American Stories 2013 Annual Report
Table of Contents
Letter from the President, Chairman and Chief Executive Officer
2
american stories
Levon Henry
6
8
Tara Furlough
10
Our Company’s American Story
12
Board of Directors
14
Financial and Corporate Information
17
Addie Williams
4 / Mutual of America
mutual of america 2013 annual report
Independent ratings1 A.M. Best (as of July 2013) A+ (Superior) Standard & Poor’sŽ (as of July 2013) AA- (Very Strong) Fitch (as of September 2013) AA- (Very Strong)
2013 selected financial Data December 31 ($ in millions)
2013 2012
Premiums
Percentage change
1,772.1
1,685.0
49.1
48.8
0.6
General Account Assets
8,155.4
7,904.1
3.2
Separate Account Assets
8,515.0
6,744.0
26.3
16,670.4
14,648.1
13.8
1,023.8
961.5
6.5
Net Income
Total Assets Total Surplus (including Asset Valuation Reserve) Surplus Ratio*
12.6%
5.2%
12.2%
* Total Surplus as a percentage of General Account Assets
annual report 2013 / 1
Letter from Thomas J. Moran, President, Chairman and Chief Executive Officer
Since Mutual of America’s founding in 1945, our primary
about job prospects. For employers, the pressure to manage
mission has not changed. Our goal is to help individuals
expenses is intense—especially for nonprofits, which
achieve a financially secure retirement. In 2013, that goal
trimmed budgets drastically in the face of federal and state
continued to drive us in the context of both a reinvigorated
budget cutbacks.
U.S. stock market and ongoing economic challenges facing our country and the world.
Although Mutual of America is not immune to current economic conditions, our surplus, built over decades for
Like many Americans, I watched our elected leaders
the benefit of our customers, stands at $1.024 billion, clear
with a mixture of concern and disappointment this year as
evidence of our continued financial strength and stability.
they struggled to find common ground over the budget.
In 2013, our assets reached $16.7 billion, an all-time high.
The partisan rancor and political gridlock in Washington
Our consistent, prudent approach to investing and managing
that resulted in the government shutdown heightened
our Company enables us to continue to fulfill the promises
the sense of uncertainty on the part of individuals and
we make to our customers.
businesses alike. While the U.S. stock market reached an all-time high in 2013, economic growth was not as strong
Our mutual company structure is one of our greatest
as we hoped.
advantages. As a mutual company, we are owned by our policyholders—not stockholders. While many companies
Unemployment continues to decrease, but it is still high,
face overwhelming pressure from investors focused on
particularly when one considers Americans who have
quarterly or yearly results, we can invest and manage risk
dropped out of the labor force because they are discouraged
for the long term. We offer competitive interest rates in
2 / Mutual of America
Growth in u.s. Gross Domestic Product
2009
2010
2011
2012
2013
6%
6%6%6%6%6
3%
3%3%3%3%3
0%
0%0%0%0%0
-3%
-3% -3% -3 -3%-3%
-6% 2009 2009 2009 2009 2009 2009
2010 2010 2010 2010 2010 2010
2011 2011 2011 2011 2011 2011
2012 2012 2012 2012 2012 2012
-6% -6% -6 -6%-6% 2013 2013 2013 2013 2013 2013
© 2014 Haver Analytics. All rights reserved.
our Interest Accumulation Account2 while maintaining our
investment styles that are prudent, long-term investment
excellent financial strength ratings in what continues to be
choices for individuals’ retirement savings. In 2013, the
a difficult economic environment.
investment selection available through Mutual of America’s
1
contracts expanded to include an additional fund from Our General Account investment strategy of maintaining
Vanguard as well as funds from T. Rowe Price, American
high-quality assets with excellent liquidity, strong capital
Funds and PIMCO. These new Separate Account offerings
adequacy and a proper matching of assets and liabilities
further expand our customers’ access to some of the largest
places Mutual of America among the strongest of all life
and best recognized investment advisers in the industry
insurance companies in the United States. The high ratings
and to an even more diverse array of sectors, investment
that were reaffirmed by the major independent rating agencies
strategies and management styles.4
in 2013 reflect the financial strength of Mutual of America’s General Account and the Company’s prudent General
Slow economic growth, stagnant wages and lingering
Account investment strategy.
financial strains have made it that much harder for individuals to set aside money for retirement. Yet, if there is
In terms of the performance of our Separate Account
an upside to our current economic scenario, it is the renewed
investment funds (“funds”), our customers had the opportunity
focus on prioritizing retirement saving. With a growing sense
to benefit from historical gains in the stock market.3 We
that government may not be willing or able to maintain
continue to refine our fund offerings to help meet the
current levels of Social Security and medical benefits for
investment goals of individuals of every age and risk
future retirees, now more than ever individuals understand
tolerance level. We believe that our funds offer an array of
the need to take charge of their financial future.
annual report 2013 / 3
U.S. Unemployment rate 10% 10%6%6%6%6%6%
9% 9%3%3%3%3%3%
8% 8%0%0%0%0%0%
-3%-3%-3%-3% -3% 7% 7%
-6%-6%-6%-6% -6% 6% 6% 2009 2009 2009 2009 2009 2010 2010 2010 2010 2010 2010 2011 2011 2011 2011 2011 2011 2012 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2013 2009 2011 2012 2013 2009
Š 2014 Haver Analytics. All rights reserved.
To assist them, we continue to expand our online, interactive
solutions that have a lasting positive impact on access to
tools to help our customers assess their risk tolerance as they
education, economic development and support for the most
plan for their long-range financial needs. To meet expectations
vulnerable among us.
for anytime-anywhere account access, we now offer individuals the ability to make transfers and asset allocation
Today, more than five years after the global financial crisis,
changes via their smart phones. We continue to bolster our
our Company continues to grow by helping individuals
Regional Office capabilities so local representatives can reach
plan for a more secure financial future. We know the
each of our customers individually, respond quickly to their
difference our services make in the lives of our customers,
questions and provide the information they need to make
their families and their loved ones. For their sake, we will
informed decisions about their retirement savings. And for
continue to dedicate our efforts to remaining financially
employers, Enhanced Plan Sponsor Reports on Hotline Plus
strong and stable while offering the finest customer service.
allow them to access and aggregate additional participant demographic and financial data to help them administer their plans more efficiently. We also continue to show our commitment to the communities where we live and work—from our headquarters in New York City to the hometowns of our local representatives
Thomas J. Moran
across the country. The Mutual of America Community
President, Chairman and
Partnership Award is one of many ways we invest in
Chief Executive Officer
4 / Mutual of America
American Stories
Mutual of America’s clients are individuals with extraordinary vision, embracing the values that make our country strong. They dedicate their lives to their communities and the people they employ. We support their efforts in ways that go above and beyond providing retirement plans; that is why their stories are also our story. The collaborative nature of our business model, with our tight-knit Regional Office structure and team approach to delivering services, is part of our Company’s American Story. From our beginning as a provider of retirement plans to social sector employees, to our growth as a leading retirement plan service provider to nonprofits as well as for-profit companies, Mutual of America has been instrumental in supporting and strengthening the work of organizations large and small, helping individuals save for their retirement and maintaining a tradition of service, responsibility and inclusiveness.
annual report 2013 / 5
Levon Henry, Executive Director DNA People’s Legal Services Window Rock, Arizona 66 // MUTUAL MUTUAL OF OF AMERICA AMERICA
An Enduring Connection to the People and the Land
DNA is an acronym for a Navajo expression, Dinébe’iiná Náhiiłna be Agha’diit’ahii, which means “attorneys who work for the economic revitalization of The People.” We have ten offices that offer free civil legal services to people living in poverty in the Southwest, including seven Native American nations. Just like any part of the country, the economy is tough out here. The unemployment rate on any reservation is upwards of 50 percent. Along with that comes a host of issues: problems with child support, domestic violence, evictions. The need here is so great. Just keeping someone in their home over the winter months is an incredible benefit to people out here. I was born on the reservation and lived here most of my life. I went away to college in Michigan and lived in Albuquerque while I was in law school. But I always come back. There’s a connection here—not only to the people, but to the land. It’s one of those areas where I can see where I’m going. I can go to the mountaintop and see 100 miles in every direction, listen to the wind, watch a thunderstorm roll in from miles away. That connection is powerful. Our offices are very remote and scattered over a huge area. There aren’t many companies willing to come out here. But Mutual of America makes sure our employees get to talk to someone regularly. They have really looked out for both our long-term employees and our younger staff, who haven’t given much thought to saving for retirement. When our employees sit down with someone from Mutual of America, they really begin to understand what it takes to help achieve a secure retirement. That’s important to me. I want them to have the opportunity to live comfortably in their old age.
annual report 2013 / 7
Addie Williams, CEO Spaulding for Children Southfield, Michigan 88 // Mutual Mutual of of America America
For Every Child, a Home
Caring about children has been a constant in my life. I graduated college with an education degree and began teaching in an elementary school in Detroit, my hometown. One young man stopped coming to class, so I visited him at home to find out why. My principal reprimanded me: “Leave that to the social worker,” she said. So I decided to go back to school and get a Masters in Social Work. I began my social work career in the adoptions unit of the Department of Human Services, where I came to see the problems facing children in foster care. To better help them and effect change, I decided to become a lawyer, focusing on juvenile justice. What I find so important is helping disadvantaged youth do better than people think they can. I hear people say, “Their parents weren’t any good. They’re not going to be any good.” People just need to have someone who believes in them—who recognizes their talents and abilities and encourages them to go on. When Spaulding for Children was founded in 1968, if you were a minority, had a disability, had brothers or sisters you needed to be placed with, then you were deemed unadoptable, and no efforts were ever made to find you a permanent home. Spaulding started when a group of parents decided that shouldn’t be and created a program focused on placing children with developmental disabilities. I joined Spaulding in 1996 and became president and CEO in 2000. Today, through our National Resource Center for Adoption, we provide consultation and technical assistance to states, tribes and local governments on how to find permanent homes for children in the child welfare system. There’s a lot of heartache in this work, but when you place a child in an adoptive home and it goes well, or see a child who struggled through abuse graduate from college—then you really celebrate. I’m planning to retire in three years. I started contributing to a 401(k) when I started working—it happened to be a Mutual of America plan. But I never fully realized how much that would mean to me today, to be able to retire and have money to cover my needs. Mutual of America does a great job of explaining the importance of saving, especially to young people, who tend not to realize they’ll ever grow old.
annual report 2013 / 9
Tara Furlough, CEO Tara Manufacturing Owens Cross Roads, Alabama 10 10 // Mutual Mutual of of America America
She’s All That... Driving Change through Girl Power
My father has been a great inspiration in my life. He always made me and my sister feel like we could accomplish anything. And he wanted us to learn what work was. When we were kids, he put us to work at the factory—in payroll, human resources, shipping. In high school I actually worked on the welding machine. My dad took me under his wing and mentored me until he decided to retire, and that’s when I took the position of CEO. Our company’s mission statement says that we give back to the community, and that’s where my passion lies. When we moved our manufacturing to Owens Cross Roads, I learned about issues in the community related to generational poverty. The director of a local nonprofit called The Care Center brought to my attention some of the needs of the students due to various life challenges and their lack of resources. I wanted to help, so I joined the board of The Care Center. I worked with them to set up a thrift store that employs women who are trying to get their lives back together. These women had problems securing jobs due to bad life decisions. At the thrift shop, we gave them mentors and classes in life skills and recovery. There were times I thought: is this what my life has come to—helping sort clothes in the back of a thrift store? But I absolutely loved it because I saw growth in those women and a lot of hope. So I decided to try a similar idea with teenage girls. We just broke ground on a clothing boutique called She’s All That… The girls who work there will be paired with mentors and learn business and life skills, and the money the shop raises will be used to help them further their education. From the beginning, my father offered a 401(k) with a matching contribution because he believed in providing for our employees. That was really hard to do—we were a small business. He also believed our employees should learn about saving for retirement— especially our factory workers because many haven’t had much education. In that regard, Mutual of America’s representatives have been phenomenal. Each quarter they come and hold meetings with our employees, educating them on the importance of investing for their future, something I feel so strongly about.
annual report 2013 / 11
12 12 // Mutual Mutual of of America America
Mutual of America: Our Company’s American Story
Our dedication to helping strengthen our country doesn’t stop with the retirement plans and services we provide. Since Mutual of America’s founding in 1945, we have been committed to giving back to the larger society in which we live and work. One way we demonstrate that commitment is through the Mutual of America Community Partnership Award. Now in its 18th year, this award honors the contributions that nonprofit organizations, in partnership with public and private organizations, make to society, providing them with well-deserved recognition, support and help in extending their reach. The Community Partnership National Award winner and recipient of the 2013 Governor Hugh L. Carey Award is the Prison Puppy Raising Program, a partnership that pairs puppies with prisoners as a first step in preparing guide dogs for the blind. This collaboration has borne fruit in unexpected ways, instilling a sense of hope in the participating inmates and reducing recidivism. In addition, nine other worthy organizations were recognized through the 2013 Community Partnership Award for their bold and ambitious leadership in applying creative solutions to critical social problems. Another way our Company supports efforts that help pave the way for a better America is by providing funding for responsible, incisive television journalism, including the award-winning Public Broadcasting System (PBS) series Religion and Ethics Newsweekly, PBS NewsHour Weekend and Metro Focus, and the Public Affairs Television series Moyers & Company. The depth of our Company’s altruism and social engagement is nowhere more evident than in the activities of our employees, who are as generous and civic minded as any you will find. Through voluntary giving and participation in a host of charitable events, they enthusiastically support organizations that help those in need. The Company supports their efforts through matching contributions, grants and gifts to hundreds of charitable organizations. Service to our customers and to the larger community in which we live are the values that have kept Mutual of America strong since our founding. In these times of economic uncertainty for so many, we embrace the responsibilities that come with leadership and strive to do whatever is in our power to better our world.
annual report 2013 / 13
mutual of america board of directors
Thomas J. Moran Chairman, President and Chief Executive Officer Mutual of America New York, New York
Clifford L. Alexander, Jr. President Alexander & Associates, Inc. New York, New York
Kimberly Casiano President Kimberly Casiano & Associates Inc. San Juan, Puerto Rico
Senator Connie Mack
Robert J. McGuire, Esq.
Roger B. Porter, Ph.D.
Chairman Emeritus Liberty Partners Group Washington, D.C.
Counsel New York, New York
IBM Professor of Business and Government Harvard University Cambridge, Massachusetts
Chairman Emeritus H. Lee Moffitt Cancer Center & Research Institute Tampa, Florida
14 / Mutual of America
Roselyn P. Epps, M.D. Medical and Public Health Consultant Washington, D.C.
Peter J. Powers Chairman and Chief Executive Officer Powers Global Strategies, LLC New York, New York
John R. Greed
Earle H. Harbison, Jr.
Senior Executive Vice President and Chief Financial Officer Mutual of America New York, New York
Chairman Harbison Corporation St. Louis, Missouri
General Dennis J. Reimer
Elie Wiesel
U.S. Army (Retired) National Security Consultant Arlington, Virginia
Andrew W. Mellon Professor in the Humanities Boston University Boston, Massachusetts Founder, The Elie Wiesel Foundation for Humanity; Nobel Laureate New York, New York
election of directors Mutual of America policyholders and contract holders are entitled to participate in the election of Directors. The election is held each year on a designated working day in April. In Maurine A. Haver
Frances R. Hesselbein
Founder and Chief Executive Officer Haver Analytics, Inc. New York, New York
President and Chief Executive Officer The Frances Hesselbein Leadership Institute New York, New York
LaSalle D. Leffall, Jr., M.D. Charles R. Drew Professor of Surgery Howard University College of Medicine Washington, D.C.
2014 the election of Directors is scheduled for Thursday, April 24, 2014, between 10:00 a.m. and 4:00 p.m., at the Home Office, 320 Park Avenue, New York, NY 10022. At each election, approximately one-third of the Directors are elected for terms of three years. Each policyholder and contract holder whose policy or contract has been in force for one year prior to the date of election is entitled to one vote per person to be cast in person, by mail or by proxy. Pursuant to Section 4210 of the New York Insurance Law, groups of policyholders or
Patrick A. Burns Consultant to the Board of Mutual of America Bronxville, New York
contract holders have the right to nominate one or more independent tickets not less than five months prior to the date of each election. Mail ballots may be obtained by writing to the Corporate Secretary at Mutual of America’s Home Office address, no later than 60 days prior to the date of election.
annual report 2013 / 15
mutual of america boards of directors
Mutual of America Capital Management Corporation
Mutual of America Investment Corporation Mutual of America Institutional Funds, Inc.
Amir Lear
Christopher C. Quick
John R. Greed
Margaret M. Smyth
Chairman and Chief Executive Officer Mutual of America Capital Management Corp. New York, New York
Vice Chairman, Global Wealth and Investment Management (Past) Bank of America New York, New York
Vice President of Finance Con Edison New York, New York
Theresa A. Bischoff
James E. Quinn
Chief Executive Officer (Past) American Red Cross in Greater New York New York, New York
President (Past) Tiffany & Company New York, New York
Chairman of the Board, President and Chief Executive Officer Mutual of America Investment Corporation and Mutual of America Institutional Funds, Inc. New York, New York
Alfred E. Smith IV
Development Director (Past) Archdiocese of Boston Boston, Massachusetts
Chairman of the Board (Past) Saint Vincent Catholic Medical Centers New York, New York
Noreen Culhane
John J. Stack
Executive Vice President (Past) New York Stock Exchange New York, New York
Chairman and Chief Executive Officer (Past) Ceska Sporitelna Prague, Czech Republic
Robert X. Chandler
Carolyn N. Dolan Founding Principal and Portfolio Manager Samson Capital Advisors LLC New York, New York
Kevin M. Kearney Partner Wingate, Kearney & Cullen Brooklyn, New York
LaSalle D. Leffall III
Nathaniel A. Davis
President and Founder LDL Financial, LLC Washington, D.C.
Chairman and Chief Executive Officer
John W. Sibal
K12 Inc. Herndon, Virginia
Robert C. Golden Executive Vice President of Corporate Operations (Past) Prudential Financial, Inc. Newark, New Jersey
16 / Mutual of America
President and Chief Executive Officer Eustis Commercial Mortgage Corporation New Orleans, Louisiana
Patrick J. Waide, Jr. President (Past) Drucker Foundation New York, New York
William E. Whiston Chief Financial Officer Archdiocese of New York New York, New York
Financial and corporate information
Statement by Management
18
Consolidated Statutory Statements of Financial Condition
19
Consolidated Statutory Statements of Operations and Surplus
20
Consolidated Statutory Statements of Cash Flows
21
Notes to Consolidated Statutory Financial Statements
22
Report of Independent Registered Public Accounting Firm Officers
39
41
Regional Offices
43
17 annual report 2013 / 17
STATEMENT BY MANAGEMENT
Management is responsible for the integrity of the accompanying consolidated statutory financial statements. In meeting this responsibility, management maintains systems of internal controls designed to provide reasonable assurance that assets are safeguarded and that transactions are executed in accordance with appropriate authorization and are properly recorded. These systems include an organizational structure that appropriately provides for delegation of authority and division of responsibility, the communication and enforcement of accounting and business policies and procedures and the utilization of an internal audit program that requires responsive action to audit findings. The accompanying consolidated financial statements have been prepared by management in conformity with statutory accounting principles prescribed or permitted by the New York State Department of Financial Services. Such practices differ from U.S. generally accepted accounting principles (GAAP). Since the New York State Department of Financial Services recognizes only statutory accounting practices for determining and reporting financial condition and results of operations of insurance companies, and no consideration is given to GAAP financial information, the accompanying consolidated statutory financial statements present the Company’s consolidated financial position and results of operations in conformity with statutory accounting practices prescribed or permitted by the New York State Department of Financial Services. The significant variances between such practices and GAAP are described in Note 9 to the consolidated statutory financial statements, which is included on pages 37-38. The accompanying consolidated statutory financial statements for the years ending December 31, 2013 and 2012, have been audited by KPMG LLP, and their opinion, which states that the accompanying consolidated statutory financial statements are fairly presented in conformity with accounting practices prescribed or permitted by the New York State Department of Financial Services, is included on pages 39-40. Their audits were performed in accordance with the standards of the Public Company Accounting Oversight Board (United States). The Board of Directors has appointed an Audit Committee composed solely of directors who are not officers or employees. The committee meets regularly with management, the Executive Vice President and Internal Auditor and the independent registered public accounting firm to review audit scope and results, the adequacy of internal controls and accounting and financial reporting matters. The Audit Committee also reviews the services performed by the independent registered public accounting firm and related fee arrangements and recommends their appointment to the Board of Directors. The independent public accounting firm and the Executive Vice President and Internal Auditor have direct access to the Committee.
18 / Mutual of America
CONSOLIDATED STATUTORY STATEMENTS OF FINANCIAL CONDITION December 31, 2013 and 2012
ASSETS General Account assets Bonds and notes Common stocks Cash and short-term investments Guaranteed funds transferable Mortgage loans Real estate Policy loans Investment income accrued Deferred federal income taxes Other assets
2013
$
Total General Account assets Separate Account assets TOTAL ASSETS
7,533,512,120 31,468,788 39,640,272 21,835,836 — 238,342,029 106,535,968 83,659,017 87,071,451 13,374,100
2012
$
7,311,434,486 23,973,659 17,592,947 24,234,965 708,307 245,450,217 100,957,806 86,775,639 74,991,293 18,065,064
8,155,439,581
7,904,184,383
8,514,976,029
6,743,948,569
$16,670,415,610
$14,648,132,952
$
$
LIABILITIES AND SURPLUS General Account liabilities Insurance and annuity reserves Other contract holders liabilities and reserves Interest maintenance reserve Other liabilities
6,769,759,330 5,849,367 132,048,698 223,906,363
6,612,413,220 7,662,271 137,639,500 184,983,047
Total General Account liabilities before asset valuation reserve
7,131,563,758
6,942,698,038
Separate Account reserves and other liabilities
8,514,976,029
6,743,948,569
15,646,539,787
13,686,646,607
72,740,031
53,607,214
Total liabilities before asset valuation reserve Asset valuation reserve Total liabilities
15,719,279,818
13,740,253,821
SURPLUS Assigned surplus Unassigned surplus
1,150,000 949,985,792
1,150,000 906,729,131
Total surplus
951,135,792
907,879,131
TOTAL LIABILITIES AND SURPLUS
$16,670,415,610
$14,648,132,952
See accompanying notes to consolidated statutory financial statements.
annual report 2013 / 19
CONSOLIDATED STATUTORY STATEMENTS OF OPERATIONS AND SURPLUS For The Years Ended December 31, 2013 and 2012
INCOME Premium and annuity considerations Life and disability insurance premiums Total considerations and premiums
2013
$ 1,760,488,109 11,628,468
$ 1,672,742,062 12,280,451
1,772,116,577
1,685,022,513
79,563,532 363,893,499 6,730,128
68,636,221 374,468,496 6,009,044
Separate Account investment and administrative fees Net investment income Other, net Total income DEDUCTIONS Change in insurance annuity reserves Annuity and surrender benefits Death and disability benefits Operating expenses Total deductions
2012
2,222,303,736
2,134,136,274
369,136,047 1,545,944,999 8,817,386 246,622,975
349,939,259 1,490,932,839 10,838,552 237,725,940
2,170,521,407
2,089,436,590
Net gain before dividends
51,782,329
44,699,684
(86,975)
(68,075)
Net gain from operations
51,695,354
44,631,609
Federal income tax (expense)
(3,472,664)
(2,940,396)
Dividends to contract holders and policyholders
Net realized capital gains
934,891
Net income
49,157,581
SURPLUS TRANSACTIONS Change in: Asset valuation reserve Unrealized appreciation (depreciation) Nonadmitted assets: Prepaid assets and other, net Net deferred income tax asset Accounting related to: Qualified pension plan Nonqualified deferred compensation plan Postretirement medical benefit plan Net change in surplus SURPLUS Beginning of year End of year
(19,132,817) 13,221,168
(4,209,057) (8,274,928)
33,894,280 14,545,818
11,578,301 12,219,285
(34,688,992) (673,997) (13,066,380)
12,860,000 (11,258,831) —
43,256,661
61,736,815
907,879,131
846,142,316
$ 951,135,792
$ 907,879,131
See accompanying notes to consolidated statutory financial statements.
20 / Mutual of America
7,130,832 48,822,045
CONSOLIDATED STATUTORY STATEMENTS OF CASH FLOWS For The Years Ended December 31, 2013 and 2012
CASH FLOWS FROM OPERATIONS Premium and other income collected Net investment income Separate Account investment and administrative fees Benefit payments Net transfers (to) from separate accounts Investment and operating expenses paid Other, net Dividends paid to policyholders
2013
2012
$ 1,772,078,122 366,723,296 79,563,532 (1,557,607,978) (185,820,656) (213,581,520) 6,736,110 (86,783)
$ 1,685,247,779 371,333,004 68,636,221 (1,506,650,205) (108,744,366) (204,882,337) 9,443,938 (72,702)
268,004,123
314,311,332
CASH FLOWS FROM INVESTMENTS Proceeds from investments sold, matured or repaid: Bonds Common stock Mortgage loans Real estate Other invested assets Other
1,796,220,751 9,859,030 708,307 8,645,178 2,399,129 12,161,997
2,445,076,404 34,431,919 554,318 8,664,284 6,104,024 151,891
Total
1,829,994,392
2,494,982,840
Costs of investment acquired: Bonds Common stock Real estate
(2,029,260,745) (8,246,199) (1,536,991)
(2,743,569,401) (4,948,244) (967,629)
Total
(2,039,043,935)
(2,749,485,274)
Net cash from operations
Net change in policy loans
(5,577,633)
Net cash used in investment activity
297,624
(214,627,176)
(254,204,810)
CASH FLOW FROM FINANCING AND OTHER SOURCES Net withdrawals on deposit-type contracts Other cash applied
(13,875,136) (17,454,486)
(53,241,376) 3,599,832
Net cash applied from financing and others sources
(31,329,622)
(49,641,544)
Net change in cash, cash equivalents and short-term investments
22,047,325
10,464,978
Cash, cash equivalents and short-term investments: Beginning of year End of year
17,592,947 $
39,640,272
7,127,969 $
17,592,947
See accompanying notes to consolidated statutory financial statements.
annual report 2013 / 21
NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS December 31, 2013 and 2012
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The accompanying financial statements include the consolidated accounts of Mutual of America Life Insurance Company (Mutual of America) and its wholly owned subsidiaries (collectively referred to as the Company), as permitted by the New York State Department of Financial Services (formerly known as the State of New York Insurance Department). Significant intercompany balances and transactions have been eliminated in consolidation.
Nature of Operations Mutual of America provides retirement and employee benefit plans in the small to medium-size company market, principally to employees in the not-for-profit social health and welfare field. In recent years, the Company has expanded to include for-profit organizations in the small to medium-size company market. The insurance company in the group is licensed in all 50 states and the District of Columbia. Sales operations are conducted primarily through a network of regional offices staffed by salaried consultants.
Basis of Presentation The accompanying consolidated financial statements are presented in conformity with statutory accounting practices prescribed or permitted by the New York State Department of Financial Services (New York Department). Such practices differ from U.S. generally accepted accounting principles (GAAP). The significant variances between such practices and GAAP are described in Note 9. The ability of the Company to fulfill its obligations to contract holders and policyholders is of primary concern to insurance regulatory authorities. The National Association of Insurance Commissioners (NAIC) has codified statutory accounting principles (Codification). The New York Department issued Regulation No. 172 (Regulation No. 172), which adopted Codification, with certain significant modifications, as the prescribed basis of accounting for its domestic insurers. Periodically, the New York Department amends Regulation No. 172 for revisions in the prescribed basis of accounting. All changes required by New York Regulation No. 172, as amended through December 31, 2013, are reflected in the accompanying consolidated statutory financial statements. The Company adopted Statement of Statutory Accounting Principles (SSAP) No. 102 (SSAP No. 102), Accounting for Pensions, a Replacement for SSAP No. 89 on January 1, 2013. SSAP No. 102 requires that the funded status, which is the difference between a Defined Benefit Plan’s projected benefit obligation and the fair value of its plan assets, be recorded as a liability, either through an immediate charge to surplus or over a period not to exceed ten years. The Company elected a period not to exceed ten years. At January 1, 2013 the annual minimum required charge to surplus would have been approximately $6.5 million until the entire $65.4 million transition obligation is completely recognized. However, since the Company’s annual 2013 pension expense includes the amortization of unrecognized prior losses greater than the minimum required, the Company properly recorded the higher amount of $10.2 million as its initial January 1, 2013 surplus charge. Furthermore, the annual January 1 charge to surplus is offset to the extent that the amount of expense recorded in the financial statements includes amortization of previously unrecognized losses. As such, during 2013, this $10.2 million surplus charge was entirely offset as the annual pension expense was recorded. SSAP No. 92, Accounting for Postretirement Benefits Other than Pensions, a Replacement for SSAP No. 14 (SSAP No. 92) also became effective on January 1, 2013. SSAP No. 92 requires that the Plan’s projected benefit obligation be recorded as a liability, either through an immediate charge to surplus or over a period not to exceed ten years. The Company elected a period not to exceed ten years. SSAP No. 92 changed the statutory accounting for the Company’s postretirement medical plan in two other ways. It now requires the Company to establish a postretirement medical liability for all employees whereas previously, the Company was required to establish a liability for only those employees who currently met the vesting requirements of the plan. In addition, amortization of prior unrecognized actuarial gains and losses now must be recognized over the average future working lifetime of active employees in the plan, whereas under the previous accounting standard these gains and losses were amortized over the average remaining life expectancy of vested employees. 22 / Mutual of America
SSAP No. 92 permits the Company to recognize this transition obligation, which at January 1, 2013 was approximately $11.8 million for the non-qualified deferred compensation plan and $55.9 million for the postretirement medical plan, over a period not to exceed 10 years and the Company has elected the deferral option. At January 1, 2013 the minimum charge to surplus was approximately $6.8 million until the entire transition obligation is completely recognized. Furthermore, the annual January 1st charge to surplus is offset each quarter to the extent that the amount of expense recorded in the financial statements related to each plan includes amortization of previously unrecognized losses. As such, effective January 1, 2013, the Company recorded $5.6 million and $1.2 million charges to surplus related to the postretirement medical plan and the non-qualified deferred compensation plan, respectively, of which $4.5 million and $.5 million, respectively, offset during the year as the expense for these plans was recorded. The Company also recorded a $12.0 million additional charge to surplus for the postretirement medical plan effective January 1, 2013 beyond the minimum required, as permitted by SSAP No. 92. The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of income and deductions during the reporting period. Actual results could differ from these estimates.
Asset Valuations Bonds, Notes and Short-Term Investments — Investment valuations are prescribed by the NAIC. Bonds, which include assetbacked and mortgage-backed investments qualifying for amortization, and notes, are stated at amortized cost. Amortization of bond premium or discount is calculated using the constant yield interest method taking into consideration specified interest and principal provisions over the life of the bond. Short-term investments are stated at cost, which approximates fair value, and consist of highly liquid investments purchased with maturities of one year or less. Bond, note and short-term investment transactions are recorded on a trade date basis. The fair value of bonds and notes is based upon quoted market prices provided by an independent pricing organization. If quoted market prices are unavailable or an inactive market for the security currently exists, fair value is estimated using internal valuation models and techniques or based upon quoted market prices for comparable investments. At December 31, 2013, there were eight securities with a fair value of $53.4 million for which no quoted market prices were available. As such, the Company used internal valuation models and techniques to determine the fair value of these securities. The Company recorded an unrealized gain of $10.0 million to adjust the carrying value of six of these securities, which were required to be reported at the lower of amortized cost or fair value, to their current fair value at December 31, 2013. At December 31, 2012, there were six securities with a fair value of $24.2 million that were valued using this methodology. Bonds are carried at the lower of amortized cost or fair value when their NAIC rating has fallen to class six. Losses that are considered to be other-than-temporary are recognized in net income when incurred. All bonds are subjected to the Company’s quarterly review process for identifying other-than-temporary impairments. This impairment identification process utilizes a screening procedure that includes all bonds in default or not in good standing, as well as bonds with a fair value that is less than 80% of their cost for a continuous six-month period. The Company writes down bonds that it deems to have an other-than-temporary impairment after considering a wide range of factors, including, but not limited to, the extent to which cost exceeds fair value, the duration of that market decline, an analysis of the discounted estimated future cash flows for asset-backed and mortgage-backed securities, an analysis of the financial health and specific prospects for the issuer, the likelihood that the Company will be able to collect all amounts due according to the contractual terms of the debt security in effect at the date of acquisition, consideration as to whether the decline in value is due to general changes in interest rates and credit spreads and the Company’s intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. If an impairment is determined to be other-than-temporary, a realized capital loss equal to the entire difference between the amortized cost of the bond and its fair value is recorded and a new cost basis for the bond is established. Credit-related other-than-temporary impairment losses are recorded as realized capital losses included in net income (and through the asset valuation reserve), whereas interest-related other-than-temporary impairment losses are recorded in the IMR.
annual report 2013 / 23
NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS December 31, 2013 and 2012
Common and Preferred Stocks — At December 31, 2013 and 2012, common stocks included $22.1 million and $17.0 million, respectively, invested in a Mutual of America sponsored series of mutual funds for institutional investors. The December 31, 2013 and 2012, amounts also include $9.3 million and $6.9 million, respectively, invested in actively managed Large-Cap and Small-Cap Value equity portfolios in 2013 and a Mid-Cap Growth equity portfolio in 2012. During 2012, the Company liquidated its entire investment in the All America Institutional Fund and recognized an $8.3 million realized capital gain. Common stocks in good standing are stated at fair value. Fair value is determined by reference to valuations quoted by an independent pricing organization. Unrealized gains and losses are recorded directly to unassigned surplus. Preferred stock is carried at cost. Losses that are considered to be other-than-temporary are recognized in net income when incurred. All equity investments are subjected to the Company’s quarterly review process for identifying other-than-temporary impairments. This impairment identification process utilizes a screening procedure that includes all common stock issuers not in good standing, as well as common stocks where the fair value is less than 80% of their cost for a continuous six-month period. The Company writes down common stocks that it deems to have an other-than-temporary impairment after considering a wide range of factors, including, but not limited to, the extent to which cost exceeds fair value, the duration of that market decline, an analysis of the financial health and specific prospects for the issuer and the Company’s intent and ability to retain its investment for a period of time sufficient to allow for any anticipated recovery in fair value in the short-term. The Company also considers other qualitative and quantitative factors in its evaluation of other-than-temporary impairments. Guaranteed Funds Transferable — Guaranteed funds transferable consists of funds held with a former reinsurer and is stated at the total principal amount of future guaranteed transfers to Mutual of America. During 2013, the $1.5 million unrealized loss that had previously been recorded against this asset was reversed as it was determined that this valuation allowance was no longer needed. Mortgage Loans — Mortgage loans are carried at amortized indebtedness. Impairments of individual loans that are considered other-than-temporary are recognized in net income when incurred. There were no impairment losses incurred during 2012. During 2013, the mortgage loan asset matured and was paid in full. Real Estate — Real estate, which is classified as Company-occupied property, is carried at cost, including capital improvements, net of accumulated depreciation of $166.3 million and $157.5 million at December 31, 2013 and 2012, respectively, and is depreciated on a straight-line basis over 39 years. Tenant improvements on real estate investments are depreciated over the shorter of the lease term or the estimated life of the improvement. Policy Loans — Policy loans are stated at the unpaid principal balance of the loan. During 2013 and 2012, the Company recognized $.1 million and $.9 million of realized capital losses, respectively, on certain loans where the loan value exceeded the associated collateral on the loans and collection efforts on the unpaid balances of the policy loans were unsuccessful. Also at December 31, 2012, the Company recorded a $1.1 million unrealized loss on certain other policy loans where the current total outstanding principal and interest amounts exceed the current value of the related participant account balances available as collateral to satisfy these loans. There were no additional unrealized losses recorded in 2013. Other — Certain other assets, such as net deferred income tax assets not expected to be realized within three years, furniture and fixtures and prepaid expenses, are considered “nonadmitted assets” and are excluded from the consolidated statutory statements of financial condition.
Insurance and Annuity Reserves Reserves for annuity contracts are computed on the net single premium method and represent the estimated present value of future retirement benefits. These reserves, which were $.9 billion at both December 31, 2013 and 2012, are based on mortality and interest rate assumptions (ranging predominately from 5.00% to 6.50% at both December 31, 2013 and 2012), which meet or exceed statutory requirements and are not subject to discretionary withdrawal. 24 / Mutual of America
Reserves for contractual funds not yet used for the purchase of annuities are accumulated at various credited interest rates that, during 2013 and 2012, averaged 2.03% and 2.29%, respectively, and are deemed sufficient to provide contractual surrender values for these funds. These reserves, which were $5.8 billion and $5.6 billion at December 31, 2013 and 2012, respectively, are subject to discretionary withdrawal at book value. Reserves for guaranteed investment contracts, which were $29.8 million and $33.0 million at December 31, 2013 and 2012, respectively, are accumulated at various guaranteed interest rates, which during 2013 and 2012 averaged 1.98% and 2.33%, respectively, and meet statutory requirements. Reserves for life and disability insurance are based on mortality, morbidity and interest rate assumptions, and meet statutory requirements.
Other Liabilities Effective January 1, 2012, the Company recorded an $11.2 million charge to surplus for an adjustment related to the Company’s nonqualified deferred compensation plan to better reflect the nature of the plan as a deferred compensation arrangement accounted for in accordance with SSAP No. 14, Postretirement Benefits Other Than Pensions. Previously, the plan was accounted for in accordance with SSAP No. 89, Accounting for Pensions (as replaced by SSAP No. 92 on January 1, 2013). The $11.2 million charge to surplus included a $2.2 million reduction in the prepaid pension asset associated with this plan, which was written off in connection with this adjustment. As such, the net impact was a $9.0 million charge to surplus. In addition, this adjustment resulted in insurance and annuity reserves of $30.5 million being reclassified to the other liabilities caption in the Statement of Financial Condition effective January 1, 2012.
Interest Maintenance and Asset Valuation Reserves Realized gains and losses, including certain other-than-temporary impairment losses, net of applicable taxes, arising from changes in interest rates are accumulated in the IMR and are amortized into net investment income over the estimated remaining life of the investment sold. All other realized gains and losses are reported in the consolidated statements of operations. An Asset Valuation Reserve (AVR), applying to the specific risk characteristics of all invested asset categories excluding cash, policy loans and investment income accrued, has been established based on a statutory formula. Realized and unrealized gains and losses, including other-than-temporary impairment losses arising from changes in the creditworthiness of the issuer, are included in the appropriate subcomponent of the AVR. Changes in the AVR are recorded directly to unassigned surplus.
Separate Account Operations Variable annuity considerations and certain variable life insurance premiums may be allocated at participants’ discretion among investment funds in Separate Accounts. Separate Account funds invest in mutual funds, including funds managed by Mutual of America Capital Management Corporation, a wholly owned subsidiary (the Advisor), and other funds managed by outside investment advisors. All net realized and unrealized capital gains in the Separate Accounts, which reflect investment performance of the mutual funds in which they invest, accrue directly to participants (net of administrative and other Separate Account charges) and are not reflected in the Company’s Consolidated Statutory Statements of Operations and Surplus. Investment advisory charges are based on the specific fee charged for each of the individual underlying investments of the Separate Accounts and are assessed as a percentage of the plan’s or participant’s account balance. Certain Separate Account administrative charges are assessed as a percentage of the plan’s or participant’s account balance as determined by the Company’s pricing tiers, which are based on established ranges of plan or participant account balances. In 2013 and 2012, such charges were equal to approximately 1.05% and 1.07%, respectively, of total average Separate Account assets. Separate Account charges and investment advisory fees paid to the Adviser are included in the Consolidated Statutory Statement of Operations and Surplus. Investments held in the Separate Accounts are stated at fair value and are not available to satisfy liabilities of the General Account. Participants’ corresponding equity in the Separate Accounts is reported as liabilities in the accompanying statements. Premiums and benefits related to the Separate Accounts are combined with the General Account in the accompanying statements. Net operating gains and losses are offset by changes to reserve liabilities in the respective Separate Accounts. These annual report 2013 / 25
NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS December 31, 2013 and 2012
reserves, which were approximately $8.5 billion and $6.7 billion at December 31, 2013 and 2012, respectively, are subject to discretionary withdrawal at fair value.
Premiums and Annuity Considerations All annuity considerations derived from voluntary retirement savings-type plans and defined benefit plans, which represent the vast majority of the Company’s annual premiums, are recognized as income when received. Insurance premiums and annuity considerations derived solely from defined contribution plans are recognized as income when due. Group life and disability insurance premiums are recognized as income over the contract period.
Investment Income and Expenses General Account investment income is reported as earned and is presented net of related investment expenses. Operating expenses, including acquisition costs for new business, are charged to operations as incurred.
Dividends Dividends are based on formulas and scales approved by the Board of Directors and are accrued currently for payment subsequent to plan anniversary dates. Certain 2012 amounts included in the accompanying consolidated statutory financial statements have been reclassified to conform to the 2013 presentation.
2. INVESTMENTS Valuation The statement and fair values of investments in fixed maturity securities (bonds and notes) at December 31, 2013 and 2012, are shown below. Excluding U.S. government and government agency investments, the Company is not exposed to any significant concentration of credit risk. December 31, 2013 (in millions)
Statement Value
Gross Unrealized Gains
Losses
Fair Value
Fixed maturities: Mortgage- and asset-backed securities: Residential mortgage-backed securities $ 1,985.1 $ 59.8 $ 32.8 $ 2,012.1 Commercial mortgage-backed securities — — — — Other asset-backed securities 38.7 .1 .3 38.5 Total $ 2,023.8 $ 59.9 $ 33.1 $ 2,050.6 U.S. Treasury securities and obligations of U.S. government corporations and agencies 1,041.8 13.4 29.9 1,025.3 Obligations of states and political subdivisions 26.4 1.8 — 28.2 Debt securities issued by foreign governments 23.9 2.1 — 26.0 Corporate securities 4,440.2 224.1 67.2 4,597.1 Total $ 7,556.1 $ 301.3 $ 130.2 $ 7,727.2
26 / Mutual of America
Statement
December 31, 2012 (in millions)
Value
Gross Unrealized Gains
Fair
Losses
Value
Fixed maturities: Mortgage- and asset-backed securities: Residential mortgage-backed securities $ 2,099.9 $ 125.0 $ .5 $ 2,224.4 Commercial mortgage-backed securities — — — — Other asset-backed securities 21.2 .1 .1 21.2 Total $ 2,121.1 $ 125.1 $ .6 $ 2,245.6 U.S. Treasury securities and obligations of U.S. government corporations and agencies 1,014.7 50.0 1.5 1,063.2 Obligations of states and political subdivisions 24.6 1.6 — 26.2 Debt securities issued by foreign governments 25.8 3.1 — 28.9 Corporate securities 4,135.3 362.0 9.6 4,487.7 Total $ 7,321.5 $ 541.8 $ 11.7 $ 7,851.6 The Company does not have any exposure to subprime mortgage loans, either through direct investment in such loans or through investments in residential mortgage-backed securities, collateralized debt obligations or other similar investment vehicles. Approximately 95% of the $3.0 billion invested in mortgage-backed securities were issued by Fannie Mae (FNMA), Freddie Mac (FHLMC) or Ginnie Mae (GNMA) and, as such, are 100% guaranteed by the U.S. government. The Company does have investments in publicly traded bonds of financial institutions. These financial institutions may have investments with subprime exposure. At December 31, 2013, the statement value and fair value of the Company’s bond investments in financial institutions totaled $779.6 million and $854.4 million, respectively. At December 31, 2012, the statement value and fair value of the Company’s bond investments in financial institutions totaled $857.4 and $955.2 million, respectively. Short-term fixed maturity securities with a statement value and fair value of $22.6 million and $10.1 million at December 31, 2013 and 2012, respectively, are included in the above tables. At December 31, 2013 and 2012, the Company had $3.2 million and $3.3 million (par value $3.2 million for both years), respectively, of its long term fixed maturity securities on deposit with various regulatory agencies.
Fair Value The Company values its financial instruments at fair value. Fair value is an estimate of the price the Company would receive upon selling a security in an orderly arms-length transaction. Investments are categorized based on a three-level valuation hierarchy for measurement and disclosure of fair value. The valuation hierarchy is based upon the transparency of inputs used to measure fair value. The three levels are as follows: Level 1 — quoted prices in active markets for identical securities. Level 2 — quoted prices for similar assets in active or non-active markets or other significant observable inputs (including yield, quality, coupon, rate, maturity, issue type, quoted prices for similar securities, prepayment speeds, trading characteristics, etc.). Level 3 — significant unobservable inputs (including the assumptions in determining the fair value of investments). The Company has determined the fair value inputs used to measure all of its assets that are considered financial instruments, which include fixed maturity securities, common stocks, cash and short-term investments, mortgage loans, policy loans, other invested assets and Separate Account funds whose net asset values are calculated on a daily basis. Cash, short-term investments, common stocks, investments in publicly traded mutual funds that are registered with the Securities and Exchange Commission and Separate Account assets were determined to be Level 1. Separate Account liabilities, which are equal to Separate Account assets, are determined to be Level 1 as the value of these liabilities changes in conjunction with the change in Separate Account assets. The vast majority of the Company’s fixed maturity securities (bonds and notes), and all of its policy loans, and other invested assets were determined to be Level 2. Finally, annual report 2013 / 27
NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS December 31, 2013 and 2012
certain fixed maturity securities, the guaranteed funds transferrable and mortgage loans representing less than 1% of the total, for which quoted market prices were unavailable or an inactive market for the security currently exists, were determined to be Level 3. The inputs used for valuing these securities are not necessarily an indication of the risk associated with investing in those securities. The following tables provide fair value information at December 31, 2013 and 2012, about the Company’s assets that are considered financial instruments: As of December 31, 2013 Financial Instruments
Level 1
Level 2
Level 3
Total
Bonds and notes $ — $ 7,673.2 $ 31.3 $ 7,704.5 Common stocks 33.4 — — 33.4 Cash and short-term investments 39.6 — — 39.6 — — 22.1 22.1 Guaranteed funds transferrable Mortgage loans — — — — Separate Account assets 8,515.0 — — 8,515.0 Total $8,588.0 $7,673.2 $53.4 $16,314.6 As of December 31, 2012 Financial Instruments
Level 1
Level 2
Level 3
Total
Bonds and notes $ — $ 7,817.4 $ 24.2 $ 7,841.6 Common stocks 24.0 — — 24.0 Cash and short-term investments 17.6 — — 17.6 Guaranteed funds transferrable — — 26.6 26.6 Mortgage loans — — 0.7 0.7 Separate Account assets 6,743.9 — — 6,743.9 Total $6,785.5 $7,817.4 $51.5 $14,654.4 The fair value of Level 3 securities increased from $51.5 million at December 31, 2012, to $53.4 million at December 31, 2013, primarily as a result of the change in fair value of Level 3 securities net of interim paydowns during the year. The fair value of bonds and notes classified as Level 3 increased by $7.1 million in 2013 as a result of the redetermination of the fair value net of paydowns on these securities during the year. The guaranteed funds transferrable and the mortgage loan asset balances declined due to the receipt of scheduled principal payments during the year. There were no additional securities added to the Level 3 classification during 2013. In determining the fair value of Level 3 bonds and notes, the Company utilized expected cash flows provided by an independent valuation service together with discount rate and default factor assumptions commensurate with the current credit rating of such securities and consistent with those that would be used in pricing similar types of securities based upon market conditions that existed at December 31, 2013 and 2012.
Unrealized Gains and Losses At December 31, 2013 and 2012, net unrealized (depreciation) appreciation reflected in surplus consisted of the following: December 31 (in millions)
Equity securities (common and preferred stock) Bonds and notes Guaranteed funds transferable Other assets Net unrealized (depreciation) appreciation
28 / Mutual of America
2013
$ 4.1 (8.6) — (1.1) $(5.6)
2012
$ 2.4 (18.6) (1.5) (1.1) $(18.8)
Change
$ 1.7 10.0 1.5 — $13.2
Net unrealized depreciation related to the Company’s bonds, equity securities and other assets decreased by $13.2 million during the year as shown above. Net unrealized appreciation of $4.1 million related to equity securities at December 31, 2013, consists of $4.2 million of gross unrealized gains and $.1 million of gross unrealized losses, of which none of the unrealized losses are greater than 12 months old. Net unrealized appreciation of $2.4 million related to equity securities at December 31, 2012, consisted of $2.6 million of gross unrealized gains and $.2 million of gross unrealized losses, of which none of the unrealized losses were greater than 12 months old. Previously, Regulation No. 172 was amended to adopt an accounting change set forth in SSAP No. 100, Fair Value Disclosures, under which the criteria used to evaluate the fair value of investment securities, which were previously determined to be otherthan-temporarily impaired, was changed. At the time of adoption, the Company recorded an $11.7 million unrealized loss to adjust the fair value of certain securities to an amount that more realistically reflected market conditions at that time. These bonds had an adjusted book value of $27.1 million prior to the recognition of this unrealized loss. In order to adjust these securities to their estimated fair value, a $10.0 million unrealized gain was recorded on these securities at December 31, 2013 as compared to a $2.0 million unrealized loss that was recognized on these securities for the year ended December 31, 2012. The following is an analysis of the fair values and gross unrealized losses as of December 31, 2013 and 2012, aggregated by fixed maturity category and length of time that the securities were in a continuous unrealized loss position. As shown in the table below, total gross unrealized losses as of December 31, 2013 and 2012, were $130.2 million and $11.7 million, respectively, and the majority of such losses related to corporate and U.S. Treasury securities. These unrealized losses arise primarily from general changes in interest rates and credit spreads, which are still wider than historical norms, despite having narrowed somewhat during 2013, and are not due to fundamental credit problems that exist with the specific issuers. The Company has the ability and intent to hold those securities that are in an unrealized loss position for a sufficient period of time in order for them to recover. The tables that follow exclude $4.7 billion and $7.3 billion at December 31, 2013 and 2012, respectively, of fair value of fixed maturity securities in an unrealized gain position. December 31, 2013 (in millions)
Fair Unrealized Number Value Losses of Issues Twelve Months or Less
Fair Unrealized Number Value Losses of Issues Twelve Months or Greater
Fixed maturities: Mortgage- and asset-backed securities: Residential mortgage-backed securities Commercial mortgage-backed securities Other asset-backed securities Total
$ 735.8 — 31.0 $ 766.8
U.S. Treasury securities and obligations of U.S. government corporations and agencies Obligations of states and political subdivisions Debt securities issued by foreign governments Corporate securities Total
560.6 20.6 139 137.2 9.2 — — — — — — — — — — 1,193.6 46.7 79 293.9 20.6 $2,521.0 $94.9 382 $526.6 $35.3
$ 27.3 — .3 $ 27.6
159 — 5 164
$ 93.1 — 2.4 $ 95.5
$ 5.4 — .1 $ 5.5
31 — 1 32
47 — — 17 96
annual report 2013 / 29
NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS December 31, 2013 and 2012
December 31, 2012 (in millions)
Fair Unrealized Number Value Losses of Issues Twelve Months or Less
Fair Unrealized Number Value Losses of Issues Twelve Months or Greater
Fixed maturities: Mortgage- and asset-backed securities: Residential mortgage-backed securities Commercial mortgage-backed securities Other asset-backed securities Total
$ 107.7 — 8.0 $ 115.7
U.S. Treasury securities and obligations of U.S. government corporations and agencies Obligations of states and political subdivisions Debt securities issued by foreign governments Corporate securities Total
203.9 1.5 52 — — — — — — — — — — — — — — — 256.1 9.0 18 41.9 .5 4 $575.7 $11.0 103 $49.7 $ .6 12
$ .5 — — $ .5
32 — 1 33
$ 1.6 — 6.2 $ 7.8
$— — .1 $ .1
5 — 3 8
Realized Capital Gains and Losses Net realized capital gains (losses) reflected in the statements of operations for the years ended December 31, 2013 and 2012, were as follows: December 31 (in millions)
2013
2012
Bonds and notes Equity securities (common and preferred stock) Other assets Net realized capital gains
$ — 1.1 (.2) $ .9
$(1.8) 9.8 (.9) $7.1
At December 31, 2013 and 2012, the book value and fair value of the Company’s mortgage-backed and asset-backed securities portfolios totaled $3.0 billion and $2.9 billion, and $3.0 billion and $3.0 billion, respectively, of which approximately 95% in both years are U.S. government agency guaranteed instruments. Investments in loan-backed and asset-backed securities are carried at amortized cost, except for those securities rated as class 6 by the NAIC, which are carried at lower of amortized cost or fair value. Sales of investments in fixed maturity securities resulted in $24.0 million and $43.0 million of net interest rate related gains being accumulated in the IMR in 2013 and 2012, respectively, as follows: December 31 (in millions)
Fixed maturity securities Proceeds Gross realized gains Gross realized losses
2013
$1,854.5 25.6 (1.6)
2012
$2,582.4 43.8 (.8)
During 2013 and 2012, $29.6 million and $26.4 million, respectively, of the IMR was amortized and included in net investment income. Sales of investments in equity securities resulted in $1.0 million and $9.8 million of net capital gains in 2013 and 2012, respectively being recognized in net income as follows: December 31 (in millions)
Equity securities Proceeds Gross realized gains Gross realized losses 30 / Mutual of America
2013
$10.0 1.1 (.1)
2012
$31.4 9.9 (.1)
Maturities The statement and fair values of investments in fixed maturity securities by contractual maturity (except for mortgage-backed securities, which are stated at expected maturity) at December 31, 2013, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to prepay obligations with or without prepayment penalties. December 31, 2013 (in millions)
Statement Value
Due in one year or less Due after one year through five years Due after five years through 10 years Due after 10 years Total
$ 218.0 1,495.9 2,866.6 2,953.0 $7,533.5
Fair Value
$ 223.0 1,629.2 2,881.4 2,970.9 $7,704.5
3. GUARANTEED FUNDS TRANSFERABLE In 1980, Mutual of America terminated a reinsurance arrangement and assumed direct ownership of funds held by John Hancock Mutual Life Insurance Company (Hancock), the former reinsurer, and direct liability for the contractual obligations to policyholders. The liability to such policyholders is included as insurance and annuity reserves in the consolidated statutory statements of financial condition. The principal amount of the funds held by the former reinsurer is guaranteed to earn at least 3.125% per year. The guaranteed funds are transferable to Mutual of America over time through 2030 and are stated at the total principal amount of future guaranteed transfers to Mutual of America of $21.8 million and $24.2 million at December 31, 2013 and 2012, respectively. The actual interest and other allocated investment earnings related to this contract amounted to $1.7 million and $1.0 million in 2013 and 2012, respectively, and are included in net investment income.
4. REAL ESTATE Real estate consists primarily of an office building that Mutual of America purchased for its corporate headquarters. The Company occupies approximately one-third of this office building as its corporate headquarters and leases the remaining space. Depreciation expense was $8.6 million and $8.3 million in 2013 and 2012, respectively.
5. PENSION PLAN AND POSTRETIREMENT BENEFITS Pension Benefit and Other Benefit Plans The Company has a qualified, noncontributory defined benefit pension plan covering virtually all employees. Benefits are generally based on years of service and final average earnings. The Company’s funding policy is to contribute annually, at a minimum, the amount necessary to satisfy the funding requirements under the Employee Retirement Income Security Act of 1974 (ERISA). The Company also maintains a nonqualified deferred compensation plan that provides benefits to employees whose total compensation and calculated benefit exceeds the maximum allowable compensation limits for qualified retirement plans under ERISA. As discussed in Note 1, effective January 1, 2012, the Company modified its accounting for its nonqualified deferred compensation plan to better reflect the nature of the plan as a deferred compensation arrangement accounted for in accordance with SSAP No. 14, Postretirement Benefits Other than Pensions, as replaced by SSAP No. 92, Postretirement Benefits Other than Pensions, a Replacement for SSAP No. 14. The Company has two defined benefit postretirement plans covering substantially all salaried employees. The postretirement benefit plan expense required to be recorded under these plans was $17.8 million and $6.0 million in 2013 and 2012, respectively. Employees may become eligible for such benefits upon attainment of retirement age while in the employ of the Company and annual report 2013 / 31
NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS December 31, 2013 and 2012
upon satisfaction of service requirements. One plan provides medical, dental and vision benefits and the second plan provides life insurance benefits. The postretirement plans are contributory for those individuals who retire with less than 25 years of eligible service, with retiree contributions adjusted annually, and contain other cost-sharing features, such as deductibles and coinsurance. All benefit plans are underwritten by Mutual of America. To the extent that the claims do not exceed stop-loss limits for single life occurrences, the plans are self-insured. Stop-loss coverage is purchased from an unaffiliated carrier. As of January 1, 2013, the Company had a total recognized liability for pension benefits of $40.5 million consisting of a transition liability of $10.2 million and the accrued benefit cost of $32.2 million. The unrecognized transition liability for the qualified pension plan at January 1, 2013 was $55.2 million. The expected amortization of the unrecognized transition liability for the qualified pension plan was $10.2 million in 2013 and will be approximately $6.1 million per year thereafter through 2022. For other benefits, as of January 1, 2013, the Company had total recognized liabilities of $43.8 million and $57.3 million, respectively, for the postretirement medical and non-qualified deferred compensation plans. The $43.8 million postretirement medical plan recognized liability consists of a $5.6 million transition liability and a $38.2 million accrued benefit cost. The $57.3 million recognized liability for the nonqualified deferred compensation plan consists of a $1.2 million transition liability and a $56.1 million accrued benefit cost. The expected amortization of the unrecognized transition liability will be $5.6 million for the postretirement medical plan and $1.2 million for the non-qualified compensation plan, respectively, per year commencing in 2014 and continuing through 2022. As shown in the table below, the Company also recorded a $12.0 million additional charge to surplus for the postretirement medical plan effective January 1, 2013, beyond the minimum required, as permitted by SSAP No. 92.
The following table provides a status of the Company’s pension and postretirement benefit plans as of December 31, 2013 and December 31, 2012 (millions):
Pension Benefits 2013
Other Benefits 2012
2013
2012
Accumulated Benefit Obligation Projected Benefit Obligation Plan Assets at Fair Value Funded Status Accrued Benefit cost Additional Surplus Charge greater than minimum Unrecognized items
$219.1 $280.7 235.5 $ (45.2) 32.2 — $ (13.0)
$219.1 $279.5 188.8 $ (90.7) 30.3 — $ (60.4)
$ 49.5 157.2 — $(157.2) 98.3 12.0 $ (46.9)
$ 49.5 119.8 — $(119.8) 82.3 — $ (37.5)
Prior Service Costs Unrecognized (Losses) Gains Additional Surplus Charge Beyond Minimum Transition asset Total Unrecognized Liability
$ (.8) (45.1) — 32.9 $ (13.0)
$ (1.5) (93.7) — 34.8 $ (60.4)
$ 2.7 $ 2.8 (49.6) (40.3) — — — — $ (46.9) $ (37.5)
The components of net periodic benefit costs as calculated in the January 1, 2013 and 2012 plan valuations are as follows: December 31 (in millions)
Service costs Interest costs on Projected Benfit Obligation (PBO) Expected return on plan assets Prior services costs Amortization of unrecognized net loss (gain) Net benefit expense 32 / Mutual of America
Pension Benefits 2013
$ 14.4 11.0 (18.9) .7 9.7 $16.9
Other Benefits 2012
$ 11.8 12.0 (16.3) .7 10.5 $18.7
2013
$ 6.4 6.2 — (.1) 5.3 $17.8
2012
$ 5.6 4.4 — (.1) .7 $10.6
The changes in the PBO and plan assets are as follows: December 31 (in millions)
Change in PBO PBO, beginning of the year Service costs Interest costs Plan amendment Change in assumptions Actuarial loss (gain) Effect of adoption of SSAP 102 and SSAP 92 Benefits and expenses paid PBO, end of year
December 31 (in millions)
Change in Plan Assets Plan assets, beginning of the year Employer contribution Actual Return on plan assets Benefits and expenses paid Plan assets, end of year Plan assets (lower than) PBO
Pension Benefits 2013
$ 279.6 14.4 11.0 — (14.8) 5.0 — (14.5) $280.7
Other Benefits 2012
$ 260.6 11.8 12.0 — 5.2 2.2 — (12.2) $279.6
Pension Benefits 2013
$188.9 15.0 45.3 (13.8) 235.4 $ (45.3)
2013
$ 119.8 6.4 6.2 — (11.5) 8.9 30.8 (3.5) $157.1
2012
$ 100.4 5.6 4.4 (3.1) 5.9 9.5 — (2.9) $119.8
Other Benefits 2012
$168.2 10.2 22.7 (12.2) 188.9 $ (90.7)
2013
— — — — — $(157.1)
2012
— — — — — $(119.8)
At December 31, 2013 and December 31, 2012, all of the pension plan assets are invested in several of the investment funds offered by the Company’s Separate Accounts and in the Company’s General Account, and consisted of approximately 83% in equity investments and 17% in fixed-income investments. A distribution of plan assets by investment objective as of December 31, 2013 and 2012, is as follows: December 31, (in millions)
Fixed Income Funds Equity Funds: Index Growth Balanced Total Level 1 Investments General Account Total plan assets
2013
2012
$ 32.1
$ 32.4
120.6 39.9 35.3 $ 227.9 7.5 $235.4
95.1 29.2 27.3 $ 184.0 4.9 $188.9
The underlying investments funds of the Separate Accounts are based on quoted market prices within an active market and as such are classified as Level 1. Amounts held in the General Account are valued at contract value, which is equal to fair value. Amounts held in the General Account are considered to be cash equivalents and are not subject to fair value evaluation. The Company made contributions to its defined benefit plan of $15.0 million and $10.2 million in 2013 and 2012, respectively. The Company estimates that it will make a contribution of at least $10.0 million to this plan in 2014. Benefits expected to be paid from this plan total $14.2 million in 2014, $16.8 million in 2015, $16.3 million in 2016, $22.8 million in 2017 and $20.8 million in 2018. The aggregate benefits expected to be paid in 2019 through 2023 total approximately $140.4 million. The calculation of expected benefits is based on the same assumptions used to measure the Company’s benefit obligation at December 31, 2013.
annual report 2013 / 33
NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS December 31, 2013 and 2012
The assumptions used in determining the aggregate projected benefit obligation for pension and other benefit plans were as follows: Weighted average assumptions at December 31
Discount rate Rate of compensation increase Expected return on plan assets
Pension Benefits 2013
4.50% 4.00% 9.50%
2012
3.75% 4.00% 9.50%
Other Benefits 2013
4.50% 4.00%
2012
3.75% 5.00%
The Company’s overall expected long-term rate of return on plan assets was determined based upon the current projected benefit payout period and the current mix of plan investments, which generally consists of approximately 80% equity investments and 20% fixed-income investments. The Company believes that this investment mix properly matches the plan’s benefit obligations. The equity component of the expected long-term rate of return was determined using a combination of the actual rate of return of equities (net of inflation) and an inflation-adjusted equity rate of return (assuming an inflation rate of 3.7%) based upon historical 30-year rolling averages. The health care cost trend rate assumption has an effect on the amounts reported for the postretirement benefit plans. The assumption is 6.0% for 2014, 5.5% for 2015, 5.0% for 2016, 5.0% for 2017, 5.0% for 2018 and 5.0% for 2019 and beyond. For example, increasing the assumed health care cost trend rate by 1.0% each year would increase the accumulated postretirement obligation for the plan as of December 31, 2013, by $2.3 million and the aggregate of the service and interest cost components of the net periodic benefit cost for 2013 by $.1 million. Benefits expected to be paid from this plan and the nonqualifed deferred compensation plan total $8.3 million in 2014, $13.1 million in 2015, $10.3 million in 2016, $11.9 million in 2017 and $16.3 million in 2018. Aggregated benefits expected to be paid in the period 2019 through 2023 total approximately $74.5 million. The calculation of expected benefits is based on the same assumptions used to measure the Company’s benefit obligation at December 31, 2013.
Savings and Other Incentive Plans All employees may participate in a Company-sponsored savings plan under which the Company matches a portion of the employee’s contributions up to 6% of salary. The Company contributed $2.6 million and $2.4 million in 2013 and 2012, respectively. The Company also has a long-term performance-based incentive compensation plan for certain employees and directors. Shares under this plan are granted each year and generally vest over a three-year period. The value of such shares is equal to the number of shares multiplied by the current share price, which is determined by the level of total assets of the Company. A financial performance threshold measure must also be met in order to receive a payout at the end of the third year. The total expense incurred related to these plans was $13.5 million and $11.6 million in 2013 and 2012, respectively. At December 31, 2013 and 2012, the accrued liability related to these plans was $23.9 million and $21.3 million, respectively.
6. COMMITMENTS AND CONTINGENCIES Rental expenses approximated $26.5 million and $25.5 million as of December 31, 2013 and 2012, respectively. The approximate minimum rental commitments under noncancelable operating leases are as follows: $5.1 million in 2014; $4.7 million in 2015; $3.7 million in 2016; $2.5 million in 2017; $1.7 million in 2018 and $1.4 million in 2019 and beyond. Such leases are principally for leased office space and certain data processing equipment, furniture and communications equipment. Certain office space leases provide for adjustments relating to changes in real estate taxes and other expenses. The Company is involved in various legal actions that have arisen in the course of the Company’s business. In the opinion of management, the ultimate resolution with respect to such lawsuits, as well as other contingencies, will not have a material adverse effect on the Company’s consolidated financial statements. 34 / Mutual of America
7. FEDERAL INCOME TAXES Effective January 1, 1998, Mutual of America’s pension business became subject to federal income tax. Mutual of America files its federal income tax return on a separate company basis. Mutual of America’s non-insurance subsidiaries file a consolidated income tax return. Mutual of America adopted SSAP No. 101, Income Taxes, a replacement of SSAP No. 10R, effective January 1, 2012. During the first quarter of 2012, Regulation No. 172 was amended to adopt the provisions of SSAP No. 101. This guidance requires that a deferred tax asset (DTA) or deferred tax liability (DTL) be established for temporary differences between the tax and statutory reporting bases of assets and liabilities. The change in Mutual of America’s net DTA must be recorded as a separate component of gains and losses in surplus. Net DTAs are required to be recorded as an admitted asset to the extent that the amount will be realized within three years, subject to a maximum admitted asset equal to 15% of statutory surplus and to the Company’s risk based capital ratio exceeding certain thresholds. A reconciliation of the income tax (expense) recognized in the Company’s consolidated statutory financial statement of operations to the amount obtained by applying the statutory tax rate of 35% to net gain from operations before federal income taxes follows: December 31 (in millions)
Net gain from operations Statutory rate Tax at statutory rate IMR amortization Realized capital (gains) losses Net capital gains (losses) deferred in IMR Pension and postretirement medical benefits Change in nonadmitted assets Change in Mutual of America’s net DTA Other Federal income tax (expenses) Effective tax rate
2013
$ 51.7 35% (18.1) 10.3 (.3) (8.4) 42.7 (22.5) (6.7) (.5) $ (3.5) 6.7%
2012
$ 44.6 35% (15.6) 9.2 (2.5) (15.0) — (12.9) 31.6 2.3 $ (2.9) 6.6%
The federal income tax expense of $3.5 million in 2013 and $2.9 million in 2012 relates primarily to the Company’s non-insurance subsidiaries. The components of the net DTA recognized in the Company’s statement of financial condition are as follows: December 31 (in millions)
Total gross DTAs excluding unrealized (gains) losses Statutory valuation allowance adjustment Total adjusted gross DTAs excluding unrealized (gains) losses Total gross DTLs excluding unrealized (gains) losses Mutual of America’s net DTA Tax effect of unrealized (gains) losses DTA nonadmitted Mutual of America’s net admitted DTA Non-insurance Subsidiaries DTA’s Total net DTAs
2013
$ 251.6 — $ 251.6 (21.3) 230.3 1.0 (145.2) 86.1 1.0 $ 87.1
2012
$ 258.5 — $ 258.5 (34.9) 223.6 5.7 (157.8) 71.5 3.5 $ 75.0
annual report 2013 / 35
NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS December 31, 2013 and 2012
At December 31, 2013, Mutual of America’s gross DTA including the tax effect of unrealized losses of $252.6 million consisted of $231.1 million of ordinary DTAs and $21.5 million of capital DTAs. The net decrease in the gross DTA of $6.9 million excluding unrealized (gains) losses reflects the utilization during 2013 of approximately $49.6 million of DTAs, offset by an increase from the change in accounting for pension and postretirement medical benefits of $42.7 million. As shown in the above table, Mutual of America’s net admitted DTA increased by $14.6 million during 2013. The tax effects of temporary differences that give rise to a significant portion of the DTAs and DTLs arise from the differing statutory and tax-basis treatment of assets and liabilities, insurance and annuity reserves, realized capital gains and losses on investment transactions, nonadmitted assets and net operating loss carryforwards. Included in such differences are items resulting from transition rules under the Internal Revenue Code as of January 1, 1998, which accompanied the change in taxation of Mutual of America’s pension business. The transition rules will continue to moderate Mutual of America’s current tax expense over the next several years. As such, Mutual of America incurred a federal income tax expense of $.8 million in 2013 and $1.1 million in 2012. The other $2.6 million in 2013 and $1.8 million in 2012 of the tax expense shown on the Consolidated Statement of Operations and Surplus relates to the operating results of the Company’s non-insurance subsidiaries. At December 31, 2013, the Company had consolidated net operating loss carryforwards of approximately $218.3 million, expiring at various dates between 2020 and 2029. On November 29, 2013, the Internal Revenue Service concluded its examination of the 2011 federal income tax return of the Company’s non-insurance subsidiaries, resulting in no additional taxes due.
8. FAIR VALUE OF FINANCIAL INSTRUMENTS The fair values of financial instruments have been determined using available market information and the valuation methodologies described below. Considerable judgment is often required in interpreting market data to develop estimates of fair value for financial instruments for which quoted market prices are not available or an inactive market for the instrument currently exists. Accordingly, certain fair values presented herein (refer to Note 2) may not necessarily be indicative of amounts that could be realized in a current market exchange. The use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts. Amounts related to the Company’s financial instruments at December 31, 2013 and 2012, were as follows: (in millions)
2013 Statement Value
Fair Value
2012 Statement Value
Fair Value
ASSETS Bonds and notes $7,535.5 Common stocks 31.5 Cash and short-term investments 39.6 Guaranteed funds transferable 21.8 Mortgage loans —
$7,704.5 31.5 39.6 22.1 —
$7,311.4 24.0 17.6 24.2 0.7
$7,841.1 24.0 17.6 26.6 0.7
LIABILITIES Insurance and annuity reserves $6,732.6
$6,889.1
$6,560.5
$6,761.1
Fixed Maturities and Equity Securities — Fair value for fixed maturities is determined by reference to market prices quoted by an independent pricing source. If quoted market prices are not available, fair value is determined using internal valuation models and techniques or based upon quoted prices for comparable securities. Fair value for equity securities is determined by reference to valuations quoted by an independent pricing organization.
36 / Mutual of America
Cash and Short-Term Investments — The carrying value for cash and short-term investments approximates fair values due to the short-term maturities of these instruments. Guaranteed Funds Transferable — Fair value for guaranteed funds transferable is determined by reference to market valuations provided by the former reinsurer. Mortgage Loans — Fair value for mortgage loans is determined by discounting the expected future cash flows using the current rate at which similar loans would be made to borrowers with similar credit ratings and remaining maturities. Policy Loans — The majority of policy loans are issued with variable interest rates, which are periodically adjusted based on changes in rates credited to the underlying policies and therefore are considered approximate fair value. Insurance and Annuity Reserves — Contractual funds not yet used to purchase retirement annuities and other deposit liabilities are stated at their cash surrender value. General Account policies are issued with variable interest rates that are periodically adjusted based on changes in underlying economic conditions. The fair value of immediate annuity contracts (approximately $1.0 billion at both December 31, 2013 and 2012) was determined by discounting expected future retirement benefits using current mortality tables and interest rates based on the duration of expected future benefits. Weighted average interest rates of 3.94% and 3.50% were used at December 31, 2013 and 2012, respectively.
9. SIGNIFICANT DIFFERENCES BETWEEN STATUTORY ACCOUNTING PRACTICES AND GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) The accompanying financial statements are presented in conformity with statutory accounting practices prescribed or permitted by the New York Department (statutory accounting), which practices differ from GAAP. The significant variances between such practices and GAAP are described below. The Company has not computed the variance between Surplus and Net Income calculated in accordance with statutory accounting practices prescribed or permitted by the New York Department and GAAP, as there is no reporting requirement to do so and the costs involved exceed the benefits derived from these calculations. Generally, GAAP results in a more favorable presentation of the Company’s financial condition.
Asset Valuations and Investment Income Recognition GAAP requires the Company’s bonds and notes to be classified as either held to maturity (HTM) or available for sale (AFS); whereas for statutory accounting, no such classification is required. In addition, for GAAP, AFS bonds and notes are carried at their fair value with the unrealized gains and losses applied directly to equity; whereas for statutory accounting, all bonds and notes in good standing are carried at their amortized cost. Realized capital gains and losses, net of applicable taxes, arising from changes in interest rates are recognized in income currently for GAAP accounting, rather than accumulated in the IMR and amortized into income over the remaining life of the security sold for statutory accounting. A general formula-based Asset Valuation Reserve is recorded for statutory accounting purposes, whereas such a reserve is not required under GAAP.
annual report 2013 / 37
NOTES TO CONSOLIDATED STATUTORY FINANCIAL STATEMENTS December 31, 2013 and 2012
For statutory accounting, certain assets, principally net deferred income tax assets not expected to be realized within three years, furniture and fixtures and prepaid expenses are excluded from the statement of financial condition by a direct charge to surplus; whereas under GAAP, such assets are carried at cost, net of accumulated depreciation.
Policy Acquisition Costs Under GAAP, policy acquisition costs that are directly related to and vary with the production of new business are deferred and amortized over the estimated life of the applicable policies, rather than being expensed as incurred, as required under statutory accounting.
Insurance and Annuity Reserves Under statutory accounting practices, the interest rates and mortality and morbidity assumptions used are those which are prescribed or permitted by the New York Department. Under GAAP, for annuities, the interest rate assumptions used are generally those assumed in the pricing of the contract at issue; for disability benefits, the interest rates assumed are those anticipated to be earned over the duration of the benefit period. Mortality and morbidity assumptions are based on Company experience.
Premium Recognition Insurance contracts that do not subject the insurer to significant mortality or morbidity risk are considered, under GAAP, to be primarily investment contracts. GAAP requires all amounts received from policyholders under these investment contracts to be recorded as a policyholder deposit rather than as premium income.
Deferred Income Taxes GAAP requires that a deferred tax asset or liability be established to provide for temporary differences between the tax and financial reporting bases of assets and liabilities. Statutory accounting adopted similar accounting principles, except that deferred income tax assets (net of any required valuation allowance) are recognized for statutory accounting only to the extent that they can be utilized within three years; whereas for GAAP, all such assets are recognized (net of any required valuation allowance) regardless of when they will be utilized until they expire. All changes in deferred income tax assets or liabilities are recorded directly as a charge or benefit to surplus for statutory accounting purposes.
Cash and Short-Term Investments The Statements of Cash Flows are presented in accordance with statutory accounting. This reporting format differs from GAAP, which requires a reconciliation of net income to net cash from operating activities. The statutory Statements of Cash Flows include changes in cash and short-term investments and also certain non-cash related changes.
10. SUBSEQUENT EVENTS The Company has evaluated subsequent events through March 19, 2014, the date the financial statements were available to be issued, and no events have occurred subsequent to the balance sheet date and before the date of evaluation that would require disclosure.
38 / Mutual of America
Independent Auditors’ Report
The Board of Directors Mutual of America Life Insurance Company: We have audited the accompanying consolidated statutory financial statements of Mutual of America Life Insurance Company and its subsidiaries, which comprise the consolidated statutory statements of financial condition as of December 31, 2013 and 2012, and the related consolidated statutory statements of operations and surplus, and cash flows for the years then ended, and the related notes to the consolidated statutory financial statements.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with statutory accounting practices prescribed or permitted by the New York State Department of Financial Services. 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.
Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements 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 entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 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 Notes 1 and 9 to the consolidated financial statements, the consolidated financial statements are prepared by Mutual of America Life Insurance Company using statutory accounting practices prescribed or permitted by the New York State Department of Financial Services, which is a basis of accounting other than U.S. generally accepted accounting principles. Accordingly, the financial statements are not intended to be presented in accordance with U.S. generally accepted accounting principles. The effects on the financial statements of the variances between the statutory accounting practices described in Notes 1 and 9 and U.S. generally accepted accounting principles, although not reasonably determinable, are presumed to be material.
annual report 2013 / 39
Adverse Opinion on U.S. Generally Accepted Accounting Principles In our opinion, because of the significance of the variances between statutory accounting principles and U.S. generally accepted accounting principles discussed in the Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles paragraph, the financial statements referred to above do not present fairly, in accordance with U.S. generally accepted accounting principles, the financial position of Mutual of America Life Insurance Company as of December 31, 2013 and 2012, or the results of its operations or its cash flows for the years then ended.
Opinion on Statutory Basis of Accounting In our opinion, the consolidated statutory financial statements referred to above present fairly, in all material respects, the financial condition of Mutual of America Life Insurance Company and its subsidiaries as of December 31, 2013 and 2012, and the results of their operations and their cash flows for the years then ended, in accordance with statutory accounting practices prescribed or permitted by the New York State Department of Financial Services described in Notes 1 and 9.
Emphasis of Matter As described in Notes 1 and 5 to the consolidated statutory financial statements, in 2013, Mutual of America Life Insurance Company changed its accounting for pensions and postretirement benefits other than pensions in accordance with statutory accounting principles adopted by State of New York Department of Financial Services through amendments to Regulation No. 172. Our opinion is not modified with respect to this matter.
New York, NY March 19, 2014
40 / Mutual of America
mutual of america officers
Thomas J. Moran Chairman of the Board, President and Chief Executive Officer William S. Conway, CLU, ChFC Senior Executive Vice President and Chief Operating Officer John R. Greed, CPA Senior Executive Vice President and Chief Financial Officer William Rose Senior Executive Vice President and Chief Marketing Officer James J. Roth Senior Executive Vice President and General Counsel Amir Lear, CFA Chairman and Chief Executive Officer Mutual of America Capital Management Corporation Thomas J. Dillman, CFA President Mutual of America Capital Management Corporation Thomas Gilliam, CLU Chairman and Chief Executive Officer Mutual of America Foundation Theodore L. Herman, CLU, ChFC Vice Chairman Mutual of America Foundation
Actuarial Consulting Mark Koehne, MAAA, EA Senior Vice President and Actuary
Jeremy J. Brown, CLU, ChFC, FSA, MAAA, EA Executive Vice President and Chief Actuary Corporate Actuarial Virginia A. Carlisi, FLMI, ACS Vice President Fanny F. Eng, FSA, MAAA, EA Vice President and Actuary Joseph A. Gross, FSA, MAAA Vice President and Actuary Andrew B. Hirschfeld, ASA, MAAA Vice President and Actuary Steve Ngai, FSA, MAAA Vice President and Actuary
Michael P. Mulligan Second Vice President
David M. Block, MAAA, EA Vice President and Actuary
Corporate Finance
Robert J. McElroy, MAAA, EA Vice President and Actuary
George L. Medlin, CIA Executive Vice President and Treasurer
Judy Mui Vice President Joanne Chang Second Vice President Jenny B. Kim Second Vice President
Chris W. Festog, CPA Executive Vice President and Deputy Treasurer Budget & Cost Accounting Nicholas A. Branchina Senior Vice President
Administrative Technical Services
Robert Healy, CAMS Vice President
Jared Gutman Executive Vice President and Chief Privacy Officer
William J. Krupskas Vice President Corporate Tax
Administrative Services Dennis S. McManus, FLMI, ACS Senior Vice President Rachelle Rossini Second Vice President
Harold J. Gannon Senior Vice President Estelle E. Miller, CPA Vice President Financial Reporting
Kathleen L. Summers, FLMI, ACS, AIAA Second Vice President Technical Services
Actuarial Services
Raymond Guinta Second Vice President
Nicole Lanni, FLMI, ACS, CIA Senior Vice President Katherine Cannizzaro Senior Vice President
Christopher M. Miseo, CPA Senior Vice President and Director of Accounting and Financial Reporting John A. Schabhutl, CPA Vice President and Deputy Director of Financial Reporting Thomas K. Ng Second Vice President
Miro Beverin, FLMI, ACS Vice President
Financial Systems
Victor Fried, FSA, MAAA, EA Vice President and Actuary
Brian J. Keogh Vice President
Barry S. Goldberg Vice President
Joe Tsien Second Vice President
Cindy Y.W. Lee Vice President Thomas J. Poulakowski Vice President Kenneth F. Powers, CEBS, ACS Vice President Dawn C. Weissman Vice President Joseph Aurello Second Vice President
Planning and Analysis Maria L. Brophy Senior Vice President
Corporate Law Scott H. Rothstein Executive Vice President and Deputy General Counsel Anne Marie Carroll Senior Vice President and Associate General Counsel Nicholas S. Curabba Senior Vice President and Associate General Counsel James K. McCutcheon Senior Vice President and Associate General Counsel Vincent R. Fitzpatrick, III Vice President and Associate General Counsel Anne M. McCarthy Vice President and Associate General Counsel Thomas M. Hogan Vice President and Associate General Counsel Amy M. Latkin Vice President and Assistant General Counsel Enterprise Risk Management Joseph Hummel Senior Vice President Jeffrey Tsai, FSA Senior Vice President Mary Ellen McCarren, FLMI, ACS Second Vice President FINRA/SEC Regulatory Compliance Kathryn Lu Executive Vice President and Chief Compliance Officer Eileen M. Tarasco Vice President Human Resources & Corporate Services Daniel J. LeSaffre Executive Vice President
Steven Duong, CPA Vice President
Corporate Services
Aferdita Gutierrez Second Vice President
Carson J. Dunbar, Jr. Senior Vice President
Treasury
James Buckland Senior Vice President
Myron O. Schlanger, CPA, FLMI Senior Vice President and Associate Treasurer
Timothy R. Johnson Second Vice President
Employee Benefits Thomas Ciociano Senior Vice President Jenny Lum, FLMI, ACS Vice President Facilities Management Sean Carroll Senior Vice President John Terwilliger, FLMI, ACS Senior Vice President Hal Bacharach Vice President James Griffin Vice President James D. Gribbin Second Vice President Human Resources Michael E. Conway, SPHR Senior Vice President Tanisha L. Cash, PHR, CCP Senior Vice President Thomas A. Harwood Senior Vice President John R. Luebs Senior Vice President Debra A. Branson Vice President Training & Leadership Development Lynn M. Nadler, FLMI, ACS, AIAA Senior Vice President Joseph Krakowski, ACS, AIAA Vice President John P. O’Connor Vice President Internal Audit John J. Corrigan, CPA, CIA, CISA Executive Vice President and Internal Auditor Diana H. Glynn, CPA, CIA, CISA, FLMI, ACS Vice President Robert P. Kane, CIA, CFSA Vice President Hendrix J. Paul, CISA Second Vice President
annual report 2013 / 41
mutual of america officers
Marketing & Corporate Communications Administration Sean A. Mannion Senior Vice President Mario F. Bento Vice President John R. Gilbride Vice President Michael P. Heffernan, CEBS, CLU, ChFC Vice President Peter R. Skrzypinski, FLMI, ACS, AIAA Vice President Annette C. Henry, CLU Field Vice President
Florence Ferguson, ACS, AIAA Vice President Samuel M. Greene Vice President Martine A. Krause, ACS, AIAA Vice President Paul J. Lorenti, CEBS Vice President Taryn M. Lubin Vice President Kathleen M. Mullally, CLU, ChFC Vice President Kieran P. O’Dwyer Vice President
Sales Operations James Gober Executive Field Vice President, Western Region Louis A. Montanti, CEBS Executive Field Vice President, Eastern Region Barbara Romine-Greene, CEBS, RPA, CRPS Executive Field Vice President, Mid-South Region
Office of the Chairman, President & Chief Executive Officer External Affairs
Andrew Katz Second Vice President
Edward J. T. Kenney Executive Vice President
Financial Consulting Services
Strategic Planning
Frances Infantino Senior Vice President
William G. Shannon Senior Vice President
Michael J. O’Grady Senior Vice President
Marcia Hudson Vice President
Greg F. Auman Vice President
Office of the Secretary
Paul L. Morigerato Vice President
Mary Ellen Dolan, CEBS Vice President
Linda M. Pistey Second Vice President
Zohreh Ghaissari Vice President
Competition & Research
Ann M. Norton Vice President
Ed Wonacott Senior Vice President
Paul O’Hara Senior Vice President Matthew J. Malm Second Vice President Corporate Communications Jeffrey M. Angelo Executive Vice President Barbara Crane Senior Vice President Robert W. Ruane, CLU Senior Vice President Mary-Clare Swanke, FLMI, ACS Senior Vice President Annette Barbasch Vice President John P. Clare Vice President
Joseph S. Reeves Vice President Patricia R. Sawyers Vice President Brian Sullivan Vice President Kellie T. Thomas Vice President National Accounts/ Institutional Funds Thomas E. MacMurray, CLU, ChFC, FLMI Senior Vice President Robert B. Kordecki, CLU Senior Vice President James W. Ward Senior Field Vice President
Gary P. Wetterau, CFA Executive Vice President
Corinne Joffe Second Vice President
Jacqueline Sabella Vice President
Lydia Kieser Second Vice President
Michelle Olave, CFA Second Vice President
Office of Technology-NY
Marketing
Dennis J. Routledge Senior Vice President
Kevin M. Walsh Senior Vice President and Chief Marketing Officer
Information Security Scott Stankiewicz, CEBS, RPA, CRPS Executive Field Vice President, Mid-West Region
Alfie Tucker Vice President
Advertising, Direct Response & Telemarketing
S. Albert Singh, FLMI Vice President
Diane M. Aramony Executive Vice President and Corporate Secretary/ Assistant to the Chairman Office of Technology Joan M. Squires, CEBS Executive Vice President and Chief Information Officer Peter Nicklin Senior Vice President MIS Operations Robert Giaquinto Executive Vice President Howard J. Rubin Senior Vice President Sonia Samuels Senior Vice President Salvatore P. Conza Vice President Michael L. Ellis Vice President Ronald Fried Vice President Esther M. Lester, FLMI, ACS Vice President
James T. Dixon, CISSP Vice President LAN Administration/Solution Center/Telecommunications Joseph Antonowicz Vice President William J. Doherty Vice President Youlian Simov Vice President MIS Business Applications Susan Watson Vice President Phil Jordan Vice President Evelyn Trujillo Second Vice President Mutual of America Capital Management Corporation Administration Thomas P. Kelly Vice President Client Services Paul Travers, CFA, FLMI Senior Vice President Susan J. Ferber Senior Vice President Nancy McAvey Senior Vice President
Joseph P. O’Reilly Vice President Patrick J. Sullivan Vice President Justin Sheehan Second Vice President Research James P. Accurso, CFA Senior Vice President and Director of Fixed Income Research Joseph R. Gaffoglio, CFA, CPA Senior Vice President David W. Johnson Senior Vice President Duygu Akyatan Vice President Evan B. Carpenter, CFA Vice President Kevin Frain, Jr. Vice President Benjamin L. Heben Vice President John Korbis Vice President Alexander Kotlyar Vice President Isabel E. Macalintal Vice President John Polcari Vice President
Equities
Jamie A. Zendel Vice President
Stephen J. Rich Executive Vice President and Chief Equity Strategist
Alexander Ginis Second Vice President
Marguerite H. Wagner Executive Vice President Fixed Income
Robert J. Lewis, III, CFA Second Vice President Michael Mastrogiannis Second Vice President
Andrew L. Heiskell Executive Vice President and Director of Fixed Income
annual report 2013 / 42
mutual of america regional offices
Akron, Ohio
Chicago, Illinois
Honolulu, Hawaii
Milwaukee, Wisconsin
New York City, New York
Korinna Gundrum Regional Vice President
Christopher Conway, ChFC Vice President
Lee M. Robinson Associate Account Executive
Troy S. Johnson Senior Regional Vice President
Tyrone A. Golatt, FLMI Senior Regional Vice President
Carter M. Adler Service Manager
Pamela M. Kodrich Vice President
Paul T. Wierzba, CEBS, CRPS Field Vice President
Harry Harris Vice President
Embassy Corporate Park 3700 Embassy Parkway Suite 500 Akron, OH 44333-8377 Tel. (330) 665-1915
Four Westbrook Corporate Center Suite 240 Westchester, IL 60154-5736 Tel. (708) 836-0644
737 Bishop Street Suite 2305 Honolulu, HI 96813-3211 Tel. (808) 532-1055
Lisa A. Thurston, ACS, CRPS Vice President
Adyna Pressley Second Vice President
Two Park Plaza 10850 West Park Place Suite 520 Milwaukee, WI 53224-3637 Tel. (414) 359-1221
One Liberty Plaza 165 Broadway, Suite 4601 New York, NY 10006-1465 Tel: 212-587-9045
Anchorage, Alaska
Cincinnati, Ohio
Dennis Dudley, CRPS Account Executive
Mark Deady, CEBS, CRPS Senior Regional Vice President
Denali Towers South 2600 Denali Street Suite 502 Anchorage, AK 99503-2754 Tel. (907) 274-7449 Atlanta, Georgia Austin Ort, ChFC, CLU, CRPS Vice President
Cristie A. Sams Service Manager Turfway Ridge Office Park 7300 Turfway Road Suite 560 Florence, KY 41042-1386 Tel. (859) 283-1200 Dallas, Texas
Gregory S. Hibbert, CRPS Service Manager
Jody A. Jurica, CEBS Senior Field Vice President
Five Concourse Parkway, NE Suite 1275 Atlanta, GA 30328-7102 Tel. (770) 396-9795
Dennis P. Berry Vice President
Baltimore, Maryland Michael R. Braney, CRPS Vice President Nathan Foster, ACS Second Vice President Court Towers 210 West Pennsylvania Avenue Suite 210 Towson, MD 21204-5301 Tel. (410) 825-7770 Boston, Massachusetts Christopher Bailey, ChFC, CRPS Senior Field Vice President
Urban Towers North Suite 1420-N 222 Las Colinas Boulevard West Irving, TX 75039-5446 Tel. (972) 556-2371 Denver, Colorado Scot McMorris, CRPS Regional Vice President Brendan Tucker Service Manager Plaza Tower One 6400 South Fiddler’s Green Circle Suite 1700 Greenwood Village, CO 80111-4961 Tel. (303) 694-6102 Hartford, Connecticut
James McAdams, CEBS, CRPS Vice President
Robert V. Fay, CEBS Senior Field Vice President
Westborough Office Park 1800 West Park Drive Suite 350 Westborough, MA 01581-3927 Tel. (508) 366-2418
Joy Beatrice-Cody, FLMI, ACS Vice President Somerset Square 95 Glastonbury Boulevard Suite 410 Glastonbury, CT 06033-4414 Tel. (860) 659-3610
Houston, Texas Christopher Thompson Senior Field Vice President Shari M. Lavelle, FLMI, PCS Second Vice President
Parsippany, New Jersey Minneapolis, Minnesota
3040 Post Oak Boulevard Suite 1250 Houston, TX 77056-6552 Tel. (713) 850-1371
Troy S. Johnson Senior Regional Vice President
Indianapolis, Indiana
Beth A. Eberbach, FLMI, PCS, AIAA Vice President
Mark Deady, CEBS, CRPS Senior Regional Vice President JoAnn Bule, CEBS Vice President 300 North Meridian Street Suite 1000 Indianapolis, IN 46204-1382 Tel. (317) 237-2190 Long Island, New York David J. Lynch Senior Field Vice President Joseph Mullady, ACS Vice President Two Jericho Plaza, Suite 303 Jericho, NY 11753-1670 Tel. (516) 937-9177 Los Angeles, California Brian Q. Severin, CRPS Senior Regional Vice President Shannon Moriarty, ACS, CRPS Vice President Rosa R. Weyman, CRPS Field Vice President 111 W. Ocean Boulevard Suite 925 Long Beach, CA 90802-7931 Tel. (562) 983-0407
Normandale Lake Office Park 8000 Norman Center Drive Suite 1110 Bloomington, MN 55437-1119 Tel. (952) 820-0089 Nashville, Tennessee LaDoverick Huggins Senior Field Vice President Melanie J. De Cant, FLMI, ACS Service Manager One Lakeview Place 25 Century Boulevard Suite 411 Nashville, TN 37214-3601 Tel. (615) 872-8223 New Orleans, Louisiana James Murphy, CRPS Vice President Eileen Gettys, CEBS, CRPS Field Vice President Mariela M. Rodriguez, FLMI, ACS, CRPS Service Manager Three Lakeway Center 3838 North Causeway Boulevard Suite 3100 Metairie, LA 70002-8342 Tel. (504) 832-9055
Michael J. Scott Vice President Justin J. DiGirolamo, ACS Service Manager Morris Corporate Center 300 Interpace Parkway Suite 260 Parsippany, NJ 07054-1125 Tel. (973) 299-8228 Philadelphia, Pennsylvania Charles P. Bagley CLU, ChFC, FLMI, CRPS Senior Field Vice President William R. Gallagher, CRPS Field Vice President Anthony C. DePiero, FLMI, ACS Second Vice President Blue Bell Executive Campus 470 Norristown Road, Suite 301 Blue Bell, PA 19422-2322 Tel. (610) 834-1754 Phoenix, Arizona Benjamin D. Bartel, CRPS Vice President Ann M. Balzano Vice President Biltmore Financial Center 2398 E. Camelback Road Suite 510 Phoenix, AZ 85016-9012 Tel. (602) 224-8080
annual report 2013 / 43
Pittsburgh, Pennsylvania Patrick A. Ring Vice President Meghan McIntyre, ACS Vice President Three Gateway Center Suite 2378 Pittsburgh, PA 15222-1011 Tel. (412) 391-1300 Queens, New York Tyrone A. Golatt, FLMI Senior Regional Vice President
St. Louis, Missouri
Southfield, Michigan
Ralph Joest, CRPS Regional Vice President
James D. Fergusson, CLU, ChFC, CEBS, RPA Senior Field Vice President
Lawrence Grellner, CLU Field Vice President Duane Stumpp, ACS Second Vice President The Sevens Building 7777 Bonhomme Avenue Suite 1710 St. Louis, MO 63105-1940 Tel. (314) 721-3123 San Diego, California
Vincent T. Dragone Field Vice President
Brian Q. Severin, CRPS Senior Field Vice President
David C. Donohue Vice President
James Tiensvold, CEBS Field Vice President
Forest Hills Tower 118-35 Queens Boulevard Suite 1602 Forest Hills, NY 11375-7251 Tel. (718) 520-8998
Janet Koblen, ACS Vice President
Richmond, Virginia Nicholas R. Forst Regional Vice President Robert Giorgi, CRPS Field Vice President
Symphony Towers 750 B Street Suite 2860 San Diego, CA 92101-8132 Tel. (619) 544-0860 San Francisco, California Abbas Moloo, CEBS, CRPS Vice President
Julie Malewski Vice President One Northwestern Plaza 28411 Northwestern Highway Suite 1100 Southfield, MI 48034-5518 Tel. (248) 351-4190 Tampa Bay, Florida Jeanne E. Tyre, ChFC Vice President Harrison Givens III, CEBS Second Vice President Bayport Plaza 3000 Bayport Drive Suite 950 Tampa, FL 33607-8408 Tel. (813) 281-8882 Tarrytown, New York Leonard Egan, CLU, ChFC, CRPS Vice President Martha Sulca Service Manager
Michael P. Malone, ACS, CRPS Vice President
120 White Plains Road Suite 120 Tarrytown, NY 10591-5588 Tel. (914) 332-0124
Arboretum One 9100 Arboretum Parkway Suite 360 Richmond, VA 23236-3493 Tel. (804) 560-0023
1333 North California Boulevard Suite 660 Walnut Creek, CA 94596-4504 Tel. (925) 937-9900
Renee Shew, CEBS, CRPS Vice President
Rochester, New York
Seattle, Washington
Geoffrey Callan, CEBS Field Vice President
Brian Thomas, CRPS Vice President
David Lim, CRPS Vice President
Edwin W. Wallace, FLMI, ACS Vice President
Samuel P. Taber Second Vice President
Linden Oaks Office Park 90 Linden Oaks, Suite 210 Rochester, NY 14625-2808 Tel. (585) 264-9890
Alderwood Business Center 3400 188th St. S.W. Suite 440 Lynnwood, WA 98037-4773 Tel. (425) 778-8434
Norman Watkins, Jr., ACS Service Manager
Mutual of America National Telecommunications and Conference Center 1150 Broken Sound Parkway N.W. Boca Raton, FL 33487-3598
Washington, D.C.
Caroline Magruder, FLMI, ACS Service Manager One Research Court Suite 350 Rockville, MD 20850-6223 Tel. (301) 977-6717 West Palm Beach, Florida Ivan B. Gregory, CRPS Regional Vice President Darlene M. Greene Vice President Debbie A. Rogers Vice President One Lakeside at Centrepark 1450 Centrepark Boulevard Suite 200 West Palm Beach, FL 33401-2280 Tel. (561) 471-1445
annual report 2013 / 44
Before investing in our variable annuity contracts, you should consider the investment objectives, risks, charges and expenses (a contract fee, Separate Account expenses and Underlying Funds expenses) carefully. This and other information is contained in the contract prospectus or brochure and Underlying Funds prospectuses. Please read the prospectuses and brochure carefully before investing. The prospectuses and brochure can be obtained by calling 1-800-468-3785 or visiting mutualofamerica.com. Mutual of America’s group and individual retirement products are variable annuity contracts and are suitable for long-term investing, particularly for retirement savings. The value of a variable annuity contract will fluctuate depending on the performance of the Separate Account investment funds you choose. Upon redemption, you could receive more or less than the principal amount invested. Withdrawals from our products are generally subject to income tax at your ordinary income tax rate at the time of withdrawal, and if made prior to age 59 ½, a 10% federal tax penalty. 1
While these ratings do not apply to the safety or investment performance of the Separate Account investment funds available under Mutual of America’s products, they do reflect the Company’s ability to fulfill its General Account obligations, which include its obligations under the Interest Accumulation Account, annuity purchase rate guarantees and annuity benefit payouts, as well as life insurance and disability income payments. Third party ratings are subject to change. A.M. Best, Standard & Poor’s® and Fitch Ratings are independent rating agencies. Standard & Poor’s® and S&P® are trademarks of Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc.
2
Subject to Mutual of America’s financial strength and claims-paying ability. Mutual of America assumes the investment risk of the underlying investments in the Interest Accumulation Account of our General Account.
3
Past performance is no guarantee of future returns.
4
The performance of the Separate Account investment funds is not guaranteed, and any assets allocated to them may decrease or increase in value. Statements made in this publication by clients of Mutual of America are not paid testimonials. These testimonials may not be representative of the experience of other clients and are not indicative of future performance or success.
Mutual of America Life Insurance Company 320 Park Avenue, New York, NY 10022-6839 1-800-468-3785 • mutualofamerica.com Mutual of America Life Insurance Company is a registered Broker-Dealer. Mutual of America® and Mutual of America Your Retirement Company ® are registered service marks of Mutual of America Life Insurance Company.
Design: Decker Design, Inc. Photography: John Madere Dale Robbins (photo of Bill Moyers) Printing: RR Donnelley
Printed in the USA
Mutual of America Life Insurance Company 320 Park Avenue New York, New York 10022 mutualofamerica.com