4.MONY CLOSED BLOCK OF BUSINESS

In 1998, 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 MONY acquisition.

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 Insurance Department (the “Superintendent”). Closed Block assets and liabilities are carried on the same basis as similar assets and liabilities held in the general account.

The excess of Closed Block liabilities over Closed Block assets (adjusted to exclude the impact of related amounts in accumulated other comprehensive income (loss) (“AOCI”)) at the merger date represented the estimated maximum future post-tax earnings from the Closed Block that would be recognized in income from continuing operations over the period the policies and contracts in the Closed Block remain in force. In connection with the acquisition of MONY, the Company developed an actuarial calculation of the expected timing of MONY’s Closed Block’s earnings as of October 1, 2013. Pursuant to the acquisition of PLC by Dai-ichi Life, this actuarial calculation of the expected timing of MONY’s Closed Block earnings was recalculated and reset as of February 1, 2015, along with the establishment of a policyholder dividend obligation as of such date.

If the actual cumulative earnings from the Closed Block are greater than the expected cumulative earnings, only the expected earnings will be recognized in the Company’s net income. Actual cumulative earnings in excess of expected cumulative earnings at any point in time are recorded as a policyholder dividend obligation because they will

ultimately be paid to Closed Block policyholders as an additional policyholder dividend unless offset by future performance that is less favorable than originally expected. If a policyholder dividend obligation has been previously established and the actual Closed Block earnings in a subsequent period are less than the expected earnings for that period, the policyholder dividend obligation would be reduced (but not below zero). If, over the period the policies and contracts in the Closed Block remain in force, the actual cumulative earnings of the Closed Block are less than the expected cumulative earnings, only actual earnings would be recognized in income from continuing operations. If the Closed Block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from assets outside the Closed Block.

Many expenses related to Closed Block operations, including amortization of VOBA, are charged to operations outside of the Closed Block; accordingly, net revenues of the Closed Block do not represent the actual profitability of the Closed Block operations. Operating costs and expenses outside of the Closed Block are, therefore, disproportionate to the business outside of the Closed Block.

Summarized financial information for the Closed Block as of March 31, 2015 (Successor Company), January 31, 2015 (Predecessor Company), and December 31, 2014 (Predecessor Company) is as follows:

	Successor		Predecessor
	Company		Company
	As of		As of
	March 31, 2015		December 31, 2014
	(Dollars In Thousands)		(Dollars In Thousands)
Closed block liabilities
Future policy benefits, policyholders’ account balances and other policyholder liabilities	$	6,105,857	$	6,138,505
Policyholder dividend obligation	251,458		366,745
Other liabilities	57,266		53,838
Total closed block liabilities	6,414,581		6,559,088
Closed block assets
Fixed maturities, available-for-sale, at fair value	$	4,588,002	$	4,524,037
Equity securities, available-for-sale, at fair value	—		5,387
Mortgage loans on real estate	427,624		448,855
Policy loans	761,749		771,120
Cash and other invested assets	56,536		30,984
Other assets	162,135		221,270
Total closed block assets	5,996,046		6,001,653
Excess of reported closed block liabilities over closed block assets	418,535		557,435
Portion of above representing accumulated other comprehensive income:
Net unrealized investments gains (losses) net of deferred tax benefit of $0 (2015 Successor), $0 (2015 Predecessor), and $0 (2014 Predecessor) net of policyholder dividend obligation of $(38,427) (2015 Successor), $194,686 (2015 Predecessor), and $106,886 (2014 Predecessor)	—		—
Future earnings to be recognized from closed block assets and closed block liabilities	$	418,535	$	557,435

Reconciliation of the policyholder dividend obligation is as follows:

	Successor			Predecessor
	Company			Company
	February 1, 2015			January 1, 2015			For The Three
	to			to			Months Ended
	March 31, 2015			January 31, 2015			March 31, 2014
	(Dollars In Thousands)			(Dollars In Thousands)
Policyholder dividend obligation, beginning of period	$	323,432		$	366,745		$	190,494
Applicable to net revenue (losses)	(12,855		)	(1,369		)	(6,680		)
Change in net unrealized investment gains (losses) allocated to policyholder dividend obligation	(59,119		)	135,077			70,267
Policyholder dividend obligation, end of period	$	251,458		$	500,453		$	254,081

Closed Block revenues and expenses were as follows:

	Successor		Predecessor
	Company		Company
	February 1, 2015		January 1, 2015		For The Three
	to		to		Months Ended
	March 31, 2015		January 31, 2015		March 31, 2014
	(Dollars In Thousands)		(Dollars In Thousands)
Revenues
Premiums and other income	$	31,460	$	15,065	$	50,066
Net investment income (loss)	32,848		19,107		52,207
Net investment gains (losses)	634		568		5,019
Total revenues	64,942		34,740		107,292
Benefits and other deductions
Benefits and settlement expenses	55,771		31,152		96,326
Total benefits and other deductions	55,771		31,152		96,326
Net revenues before income taxes	9,171		3,588		10,966
Income tax expense	3,210		1,256		3,838
Net revenues	$	5,961	$	2,332	$	7,128