MONY CLOSED BLOCK OF BUSINESS

3 Months Ended

Mar. 31, 2020

In 1998, MONY Life Insurance Company (“MONY”) converted from a mutual insurance company to a stock corporation (“demutualization”). In connection with its demutualization, an accounting mechanism known as a closed block (the “Closed Block”) was established for certain individuals’ participating policies in force as of the date of demutualization. Assets, liabilities, and earnings of the Closed Block are specifically identified to support its participating policyholders. The Company acquired the Closed Block in conjunction with the acquisition of MONY in 2013.

Assets allocated to the Closed Block inure solely to the benefit of each Closed Block’s policyholders and will not revert to the benefit of MONY or the Company. No reallocation, transfer, borrowing or lending of assets can be made between the Closed Block and other portions of MONY’s general account, any of MONY’s separate accounts or any affiliate of MONY without the approval of the Superintendent of The New York State Department of Financial Services (the “Superintendent”). Closed Block assets and liabilities are carried on the same basis as similar assets and liabilities held in the general account.

Summarized financial information for the Closed Block as of March 31, 2020 and December 31, 2019 is as follows:


	As of
	March 31, 2020		December 31, 2019
	(Dollars In Thousands)
Closed block liabilities
Future policy benefits, policyholders’ account balances and other policyholder liabilities	$	5,593,437	$	5,836,815
Policyholder dividend obligation	73,930		278,505
Other liabilities	17,732		11,247
Total closed block liabilities	5,685,099		6,126,567
Closed block assets
Fixed maturities, available-for-sale, at fair value	$	4,453,685	$	4,682,731

Mortgage loans on real estate	70,789		72,829
Policy loans	632,318		640,134
Cash and other invested assets	57,031		44,877
Other assets	100,885		107,177
Total closed block assets	5,314,708		5,547,748
Excess of reported closed block liabilities over closed block assets	370,391		578,819
Portion of above representing accumulated other comprehensive income:
Net unrealized gains (losses) - investments/derivatives net of policyholder dividend obligation: $— and $167,285; and net of income tax: $— and $(35,130)	—		—
Future earnings to be recognized from closed block assets and closed block liabilities	$	370,391	$	578,819

Reconciliation of the policyholder dividend obligation is as follows:


	For The Three Months Ended March 31,
	2020		2019
	(Dollars In Thousands)
Policyholder dividend obligation, beginning balance	$	278,505	$	—
Applicable to net revenue (losses)	(6,496)		(10,655)
Change in net unrealized gains (losses) - investments/derivatives allocated to the policyholder dividend obligation	(198,079)		22,458
Policyholder dividend obligation, ending balance	$	73,930	$	11,803

Closed Block revenues and expenses were as follows:


	For The Three Months Ended March 31,
	2020		2019
	(Dollars In Thousands)
Revenues
Premiums and other income	$	35,336	$	37,444
Net investment income	51,015		51,128
Net gains (losses) - investments/derivatives	75		(454)
Total revenues	86,426		88,118
Benefits and other deductions
Benefits and settlement expenses	77,593		78,666
Other operating expenses	323		359
Total benefits and other deductions	77,916		79,025
Net revenues before income taxes	8,510		9,093
Income tax expense	1,768		1,910
Net revenues	$	6,742	$	7,183