a rollforward of the cumulative credit loss component of OTTI loss recognized in earnings on fixed maturity securities still held for which a portion of the OTTI loss was not recognized in earnings:

---

| | | |
|:---|:---|:---|
| **As of December 31,** | **2023** | **2022** |
|  Balance, beginning of period | $11267 | $8169 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Credit loss impairments previously recognized on securities which matured, paid down, prepaid or were sold during the period | (2463) | (316) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Credit loss impairments previously recognized on securities impaired to fair value during the period |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Credit loss impairments recognized in the current period on securities not previously impaired |  | 3414 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additional credit loss impairments recognized in the current period on securities previously impaired |  |  |
|  **Balance, end of period** | $**8804** | $**11267** |

---

**UNREALIZED LOSSES ON INVESTMENTS** Management has determined that the unrealized losses on the Company's investments in equity and fixed maturity securities at December 31, 2023 are temporary in nature.

The following tables are an analysis of the fair values and gross unrealized losses aggregated by bond category and length of time that the securities were in a continuous unrealized loss position as of December 31:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Less than 12 months** | **Less than 12 months** | **Greater than<br>12 months** | **Greater than<br>12 months** | **Total** | **Total** | **Total** |
| **2023** | **Fair<br>Value** | **Gross<br>Unrealized<br>Capital<br>Loss** | **Fair<br>Value** | **Gross<br>Unrealized<br>Capital<br>Loss** | **Fair<br>Value** | **Gross<br>Unrealized<br>Capital<br>Loss** | **Number<br>of<br>Securities** |
|  US Governments | $11821 | $653 | $320644 | $28306 | $332465 | $28959 | 54 |
|  Other Governments |  |  | 5580 | 421 | 5580 | 421 | 2 |
|  States, Territories and Possessions |  |  | 20848 | 1780 | 20848 | 1780 | 11 |
|  Political Subdivisions | 2258 | 304 | 207624 | 38818 | 209882 | 39122 | 75 |
|  Special Revenue | 24996 | 745 | 796438 | 149348 | 821434 | 150093 | 327 |
|  Industrial and Miscellaneous | 68704 | 4047 | 3961309 | 586213 | 4030013 | 590260 | 2021 |
|  Residential Mortgage-backed Securities | 155916 | 11277 | 805811 | 93416 | 961727 | 104693 | 256 |
|  Commercial Mortgage-backed Securities | 130888 | 6544 | 1073550 | 82635 | 1204438 | 89179 | 542 |
|  Asset-backed Securities | 317267 | 7190 | 1556463 | 83630 | 1873730 | 90820 | 601 |
|  Hybrid Securities |  |  | 232017 | 19048 | 232017 | 19048 | 80 |
|  SVO Identified Funds |  |  | 406 | 148 | 406 | 148 |  |
|  Total Bonds | $711850 | $30760 | $8980690 | $1083763 | $9692540 | $1114523 | 3969 |
|  Preferred Stock | 4863 | 138 | 39209 | 4661 | 44072 | 4799 | 18 |
|  **Total Bonds and Preferred Stocks** | $**716713** | $**30898** | $**9019899** | $**1088424** | $**9736612** | $**1119322** | **3987** |

---

*Page 18* *The Penn Mutual Life Insurance Company*

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*($ In Thousands)* 

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Less than 12 months** | **Less than 12 months** | **Greater than<br>12 months** | **Greater than<br>12 months** | **Total** | **Total** | **Total** |
| **2022** | **Fair<br>Value** | **Gross<br>Unrealized<br>Capital<br>Loss** | **Fair<br>Value** | **Gross<br>Unrealized<br>Capital<br>Loss** | **Fair<br>Value** | **Gross<br>Unrealized<br>Capital<br>Loss** | **Number<br>of<br>Securities** |
|  US Governments | $187333 | $6647 | $692906 | $51066 | $880239 | $57713 | 61 |
|  Other Governments | 841 | 159 |  |  | 841 | 159 | 2 |
|  States, Territories and Possessions | 32320 | 2970 |  |  | 32320 | 2970 | 10 |
|  Political Subdivisions | 156007 | 25253 | 60526 | 24954 | 216533 | 50207 | 544 |
|  Special Revenue | 550467 | 84550 | 238000 | 99976 | 788467 | 184526 | 298 |
|  Industrial and Miscellaneous | 3649910 | 484842 | 725904 | 289673 | 4375814 | 774515 | 1950 |
|  Residential Mortgage-backed Securities | 569522 | 54718 | 246767 | 57764 | 816289 | 112482 | 222 |
|  Commercial Mortgage-backed |  |  |  |  |  |  |  |
|  Securities | 1264993 | 93979 | 182923 | 30556 | 1447916 | 124535 | 492 |
|  Asset-backed Securities | 1030166 | 64692 | 857933 | 78977 | 1888099 | 143669 | 465 |
|  Hybrid Securities | 217691 | 24775 | 15917 | 2958 | 233608 | 27733 | 80 |
|  Bank Loans | 1203 | 27 |  |  | 1203 | 27 | 2 |
|  Total Bonds | $7660453 | $842612 | $3020876 | $635924 | $10681329 | $1478536 | 4126 |
|  Preferred Stock | 41549 | 6729 | 6526 | 1327 | 48075 | 8056 | 26 |
|  **Total Bonds and Preferred Stocks** | $**7702002** | $**849341** | $**3027402** | $**637251** | $**10729404** | $**1486592** | **4152** |

---

Included in the December 31, 2023 and 2022 amounts above is the interest portion of other-than-temporary impairments on securities of $1,094 and $1,228, respectively.

**COMMON STOCK — UNAFFILIATED** The following summarizes the cost and estimated fair value of the Company's investment in unaffiliated common stock:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Gross Unrealized<br>Capital** | **Gross Unrealized<br>Capital** | |
| |<br>**Cost** | **Gains** | **Losses** |<br>**Estimated<br>Fair Value** |
|  December 31, 2023 | $68085 | $5156 | $2821 | $70420 |
|  December 31, 2022 | $47329 | $1651 | $6423 | $42557 |

---

*2023 Statutory Financial Statements* *Page 19* 

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*($ In Thousands)* 

The following presents the gross unrealized capital losses and fair values for unaffiliated common stock with unrealized capital losses.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Less than 12 months** | **Less than 12 months** | **Greater than<br>12 Months** | **Greater than<br>12 Months** | **Total** | **Total** |
| | **Fair<br>Value** | **Gross<br>Unrealized<br>Capital<br>Losses** | **Fair<br>Value** | **Gross<br>Unrealized<br>Capital<br>Losses** | **Fair<br>Value** | **Gross<br>Unrealized<br>Capital<br>Losses** |
|  December 31, 2023 | $10949 | $1427 | $14907 | $1394 | $25856 | $2821 |
|  December 31, 2022 | $9483 | $1759 | $13467 | $4664 | $22950 | $6423 |

---

The amount of unrealized capital losses on the Company's investment in unaffiliated common stock is spread over 22 individual securities. As of December 31, 2023, there were 2 unaffiliated common stock securities that were priced below 80% of the security's cost. Out of those 2 securities, 1 was impaired totaling $1,961.

*Federal Home Loan Bank* The Company's investment in the FHLB-PGH Class B Membership Capital Stock as of December 31, 2023 and 2022 was $3,075 and $2,753, respectively. The Company also invested $0 and $4,000 in FHLB-PGH Activity Stock as of December 31, 2023 and 2022, respectively. The Class B Membership Capital Stock held by the Company is subject to written notices of requests for redemption followed by a five year waiting period.

As of December 31, 2023 and 2022, the Company's borrowing capacity with the FHLB-PGH was $1,240,364 and $910,080, respectively.

The following represents the amount of collateral required to be pledged to the FHLB-PGH, and the maximum amount of collateral pledged is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31,<br>2023** | **Maximum<br>during 2023** | **December 31,<br>2022** | **Maximum<br>during 2022** |
|  Carrying value | $– $| 482456 | $489304 | $573764 |
|  Fair value | – | 431230 | 432986 | 538930 |

---

The amount of interest expense on borrowings classified as funding agreements for the years ended December 31, 2023 and 2022 was $705 and $3,930, respectively.

**OTHER THAN TEMPORARY IMPAIRMENTS** For the year ended December 31, 2023, the Company did not recognize any other than temporary impairments on any asset-backed security. For the year ended December 31, 2022, the Company recognized an other than temporary impairment on an asset-backed security as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Amortized Cost**<br>**Prior to OTTI** | **OTTI** | **OTTI** | **Fair Value** |
| <br>**December 31, 2022** | **Amortized Cost**<br>**Prior to OTTI** | **Interest** | **Non-Interest** | **Fair Value** |
|  Intent to sell | $— | $— | $— | $— |
|  Lack of intent to hold to recovery |  |  |  |  |
|  Expected PV of cash flows less than cost | 4091 |  | 3414 | 677 |
|  **Total other-than-temporary impairments** | $4091 | $— | $3414 | $677 |

---

**REAL ESTATE** Investments in real estate consist of the Company's home office property. As of December 31, 2023 and 2022, accumulated depreciation on real estate amounted to $32,016 and $30,611, respectively.

*Page 20* *The Penn Mutual Life Insurance Company*

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**ALTERNATIVE ASSETS** The investment values of alternative assets are provided per the partnerships' capital account statements. The Company's interest cannot be redeemed; insteadPML distributions from each fund result from the liquidation of the underlying assets. The period over which unredeemable investments are expected to be liquidated ranges from 5 to 10 years. As of December 31, 2023, none of these investments exceeds 10% of the Company's admitted assets. The Company recognized realized losses of $3,660 and $434 for the years ended December 31, 2023 and 2022, respectively, associated with other-than-temporary impairments of certain alternative assets.

Unfunded commitments for alternative assets were $315,738 and $323,119 for the years ended December 31, 2023 and 2022, respectively.

**OTHER INVESTED ASSETS** The components of other invested assets as of December 31, 2023 and 2022 were as follows:

---

| | | |
|:---|:---|:---|
| **December 31,** | **2023** | **2022** |
|  LIHTC | $111638 | $68024 |
|  Receivable for securities | 84 | 794 |
|  Notes receivable — affiliates | 708000 | 650000 |
|  Investments in affiliates | 292120 | 195458 |
|  Investment in Private Funds/PMUBX | 118665 | 108695 |
|  Other | 1382 | 1382 |
|  **Total other invested assets** | $**1231889** | $**1024353** |

---

Other invested assets also include notes receivable carried at book value from PMAM and JMS, investments in JMS, HTK, ISP, PMAM, 1847, and PMAM's Private Funds/PMUBX, as well as receivables for unsettled investment transactions. In 2022 changes in Private Funds/PMUBX resulted in an opening surplus adjustment.

*Low Income Housing Tax Credits* The Company has no LIHTC properties under regulatory review at December 31, 2023 and 2022. There were no write-downs due to forfeiture of eligibility and there were no impairments for 2023 or 2022.

Commitments of $94,521 and $53,452 for the years ended December 31, 2023 and 2022, respectively, have been recorded in Other liabilities related to unconditional and legally binding delayed equity contributions associated with investments in LIHTC. The Company has unexpired tax credits with remaining lives ranging between 1 and 13 years and required holding periods for its LIHTC investments between 6 and 17 years.

*2023 Statutory Financial Statements* *Page 21* 

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*($ In Thousands)* 

**NET INVESTMENT INCOME AND REALIZED CAPITAL GAINS/(LOSSES)** The following table summarizes the major categories of net investment income for the years ended:

---

| | | |
|:---|:---|:---|
| **December 31,** | **2023** | **2022** |
|  Income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Bonds and preferred stock | $674197 | $557331 |
| &nbsp;&nbsp;&nbsp;&nbsp; Common stock — unaffiliated | 3499 | 3134 |
| &nbsp;&nbsp;&nbsp;&nbsp; Common stock — affiliated |  | 8202 |
| &nbsp;&nbsp;&nbsp;&nbsp; Real estate | 3588 | 3588 |
| &nbsp;&nbsp;&nbsp;&nbsp; Policy loans | 34884 | 23969 |
| &nbsp;&nbsp;&nbsp;&nbsp; Alternative assets | 81330 | 118835 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other invested assets | 147671 | 183544 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other | 17792 | 5241 |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivatives | (9607) | 1211 |
| &nbsp;&nbsp;&nbsp;&nbsp; IMR amortization | (16320) | (11637) |
|  Total investment income | 937034 | 893418 |
|  Expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Surplus note interest | 47876 | 47853 |
| &nbsp;&nbsp;&nbsp;&nbsp; Depreciation of real estate | 1406 | 1436 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other investment expenses | 18236 | 23829 |
|  Total investment expenses | 67518 | 73118 |
|  **Net Investment Income** | $**869516** | $**820300** |

---

Included in the table above (Bonds and preferred stock) for 2023 is $221 of investment income attributable to securities disposed of as a result of a callable feature, spread over 2 securities.

During 2023 and 2022, proceeds from sales of bonds, preferred stock, and common stocks, and related gross realized gains and losses on those sales were as follows for the years ended December 31:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | | **2023** | | | **2022** | |
| | **Proceeds<br>From Sales** | **Gross<br>Realized<br>Gains** | **Gross<br>Realized<br>Losses** | **Proceeds<br>From Sales** | **Gross<br>Realized<br>Gains** | **Gross<br>Realized<br>Losses** |
|  Bonds | $460503 | $442 | $15200 | $629451 | $2668 | $53846 |
|  Preferred stock | 5741 | 12 | 183 | 15440 |  | 1440 |
|  Common stock | 27306 | 3827 | 3061 | 30537 | 568 | 15420 |

---

There was no nonadmitted accrued investment income at December 31, 2023 and 2022. As of December 31, 2023, there were 10 common stock impairments totaling $13,056.

Realized capital gains are reported net of federal income taxes and amounts transferred to the IMR as follows for the years ended:

---

| | | |
|:---|:---|:---|
| **December 31,** | **2023** | **2022** |
|  Realized capital (losses)/gains | $(9116) | $48264 |
|  Less amount transferred to IMR | (16531) | (20360) |
|  Less Taxes: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Transferred to IMR | 3472 | 4277 |
| &nbsp;&nbsp;&nbsp;&nbsp; Capital gains | (5035) | (15461) |
|  **Net Realized Capital Gains** | $**8978** | $**79808** |

---

*Page 22* *The Penn Mutual Life Insurance Company*

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*($ In Thousands)* 

Portions of realized capital gains and losses that were determined to be interest related were transferred to the IMR.

There were no NAIC designation 3 or below, or unrated securities sold during the year ended December 31, 2023 and reacquired within 30 days of the sale date.

***Note 4.*SEPARATE ACCOUNTS** 

**Separate Accounts Registered with the SEC** The Company maintains separate accounts that are registered with the Securities Exchange Commission ("SEC") for its individual variable life and annuity products with assets of $8,665,714 and $7,900,397 at December 31, 2023 and 2022, respectively. The assets for these separate accounts, which are carried at fair value, represent investments in shares of the Company's Penn Series Funds and other non-proprietary funds.

**Separate Accounts Not Registered with the SEC** The Company also maintains separate accounts, which are not registered with the SEC, with assets of $137,855 and $191,223 at December 31, 2023 and 2022, respectively. While the product itself is not registered with the SEC, the underlying assets are comprised of SEC registered mutual funds. The assets in these separate accounts are carried at fair value.

Information regarding the Separate accounts of the Company, all of which are nonguaranteed, is as follows:

---

| | | |
|:---|:---|:---|
| **Years Ended December 31,** | **2023** | **2022** |
|  Premiums, considerations and deposits | $252351 | $325968 |
|  Reserves at December 31, at market value | 8681384 | 7972530 |
|  Subject to discretionary withdrawal at market value | 8681384 | 7972530 |

---

The following table reconciles the amounts transferred to and from the separate accounts as reported in the financial statements of the separate accounts to the amount reported in the Statements of Income and Changes in Surplus:

---

| | | |
|:---|:---|:---|
| **Years Ended December 31,** | **2023** | **2022** |
|  Transfers as reported in the financial statements of the separate accounts: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfers to separate accounts | $252351 | $325968 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfers from separate accounts | (694612) | (544287) |
|  **Transfers as reported in the Statements of Income** | $**(442261)** | $**(218319)** |

---

The Company utilizes separate accounts to record and account for assets and liabilities for particular lines of business and transactions. The Company reports assets and liabilities from variable life and annuity product lines into a separate account.

The assets of the separate accounts, which are legally insulated from the general account, are comprised of the following product mix as of December 31:

---

| | | |
|:---|:---|:---|
| **Product Description** | **2023** | **2022** |
|  Enhanced Deferred Individual Annuity | $7132944 | $6557955 |
|  Single Life Variable Universal Life | 905427 | 778099 |
|  Basic Deferred Individual Annuity | 342562 | 310285 |
|  Joint Life Variable Universal Life | 284781 | 254058 |
|  Deferred Group Annuity | 137855 | 191223 |
|  **Total** | $**8803569** | $**8091620** |

---

*2023 Statutory Financial Statements* *Page 23* 

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*($ In Thousands)* 

Certain separate account liabilities are guaranteed by the general account. To compensate the general account for the risk taken on a direct basis, the separate account paid risk charges to the general account totaling $80,088 and $79,020 for the years ended December 31, 2023 and 2022, respectively and $359,683 for the five-year period between 2019 and 2023.

For the years ended December 31, 2023 and 2022, the general account of the Company has paid $1,583 and $2,345, respectively, towards separate account guarantees on a direct basis, and $6,267 cumulatively over the last five years.

***Note5*. DERIVATIVES** 

The Company utilizes derivatives to achieve its risk management goals. Exposure to risk is monitored and analyzed as part of the Company's asset/liability management process, which focuses on risks that impact liquidity, capital, and income. The Company may enter into derivative transactions to hedge exposure to interest rate, credit, liability, currency, and cash flow risks. The Company uses swaps, swaptions, futures, forward contracts, caps and options to mitigate these risks.

The Company may enter into interest rate caps, interest rate and equity futures, credit default swaps, currency swaps, forward contracts, interest rate and treasury swaps, inflation swaps and equity options that do not qualify for hedge accounting.

If entered into, the Company's use of interest rate caps is designed to manage risk associated with rising interest rates. Credit default swaps protect the Company from a decline in credit quality of a specified security resulting in bankruptcy or the failure to pay. The Company may use "to be announced" forward contracts to gain exposure to the investment risk and return of mortgage-backed securities.

The Company uses currency swaps to reduce market risks from changes in foreign exchange rates.

The Company uses interest rate swaps, interest rate futures, treasury swaps, treasury forwards and swaptions to reduce market risks from changes in interest rates; the Company uses inflation swaps as an economic hedge to reduce inflation risk associated with inflation-indexed liabilities.

Total return swaps, equity options and equity futures are used to hedge the Company's liability risk exposure to declines in the equity markets.

When entering into a derivative transaction, there are several risks, including but not limited to basis risk, credit risk, and market risk. Basis risk is the exposure to loss from imperfectly matched positions, and is monitored and minimized by modifying or terminating the transaction. Credit risk is the exposure to loss as a result of default or a decline in credit rating of a counterparty. Credit risk is addressed by establishing and monitoring guidelines on the amount of exposure to any particular counterparty. Market risk is the adverse effect that a change in interest rates, currency rates, implied volatility rates, or a change in certain equity indexes or instruments has on the value of a financial instrument. The Company manages the market risk by establishing and monitoring limits as to the types and degree of risk that may be undertaken. Also, the Company requires that an International Swaps and Derivatives Association Master Agreement govern all Over-the-Counter ("OTC") derivative contracts. In addition, interest rate swaps are centrally cleared through an exchange.

**Derivative Instruments Designated and Qualifying as Hedging Instruments** 

During 2023, the Company purchased certain interest rate swaps that qualify for hedge accounting. These swaps are used to hedge the impact of changing interest rates on the value of specific municipal bonds. As these are derivatives in a highly effective hedge, they are carried at cost. At termination/expiration, a realized gain/(loss) amount, net of the cost basis, is recognized. In the event that the hedge fails to qualify as being highly effective at any of the accounting measurement points, the hedge will be considered ineffective and the derivative will be marked to market and the associated change will be recognized as unrealized gain/(loss).

The following table presents the notional values, fair values and carrying values of derivative instruments designated and qualifying as hedging instruments. Derivative instruments with carrying values showing a gain are

*Page 24* *The Penn Mutual Life Insurance Company*

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*($ In Thousands)* 

reported as admitted assets and Derivative instruments with carrying values showing a loss are reported in Other liabilities.

Derivative Instruments Designated and Qualifying as Hedging Instruments are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **December 31,** |  | **2023** |  |  |  |
|  | **Notional<br>Value** | **Fair Value** | **Fair Value** | **Carrying Value** | **Carrying Value** |
|  | **Notional<br>Value** | **Gain** | **(Loss)** | **Gain** | **(Loss)** |
|  Fair value hedges: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest rate swaps | $33500 | $— | $(913) | $— | $— |
|  **Total designated and qualifying as hedges** | $**33500** | $**—** | $**(913)** | $**—** | $**—** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Years Ended December 31,** | **2023** | **2023** | **2022** | **2022** |
|  | **Net Investment<br>Income** | **Realized Capital<br>Losses** | **Net Investment<br>Income** | **Realized Capital<br>Gains/(Losses)** |
|  Cash flow hedges: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Call spreads | $— | $— | $— | $— |
|  Fair value hedges: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest rate swaps | 236 |  |  |  |
|  **Total** | $**236** | $**—** | $**—** | $**—** |

---

The following table presents the notional and fair values of derivative financial instruments that did not qualify for hedge accounting. Fair values showing a gain are reported as admitted assets. Fair values showing a loss are reported in liabilities. For the derivative instruments shown below, fair values equal carrying values except for futures. The carrying value for futures is the initial margin, which was $15,920 and $14,328 at December 31, 2023 and 2022, respectively.

Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **December 31,** |  | **2023** |  |  | **2022** |  |
|  | **Notional<br>Value** | **Fair Value** | **Fair Value** | **Notional<br>Value** | **Fair Value** | **Fair Value** |
|  | **Notional<br>Value** | **Gain** | **(Loss)** | **Notional<br>Value** | **Gain** | **(Loss)** |
|  Currency swaps | $23263 | $2341 | $— | $23263 | $3812 | $— |
|  Equity futures | 445112 | 1133 |  | 181474 | 795 |  |
|  Equity options | 1566439 | 25728 | (68755) | 1029370 | 2647 | (1044) |
|  Inflation swaps | 540000 | 223 | (3005) | 260000 | 4891 | (6092) |
|  Interest rate futures | 56445 | 487 |  | 78008 | 155 |  |
|  Interest rate swaps | 16829800 | 989307 | (1086463) | 11075800 | 1038767 | (968314) |
|  Swaptions | 1650000 | 308 | (6415) | 1170000 | 3024 | (4763) |
|  Total return swaps | 3254576 | 235685 | (450353) | 5325845 | 103616 | (324832) |
|  Treasury forwards | 42000 |  | (2010) | 147000 |  | (13438) |
|  **Total** | $**24407635** | $**1255212** | $**(1617001)** | $**19290760** | $**1157707** | $**(1318483)** |

---

*2023 Statutory Financial Statements* *Page 25* 

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---

| | | | | |
|:---|:---|:---|:---|:---|
| **Ye ars Ended December 31,** | **2023** | **2023** | **2022** | **2022** |
|  | **Net Investment<br>Income** | **Realized Capital<br>Gains/(Losses)** | **Net Investment<br>Income** | **Realized Capital<br>Gains/(Losses)** |
|  Currency swaps | $781 | $(18) | $877 | $84 |
|  Equity options |  | 20444 |  | (18004) |
|  Equity futures |  | (8223) |  | (4221) |
|  Inflation swaps | 391 | 6454 | 4318 | 850 |
|  Interest rate futures |  | 1420 |  | (399) |
|  Interest rate swaps | (41271) | 234190 | (15085) | 174545 |
|  Swaptions |  | 10110 |  | 939 |
|  Total return swaps | 30255 | (237378) | 9876 | 13767 |
|  Treasury forwards |  | (12417) |  | (16874) |
|  Treasury swaps |  |  | 1225 | (30226) |
|  **Total** | $**(9844)** | $**14582** | $**1211** | $**120461** |

---

---

| | |
|:---|:---|
| 1 | $35 and $— of the realized capital gains/(losses) were transferred to the IMR for the years ended December 31, 2023 and 2022, respectively.  |

---

The change in unrealized capital (losses)/gains for derivative instruments are as follows for the years ended December 31:

---

| | | |
|:---|:---|:---|
| | **2023** | **2022** |
|  Currency swaps | $(1471) | $1453 |
|  Equity options | (19735) | (13197) |
|  Inflation swaps | (5706) | (925) |
|  Interest rate swaps | (176695) | (151869) |
|  Swaptions | 1638 | (854) |
|  Total return swaps | 6549 | 150295 |
|  Treasury forwards | 11429 | (12614) |
|  Treasury swaps |  | 23704 |
|  **Total** | $**(183991)** | $**(4007)** |

---

The Company offers a variety of variable annuity contracts with GMAB or GMWB (described further in Note 4). The contractholders may elect to invest in equity funds. Adverse changes in the equity markets expose the Company to losses if the changes result in contractholder's account balances falling below the guaranteed minimum. To mitigate the risk associated with these liabilities, the Company enters into various derivative instruments. The changes in value of the derivative instruments will offset a portion of the changes in the annuity accounts relative to changes in the equity market.

**CREDIT RISK** The Company is exposed to credit related losses in the event of non-performance by counterparties to derivative financial instruments. In order to minimize credit risk, the Company and its derivative counterparties require collateral to be posted in the amount owed under each transaction, subject to minimum transfer amounts that are functions of the counterparty's credit rating. As of December 31, 2023 and 2022, the Company was fully collateralized thereby eliminating the potential for an accounting loss. Additionally, certain agreements with counterparties allow for contracts in a positive position to be offset by contracts in a negative position. This right of offset also reduces the Company's exposure. As of December 31, 2023 and 2022, the Company pledged net collateral of $533,412 and $209,739, respectively, in the form of securities and cash. The cash received from held collateral that is not invested in an interest bearing money market fund is invested mainly in fixed income securities.

As of December 31, 2023 and 2022, the Company pledged collateral for futures contracts of $15,920 and $5,277, respectively, in the form of cash. Notional or contractual amounts of derivative financial instruments provide a

*Page 26* *The Penn Mutual Life Insurance Company*

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measure of involvement in these types of transactions and do not represent the amounts exchanged between the parties engaged in the transaction. The amounts exchanged are determined by reference to the notional amounts and other terms of the derivative financial instruments.

***Note 6.*FAIR VALUE OF FINANCIAL INSTRUMENTS AND OFF-BALANCE-SHEET RISK** 

**FAIR VALUE MEASUREMENT** Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement is based on assumptions market participants would make in pricing an asset or liability. Inputs to valuation techniques to measure fair value are prioritized by establishing a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to prices derived from unobservable inputs. An asset or liability's classification within the fair value hierarchy is based on the lowest level of significant input to its fair value measurement.

The Company has categorized its assets and liabilities into the three-level fair value hierarchy based upon the priority of the inputs. The following summarizes the types of assets and liabilities included within the three-level hierarchy:

---

| | |
|:---|:---|
| Level 1 | Fair value is based on unadjusted quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date. These generally provide the most reliable evidence and are used to measure fair value whenever available. Active markets are defined as having the following for the measured asset/liability: i) many transactions, ii) current prices, iii) price quotes not varying substantially among market makers, iv) narrow bid/ask spreads and v) most information publicly available. Prices are obtained from readily available sources for market transactions involving identical assets and liabilities. |
|  <br> Level 2 | <br> Fair value is based on significant inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability through corroboration with observable market data. Prices for assets classified as Level 2 are primarily provided by an independent pricing service or are internally priced using observable inputs. In circumstances where prices from pricing services are reviewed for reasonability but cannot be corroborated to observable market data as noted above, these security values are recorded in Level 3 in the fair value hierarchy. |
|  <br> Level 3 | <br> Fair value is based on significant inputs that are unobservable for the asset or liability. These inputs reflect the Company's assumptions about the assumptions market participants would use in pricing the asset or liability. These are typically less liquid fixed maturity securities with very limited trading activity. Prices are determined using valuation methodologies such as option pricing models, discounted cash flow models, market approach and other similar techniques. Prices may be based upon non-binding quotes from brokers or other market makers that are reviewed for reasonableness, based on the Company's understanding of the market but are not further corroborated with other additional observable market information. |

---

The determination of fair value, which for certain assets and liabilities is dependent on the application of estimates and assumptions, can have a significant impact on the Company's results of operations. The following sections describe the valuation methodologies used to determine fair values as well as the key estimates and assumptions surrounding certain assets and liabilities, measured at fair value on a recurring basis that could have a significant impact on the Company's results of operations or involve the use of significant unobservable inputs.

The fair value process is monitored on a monthly basis by financial and investment professionals who utilize additional subject matter experts as applicable. The purpose is to monitor the Company's asset valuation policies and procedures by ensuring objective and reliable valuation practices and pricing of financial instruments, as well as addressing fair valuation issues, changes to valuation methodologies and pricing sources. To assess the continuing appropriateness of third party pricing service security valuations, the Company regularly monitors the prices and reviews price variance reports. In addition, the Company performs an initial and ongoing review of the third party pricing services methodologies, reviews inputs and assumptions used for a sample of securities on a periodic basis. Pricing challenges are raised on valuations considered not reflective of market and are monitored by the Company.

*2023 Statutory Financial Statements* *Page 27* 

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**BONDS** The fair values of the Company's debt securities are generally based on quoted market prices or prices obtained from independent pricing services or internally developed pricing.

In order to validate reasonability of valuations received from independent pricing services, prices are reviewed by investment professionals through comparison with directly observed recent market trades or color or by comparison of significant inputs used by the pricing service to the Company's observations of those inputs in the market. In circumstances where prices from independent pricing services are reviewed for reasonability but cannot be corroborated to observable market data as noted above, these security values are recorded in Level 3 in the Company's fair value hierarchy. Under certain conditions, the Company may conclude pricing information received from third party pricing services is not reflective of market activity and may over-ride that information with a valuation that utilizes market information and activity. These securities are recorded in Level 2 in the Company's fair value hierarchy. As of December 31, 2023, there were 2 debt securities carried at fair value of $221 that were valued in this manner. As of December 31, 2022, there was 1 debt security carried at fair value of $4,867 that was valued in this manner.

In circumstances where market data such as quoted market prices or vendor pricing is not available, estimated fair value is calculated using internal estimates based on significant observable inputs are used to determine fair value. Inputs considered in developing internal pricing vary by type of security; however generally include: public debt, industrial comparables, underlying assets, credit ratings, yield curves, type of deal structure, collateral performance, loan characteristics and various indices, as applicable. Internally priced securities using significant observable inputs are classified within Level 2 of the fair value hierarchy which generally include the Company's investments in privately-placed corporate securities and investments in certain structured securities that are priced using observable market data. Inputs considered for these securities generally include: public corporate bond spreads, industry sectors, average life, internal ratings, security structure, liquidity spreads, credit spreads and yield curves, as applicable. If the discounted cash flow model incorporates significant unobservable inputs, these securities would be reflected within Level 3 in the Company's fair value hierarchy.

In circumstances where significant observable inputs are not available, estimated fair value is calculated by using unobservable inputs. These inputs reflect the Company's assumptions about the inputs market participants would use in pricing the asset, and are therefore included in Level 3 in the Company's fair value hierarchy. Circumstances where observable market data is not available may include events such as market illiquidity and credit events related to the security.

The Company's Level 3 debt securities generally include certain structured securities priced using one or multiple broker quotes, asset backed trust preferred debt, auction rate securities, and certain public and private debt securities priced based on observable and unobservable inputs.

Significant inputs used in valuing the Company's Level 3 debt securities include: issue specific credit adjustments, illiquidity premiums, estimation of future collateral performance cash flows, default rate assumptions, acquisition cost, market activity for securities considered comparable and non-binding quotes from certain market participants. Certain of these inputs are considered unobservable, as not all market participants will have access to this data.

**EQUITY SECURITIES** Equity securities consist principally of investments in common and preferred stock of publicly traded companies, exchange traded funds, closed-end funds, and FHLB-PGH capital stock.

*Common Stock* The fair values of most publicly traded common stock are based on quoted market prices in active markets for identical assets and are classified within Level 1 in the Company's fair value hierarchy. Fair value for the FHLB capital stock approximates par value and is classified within Level 3 of the Company's fair value hierarchy.

*Preferred Stock* The fair values of publicly traded preferred stock are based on quoted market prices in active markets for identical assets and are classified within Level 1 in the Company's fair value hierarchy. The fair values of non-exchange traded preferred equity securities are based on prices obtained from independent pricing services. Accordingly, these securities are classified within Level 2 of the Company's fair value hierarchy. Preferred stock that is priced using less observable inputs are generally classified within Level 3 of the fair value hierarchy.

*Page 28* *The Penn Mutual Life Insurance Company*

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**CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS** Short-term investments and cash equivalents carried at Level 1 consist of money market funds and investments purchased with maturities less than or equal to 12 months. These are carried at amortized cost and approximate fair value.

**DERIVATIVE INSTRUMENTS** The fair values of derivative contracts are determined based on quoted prices in active exchanges or prices provided by counterparties, exchanges or clearing members as applicable, utilizing valuation models. The fair values of derivative contracts can be affected by changes in interest rates, foreign exchange rates, commodity prices, credit spreads, market volatility, expected returns and liquidity as well as other factors.

The Company's exchange traded futures are valued using quoted prices in active markets and are classified within Level 1 of the Company's fair value hierarchy.

Derivative positions traded in the OTC and cleared OTC derivative markets, where fair value is determined by third party independent services, are classified within Level 2. These investments include: interest rate swaps, currency swaps, Treasury swaps, interest rate caps, total return swaps, swaptions, equity options, inflation swaps, forward contracts, and credit default swaps. OTC derivatives classified within Level 2 are valued using models generally accepted in the financial services industry that use actively quoted or observable market input values from external market data providers, broker-dealer quotations, third-party pricing vendors, discounted cash flow models and/or recent trading activity. Prices are reviewed by investment professionals through comparison with directly observed recent market trades, comparison with valuations estimated through use of valuation models maintained on an industry standard analytical and valuation platform, or comparison of all significant inputs used by the pricing service to observations of those inputs in the market.

**SEPARATE ACCOUNT ASSETS** Separate account assets primarily consist of mutual funds. The fair value of mutual funds is based upon quoted prices in an active market, resulting in classification within Level 1 of the Company's fair value hierarchy.

The following table presents the financial instruments carried at fair value by caption on the Statements of Admitted Assets, Liabilities and Surplus and by valuation hierarchy (as described above).

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2023** | **FV<br>Level 1** | **FV<br>Level 2** | **FV<br>Level 3** | **Total** |
|  Assets: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Bonds: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial MBS | $— | $1450 | $— | $1450 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SVO Identified Funds | 406 |  |  | 406 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Bonds | 406 | 1450 |  | 1856 |
| &nbsp;&nbsp;&nbsp;&nbsp; Preferred Stock | 24706 | 5305 |  | 30011 |
| &nbsp;&nbsp;&nbsp;&nbsp; Common stock — unaffiliated | 67345 |  | 3075 | 70420 |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivatives: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Futures | 17540 |  |  | 17540 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Options |  | 26036 |  | 26036 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Swaps |  | 1227556 |  | 1227556 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total derivatives | 17540 | 1253592 |  | 1271132 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total investments | 109997 | 1260347 | 3075 | 1373419 |
| &nbsp;&nbsp;&nbsp;&nbsp; Separate account assets | 8803569 |  |  | 8803569 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $8913566 | $1260347 | $3075 | $10176988 |
|  Liabilities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivatives: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Options | $— | $(68755) | $— | $(68755) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forwards |  | (2010) |  | (2010) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Swaps |  | (1546236) |  | (1546236) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | $— | $(1617001) | $— | $(1617001) |

---

*2023 Statutory Financial Statements* *Page 29* 

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The following table presents the financial instruments carried at fair value by caption on the Statements of Admitted Assets, Liabilities and Surplus and by valuation hierarchy (as described above).

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2022** | **FV<br>Level 1** | **FV<br>Level 2** | **FV<br>Level 3** | **Total** |
|  Assets: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Bonds: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial MBS | $— | $1438 | $— | $1438 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SVO Identified Funds | 388 |  |  | 388 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Bonds | 388 | 1438 |  | 1826 |
| &nbsp;&nbsp;&nbsp;&nbsp; Preferred Stock | 23182 | 4972 | 937 | 29091 |
| &nbsp;&nbsp;&nbsp;&nbsp; Common stock – unaffiliated | 35793 |  | 6764 | 42557 |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivatives: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Futures | 950 |  |  | 950 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Options |  | 2647 |  | 2647 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Swaps |  | 1154110 |  | 1154110 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total derivatives | 950 | 1156757 |  | 1157707 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total investments | 60313 | 1163167 | 7701 | 1231181 |
| &nbsp;&nbsp;&nbsp;&nbsp; Separate account assets | 8091620 |  |  | 8091620 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $8151933 | $1163167 | $7701 | $9322801 |
|  Liabilities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivatives: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Options | $— | $(1044) | $— | $(1044) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forwards |  | (13438) |  | (13438) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Swaps |  | (1304001) |  | (1304001) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | $— | $(1318483) | $— | $(1318483) |

---

**CHANGES IN LEVEL 3 RECURRING FAIR VALUE MEASUREMENTS** When a determination is made to classify a financial instrument within Level 3, the determination is based upon the significance of the unobservable parameters to the overall fair value measurement. However, Level 3 financial instruments typically include, in addition to the unobservable or Level 3 components, observable components (that is, components that are actively quoted and can be validated to external sources); accordingly, the gains and losses in the table below include changes in fair value due in part to observable factors that are part of the valuation methodology.

The Company recognizes transfers into Level 3 as of the end of the period in which the circumstances leading to the transfer occurred. The Company recognizes transfers out of Level 3 at the beginning of a period in which the circumstances leading to the transfer occurred.

There were 0 securities transferred out of Level 3 for the year ended December 31, 2023.

*Page 30* *The Penn Mutual Life Insurance Company*

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The tables below include a rollforward of the Statements of Admitted Assets, Liabilities and Surplus amounts for the years ended December 31, 2023 and 2022 (including the change in fair value), for financial instruments classified by the Company within Level 3 of the valuation hierarchy.

---

| | | | |
|:---|:---|:---|:---|
| | **Preferred<br>Stock** | **Common<br>Stock** | **Total<br>Assets** |
|  Balance January 1, 2023 | $937 | $6764 | $7701 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfers in |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfers out |  |  |  |
|  Total gains or losses (realized/ unrealized) included in: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income/(loss) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Surplus |  |  |  |
|  Amortization/Accretion |  |  |  |
|  Purchases/(sales): |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Sales) | (937) | (3689) | (4626) |
|  **Balance, December 31, 2023** | $**—** | $**3075** | $**3075** |
|  | **Preferred<br>Stock** | **Common<br>Stock** | **Total<br>Assets** |
|  Balance January 1, 2022 | $6687 | $4871 | $11558 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfers in |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transfers out | (5000) |  | (5000) |
|  Total gains or losses (realized/ unrealized) included in: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income/(loss) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Surplus |  |  |  |
|  Amortization/Accretion |  |  |  |
|  Purchases/(sales): |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases |  | 1893 | 1893 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Sales) | (750) |  | (750) |
|  **Balance, December 31, 2022** | **$937** | $**6764** | $**7701** |

---

The following summarizes the fair value, valuation techniques and significant unobservable inputs of the Level 3 fair value measurements that were developed as of December 31, 2023:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Fair Value** | **Valuation Technique** | **Significant<br>Unobservable Inputs** | **Rate/Range or /<br>weighted avg.** |
|  Assets: |  |  |  |  |
|  Investments |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Preferred stock | $— | Cost | Not available | N/A |
| &nbsp;&nbsp;&nbsp;&nbsp; Common stock: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unaffiliated | $— | Cost | Not available | N/A |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; FHLB Stock | 3075 | Set by issuer-FHLB-PGH<sup>(1)</sup> | Not available | N/A |
|  **Total investments** | $**3075** |  |  |  |

---

(1) Fair Value approximates carrying value. The par value of the FHLB capital stock is $100 and set by the FHLB. The capital
stock is issued, redeemed and repurchased at par.

*2023 Statutory Financial Statements* *Page 31* 

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The following tables summarizes the aggregate fair value for all financial instruments and the level within the fair value hierarchy, in which the fair value measurements in their entirety fall, for which it is practicable to estimate fair value, at December 31:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **2023** | **Aggregate<br>Fair Value** | **Admitted<br>Value** | **Level 1** | **Level 2** | **Level 3** |
|  Financial Assets: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Bonds | $13770068 | $14731578 | $507768 | $13071105 | $191195 |
| &nbsp;&nbsp;&nbsp;&nbsp; Preferred stock | 46374 | 47867 | 41069 | 5305 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Common stock-unaffiliated | 70420 | 70420 | 67345 |  | 3075 |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash and short-term investments | 464241 | 464241 | 464241 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivatives | 1271132 | 1271132 | 17540 | 1253592 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Separate Account assets | 8803569 | 8803569 | 8803569 |  |  |
|  Financial Liabilities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Investment-Type Contracts |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Individual annuities | $2741564 | $2832281 | $— | $— | $2741564 |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivatives |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Separate Account liabilities | 8803569 | 8803569 | 8803569 |  |  |
| **2022** | **Aggregate<br>Fair Value** | **Admitted<br>Value** | **Level 1** | **Level 2** | **Level 3** |
|  Financial Assets: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Bonds | $12270040 | $13672878 | $743570 | $11342670 | $183800 |
| &nbsp;&nbsp;&nbsp;&nbsp; Redeemable preferred stock | 48264 | 51966 | 38496 | 8832 | 936 |
| &nbsp;&nbsp;&nbsp;&nbsp; Common stock-unaffiliated | 42557 | 42557 | 35793 |  | 6764 |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash and short-term investments | 376029 | 376029 | 376029 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivatives | 1157706 | 1172035 | 950 | 1156756 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Separate Account assets | 8091620 | 8091620 | 8091620 |  |  |
|  Financial Liabilities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Investment-Type Contracts |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Individual annuities | $2495955 | $2552277 | $— | $— | $2495955 |
| &nbsp;&nbsp;&nbsp;&nbsp; Derivatives | 1318483 | 1318483 |  | 1318483 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Separate Account liabilities | 8091620 | 8091620 | 8091620 |  |  |

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*Page 32* *The Penn Mutual Life Insurance Company*

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***Note 7.* LIFE RESERVES BY WITHDRAWAL CHARACTERISTICS** 

The withdrawal characteristics of the Company's life reserves are illustrated below as of December 31:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **General Account** | **General Account** | **General Account** | **Separate Account** | **Separate Account** | **Separate Account** |
| <br>**December 31, 2023** | **Account<br>Value** | **Cash<br>Value** | **Reserve** | **Account<br>Value** | **Cash<br>Value** | **Reserve** |
|  Subject to Discretionary Withdrawal, |  |  |  |  |  |  |
|  Surrender Values, or Policy Loans: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Universal Life | $263845 | $262687 | $264941 | $— | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Universal Life with Secondary |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Guarantees | 1973433 | 1912661 | 4845901 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Indexed Universal Life with |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Secondary Guarantees | 1466858 | 1454060 | 1642075 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other Permanent Cash Value Life |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Insurance |  | 7748789 | 8595424 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Variable Universal Life | 336307 | 319163 | 317456 | 1182435 | 1174230 | 1174230 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Miscellaneous Reserves |  |  | 22489 |  |  |  |
|  Not Subject to Discretionary |  |  |  |  |  |  |
|  Withdrawal or No Cash Values: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Term Policies without Cash Value |  |  | 392146 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accidental Death Benefits |  |  | 225 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disability — Active Lives |  |  | 35226 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disability — Disabled Lives |  |  | 13250 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Miscellaneous Reserves |  |  | 84165 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | 4040443 | 11697360 | 16213298 | 1182435 | 1174230 | 1174230 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Reinsurance ceded | 3230984 | 3174907 | 5262855 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net | $809459 | $8522453 | $10950443 | $1182435 | $1174230 | $1174230 |

---

Life reserves of $367,561 with surrender charges of 5% or more as of December 31, 2023 will have less than a 5% surrender charge in 2024.

*2023 Statutory Financial Statements* *Page 33* 

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*($ in Thousands)* 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **General Account** | **General Account** | **General Account** | **Separate Account** | **Separate Account** | **Separate Account** |
| <br>**December 31, 2022** | **Account<br>Value** | **Cash<br>Value** | **Reserve** | **Account<br>Value** | **Cash<br>Value** | **Reserve** |
|  Subject to Discretionary Withdrawal, |  |  |  |  |  |  |
|  Surrender Values, or Policy Loans: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Universal Life | $342279 | $341283 | $344474 | $— | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Universal Life with Secondary |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Guarantees | 1961941 | 1888725 | 4673352 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Indexed Universal Life with |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Secondary Guarantees | 1443753 | 1422171 | 1594470 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other Permanent Cash Value Life |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Insurance |  | 6633446 | 7565081 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Variable Universal Life | 298965 | 283928 | 281476 | 1031034 | 1021846 | 1021846 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Miscellaneous Reserves |  |  | 28473 |  |  |  |
|  Not Subject to Discretionary |  |  |  |  |  |  |
|  Withdrawal or No Cash Values: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Term Policies without Cash Value |  |  | 391249 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accidental Death Benefits |  |  | 225 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disability — Active Lives |  |  | 31595 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disability — Disabled Lives |  |  | 13610 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Miscellaneous Reserves |  |  | 69203 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | 4046938 | 10569553 | 14993208 | 1031034 | 1021846 | 1021846 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Reinsurance ceded | 3266725 | 3190539 | 5097291 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net | $780213 | $7379014 | $9895917 | $1031034 | $1021846 | $1021846 |

---

***Note 8.* RESERVES AND FUNDS FOR PAYMENT OF ANNUITY BENEFITS** 

The Company's separate accounts are non-guaranteed. The withdrawal characteristics of the Company's annuity actuarial reserves and deposit-type contracts are illustrated below as of December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **2023** | **General<br>Account** | **Separate<br>Account** | **Total** | **% of<br>Total** |
|  Subject to discretionary withdrawal-with adjustments: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; With fair value adjustment | $— | $— | $— | —% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; At book value less surrender charges | 251995 |  | 251995 | 2% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; At fair value |  | 7372385 | 7372385 | 68% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 251995 | 7372385 | 7624380 | 70% |
|  At book value — without adjustment | 1552590 |  | 1552590 | 14% |
|  Not subject to discretionary withdrawal | 1516043 | 134783 | 1650826 | 15% |
|  Total annuity reserves and deposit liabilities gross | 3320628 | 7507168 | 10827796 | 100% |
|  Less: Reinsurance ceded | 142487 |  | 142487 |  |
|  **Total Annuity Reserves and Deposit Liabilities, Net** | $**3178141** | $**7507168** | $**10685309** |  |

---

*Page 34* *The Penn Mutual Life Insurance Company*

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*($ in Thousands)* 

Annuity and deposit-type contract reserves of $4,649 with surrender charges of 5% or more as of December 31, 2023 will have less than a 5% surrender charge in 2024.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **2022** | **General<br>Account** | **Separate<br>Account** | **Total** | **% of<br>Total** |
|  Subject to discretionary withdrawal-with adjustments: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; With fair value adjustment | $— | $— | $— | —% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; At book value less surrender charges | 198904 |  | 198904 | 2% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; At fair value |  | 6762724 | 6762724 | 67% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 198904 | 6762724 | 6961628 | 69% |
|  At book value — without adjustment | 1778423 |  | 1778423 | 18% |
|  Not subject to discretionary withdrawal | 1219375 | 187961 | 1407336 | 14% |
|  Total annuity reserves and deposit liabilities gross | 3196702 | 6950685 | 10147387 | 100% |
|  Less: Reinsurance ceded | 168822 |  | 168822 |  |
|  **Total Annuity Reserves and Deposit Liabilities, Net** | $**3027880** | $**6950685** | $**9978565** |  |

---

The following summarizes total annuity actuarial reserves and liabilities for deposit-type contracts at December 31:

---

| | | |
|:---|:---|:---|
| | **2023** | **2022** |
|  Statutory Statements of Admitted Assets, Liabilities and Surplus: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Policyholders' reserves — group annuities | $139051 | $151609 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Policyholders' reserves — individual annuities | 2411825 | 2163661 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Liabilities for deposit-type contracts | 603553 | 628247 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; VM-21 reserves | 23712 | 84363 |
|  Subtotal | 3178141 | 3027880 |
|  Separate Account Annual Statement: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Annuities | 7507168 | 6950685 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Supplementary contracts with life contingencies |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other annuity contract-deposit-funds |  |  |
|  Subtotal | 7507168 | 6950685 |
|  **Total Reserves** | $**10685309** | $**9978565** |

---

As of December 31, 2023 and 2022, the Company has recorded reserves of $- and $100,263, respectively, related to outstanding borrowings from the FHLB-PGH classified as funding agreements.

The Company has variable annuity contracts containing GMDB provisions that provide a specified minimum return upon death as follows:

**RETURN OF PREMIUM** provides the greater of the account value or total deposits made to the contract less any partial withdrawals and assessments, which is referred to as "net purchase payments." This guarantee is a standard death benefit on all individual variable annuity products.

**STEP-UP** provides a variable death benefit equal to the greater of the account value and the highest variable account value adjusted for withdrawals and transfers from any prior contract anniversary date.

**RISING FLOOR** provides a variable death benefit equal to the greater of the current account value and the variable purchase payments accumulated at a set rate and adjusted for withdrawals and transfers.

*2023 Statutory Financial Statements* *Page 35* 

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*($ in Thousands)* 

The following table summarizes the account values and net amount at risk (death benefit in excess of account value), net of reinsurance for variable annuity contracts with guarantees invested in the separate account as of December 31:

---

| | | |
|:---|:---|:---|
| | **2023** | **2022** |
|  Account value | $6973547 | $6395190 |
|  Net amount at risk | 82767 | 328912 |

---

The Company has variable annuity contracts that have GMAB, GMWB, and GMAB/GMWB Rider options. The Company also has fixed indexed annuity contracts that have GMWB Rider options. The GMAB provides for a return of principal at the end of a ten-year period. The GMAB/GMWB combination rider allows for guaranteed withdrawals from a benefit base after a selected waiting period. The GMWB riders are also available with inflation or death benefit protection. The benefit base is calculated as the maximum of principal increase at a roll up rate less any partial withdrawals during the accumulation phase, the current account value, and the highest anniversary value over the first ten years. The withdrawal amount is stated as a percentage of the benefit base and varies based on whether the annuitant selects lifetime withdrawals or a specified period. One version of this rider has an inflation adjustment applied to the Guaranteed Withdrawal Amount.

The following table summarizes the account values for the different benefit types as of December 31, 2023:

---

| | | | |
|:---|:---|:---|:---|
| **Rider Type** | **Contracts** | **Fund<br>Value** | **Cash<br>Value** |
|  GMAB | 1624 | $283169 | $273599 |
|  GMWB | 11456 | 2886842 | 2830990 |
|  GMWB w/ DB | 1012 | 227514 | 221070 |
|  GMWB w/ inflation | 9695 | 2188828 | 2167414 |
|  GMWB w/ inflation w/ DB | 279 | 61001 | 59959 |
|  GMAB/GMWB | 1945 | 363782 | 363629 |
|  Total | 26011 | $6011136 | $5916661 |

---

The following table summarizes the account values for the different benefit types as of December 31, 2022:

---

| | | | |
|:---|:---|:---|:---|
| **Rider Type** | **Contracts** | **Fund<br>Value** | **Cash<br>Value** |
|  GMAB | 1624 | $245587 | $236610 |
|  GMWB | 11689 | 2628664 | 2571329 |
|  GMWB w/ DB | 991 | 196031 | 189974 |
|  GMWB w/ inflation | 10070 | 2064335 | 2042028 |
|  GMWB w/ inflation w/ DB | 260 | 53116 | 52158 |
|  GMAB/GMWB | 2123 | 368769 | 368580 |
|  Total | 26757 | $5556502 | $5460679 |

---

Variable annuity reserves for living and death benefits are based on the methodology specified in Valuation Manual – 21: Requirements for Principle-Based Reserves for Variable Annuities (VM-21), which specifies the reserve as the Company Stochastic Reserve plus the Additional Standard Projection Amount. The individual policy reserve is floored at cash surrender value. The Company Stochastic Reserve is based on the Conditional Tail Expectation ("CTE") 70% of 1,000 stochastically generated interest rate and equity return scenarios. Prudent estimate assumptions including margins for uncertainty are used to calculate the Company Stochastic Reserve. Key assumptions needed in valuing the liability include full withdrawals, partial withdrawals, mortality, the Consumer Price Index, investment management fees and revenue sharing, expenses, fund allocations and other policyholder behavior. The Additional Standard Projection Amount requires prescribed assumptions to be used in place of

*Page 36* *The Penn Mutual Life Insurance Company*

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*($ in Thousands)* 

Company assumptions for most key assumptions. The reserve also requires the projection of in-force general account assets and assets from reinvested cash flows. The key assumptions needed in valuing the assets, including the maximum reinvestment earned rate spreads and default rates, are prescribed. In addition, the method for projecting interest rates and equity returns is prescribed for both the Company Stochastic Reserve calculation and the Additional Standard Projection Amount calculation. The final reserve balance for policies that fall within the scope of VM-21, which covers both Living and Death Benefit guarantees, is $6,892,559 and $6,373,834, as of December 31, 2023 and 2022, respectively. During 2023 and 2022, there were $2,993 and $2,373 reserves released as a result of the annual assumption review.

Fixed indexed annuity reserves for living benefits are based on the methodology specified in Actuarial Guideline XXXV, which specifies the reserve as the sum of the non-elective benefit reserve and the elective benefit reserve. The elective benefit reserve is calculated using the elective benefit path that results in the highest present value of future benefits. The final reserve balance for policies that fall within the scope of Actuarial Guideline XXXV is $60,252 and $64,912, as of December 31, 2023 and 2022, respectively.

***Note 9.* BENEFIT PLANS** 

The Company maintains both funded and unfunded non-contributory defined benefit pension plans covering all eligible employees. The Company also has other postretirement benefit plans (health care plans) covering eligible existing retirees and limited other eligible employees. The Company uses a measurement date of December 31 for all plans.

**PENSION PLANS** The Company has both funded ("qualified pension plan") and unfunded ("nonqualified pension plans") non-contributory defined benefit pension plans covering all eligible employees (collectively, the "pension plans"). The Company's policy is to fund qualified pension costs in accordance with the Employee Retirement Income Security Act ("ERISA") of 1974. The Company may increase its contribution above the minimum based upon an evaluation of the Company's tax and cash positions and the plan's funded status.

The Company approved the freezing of benefits under its qualified pension plan and nonqualified Tax Equity and Fiscal Responsibility Act ("TEFRA") pension plans. Therefore, no further benefits are accrued for participants.

**OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS** The Company provides certain life insurance and health care benefits ("other postretirement healthcare plans") for its retired employees and financial professionals, and their beneficiaries and covered dependents.

**OTHER PLANS** The Company has non-qualified deferred compensation plans that permit eligible key employees, financial professionals, and trustees to defer portions of their compensation to these plans. Certain Company contributions in excess of allowable qualified plan limits may also be credited to these plans. Company contributions are recorded as expenses and earnings/(losses) on investments are recorded to interest credited to policyholder funds in the Statements of Income and Changes in Surplus.

**BENEFIT OBLIGATIONS** Accumulated benefit obligations represent the present value of pension benefits earned as of the measurement date based on service and compensation and do not take into consideration future salary increases. Projected benefit obligations for defined benefit plans represent the present value of pension benefits earned as of the measurement date projected for estimated salary increases to an assumed date with respect to retirement, termination, disability or death.

*2023 Statutory Financial Statements* *Page 37* 

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*($ in Thousands)* 

The following table sets forth the plans' change in projected benefit obligation of the defined benefit pension and other postretirement plans as of December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pension Plans** | **Pension Plans** | **Other Postretirement<br>Healthcare Plans** | **Other Postretirement<br>Healthcare Plans** |
| | **2023** | **2022** | **2023** | **2022** |
|  **Change in projected benefit obligation** |  |  |  |  |
|  Projected benefit obligation at beginning of year | $147378 | $195103 | $11012 | $16913 |
|  Service cost |  |  | 247 | 231 |
|  Interest cost | 7612 | 4440 | 649 | 320 |
|  Actuarial loss/(gain) | 5435 | (40804) | 3992 | (5156) |
|  Benefits paid | (11666) | (11361) | (2995) | (1296) |
|  **Projected benefit obligation at end of year** | $**148759** | $**147378** | $**12905** | $**11012** |

---

The discount rate was 5.14% at December 31, 2023 and 5.49% at December 31, 2022, which resulted in an actuarial loss on the benefit obligation for the Pension Plans during 2023.

The discount rate was 5.19% at December 31, 2023 and 5.53% at December 31, 2022, which resulted in an actuarial loss on the benefit obligation for Other Postretirement Healthcare Plans during 2023.

The weighted-average assumptions used to measure the actuarial present value of the projected benefit obligation were as follows as of December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pension Plans** | **Pension Plans** | **Other Postretirement<br>Healthcare Plans** | **Other Postretirement<br>Healthcare Plans** |
| | **2023** | **2022** | **2023** | **2022** |
|  Discount rate <sup>(1)</sup> | 5.14% | 5.49% | 5.19% | 5.53% |
|  Rate of compensation increase | N/A | N/A | N/A | N/A |
| (1) 2023 discount rates are 5.08%, 5.07%, and 4.98% for the various Nonqualified Pension Plans. | (1) 2023 discount rates are 5.08%, 5.07%, and 4.98% for the various Nonqualified Pension Plans. | (1) 2023 discount rates are 5.08%, 5.07%, and 4.98% for the various Nonqualified Pension Plans. | (1) 2023 discount rates are 5.08%, 5.07%, and 4.98% for the various Nonqualified Pension Plans. | (1) 2023 discount rates are 5.08%, 5.07%, and 4.98% for the various Nonqualified Pension Plans. |

---

The discount rate is determined at the annual measurement date of the plans and is therefore subject to change each year. The rate reflects prevailing market rates for high quality fixed-income debt instruments with maturities corresponding to expected duration of the benefit obligations on the measurement date. The rate is used to discount the future cash flows of benefits obligations back to the measurement date.

The assumed health care cost trend rates used in determining the benefit obligation for the other postretirement healthcare plans were as follows as of December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2023** | **2023** | **2022** | **2022** |
| | **Pre-65** | **Post-65** | **Pre-65** | **Post-65** |
|  Health care cost trend rate assumed for next year | 6.50% | 6.75% | 6.75% | 6.75% |
|  Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | 5.00% | 5.00% | 5.00% | 5.00% |
|  Year that the rate reaches the ultimate trend rate | 2030 | 2030 | 2030 | 2030 |

---

*Page 38* *The Penn Mutual Life Insurance Company*

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*($ in Thousands)* 

**PLAN ASSETS** The change in plan assets of pension plans and other postretirement healthcare plans represents a reconciliation of beginning and ending balances of the fair value of the plan assets used to fund future benefit payments. The following table sets forth the change in plan assets as of December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pension Benefits** | **Pension Benefits** | **Other Benefits** | **Other Benefits** |
| | **2023** | **2022** | **2023** | **2022** |
|  **Change in plan assets:** |  |  |  |  |
|  Fair value of plans assets at beginning of year | $194033 | $230758 | $— | $— |
|  Actual return on plan assets | 22835 | (27651) |  |  |
|  Employer contribution | 2197 | 2287 | 2995 | 1296 |
|  Benefits paid | (11666) | (11361) | (2995) | (1296) |
|  **Fair value of plan assets at end of year** | $**207399** | $**194033** | $**—** | $**—** |

---

The plan assets of the qualified pension plan consist primarily of investments in mutual funds through a group annuity contract with the Company. The fair value of those funds is based upon quoted prices in an active market, resulting in a classification of Level 1. The qualified pension plan also invested in bond funds that are managed by a subsidiary of the Company. The fair value of these funds are based upon the net asset value used as a practical expedient obtained from the investment manager, resulting in a classification of Level 2.

The following table presents the financial instruments carried at fair value in the Company's qualified pension plan assets as of December 31, 2023:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Asset Category** | **FV**<br> **Level 1** | **FV<br>Level 2** | **FV<br>Level 3** | **Total** |
|  Equity funds | $386 | $— | $— | $386 |
|  Bond funds | 128302 | 72229 |  | 200531 |
|  Money market funds | 6482 |  |  | 6482 |
|  **Total** | $**135170** | $**72229** | $**—** | $**207399** |

---

The following table presents the financial instruments carried at fair value in the Company's qualified pension plan assets as of December 31, 2022:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Asset Category** | **FV**<br> **Level 1** | **FV<br>Level 2** | **FV<br>Level 3** | **Total** |
|  Equity funds | $58429 | $— | $— | $58429 |
|  Bond funds | 122312 | 6059 |  | 128371 |
|  Money market funds | 7233 |  |  | 7233 |
|  **Total** | $**187974** | $**6059** | $**—** | $**194033** |

---

The Company's overall investment strategy with respect to pension assets is growth, preservation of principal, preservation of purchasing power and partial immunization through asset/liability matching while maintaining return objectives over the long term. To achieve these objectives, the Company has established a strategic asset allocation policy. Plan assets are diversified both by asset class and within each asset class in order to provide reasonable assurance that no single security or class of security will have a disproportionate impact on the plan. The target allocation for 2023 was primarily focused on bonds. The target allocation for 2022 was a 40%-60% allocation between equity and bond funds. The Company will continue its policy to rebalance the portfolio on an annual basis. Performance of investment managers, liability measurement and investment objectives are reviewed on a regular basis.

*2023 Statutory Financial Statements* *Page 39* 

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*($ in Thousands)* 

The Company's qualified pension plan asset allocation and target allocations at December 31, 2023 and 2022 are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2023 Target<br>Allocation** | **2022 Target<br>Allocation** | **Percentage of Plan Assets<br>As of December 31,** | **Percentage of Plan Assets<br>As of December 31,** |
| **Asset Category** |  |  | **2023** | **2022** |
|  Equity funds | —% | 40.0% | 0.2% | 30.1% |
|  Bond funds | 100.0% | 60.0% | 96.7% | 66.2% |
|  Money market funds | —% | —% | 3.1% | 3.7% |
|  **Total** | **100.0%** | **100.0%** | **100.0%** | **100.0%** |

---

The expected rate of return on plan assets was estimated utilizing a variety of factors including the historical investment returns achieved over a long-term period, the targeted allocation of plan assets, and expectations concerning future returns in the marketplace for both equity and debt securities. Lower returns on plan assets result in higher net periodic benefit cost.

**AMOUNTS RECOGNIZED IN THE STATEMENTS OF ADMITTED ASSETS, LIABILITIES AND SURPLUS** 

The funded status of the defined benefit pension plans and other postretirement healthcare plans is a comparison of the projected benefit obligations to the assets related to the respective plan, if any. The difference between the two represents amounts that have been appropriately recognized as expenses in prior periods that appear as the net amount recognized or represent amounts that will be recognized as expenses in the future through the amortization of the unrecognized net actuarial gains or losses and unrecognized prior service costs or credits.

The following table sets forth the funded status of the plans as of December 31, 2023 and 2022 as of the measurement date:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pension Plans** | **Pension Plans** | **Other Postretirement<br>Healthcare Plans** | **Other Postretirement<br>Healthcare Plans** |
| | **2023** | **2022** | **2023** | **2022** |
|  Benefit obligation | $(148759) | $(147378) | $(12905) | $(11012) |
|  Fair value of plan assets | 207399 | 194033 |  |  |
|  **Funded Status** | $**58640** | $**46655** | $**(12905)** | $**(11012)** |

---

The funded status reconciles to amounts reported in the Statement of Admitted Assets, Liabilities and Surplus as follows as of December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pension Plans** | **Pension Plans** | **Other Postretirement<br>Healthcare Plans** | **Other Postretirement<br>Healthcare Plans** |
| | **2023** | **2022** | **2023** | **2022** |
|  Prepaid pension asset (nonadmitted) | $75217 | $63949 | $— | $— |
|  Accrued benefit cost and liability for benefits recognized (other liabilities) | (16577) | (17294) | (12905) | (11012) |
|  **Funded Status** | $**58640** | $**46655** | $**(12905)** | $**(11012)** |

---

*Page 40* *The Penn Mutual Life Insurance Company*

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*($ in Thousands)* 

The breakout of the fair value of plan assets, projected benefit obligation and accumulated benefit obligation for plans in an overfunded status, where the fair value exceeded the projected benefit obligation, and plans in an underfunded status, where the projected benefit obligation exceeded the fair value of plan assets were as follows as of December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Overfunded**<br> **Pension Plans** | **Overfunded**<br> **Pension Plans** | **Underfunded<br>Pension Plans** | **Underfunded<br>Pension Plans** |
| | **2023** | **2022** | **2023** | **2022** |
|  Projected benefit obligation | $(132182) | $(130084) | $(16577) | $(17294) |
|  Fair value of plan assets | 207399 | 194033 |  |  |
|  Funded Status | 75217 | 63949 | (16577) | (17294) |
|  **Accumulated benefit obligation** | $**(132182)** | $**(130084)** | $**(16577)** | $**(17294)** |

---

**SURPLUS ITEMS NOT YET RECOGNIZED** The amounts in surplus that have not yet been recognized as part of net periodic benefit cost/(credit) were as follows as of December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pension Plans** | **Pension Plans** | **Other Postretirement<br>Healthcare Plans** | **Other Postretirement<br>Healthcare Plans** |
| | **2023** | **2022** | **2023** | **2022** |
|  Unrecognized prior service cost | $83 | $103 | $— | $185 |
|  Unrecognized actuarial (gain)/loss | 44759 | 50574 | (2858) | (7224) |
|  **Total** | $**44842** | $**50677** | $**(2858)** | $**(7039)** |

---

The following represents activity relating to amounts recognized in surplus or included in the remaining unrecognized transition liability from the adoption of SSAP No. 92, "*Accounting for Postretirement Benefits Other Than Pensions*," during the year ended December 31, 2023 and 2022, including reclassification adjustments for those amounts recognized as components of net periodic benefit cost/(credit), for the years ended December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pension Benefits** | **Pension Benefits** | **Other Benefits** | **Other Benefits** |
| | **2023** | **2022** | **2023** | **2022** |
|  Items not yet recognized as a component of net periodic benefit cost/(credit) — prior year | $50677 | $49560 | $(7039) | $(1697) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net prior service (cost)/credit recognized to net periodic benefit cost/(credit) | (20) | (20) | (186) | (441) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net actuarial loss/(gain) arising during the period | (4155) | 2675 | 3992 | (5155) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net actuarial (loss) recognized to net periodic benefit cost/(credit) | (1660) | (1538) | 375 | 254 |
|  **Items not yet recognized as a component of net periodic benefit cost — current year** | $**44842** | $**50677** | $**(2858)** | $**(7039)** |

---

*2023 Statutory Financial Statements* *Page 41* 

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*($ in Thousands)* 

**NET PERIODIC BENEFIT COST/(CREDIT)** The components of net periodic benefit cost/(credit) were as follows for the years ended December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pension Plans** | **Pension Plans** | **Other Postretirement<br>Healthcare Plans** | **Other Postretirement<br>Healthcare Plans** |
| | **2023** | **2022** | **2023** | **2022** |
|  Service cost | $— | $— | $247 | $231 |
|  Interest cost | 7612 | 4440 | 649 | 320 |
|  Expected return on plan assets | (13246) | (15827) |  |  |
|  Amortization of prior service cost/(credit) | 20 | 20 | 185 | 441 |
|  Amortization of actuarial losses/(gains) | 1660 | 1538 | (375) | (254) |
|  **Total net periodic benefit (credit)/cost** | $**(3954)** | $**(9829)** | $**706** | $**738** |

---

The weighted-average assumptions used to determine net periodic benefit cost/(credit) were as follows for the years ended December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pension Plans** | **Pension Plans** | **Other Postretirement<br>Healthcare Plans** | **Other Postretirement<br>Healthcare Plans** |
| | **2023** | **2022** | **2023** | **2022** |
|  Discount rate for benefit obligations | 5.49% | 2.86% | 5.52% | 2.88% |
|  Expected return on plan assets | 7.00% | 7.00% | N/A | N/A |
|  Rate of compensation increase | N/A | N/A | N/A | N/A |

---

The assumed health care cost trend rates used in determining net periodic benefit cost were as follows for the years ended December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2023** | **2023** | **2022** | **2022** |
| | **Pre-65** | **Post-65** | **Pre-65** | **Post-65** |
|  Health care cost trend rate assumed for next year | 6.50% | 6.75% | 6.75% | 6.75% |
|  Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | 5.00% | 5.00% | 5.00% | 5.00% |
|  Year that the rate reaches the ultimate trend rate | 2030 | 2030 | 2030 | 2030 |

---

**ACTUAL CONTRIBUTIONS AND BENEFITS** The contributions made and the benefits paid from the plans at December 31 were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pension Benefits** | **Pension Benefits** | **Other Benefits** | **Other Benefits** |
| | **2023** | **2022** | **2023** | **2022** |
|  Employer Contributions | $2197 | $2287 | $2995 | $1296 |
|  Benefits Paid | $(11666) | $(11361) | $(2995) | $(1296) |

---

**CASH FLOWS** The Company's funding policy is to contribute an amount at least equal to the minimum required contribution under ERISA. The Company may increase its contribution above the minimum based upon an evaluation of the Company's tax and cash positions and the plan's funded status.

In 2024, the Company expects to make the minimum required contribution to the qualified pension plan, currently estimated to be $0. The Company expects to contribute to the nonqualified pension plans and other postretirement healthcare plans in amounts equal to the expected benefit costs of approximately $11,886 and $1,071, respectively.

*Page 42* *The Penn Mutual Life Insurance Company*

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*($ in Thousands)* 

The estimated future benefit payments are based on the same assumptions as used to measure the benefit obligations as of December 31, 2023 and 2022. The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

---

| | | |
|:---|:---|:---|
| | **Pension<br>Plans** | **Other Post<br>Retirement<br>Healthcare Plans** |
| 2024 | $11886 | $1071 |
| 2025 | 11845 | 1086 |
| 2026 | 11867 | 1105 |
| 2027 | 11905 | 1147 |
| 2028 | 11795 | 1139 |
|  Years 2029-2033 | 56279 | 5214 |

---

**DEFINED CONTRIBUTION PLANS** The Company maintains three defined contribution pension plans for substantially all of its employees and full-time financial professionals. For two plans, designated contributions of up to 6% of annual compensation are eligible to be matched by the Company. Contributions for the third plan are based on tiered earnings of full-time financial professionals. For the years ended December 31, 2023, and 2022, the expense recognized for these plans was $9,583 and $8,315, respectively.

***Note 10*. FEDERAL INCOME TAXES** 

The Company follows Statement of Statutory Accounting Principles No. 101 - Income Taxes, A Replacement of SSAP No. 10R and SSAP No. 10 ("SSAP 101"). SSAP 101 includes a calculation for the limitation of gross deferred tax assets for insurers that maintain a minimum of 300% of their authorized control level RBC computed without net deferred tax assets. The Company exceeded the 300% minimum RBC requirement at December 31, 2023 and 2022.

The Company is required to evaluate the recoverability of deferred tax assets and to establish a valuation allowance if necessary to reduce the deferred tax asset to an amount which is more likely than not to be realized. Considerable judgment is required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance, the Company considers many factors, including: (1) the nature of the deferred tax assets and liabilities; (2) whether they are ordinary or capital; (3) the timing of their reversal; (4) taxable income in prior carryback years as well as projected taxable income exclusive of reversing temporary differences and carryforwards; (5) the length of time that carryovers can be utilized; (6) unique tax rules that would impact the utilization of the deferred tax assets; and (7) any tax planning strategies that the Company would employ to avoid a tax benefit from expiring unused; although the realization is not assured, management believes it is more likely than not that the deferred tax assets, will be realized. The Company has not recorded a valuation allowance as of December 31, 2023 and 2022.

The components of deferred tax asset ("DTA") and deferred tax liabilities ("DTL") recognized by the Company are as follows as of December 31:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Description** |  | **2023** |  |  | **2022** |  |
|  | **Ordinary** | **Capital** | **Total** | **Ordinary** | **Capital** | **Total** |
|  Gross DTAs | $474131 | $36818 | $510949 | $504102 | $14627 | $518729 |
|  Adjusted gross DTAs | 474131 | 36818 | 510949 | 504102 | 14627 | 518729 |
|  Adjusted gross DTAs nonadmitted | (74580) |  | (74580) | (40179) |  | (40179) |
|  Subtotal admitted adjusted DTA | 399551 | 36818 | 436369 | 463923 | 14627 | 478550 |
|  Gross DTL | (177606) | (55607) | (233213) | (144243) | (78732) | (222975) |
|  **Net admitted DTA/(DTL)** | $**221945** | $**(18789)** | $**203156** | $**319680** | $**(64105)** | $**255575** |

---

*2023 Statutory Financial Statements* *Page 43* 

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*($ in Thousands)* 

---

| | | | |
|:---|:---|:---|:---|
| **Description** | **Changes during 2023** | **Changes during 2023** | **Changes during 2023** |
|  | **Ordinary** | **Capital** | **Total** |
|  Gross DTAs/(DTLs) | $(29971) | $22191 | $(7780) |
|  Adjusted gross DTAs | (29971) | 22191 | (7780) |
|  Adjusted gross DTAs nonadmitted | (34401) |  | (34401) |
|  Subtotal admitted adjusted DTA/(DTL) | (64372) | 22191 | (42181) |
|  Gross DTL | (33363) | 23125 | (10238) |
|  **Net admitted DTA/(DTL)** | $**(97735)** | $**45316** | $**(52419)** |

---

Admitted DTAs are comprised of the following admission components based on paragraph 11 of SSAP No. 101 as of December 31:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Description** | **2023** | **2023** | **2023** | **2022** | **2022** | **2022** |
|  | **Ordinary** | **Capital** | **Total** | **Ordinary** | **Capital** | **Total** |
|  Admitted DTA 3 Years: |  |  |  |  |  |  |
|  Federal income taxes that can be recovered: |  |  |  |  |  |  |
|  Remaining adjusted gross DTAs expected to be realized in 3 years (lesser of 1 or 2): | $189162 | $13994 | $203156 | $240978 | $14597 | $255575 |
| &nbsp;&nbsp;&nbsp;&nbsp;1. Adjusted gross DTA expected to be realized | 189162 | 13994 | 203156 | 240978 | 14597 | 255575 |
| &nbsp;&nbsp;&nbsp;&nbsp;2. Adjusted gross DTA allowed per limitation threshold |  |  | 399208 |  |  | 355534 |
|  Adjusted gross DTA offset by existing DTLs | 210390 | 22823 | 233213 | 222975 |  | 222975 |
|  **Total admitted DTA realized within 3 years** | $**399552** | $**36817** | $**436369** | $**463953** | $**14597** | $**478550** |

---

---

| | | | |
|:---|:---|:---|:---|
| **Description** | **Changes during 2023** | **Changes during 2023** | **Changes during 2023** |
|  | **Ordinary** | **Capital** | **Total** |
|  Admitted DTA 3 years: |  |  |  |
|  Federal income taxes that can be recovered: |  |  |  |
|  Remaining adjusted gross DTAs expected to be realized within 3 years (lesser of 1 or 2): | $(51816) | $(602) | $(52418) |
| &nbsp;&nbsp;&nbsp;&nbsp;1. Adjusted gross DTA to be realized | (51816) | (602) | (52418) |
| &nbsp;&nbsp;&nbsp;&nbsp;2. Adjusted gross DTA allowed per limitation threshold |  |  |  |
|  Adjusted gross DTA offset by existing DTLs | (12585) | 22823 | 10238 |
|  **Total admitted DTA realized within 3 years** | $**(64401)** | $**22221** | $**(42180)** |

---

The authorized control level RBC and total adjusted capital computed without net deferred tax assets utilized when determining the amount of admissible net deferred tax assets was as follows:

---

| | | |
|:---|:---|:---|
| **December 31** | **2023** | **2022** |
|  Ratio percentage used to determine recovery period and threshold limitation amount | 518% | 435% |
|  Amount of adjusted capital and surplus used to determine recovery period and threshold limitation | $3405206 | $2930954 |

---

*Page 44* *The Penn Mutual Life Insurance Company*

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*($ in Thousands)* 

The impact of tax planning strategies on the determination of adjusted gross DTAs and net admitted DTAs is as follows**:**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **December 31, 2023** | **December 31, 2023** | **December 31, 2023** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | | **Change** | |
|  | **Ordinary** | **Capital** | **Total** | **Ordinary** | **Capital** | **Total** | **Ordinary** | **Capital** | **Total** |
|  Adjusted gross DTAs | —% | 100% | 89% | —% | 100% | 3% | —% | —% | 86% |
|  Net admitted DTAs | —% | 100% | 91% | —% | 100% | (25)% | —% | —% | 116% |

---

The Company's tax planning strategies does not include the use of reinsurance. There are no temporary differences for which a DTL has not been established.

**Significant components of income taxes incurred** 

Current income taxes incurred consist of the following major components for the years ended December 31:

---

| | | |
|:---|:---|:---|
| **Description** | **2023** | **2022** |
|  Current federal income tax expense/(benefit) | $(30413) | $(3579) |
|  Income tax effect on realized capital gains/(losses) | (5035) | (15461) |
|  **Federal and foreign income taxes incurred** | $**(35448)** | $**(19040)** |

---

As reported on the capital gains and losses, net of tax as disclosed within the income statement, the Company's accounting policy is to record tax expense or benefit as calculated pursuant to the Internal Revenue Code, adjusted for taxes transferred to the IMR reserve.

*2023 Statutory Financial Statements* *Page 45* 

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*($ in Thousands)* 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are as follows as of December 31:

---

| | | | |
|:---|:---|:---|:---|
| | **2023** | **2022** | **Change** |
|  **DTAs resulting in book/tax differences in:** |  |  |  |
|  **Ordinary:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Future policy benefits | $119606 | $125975 | $(6369) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DAC | 174441 | 151726 | 22715 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred compensation | 41178 | 38022 | 3156 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Nonadmitted assets | 21991 | 19294 | 2697 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LIHTC credits | 9435 | 68418 | (58983) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; PML Reserve Financing | 36343 | 36343 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; PML Reinsurance | 56658 | 60741 | (4083) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other- ordinary | 14479 | 3583 | 10896 |
|  Subtotal — Gross ordinary DTAs | 474131 | 504102 | (29971) |
|  Nonadmitted ordinary DTAs | (74580) | (40179) | (34401) |
|  Admitted ordinary DTAs | 399551 | 463923 | (64372) |
|  **Capital:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Unrealized Investment Losses | 22750 |  | 22750 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other — Capital | 73 |  | 73 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; OTTI on Investments | 13995 | 14627 | (632) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gross capital DTAs | 36818 | 14627 | 22191 |
|  Admitted capital DTAs | 36818 | 14627 | 22191 |
|  Admitted DTAs | 436369 | 478550 | (42181) |
|  **DTLs resulting in book/tax differences in:** |  |  |  |
|  **Ordinary:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investments — ordinary | (137335) | (117891) | (19444) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Future Policy Benefits — 8 year spread | (12137) | (18176) | 6039 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | (28134) | (8176) | (19958) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ordinary DTLs | (177606) | (144243) | (33363) |
|  **Capital:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Alternative asset investments | (55607) | (45428) | (10179) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net unrealized investment gains |  | (33304) | 33304 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Capital DTLs | (55607) | (78732) | 23125 |
|  DTLs | (233213) | (222975) | (10238) |
|  **Net deferred tax asset** | $**203156** | $**255575** | $**(52419)** |

---

*Page 46* *The Penn Mutual Life Insurance Company*

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*($ in Thousands)* 

The change in deferred income taxes, exclusive of the effect of nonadmitted assets, as the change in nonadmitted assets is reported separately from the change in net deferred income taxes in the Statements of Changes in Surplus, is comprised of the following:

---

| | | | |
|:---|:---|:---|:---|
| | **2023** | **2022** | **Change** |
|  Total deferred tax assets | $510949 | $518729 | $(7780) |
|  Total deferred tax liabilities | (233213) | (222975) | (10238) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net deferred tax asset | $277736 | $295754 | $(18018) |
|  Tax effect of net unrealized gains/(losses) |  |  | (56053) |
|  Tax effect of postretirement liability |  |  | (61) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Change in net deferred income tax** |  |  | $**(74132)** |

---

The provision for federal income taxes incurred is different from that which would be obtained by applying the statutory federal income tax rate to income before income taxes. The significant items causing the differences as of December 31, 2023 are as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Description** | **Amount** | **Tax Effect** | **Effective<br>Tax Rate** |
|  Income before Taxes | $114647 | $24076 | 21.00% |
|  Income from Affiliates | (96963) | (20362) | (17.76)% |
|  Separate Account Dividend Received Deduction | (16653) | (3497) | (3.05)% |
|  LIHTC |  | (3837) | (3.35)% |
|  Executive Benefits | (16400) | (3444) | (3.00)% |
|  IMR Tax Adjustment | 16320 | 3427 | 2.99% |
|  Dividends Received Deduction | (2155) | (452) | (0.39)% |
|  Change in Valuation Basis | 216831 | 45534 | 39.72% |
|  Other | (13148) | (2761) | (2.27)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total** | $**202479** | $**38684** | **33.88%** |
|  Federal income taxes incurred |  | $(30413) | (26.53)% |
|  FIT expense/(benefit) on realized capital gains/losses |  | (1563) | (1.36)% |
|  FIT in IMR gains/losses |  | (3472) | (3.02)% |
|  Change in net deferred income tax |  | 74132 | 64.80% |
|  **Total Statutory Taxes** |  | $**38684** | **33.88%** |

---

The effective tax rate is primarily driven by the following components: (1) the reversal of income from affiliates, the tax on which is recorded in their separate company financial statements, (2) the separate account dividends received deduction, and (3) low income housing tax credits.

The Company utilized $78,157 of the total LIHTC available at December 31, 2023. The Company now has $9,435 of LIHTC carryforwards as of December 31, 2023 that will begin to expire in 2040.

There was no income tax expense for 2023, 2022 and 2021 that is available for recoupment in the event of future net losses. The Company has not made any deposits regarding the suspension of running interest (protective deposits) pursuant to Internal Revenue Code Section 6603.

The Company's federal income tax return is consolidated with its majority owned subsidiaries listed below. The method of tax allocation among the companies is subject to a written agreement, whereby the tax allocation is made on a benefits for loss basis. The tax share agreement allows for each direct Subsidiary of Parent that owns stock of another Subsidiary to be treated as the Intermediate Parent of the Intermediate Parent Group.

*2023 Statutory Financial Statements* *Page 47* 

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*($ in Thousands)* 

A listing of the companies included in the consolidated return is as follows:

Penn Insurance & Annuity Company PIA

Reinsurance Company of Delaware I

Vantis Life Insurance Company

Penn Insurance and Annuity Company of New York

Tax years 2020 and subsequent are subject to audit by the Internal Revenue Service.

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits, as a component of tax expense. During the years ended December 31, 2023 and 2022, the Company did not recognize or accrue penalties or interest.

The Company had no tax loss contingencies for which it is reasonably possible that the total liability will significantly increase within the next twelve months of the reporting date.

On August 16, 2022, the Inflation Reduction Act of 2022 (Act) was passed by the US Congress and signed into law by President Biden. The Act includes a new corporate alternative minimum tax (CAMT) for tax years beginning after December 31, 2022. The Company has determined that they are a non-applicable reporting entity in 2023.

***Note 11.* REINSURANCE** 

The Company has assumed and ceded reinsurance on certain life and annuity contracts under various agreements. Reinsurance ceded permits recovery of a portion of losses from reinsurers.

The table below highlights the reinsurance amounts shown in the accompanying financial statements.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Direct** | **Assumed** | **Ceded** | **Net Amount** |
|  **December 31, 2023:** |  |  |  |  |
|  Premium and annuity considerations | $3001718 | $13704 | $1446747 | $1568675 |
|  Reserves and funds for payment of insurance and annuity benefits | 19764727 | 3978 | 5630366 | 14138339 |
|  **December 31, 2022:** |  |  |  |  |
|  Premium and annuity considerations | $2771772 | $11831 | $1924645 | $858958 |
|  Reserves and funds for payment of insurance and annuity benefits | 18408702 | 4229 | 5480114 | 12932817 |

---

The Company entered into a coinsurance funds withheld agreement with a certified, non-affiliated reinsurer, effective June 30, 2020, and amended October 1, 2020, to coinsure an existing block of Term and Universal Life policies on a quota share basis. In addition, this agreement reinsured on a YRT basis certain Universal Life policies on a quota share basis. The agreement generated an after-tax gain of $238,580, that was a direct increase to surplus. The after-tax gain is amortized into income over the emerging earnings of the business.

The Company entered into a coinsurance fund withheld agreement with an authorized, non-affiliated reinsurer, effective September 30, 2017, to coinsure an existing block of whole life policies on a 20% quota share basis. In addition to the whole life policies, this agreement reinsured on a YRT basis certain Universal Life policies on a 85% quota share basis. The agreement generated an after-tax gain of $61,750, that was a direct increase to surplus and will be amortized into income. The agreement was amended on April 1, 2020 and generated an additional after-tax gain of $19,750, that was a direct increase to surplus. The after-tax gain is amortized into income over the emerging earnings of the business.

The Company has entered into an indemnity reinsurance agreement with a single non-affiliated reinsurer, whereby the Company cedes its risk associated with the Disability Income line of business. Under the agreement, 95% of the assets and liabilities were transferred to the reinsurer, and the assets were placed in a trust that names the

*Page 48* *The Penn Mutual Life Insurance Company*

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Company as beneficiary. As of December 31, 2023 and 2022, the Company had a related reserve credit of $181,322 and $167,333, respectively, which was secured by investment grade securities with a market value of $255,627 and $238,951, respectively, held in trust.

The Company entered into a coinsurance agreement with an authorized, non-affiliated reinsurer, effective January 1, 2013, to coinsure an existing block of guaranteed term products. The coinsurance agreement generated an after-tax gain of $30,200, which was a direct increase to surplus. The after-tax gain was amortized into income over the emerging earnings of the business, and fully amortized in 2022.

**INTERCOMPANY REINSURANCE** The Company maintains various reinsurance agreements with affiliates. The following table summarizes premium and reserves balances associated with such agreements as of and for the years ended December 31:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | **Assumed/(Ceded)** | **Assumed/(Ceded)** | **Assumed/(Ceded)** | **Assumed/(Ceded)** |
|  | | **2023** | **2023** | **2022** | **2022** |
| |<br>**Affiliate** | **Premium** | **Reserves** | **Premium** | **Reserves** |
|  Coinsurance Modified Coinsurance | PIANY | $(42473) | $(212030) | $(48295) | $(224537) |
|  YRT — Over retention | PIANY | 3481 | 937 | 2771 | 543 |
|  Coinsurance Funds Withheld | PIA | (30972) | (1585521) | (33895) | (1518169) |
|  Coinsurance — Inforce | PIA | (33543) | (579871) | (37929) | (565410) |
|  Coinsurance | PIA | (95937) | (1273467) | (92718) | (1293105) |
|  YRT — Over retention | PIA | 4932 | 668 | 4239 | 584 |
|  YRT — Over retention | Vantis | 61 | 81 | 13 | 52 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total |  | $(194451) | $(3649203) | $(205814) | $(3600042) |

---

*Coinsurance Modified Coinsurance — PIANY* PML ceded to PIANY an inforce block of New York issued variable universal life and variable deferred annuity policies. The Company ceded 100% of the insurance risk, gross of inuring reinsurance.

*YRT Over Retention* — PIANY The Company assumes from PIANY the policies that result in retention greater than $300 per life, up to $7,500.

*Coinsurance Funds Withheld — PIA* At December 31, 2014, the Company entered into a contract to cede reserves pursuant to transactions subject to the requirements of Section 7 of the NAIC XXX and AXXX Reinsurance Model Regulation. PIA contemporaneously reinsured the policies to PIAre I, an authorized, affiliated reinsurer. The agreement generated an after-tax gain of $173,062, that was a direct increase to surplus and is amortized into income as earnings emerge.

*Coinsurance — Inforce — PIA* Effective January 1, 2015, PML ceded to PIA an inforce block of single life index universal life policies. The Company ceded 100% of the risk, net of inuring reinsurance. The after-tax gain of $20,814 was a direct increase to surplus and has been fully amortized into income.

*Coinsurance — PIA* The Company cedes certain insurance risks to PIA on a coinsurance basis.

*YRT — Over Retention — PIA* The Company assumed from PIA policies issued after October 1, 2006 and before October 1, 2014 that resulted in retention greater than $1,000 per life.

*YRT — Over retention — Vantis* Effective April 12, 2021, the Company assumed from Vantis a quota share of 90% for term policies and 50% for whole life policies. If Vantis has reached its retention limit of $300 per life, the Company's share will be 100% of the excess up to $5,000.

*2023 Statutory Financial Statements* *Page 49* 

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***Note 12.* RELATED PARTIES** 

The Company holds revolving loan agreements with affiliates.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Affiliate** | **Effective Date** | **Maturity Date** | **Maximum<br>Amount** | **Current Interest Rate** |
| JMS | March 1, 2009 | March 2028 | $65000 | Market Based at time of draw |
| JMS | September 1, 2016 | September 2036 | 100000 | 8% |
| JMS | December 1, 2018 | December 2038 | 130000 | 8% |
| JMS | December 1, 2018 | December 2038 | 100000 | 8% |
| PMAM | July 1, 2019 | July 2039 | 100000 | Market Based at time of draw |
| JMS | August 19, 2021 | August 2041 | 150000 | Market Based at time of draw |
| PMAM | August 31, 2021 | August 2041 | 100000 | Market Based at time of draw |
| PMAM | June 22, 2022 | June 2042 | 100000 | Market Based at time of draw |
| HTK | July 31, 2023 | July 2042 | 20000 | Market Based at time of draw |

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The Company recorded $55,671 and $49,451 in interest income on these notes for the years ended December 31, 2023 and 2022, respectively. At December 31, 2023 and 2022, the Company had outstanding principle receivables of $708,000 and $650,000 and interest receivables of $14,229 and $14,469, respectively, relating to these agreements.

JMS has a line of credit with the Company. There was no outstanding balance as of December 31, 2023 and December 31, 2022.

In 2023, the Company formed 1847 Insurance Captive, LLC. 1847, which is domiciled in Delaware, currently provides Fidelity Bond, Cyber and Medical Stop Loss insurance coverages to the Company and its affiliates.

The Company's investment in PMAM's Private Funds/PMUBX at December 31, 2023 and 2022 of $118,665 and $108,695, respectively, represents a majority ownership of the funds and are considered affiliates.

The Company's unconsolidated subsidiaries had combined assets of $17,805,153 and $15,839,682 and combined liabilities of $16,516,057 and $14,760,955 as of December 31, 2023 and 2022, respectively. The admitted value of the Company's investments in subsidiaries includes goodwill of $140,423 and $74,434 and other intangible assets of $5,326 and $3,220 at December 31, 2023 and 2022, respectively.

The Company made the following capital contributions for 2023 and 2022, respectively:

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| | | |
|:---|:---|:---|
| **December 31** | **2023** | **2022** |
|  | **Capital<br>Contributions** | **Capital<br>Contributions** |
|  PIA | $30000 | $60000 |
|  Vantis |  | 35000 |
| 1847 | 6000 |  |
|  PIANY |  | 15000 |

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Capital contributions were in the form of cash.

Under a variety of intercompany agreements, the Company provides its subsidiaries with administrative services, leases, and accounting services. For 2023 and 2022, the total expenses incurred by subsidiaries under these agreements were $68,552 and $61,801, respectively. The Company received services from its subsidiary, Vantis, during 2023 and 2022, incurring expenses of $447 and $2,578, respectively. The net amount due to the Company was $15,267 and $16,272 at December 31, 2023 and December 31, 2022, respectively. Under the terms of an investment management agreement, the Company incurred expenses from PMAM of $18,566 and $12,688 for 2023 and 2022, respectively.

*Page 50* *The Penn Mutual Life Insurance Company*

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***Note 13*. COMMITMENTS, CONTINGENCIES AND UNCERTAINTIES** 

**LITIGATION** The Company and its subsidiaries are involved in litigation arising in and out of the normal course of business, which seek both compensatory and punitive damages. In addition, the regulators within the insurance and brokerage industries continue to focus on market conduct and compliance issues. While the Company is not aware of any actions or allegations that should reasonably give rise to a material adverse impact to the Company's financial position or liquidity, the outcome of litigation cannot be foreseen with certainty.

For some matters, the Company is able to estimate a possible range of loss. For such matters in which a loss is probable, an accrual has been made. For matters where the Company, however, believes a loss is reasonably possible, but not probable, no accrual is required. For matters for which an accrual has been made, but there remains a reasonably possible range of loss in excess of the amounts accrued or for matters where no accrual is required, the Company develops an estimate of the unaccrued amounts of the reasonably possible range of losses.

**GUARANTY FUNDS** The Company is subject to insurance guaranty fund laws in the states in which it does business. These laws assess insurance companies' amounts to be used to pay benefits to policyholders and policy claimants of insolvent insurance companies. Many states allow these assessments to be credited against future premium taxes. The liability for estimated guaranty fund assessments net of applicable premium tax credits as December 31, 2023 and 2022 was $175. The Company monitors sales materials and compliance procedures and makes extensive efforts to minimize any potential liabilities in this area. The Company believes such assessments in excess of amounts accrued will not materially impact its financial statement position, results of operation, or liquidity.

**LEASES** The Company has entered into other leases, primarily for field offices.

As of December 31, 2023 future minimum payments under noncancellable leases are as follows:

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| | |
|:---|:---|
| **For the year ending:** | |
| 2024 | $6989 |
| 2025 | 6101 |
| 2026 | 3871 |
| 2027 | 480 |
| Thereafter | 239 |

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Rent expense was $4,658 and $8,221 as of December 31, 2023 and December 31, 2022, respectively.

**COMMITMENTS** In the normal course of business, the Company extends commitments relating to its investment activities. As of December 31, 2023, the Company had outstanding commitments totaling $315,738 relating to these investment activities. The fair value of these commitments approximates the face amount.

***Note 14*. SUBSEQUENT EVENTS** 

The Company has evaluated events subsequent to December 31, 2023 and through the financial statement issuance date of February 16, 2024 and has determined that there were no other significant events requiring recognition in the financial statements and no additional events requiring disclosure in the financial statements.

*2023 Statutory Financial Statements* *Page 51* 

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| ![LOGO](g934200g67z36.jpg) | **About The PennMutual Life Insurance Company**<br>For more than 175 years, Penn Mutual has been helping people get stronger. Our expertly crafted life insurance is vital to long-term financial health and strengthens people's ability to enjoy every day.Working with our trusted network of financial professionals, we take the long view, building customized solutions for individuals, their families, and their businesses. Penn Mutual supports its financial professionals with retirement and investment services through its wholly-owned subsidiary Hornor, Townsend & Kent, LLC, member Fl NRA/SIPC.<br>**Visit Penn Mutual at www.pennmutual.com.**<br>![LOGO](g934200g01f42.jpg)  |

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<sup>©</sup> 2024 The Penn Mutual Life Insurance Company, Philadelphia, PA 19172, www.pennmutual.com

PM1941 01/24