Zurich American Life Insurance

Company

Statutory Financial Statements

December 31, 2022, 2021 and 2020

Zurich American Life Insurance Company

Index

December 31, 2022, 2021 and 2020

	Page
Report of Independent Auditors		1-5
Statutory Financial Statements
Statutory Statements of Admitted Assets, Liabilities and Capital and Surplus		6
Statutory Statements of Operations		7
Statutory Statements of Changes in Capital and Surplus		8
Statutory Statements of Cash Flows		9
Notes to Statutory Financial Statements		10-54

Report of Independent Auditors

Board of Directors

Zurich American Life Insurance Company

Opinion

We have audited the statutory-basis financial statements of Zurich American Life Insurance Company (the Company), which comprise the statements of admitted assets, liabilities, and capital and surplus as of December 31, 2022 and 2021, and the related statements of operations, changes in capital and surplus and cash flow for the years then ended, and the related notes to the financial statements (collectively referred to as the “financial statements”).

Unmodified Opinion on Statutory Basis of Accounting

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, on the basis of accounting described in Note 2.

Adverse Opinion on U.S. Generally Accepted Accounting Principles

In our opinion, because of the significance of the matter described in the Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles section of our report, the financial statements do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Company at December 31, 2022 and 2021, or the results of its operations or its cash flows for the years then ended.

Basis for Opinion

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

1

Basis for Adverse Opinion on US. Generally Accepted Accounting Principles

As described in Note 2 to the financial statements, the Company prepared these financial statements using accounting practices prescribed or permitted by the Illinois Department of Insurance, which is a basis of accounting other than accounting principles generally accepted in the United States of America. The effects on the financial statements of the variances between these statutory accounting practices described in Note 2 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material and pervasive.

Responsibilities of Management for the Financial Statements

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

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

Auditor’s Responsibilities for the Audit of the Financial Statements

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

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

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

2

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

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

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

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

Report of Other Auditors on December 31, 2020 Financial Statements

The statutory-basis financial statements of Zurich American Life Insurance Company for the year ended December 31, 2020, were audited by other auditors who expressed an adverse opinion with respect to conformity with U.S. generally accepted accounting principles and an unmodified opinion with respect to conformity with accounting practices prescribed or permitted by the Illinois Department of Insurance on those statements on April 23, 2021.

/s/ Ernst & Young LLP

Chicago, Illinois

April 24, 2023

3

Report of Independent Auditors

To the Board of Directors of Zurich American Life Insurance Company

We have audited the accompanying statutory financial statements of Zurich American Life Insurance Company, which comprise the statutory statements of admitted assets, liabilities and capital and surplus as of December 31, 2020 and December 31, 2019, and the related statutory statements of operations and changes in capital and surplus, and of cash flows for each of the three years in the period ended December 31, 2020.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the accounting practices prescribed or permitted by the Illinois Department of Insurance. 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 the financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 our 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, we consider internal control relevant to the Company’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 Company’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 opinion.

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

As described in Note 2 to the financial statements, the financial statements are prepared by the Company on the basis of the accounting practices prescribed or permitted by the Illinois Department of Insurance, which is a basis of accounting other than accounting principles generally accepted in the United States of America.

The effects on the financial statements of the variances between the statutory basis of accounting described in Note 2 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material.

PricewaterhouseCoopers LLP, One North Wacker, Chicago, IL 60606

T: (312) 298 2000, F: (312) 298 2001, www.pwc.com/us

4

Adverse Opinion on U.S. Generally Accepted Accounting Principles

In our opinion, because of the significance of the matter discussed in the “Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles” paragraph, the financial statements referred to above do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Company as of December 31, 2020 and December 31, 2019, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 2020.

Opinion on Statutory Basis of Accounting

In our opinion, the financial statements referred to above present fairly, in all material respects, the admitted assets, liabilities and surplus of the Company as of December 31, 2020, and December 31, 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in accordance with the accounting practices prescribed or permitted by the Illinois Department of Insurance described in Note 2.

Emphasis of Matter

As discussed in Note 6 to the financial statements, the Company has entered into significant transactions with its parent company Zurich Insurance Group Ltd and its affiliates, which are related parties. Our opinion is not modified with respect to this matter.

Other Matter

Our audit was conducted for the purpose of forming an opinion on the statutory-basis financial statements taken as a whole. The supplemental schedule of assets and liabilities, summary investment schedule, schedule of investment risk interrogatories and schedule of reinsurance disclosures (collectively, the “supplemental schedules”) of the Company as of December 31, 2020 and for the year then ended are presented to comply with the National Association of Insurance Commissioners’ Annual Statement

Instructions and Accounting Practices and Procedures Manual and for purposes of additional analysis and are not a required part of the statutory-basis financial statements. The supplemental schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the statutory-basis financial statements. The supplemental schedules have been subjected to the auditing procedures applied in the audit of the statutory-basis financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the statutory-basis financial statements or to the statutory-basis financial statements themselves and other additional procedures, in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplemental schedules are fairly stated, in all material respects, in relation to the statutory-basis financial statements taken as a whole.

Chicago, Illinois

April 23, 2021

5

Zurich American Life Insurance Company

Statutory Statements of Admitted Assets, Liabilities and Capital and Surplus

December 31, 2022 and 2021

(in thousands of dollars)	2022			2021
Admitted assets
Cash and invested assets:
Fixed maturities, at amortized cost (fair value of $857,315 and $1,018,472, respectively)	$	912,911		$	978,169
Investment in subsidiary		22,145			20,267
Contract loans		176,496			176,642
Cash, cash equivalents and short-term investments		83,377			65,638
Receivables for securities		1,394			2
Total cash and invested assets		1,196,323			1,240,718
Federal income tax receivable		15,922			27,450
Other amounts receivable under reinsurance contracts		29,836			39,996
Deferred and uncollected premiums		20,526			21,477
Investment income due and accrued		20,212			14,671
Guaranty funds receivable or on deposit		36			36
Receivable from separate accounts		49,068			32,654
Receivables from parent, subsidiaries and affiliates		483			347
Net deferred income tax asset		1,535			1,055
Other assets		(385	)		339
Separate account assets		15,695,452			15,521,673
Total admitted assets	$	17,029,008		$	16,900,416
Liabilities and capital and surplus Liabilities:
Life and annuity reserves	$	606,107		$	616,253
Supplemental contracts without life contingencies		4,230			4,538
Claims and benefits payable to policyholders		82,316			77,842
Total policy liabilities		692,653			698,633
Provision for experience rating refunds		390,075			387,362
Other amounts payable on reinsurance		63,265			68,551
Interest maintenance reserve		—			12,717
General expenses due or accrued		3,497			6,546
Transfers to separate accounts due or accrued		(13	)		(18	)
Taxes, licenses and fees due or accrued		9,584			7,050
Asset valuation reserve		3,324			3,354
Payable to affiliates		6,572			10,510
Funds held under coinsurance		2,088			3,073
Commission to agents due or accrued		1,152			1,476
Other liabilities		12,900			15,935
Separate account liabilities		15,695,452			15,521,673
Total liabilities		16,880,549			16,736,862
Capital and surplus:
Capital stock ($10 par value – 300,000 authorized shares; 250,000 shares issued and outstanding)		2,500			2,500
Paid-in and contributed surplus		956,970			956,970
Unassigned deficit		(811,011	)		(795,916	)
Total capital and surplus		148,459			163,554
Total liabilities and capital and surplus	$	17,029,008		$	16,900,416

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

6

Zurich American Life Insurance Company

Statutory Statements of Operations

Years Ended December 31, 2022, 2021 and 2020

(in thousands of dollars)	2022			2021			2020
Income and loss:
Premium and annuity considerations	$	929,619		$	862,797		$	614,100
Considerations for supplemental contracts with life contingencies		11,177			13,220			11,454
Net investment income		29,710			25,190			30,431
Amortization of interest maintenance reserve		188			3,247			2,102
Separate account fees		447,246			405,915			499,783
Separate account losses		(322	)		(557	)		(474	)
Commissions and expense allowances on reinsurance ceded		31,115			47,564			46,693
Fee income from non-variable separate account funds		3,781			3,330			1,596
Other (loss) income		(844	)		1,296			(314	)
Gain on sale — Corporate Life and Pension (see footnote 1)		—			—			22,025
Total income		1,451,670			1,362,002			1,227,396
Benefits and expenses:
Death benefits		394,903			401,310			352,312
Annuity benefits		35,716			33,555			50,256
Disability benefits		23			105			1,239
Surrender benefits		41,324			31,985			27,174
Interest and adjustments on policy or deposit-type contracts		3,298			3,265			(8,512	)
Payments on supplementary contracts with life contingencies		18,569			19,570			19,247
(Decrease) increase in aggregate reserves for life policies and contracts		(10,146	)		10,400			7,724
Commissions		32,535			47,948			77,606
General expenses		34,701			35,485			37,848
Insurance taxes, licenses and fees		15,643			14,638			16,763
Change in loading on deferred and uncollected premiums		65			(91	)		(89	)
Net transfers to separate accounts		702,331			612,898			376,903
Experience rating refunds		88,809			43,477			164,615
Reinsured fees associated with separate accounts		31,967			33,552			31,773
Variable separate account fees ceded and other		69,471			92,223			91,403
Total benefits and expenses		1,459,209			1,380,320			1,246,262
Net loss from operations before federal income taxes and total realized capital losses after taxes		(7,539	)		(18,318	)		(18,866	)
Federal income tax expense (benefit)		3,418			(17,754	)		60,245
Net loss from operations before total realized capital losses after taxes		(10,957	)		(564	)		(79,111	)
Net realized capital (losses) gains before taxes		(23,062	)		2,259			12,613
Less: related federal income tax (benefit) expense		(4,306	)		800			2,776
Less: realized (losses) gains transferred to the interest maintenance reserve		(18,224	)		1,788			9,872
Total realized capital losses after taxes		(532	)		(329	)		(35	)
Net loss	$	(11,489	)	$	(893	)	$	(79,146	)

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

7

Zurich American Life Insurance Company

Statutory Statements of Changes in Capital and Surplus

Years Ended December 31, 2022, 2021 and 2020

(in thousands of dollars)	Capital Stock		Paid-in and Contributed Surplus		Unassigned Deficit			Total Capital and Surplus
Balances at December 31, 2019	$	2,500	$	881,970	$	(718,250	)	$	166,220
Net loss		—		—		(79,146	)		(79,146	)
Change in:
Net unrealized capital losses, net of tax		—		—		1,875			1,875
Nonadmitted assets		—		—		(95,277	)		(95,277	)
Net deferred income tax		—		—		96,887			96,887
Liability for unauthorized reinsurance		—		—		(264	)		(264	)
Asset valuation reserve		—		—		(620	)		(620	)
Paid-in capital		—		75,000		—			75,000
Surplus as a result of reinsurance		—		—		(162	)		(162	)
Interest maintenance reserve generated by transferred coinsurance assets		—		—		(208	)		(208	)
Balances at December 31, 2020	$	2,500	$	956,970	$	(795,165	)	$	164,305
Net loss		—		—		(893	)		(893	)
Change in:
Net unrealized capital gains, net of tax		—		—		65			65
Nonadmitted assets		—		—		12,382			12,382
Net deferred income tax		—		—		(11,921	)		(11,921	)
Liability for unauthorized reinsurance		—		—		317			317
Asset valuation reserve		—		—		(295	)		(295	)
Surplus as a result of reinsurance		—		—		(177	)		(177	)
Interest maintenance reserve generated by transferred coinsurance assets		—		—		(229	)		(229	)
Balances at December 31, 2021	$	2,500	$	956,970	$	(795,916	)	$	163,554
Net loss		—		—		(11,489	)		(11,489	)
Change in:
Net unrealized capital gains, net of tax		—		—		1,878			1,878
Nonadmitted assets		—		—		(12,561	)		(12,561	)
Net deferred income tax		—		—		7,480			7,480
Asset valuation reserve		—		—		30			30
Interest maintenance reserve generated by transferred coinsurance assets		—		—		(433	)		(433	)
Balances at December 31, 2022	$	2,500	$	956,970	$	(811,011	)	$	148,459

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

8

Zurich American Life Insurance Company

Statutory Statements of Cash Flows

Years Ended December 31, 2022, 2021 and 2020

(in thousands of dollars)	2022			2021			2020
Cash flow from operating activities:
Premiums collected, net of reinsurance	$	943,730		$	802,275		$	739,403
Net investment income		25,348			25,534			28,533
Miscellaneous income		480,976			457,548			569,308
Benefits and loss related payments		(488,833	)		(474,105	)		(449,564	)
Net transfers to separate accounts		(702,325	)		(612,726	)		(376,570	)
Commissions, expenses paid and aggregate write-ins for deductions		(269,018	)		(275,158	)		(407,779	)
Federal and foreign income taxes recovered (paid)		12,415			(1,574	)		(69,293	)
Net cash provided by (used in) operations		2,293			(78,206	)		34,038
Cash flow from investing activities:
Proceeds from investments sold, matured or repaid
Fixed maturities		825,829			377,319			521,628
Net gains on cash, cash equivalents and short-term investments		4			1			114
Miscellaneous proceeds		—			677			—
Total investment proceeds		825,833			377,997			521,742
Cost of investments acquired
Fixed maturities		784,132			346,645			595,802
Miscellaneous applications		1,392			10,504			22,372
Total investments acquired		785,524			357,149			618,174
Net (decrease) increase in contract loans		(146	)		(6,451	)		1,291
Net cash provided by (used in) investments		40,455			27,299			(97,723	)
Cash flow from financing activities:
Capital contributions		—			—			75,000
Net deposits on deposit-type funds and other liabilities		(309	)		(114	)		(11,832	)
Other cash (applied) provided		(24,700	)		10,520			3,341
Net cash (used in) provided by financing and miscellaneous sources		(25,009	)		10,406			66,509
Net change in cash, cash equivalents and short-term investments		17,739			(40,501	)		2,824
Cash, cash equivalents and short-term investments:
Beginning of year		65,638			106,139			103,315
End of year	$	83,377		$	65,638		$	106,139

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

9

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

1. The Company and Nature of Operations

Organization and Description of Business

Zurich American Life Insurance Company (“ZALICO” or the “Company”) is a stock life insurance company founded in 1947. The Company is incorporated under the insurance laws of the state of Illinois and is licensed in the District of Columbia and all states, except New York.

The Company is a wholly owned subsidiary of Zurich Holding Company of America, Inc. (“ZHCA”), a Delaware Corporation, which in turn is a wholly owned indirect subsidiary of its ultimate parent company Zurich Insurance Group Ltd. (“ZIG”), of Zurich, Switzerland.

Prior to June 20, 2022, ZALICO was a wholly owned subsidiary of Zurich American Company, LLC (“ZAC”). On June 20, 2022, ZAC merged into ZHCA, with ZHCA as the surviving entity. This merger had no impact on ZALICO or its operations.

Effective September 3, 2003, ZALICO transferred certain of its business, as well as the capital stock of its wholly owned subsidiaries, to a former affiliate, Federal Kemper Life Assurance Company (“FKLA”). In a contemporaneous transaction, FKLA and ZALICO entered into a coinsurance agreement under which FKLA administers the business and the records of, and 100% reinsures, certain lines of business issued by ZALICO, including certain registered variable annuity contracts that are funded through the Company’s Separate Account. These transfers were part of a larger transaction under which the capital stock of FKLA was sold to Bank One Insurance Holdings, Inc. (“Bank One”). On July 1, 2004, Bank One merged into JP Morgan Chase & Co., and FKLA changed its name to Chase Insurance Life and Annuity Company (“Chase Insurance”).

On July 3, 2006, Protective Life Insurance Company of Birmingham, Alabama (“Protective Life”), purchased Chase Insurance. Effective April 1, 2007, Chase Insurance merged with and into Protective Life.

In addition to the above transactions, the Company has entered into various affiliated and unaffiliated reinsurance agreements in order to execute strategic transactions and manage various risks to control its net exposures, and limit the volatility of losses, in an effort to protect capital and surplus. These reinsurance transactions have been disclosed in various sections of the following notes to the statutory financial statements.

The Company markets a variety of life insurance products primarily through independent insurance agents and brokers. The Company’s products include fixed universal life, indexed universal life and level term. The Company also offers a series of private placement products including variable annuity, individual variable universal life and variable life. In December 2022, the Company announced it will discontinue new sales of certain indexed universal life and term life products effective February 1, 2023. See ‘Discontinued Operations’ below for additional information.

Additionally, the Company marketed group term life products, accidental death & dismemberment, group long term disability and short-term disability insurance. These products were primarily sold through the Corporate Life and Pension (“CLP”) business, which was sold to American Family Life Insurance Company of Columbus (“Aflac”) in 2020. See ‘Discontinued Operations’ below for additional information.

The Company had also previously marketed registered individual and group variable, fixed and market value adjusted deferred annuity products (“DESTINATIONS Products”), as well as non-registered group variable universal life (“PPVUL”) and business owned life insurance (“BOLI”).

10

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

Non-Registered Group Life Insurance

The Company marketed PPVUL and BOLI from 1997 to 2003. PPVUL and BOLI are a form of group life insurance, which enables clients to buy variable life insurance on key employees. The policies remain in force until the last insured dies or the policy is surrendered or exchanged. The policyholder has flexibility regarding premiums and the right to allocate premiums to various divisions with differing investment objectives. The policyholders may also borrow from the investment value of the policies, surrender the policies for their cash surrender values or, in some cases, make partial withdrawals from the cash surrender values. Death benefits on the life of any insured are at least equal to the face amount on the individual insured provided the cash value relating to the insured is greater than zero.

The Company records as fees cost of insurance charges taken from the separate accounts, which is recorded as separate account fees. Cost of insurance charges ceded to reinsurers are recorded as a reduction of premiums. The BOLI policies are experience rated contracts with profitability based in part on the policyholder’s mortality experience. Separate account fees collected which are expected to be returned to policyholders due to favorable mortality experience are recorded as a liability in the provision for experience rating refunds. Cost of insurance charges collected in excess of amounts needed to pay death benefits, and to establish mortality reserves, are returned to the policyholder as an experience rating refund expense.

Zurich Insurance Company Ltd. (“ZIC”) offers a stable value protection (“SVP”) option in conjunction with the BOLI policies. The SVP option allows purchasers of the option to make investments into SVP divisions of the Company’s separate accounts. These SVP divisions purchase value protection from a stable value provider which offers smooth or stabilized investment returns over a specified period of time. ZIC provides net amount at risk protection to the Company.

Separate Accounts

The Company maintains separate account assets and liabilities, which are reported at fair value. Separate Accounts reflect two categories of risk assumption: non-guaranteed separate accounts, wherein the contract holder assumes the investment risk, and guaranteed separate accounts, wherein the Company contractually guarantees either a minimum return or account value to the contract holder. Non-guaranteed separate account assets are segregated from other investments. Investment income and gains and losses are credited to or charged against the non-guaranteed accounts without regard to other income, gains or losses of the Company. Mortality, policy administration and surrender charges to all accounts are included in the revenues of the Company. Changes in liabilities for minimum guarantees are included in the life and annuity reserves line item in the financial statements.

BFP Securities LLC

BFP Securities LLC (“BFPS”) and Investment Distributors, Inc. (“IDI”), affiliates of Protective Life, are the principal underwriters for ZALICO’s variable separate accounts. BFPS is also the primary wholesaling distributor of ZALICO’s BOLI and mortality-based funding products. BFPS is a wholly owned subsidiary of Benefit Finance Partners, LLC (“BFP”). BFP is 50% owned by Bancorp Services, L.L.C. (“Bancorp”), an unaffiliated party, and 50% owned by Zurich Benefit Finance LLC (“ZBF”), an affiliate of ZALICO.

Discontinued Operations

In December 2022, the Company announced it will discontinue new sales of certain indexed universal life and term life products effective February 1, 2023. The Company is currently anticipating it will run-off the existing book of business over time and does not anticipate any significant impact related to this decision on its future financial results. The Company did incur severance expense of $1.3 million, which was recorded as a component of general expenses in the accompanying statements of operations, as of December 31, 2022.

11

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

On March 19, 2020, an agreement was executed between ZALICO and the Company’s wholly owned subsidiary, Zurich American Life Insurance Company of New York (“ZALICONY”) (ZALICO and ZALICONY, collectively the “Companies”), ZHCA, ZIC, Aflac and American Family Life Assurance of New York (“Aflac NY”) to sell the Companies’ CLP business. The transaction closed on November 2, 2020. Part of the transaction required the recapture of CLP net liabilities previously ceded to ZIC as of the closing date, and, subsequently, the Companies ceded 100% of the in-force net CLP liabilities to Aflac and Aflac NY through reinsurance agreements dated as of November 2, 2020.

In addition, the Companies and Aflac entered into an agreement with Benefit Harbor LP to transfer the assets and employees of Benefit Harbor Insurance Services, LLC, the third-party administrator for the Companies CLP business. The Companies, Aflac and Aflac NY also entered into Administrative Services Agreements where the Companies will front CLP business directly written by the Companies to Aflac and Aflac NY in exchange for a fronting fee to be determined as a percentage of premiums written and fees collected until Aflac and Aflac NY obtain the proper licensing to write the business directly. Effective January 1, 2023, the Company is no longer fronting for Aflac.

ZALICO recorded a pre-tax gain of $22.0 million in 2020 related to the discontinued operations sold to Aflac, equal to the fair value of consideration received less the costs to sell.

2. Summary of Significant Accounting Policies

Basis of Presentation

The financial statements have been prepared in conformity with accounting practices prescribed or permitted by the Illinois Department of Financial and Professional Regulation (“Illinois Department of Insurance”).

The Illinois Department of Insurance recognizes only Statements of Statutory Accounting Principles (“SSAP” or “statutory basis of accounting”) prescribed or permitted by the State of Illinois for determining and reporting the financial condition and results of operations of an insurance company, and for determining its solvency under the Illinois Insurance Law. The National Association of Insurance Commissioners’ (“NAIC”) Accounting Practices and Procedures Manual version effective January 1, 2001 (“the Manual”) has been adopted as a component of prescribed or permitted practices by the State of Illinois.

The statutory basis of accounting differs from accounting principles generally accepted in the United States of America (“US GAAP”) in certain respects, which in some cases may be material. The most significant of these differences are as follows:

• Cash and cash equivalents consist of cash on hand, deposits in banks and other investments, with an original maturity of 90 days or less. Cash and cash equivalents are carried at cost, which approximates fair value as required by the NAIC. Investments in money market mutual funds are carried at fair value or net asset value (“NAV”). Under US GAAP, cash and cash equivalents are carried at fair value and have a maturity of 12 months or less;

• Fixed maturities are carried at cost, adjusted for amortization of premium or discount. Fixed maturities with NAIC designations of 6 are reported at the lower of amortized cost or fair value. All other fixed maturities are reflected at amortized cost. Discount or premium on fixed maturities is amortized using the interest method on a prospective basis. A yield to worst amortization method is used to take into consideration any fixed maturity call or sinking fund feature. Under US GAAP, fixed maturities are reported at fair value or amortized cost based upon management’s intent as to whether fixed maturities are available for sale or will be held until maturity. Differences between cost and admitted asset investment carrying amounts are credited and charged directly to unassigned surplus rather than to a separate component of stockholder’s equity and other comprehensive income;

12

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

• Included within the fixed maturities, loan-backed securities are amortized using the interest method including anticipated prepayments at the date of purchase. Prepayment assumptions for single class and multi-class mortgage-backed/asset-backed securities were obtained from the respective asset managers and the prepayment windows and/or cash flows were obtained from Bloomberg. Loan-backed securities with evidence of deterioration of credit quality for which it is probable that the Company will be unable to collect all contractually required payments receivable are written down to the present value of expected cash flows to be received. Under US GAAP, fixed maturities are reported at fair value or amortized cost based upon management’s intent as to whether fixed maturities are available for sale or will be held until maturity;

• Investments in United States (“US”) insurance company common stocks are not consolidated as required by US GAAP, and are carried at the underlying audited statutory equity of the insurance company, with equity in earnings being recorded directly to unassigned surplus as net unrealized gains or losses rather than recorded through the statements of operations;

• The asset valuation reserve (“AVR”) is determined by NAIC prescribed formulas, which establish a provision for the risk of asset defaults and is reported as a liability with changes recorded directly to unassigned surplus. Under US GAAP, no such liability is established;

• An interest maintenance reserve (“IMR”) is required under SSAP in order to defer certain realized investment gains and losses, net of tax, related to interest rate fluctuations, and to amortize such gains and losses through operating income over the remaining life of the securities sold. Any net unamortized deferred losses are nonadmitted and charged directly to unassigned surplus. No such reserve is required by US GAAP;

• Life and annuity reserves under statutory accounting practices are based on statutory mortality, morbidity and interest requirements without consideration of withdrawals and Company experience. Under the statutory basis of accounting, the NAIC Reserve Valuation Method is used for the majority of individual insurance reserves; under US GAAP, individual insurance policyholder liabilities for traditional forms for insurance are generally established using the net premium method. For interest-sensitive policies, a liability for policyholder account balances is established under GAAP based on the contract value that has accrued to the benefit of the policyholder. Policy valuation assumptions used in the estimation of policyholder liabilities are generally prescribed under SSAP; under US GAAP, policy valuation assumptions are based upon best estimates as of the date the policy is issued, with provisions for the risk of adverse deviation;

• Certain contracts, in particular deferred annuities with mortality risk, are considered “life contracts” under SSAP and, accordingly, premiums associated with these contracts are reported as revenues. Under US GAAP, the Company’s deferred annuities are classified as either “insurance contracts” or “investment contracts” and, accordingly, for those annuities, premiums are not reported as revenues. Amounts received for investment contracts are also not reported as policy liabilities and insurance reserves under US GAAP;

• Under SSAP, the Commissioner’s Annuity Reserve Valuation Method (“CARVM”) is used for the majority of individual deferred annuity reserves. Under US GAAP, individual deferred annuity policyholder liabilities are generally equal to the contract value that has accrued to the benefit of the policyholder, in addition to liabilities for certain guarantees under variable annuity contracts;

• Under statutory accounting practices, costs of acquiring new business are charged to operations in the year such costs are incurred. Under US GAAP, such costs are deferred and amortized over the premium-paying period of the policies for traditional products, or as a level percentage of gross profits for interest sensitive products;

13

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

• Under statutory accounting practices, premiums are recognized as revenues when due. For US GAAP purposes, premiums for traditional life insurance products, which include those products with fixed and guaranteed premiums and benefits and consist principally of whole and term life insurance policies, are recognized as revenues when due. Revenues for universal life insurance policies and for investment products consist of policy charges for the cost of insurance, interest earned, policy administration charges and surrender charges assessed against policyholder account balances during the year. Expenses related to these products include interest credited to policy account balances, benefit claims incurred in excess of policy account balances and commissions and expense allowances on reinsurance assumed. Revenues also include commissions and expense allowances on reinsurance ceded and reserve adjustments on reinsurance ceded. Under the statutory basis of accounting, deferred premiums, representing gross premiums less loading, are reported as an admitted asset. Under US GAAP, uncollected premiums are stated at gross amounts and deferred premiums are reflected as a reduction of the related aggregate reserve. Contracts that contain an embedded derivative are not bifurcated between components and are accounted for as part of the host contract, whereas under US GAAP, the embedded derivative would be bifurcated from the host contract and accounted for separately;

• Assets and liabilities are reported gross of reinsurance under US GAAP and net of reinsurance under the statutory basis of accounting. Certain reinsurance transactions are accounted for as financing transactions under US GAAP and as reinsurance for SSAP. Transactions recorded as financing have no impact on premiums or losses incurred, while under the statutory basis of accounting, premiums paid to the reinsurer are recorded as ceded premiums (a reduction in revenue) and expected reimbursement for losses from the reinsurer are recorded as a reduction in losses. Reserves and reinsurance recoverables on unpaid claims on reinsured business are netted with aggregate reserves and the liability for life policy claims, respectively. Under US GAAP, these reinsured amounts are reflected as an asset;

• Deferred income taxes are provided for temporary differences between the financial statement and tax bases of assets and liabilities at the end of each year based on enacted tax rates. Deferred income tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. Net deferred tax assets are limited to their admissible amount according to a prescribed formula. Changes in deferred income tax assets and liabilities are reported as adjustments to surplus. Comprehensive income is not determined for statutory reporting purposes. Under US GAAP, most changes in deferred income taxes are included in income tax expense or benefit and are allocated to continuing operations, discontinued operations, extraordinary items and items charged directly to shareholders’ equity. There are no admissibility considerations under US GAAP;

• Certain assets are considered nonadmitted assets for statutory purposes and any changes in such assets are credited or charged directly to unassigned surplus. There are no nonadmitted assets for US GAAP purposes; and

• The statutory statement of cash flows is presented as required and differs from US GAAP presentation. The Company defines cash as cash in banks and money market accounts and considers all highly liquid investments, with maturity of one year or less when purchased, to be short-term investments.

14

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

Investments

Investments are valued as prescribed by the NAIC and as required by the Illinois Department of Insurance. All security transactions are recorded on a trade date basis.

The Company’s investment in the common stock of its wholly owned insurance subsidiary is accounted and reported under the equity method as described in SSAP No. 97, “Investments in Subsidiary, Controlled and Affiliated Entities,” and valued in accordance with section 3(ii) (D) of the NAIC Valuations Securities manual and reported based on the audited statutory capital and surplus of the subsidiary. Changes in the carrying value of such investments are reflected as unrealized gains or losses in capital and surplus.

The Company records short-term investments at cost or amortized cost.

Contract loans are carried at the aggregate of the unpaid balance provided the unpaid balance does not exceed either cash surrender value of the policy or the policy reserves. The excess of the unpaid loan balance over the cash surrender value is nonadmitted and reflected as an unrealized capital loss.

Upon default or indication of potential default by an issuer of fixed maturity securities, other than mortgage-backed securities, the issue(s) of such issuer would be analyzed for possible write-down. Any such issue would be written down to its net realizable value (or “fair value”) during the year in which the impairment was determined to have become other than temporary. Thereafter, each issue is regularly reviewed, and additional write-downs may be taken in light of later developments. Write-downs are included as part of net realized capital gains and losses. All loan-backed and structured securities were reviewed to determine if there were any indications of potential for other than temporary impairment classification (“OTTI”). Where such an indication existed, cash flow and credit support analyses were performed. If it was determined that the Company was to receive less than 100% of contractual cash flows, the OTTI impact was measured and recorded in accordance with SSAP 43R, “Loan-Backed and Structured Securities.”

In determining fair market value, for the majority of securities, quotes were obtained from third party sources. If quotes from these sources were not available, a broker estimate was used.

Investment income is recorded when earned. All investment income due and accrued amounts that are over 90 days past due, are excluded from surplus. The Company had no investment income due and accrued that was over 90 days past due at December 31, 2022. The Company had $1,134 investment income due and accrued that was over 90 days past due at December 31, 2021.

Realized gains or losses on sales of investments, determined on the basis of identifiable cost on the disposition of the respective investment, which are not transferred to the IMR and write-downs are credited or charged to income or loss, net of applicable federal income tax. Unrealized gains and losses are credited or charged to surplus, net of deferred tax.

Life and Annuity Reserves

Liabilities for policy reserves on annuity contracts are calculated based on CARVM. Interest crediting rates under the contracts’ accumulation periods range from 0% to 7%. Guarantee periods range from one to ten years with minimum interest rate guarantees ranging from 0% to 5%.

Liabilities for life policy reserves and interest-sensitive life insurance contracts are based on statutory mortality and interest requirements without consideration of withdrawals. Liabilities for the majority of these contracts are calculated based on the 1980 Commissioner’s Standard Ordinary (“CSO”) table assuming interest rates ranging from 0% to 6%.

15

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

The Company waives deduction of deferred fractional premiums upon death of the insured and returns the portion of the final premium paid beyond the policy month of death. Surrender values promised in excess of the legally computed reserves, if any, would be included as a component of reserves.

Extra premiums are charged for policies issued on substandard lives according to underwriting classifications. Final reserves are determined by computing the mid-terminal reserve for the plan and holding an additional one half of the net valuation premium for the modal period.

Use of Estimates

The preparation of financial statements in conformity with accounting practices prescribed or permitted by the Illinois Department of Insurance requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Guaranty Fund Assessments

The Company is liable for guaranty fund assessments (“GFA”) related to certain unaffiliated life insurance companies that have become insolvent during the years 2022 and prior. The Company’s financial statements include provisions for all known assessments that are expected to be levied against the Company as well as an estimate of amounts (net of expected future premium tax recoveries) that the Company believes will be assessed in the future. According to SSAP No. 35R, “Guaranty Fund and Other Assessments,” such liabilities and estimated premium tax credits, as well as the estimated GFA recoverable for the ceded portion of the future liabilities, are presented separately in the balance sheet. The majority of the GFA liability is ceded to Protective Life.

The Company’s guaranty fund liability is $10,263,000 and $10,298,000 at December 31, 2022 and 2021, respectively. Amounts recoverable from reinsurers related to GFA liabilities are $9,511,000 and $9,545,000 at December 31, 2022 and 2021, respectively. The amount and period over which the GFA liabilities are expected to be paid varies by insolvency. Future premium tax recoveries total $36,000 at both December 31, 2022 and 2021. Premium tax recoveries vary by state and generally range between five to twenty years.

Separate Accounts

The assets of the separate accounts represent segregated funds administered and invested by the Company for purposes of funding variable annuity and variable life insurance contracts for the exclusive benefit of variable annuity and variable life insurance contract holders. The Company receives administrative fees from the separate accounts and retains varying amounts of withdrawal charges to cover expenses in the event of early withdrawals by contract holders.

The assets and liabilities of the separate accounts are carried at the fair value of the underlying contracts. The difference between the fair values of the contracts, and their termination value, is recorded as a negative liability for transfers to separate accounts due or accrued. Changes in termination value of the contracts are recognized through the Company’s net loss from operations as a component of net transfers to (from) the separate accounts rather than directly to surplus. The assets are invested primarily in a series of mutual funds managed by other unaffiliated mutual fund managers.

16

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

Reinsurance

In the ordinary course of business, the Company enters into reinsurance agreements to diversify risk and limit its overall financial exposure to certain blocks of annuities and to individual death claims and other claims. Although these reinsurance agreements contractually obligate the reinsurers to reimburse the Company, they do not discharge the Company from its primary liabilities and obligations to policyholders. An additional protection is the existence of a security trust. Several of the Company’s reinsurance contracts require that the reinsurer fund a trust and/or letters of credit, with the fair value of the assets at least equal to the book value of the statutory liabilities reinsured.

Federal Income Taxes

The Company has applied SSAP No. 101, “Income Taxes.” Income tax incurred is recognized by applying the enacted income tax law. Deferred income taxes are provided for temporary differences between the financial statement and tax bases of assets and liabilities at the end of each year based on enacted tax rates. Changes in admitted deferred tax assets (“DTA”) and liabilities (“DTL”) are recognized as adjustments to surplus. DTAs are first subjected to a valuation allowance assessment.

Net DTAs remaining after the valuation allowance assessment are considered admitted assets based upon specific criteria, which consider the reversal pattern of DTAs and surplus. The reversal pattern and surplus limitation parameters in the admission tests are determined based on the risk-based capital levels.

The Company records interest and penalties related to income tax contingencies as a component of income tax expense.

Nonadmitted Assets

Certain assets, designated as “nonadmitted assets,” such as investment income due and accrued exceeding 90 days, deferred income tax in excess of permitted amounts, a negative IMR, electronic data processing equipment and software, etc., have been excluded from the statutory statements of admitted assets, liabilities and capital and surplus through a direct charge against unassigned surplus.

3. Investments

The components of investment income by type of investment for the years ended December 31, 2022, 2021 and 2020 are as follows:

(in thousands of dollars)	2022			2021			2020
Fixed maturities	$	25,385		$	22,836		$	26,345
Contract loans		6,022			4,754			6,325
Cash, cash equivalents and short-term investments		1,169			39			427
Other		—			102			—
Gross investment income		32,576			27,731			33,097
Less: Investment expenses		(2,866	)		(2,541	)		(2,666	)
Net investment income	$	29,710		$	25,190		$	30,431

17

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

Investment expenses included the following fees paid to the Company’s various affiliated and non-affiliated investment managers:

(in thousands of dollars)	2022		2021		2020
Fees paid to investment managers:
Affiliated investment managers:
Zurich Investment Services Limited	$	217	$	228	$	304
Zurich Global Investment Management		1,080		886		892
Farmers Group Inc.		125		115		131
Non-affiliated investment managers:
Prudential Private Placement Investors L.P.		209		200		201
DWS Investment Management Americas, Inc.		217		236		267
Pinebridge Investments LLC		162		199		229
Goldman Sachs Asset Management, L.P.		418		382		289
Custody fees		431		288		346
Other investment expenses		7		7		7
Total investment expenses	$	2,866	$	2,541	$	2,666

Realized Gains and Losses

Realized gains and losses on sales, redemptions and impairments of investments are determined based on the actual cost of the securities based on specific identification.

Realized investment gains (losses) for the years ended December 31, 2022, 2021 and 2020 are as follows:

(in thousands of dollars)	2022			2021			2020
Fixed maturities	$	(23,064	)	$	2,263		$	12,496
Cash, cash equivalents, and short term		2			(4	)		117
		(23,062	)		2,259			12,613
Less: Capital gains tax (expense) benefit		4,306			(800	)		(2,776	)
		(18,756	)		1,459			9,837
Less: IMR transfers net of tax		18,224			(1,788	)		(9,872	)
Total realized capital losses after taxes	$	(532	)	$	(329	)	$	(35	)

18

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

Unrealized Gains and Losses on Fixed Maturities

Amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of fixed maturities, as of December 31, 2022 and 2021 are as follows:

(in thousands of dollars)	2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Fixed maturities
U.S. government	$	298,843	$	135	$	(12,537	)	$	286,441
Other governments		9,854		—		(717	)		9,137
Political subdivisions		4,255		239		(104	)		4,390
Special revenues		73,601		581		(6,101	)		68,081
Industrial and miscellaneous (unaffiliated)		526,358		2,871		(39,963	)		489,266
Total fixed maturities	$	912,911	$	3,826	$	(59,422	)	$	857,315

(in thousands of dollars)	2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Fixed maturities
U.S. government	$	358,221	$	3,321	$	(2,954	)	$	358,588
Other governments		10,933		101		(101	)		10,933
Political subdivisions		4,266		1,210		(5	)		5,471
Special revenues		75,805		5,228		(593	)		80,440
Industrial and miscellaneous (unaffiliated)		528,944		35,970		(1,874	)		563,040
Total fixed maturities	$	978,169	$	45,830	$	(5,527	)	$	1,018,472

19

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

Unrealized Losses on Fixed Maturities

Fair value and gross unrealized losses of fixed maturities as of December 31, 2022 and 2021 for securities that were in an unrealized loss position were as follows:

(in thousands of dollars)	2022
	Unrealized Losses Less Than 12 Months					Unrealized Losses Greater Than 12 Months
	Gross Estimated Fair Value		Gross Unrealized Losses			Gross Estimated Fair Value		Gross Unrealized Losses
Fixed maturities
U.S. government	$	191,430	$	(4,756	)	$	66,885	$	(7,693	)
Other governments		2,717		(33	)		6,420		(684	)
U.S. political subdivisions bonds		379		(60	)		197		(44	)
U.S. special revenues bonds		17,336		(1,462	)		1,678		(125	)
Industrial and miscellaneous		232,463		(17,415	)		88,264		(14,949	)
Loan-backed securities		97,717		(5,894	)		45,702		(6,307	)
Total fixed maturities	$	542,042	$	(29,620	)	$	209,146	$	(29,802	)

(in thousands of dollars)	2021
	Unrealized Losses Less Than 12 Months					Unrealized Losses Greater Than 12 Months
	Gross Estimated Fair Value		Gross Unrealized Losses			Gross Estimated Fair Value		Gross Unrealized Losses
Fixed maturities
U.S. government	$	209,937	$	(1,342	)	$	40,695	$	(1,612	)
Other governments		6,244		(101	)		—		—
U.S. political subdivisions bonds		300		(5	)		—		—
U.S. special revenues bonds		4,372		(21	)		3,759		(103	)
Industrial and miscellaneous		77,963		(1,161	)		11,463		(450	)
Loan-backed securities		51,637		(588	)		9,364		(144	)
Total fixed maturities	$	350,453	$	(3,218	)	$	65,281	$	(2,309	)

As of December 31, 2022 and 2021, fixed maturities represented 100% of the Company’s total unrealized loss amount for both years and totaled 1,080 and 357 securities, respectively.

As of December 31, 2022 and 2021, fixed maturities in an unrealized loss position for less than 12 months were comprised of 714 and 303 securities, respectively.

Fixed maturities in an unrealized loss position for greater than 12 months as of December 31, 2022 and 2021 were comprised of 366 and 54 securities, respectively. The Company recognized OTTI on fixed maturities of $1,048 in 2022. The Company did not recognize OTTI on fixed maturities investments in 2021.

The majority of these securities are investment grade fixed maturities and the decline in fair value is attributed to changes in interest rates and not credit quality. As the Company has the ability and intent to hold these investments until a recovery of fair value which may be at maturity, the Company does not consider these investments to be other-than temporarily-impaired at December 31, 2022 or 2021.

20

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

Loan-Backed Securities

Loan-backed securities with evidence of deterioration of credit quality, for which it is probable that the Company will be unable to collect all contractually required payments receivable, are written down to the present value of expected cash flows to be received. In determining the impairments for loan-backed securities, a review of default rate, credit support and other key assumptions is made on the security level.

Loan-backed securities impaired, as their carrying value was less than the present value of their projected cash flows that were held as of December 31, 2022, were as follows:

2022
CUSIP Identification	Book/Adjusted Carrying Value Amortized Cost Before Current Period OTTI		Present Value of Projected Cash Flows		Recognized Other-Than- Temporary Impairment		Amortized Cost After OTTI		Fair Value at Time of OTTI		Date of Financial Statement Where Reported
22540VG71	$	36,525	$	35,477	$	1,048	$	35,477	$	37,782		6/30/22
Total	$	36,525	$	35,477	$	1,048	$	35,477	$	37,782

As of December 31, 2021, there were no impaired loan-backed securities.

Concentrations of Credit Risk

The Company is not exposed to any significant concentration of credit risk of a single or group non-governmental issuer. Concentration of credit risk could exist when changes in economic, industry or geographic factors similarly affect groups of counter-parties whose aggregate credit exposure is material in relation to the Company’s total exposure.

Maturities of Fixed Maturities

The amortized cost and estimated fair value of fixed maturities, by contractual maturity, at December 31, 2022 and 2021 are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties and because mortgage-backed securities provide for periodic payments throughout their life. As the stated maturities of such securities may not be indicative of actual maturities, the totals for mortgage-backed securities are shown separately.

21

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

(in thousands of dollars)	2022				2021
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in 1 year or less	$	27,616	$	27,188	$	66,169	$	66,514
Due after 1 year through 5 years		421,559		404,598		407,220		411,590
Due after 5 years through 10 years		181,390		163,561		228,161		233,418
Due after 10 years		120,620		112,211		110,611		138,132
		751,185		707,558		812,161		849,654
Mortgage-backed securities		161,726		149,757		166,008		168,818
	$	912,911	$	857,315	$	978,169	$	1,018,472

Proceeds from sold, matured or repaid fixed maturities and gross realized gains and losses for the years ended December 31, 2022, 2021 and 2020 are as follows:

(in thousands of dollars)	Gross Gains		Gross Losses			Proceeds
2022
Long term fixed maturities	$	858	$	(23,922	)	$	825,829
Short term fixed maturities		2		(6	)		2,554
2021
Long term fixed maturities	$	4,371	$	(2,142	)	$	377,319
Short term fixed maturities		1		—			9,292
2020
Long term fixed maturities	$	12,952	$	(502	)	$	521,628
Short term fixed maturities		1		—			12,094

22

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

Restricted Assets

As of December 31, 2022 and 2021, the Company has the following restricted assets held at amortized cost, which were on deposit with various states to satisfy regulatory requirements:

Gross Restricted																				Percentage
(in thousands of dollars)
	1		2		3		4		5		6		7			8		9		10			11
Restricted Asset Category	Total General Account (G/A)		G/A Supporting Protected Cell Account Activity		Total Separate Account (S/A) Restricted Assets		S/A Assets Supporting G/A Activity		Total		Total From Prior Year		Increase/ Decrease			Total Non- Admitted Restricted		Total Current Year Admitted Restricted		Gross Restricted to Total Assets			Admitted Restricted to Total Admitted Assets
2022
On deposit with states regulatory bodies	$	4,365	$	—	$	—	$	—	$	4,365	$	3,959	$	406		$	—	$	4,365		0.03	%		0.03	%
Total restricted assets	$	4,365	$	—	$	—	$	—	$	4,365	$	3,959	$	406		$	—	$	4,365		0.03	%		0.03	%
2021
On deposit with states regulatory bodies	$	3,959	$	—	$	—	$	—	$	3,959	$	3,973	$	(14	)	$	—	$	3,959		0.02	%		0.02	%
Total restricted assets	$	3,959	$	—	$	—	$	—	$	3,959	$	3,973	$	(14	)	$	—	$	3,959		0.02	%		0.02	%

The fair value of these securities was $4,098,257 and $3,950,987 as of December 31, 2022 and 2021, respectively.

23

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

4. Fair Value of Financial Instruments

The Company’s financial assets and liabilities carried at fair value have been classified, for disclosure purposes, based on a hierarchy defined by SSAP No. 100R, “Fair Value.” The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). An asset’s or liability’s classification is based on the lowest level input that is significant to its measurement. For example, a Level 3 fair value measurement may include inputs that are both observable (Levels 1 and 2) and unobservable (Level 3). The levels of the fair value hierarchy are as follows:

Level 1 Securities valued based on directly observable market prices and are traded in active markets; securities valued on unadjusted quoted prices, if not actively traded. Level 1 securities include money market funds and exchange traded equity and derivative securities.

Level 2 Quoted prices in markets that are not active or significant inputs that are observable either directly or indirectly. Level 2 inputs include the following:

a. Quoted prices for similar assets or liabilities in active markets;

b. Quoted prices for identical or similar assets or liabilities in nonactive markets;

c. Inputs other than quoted market prices that are observable; and

d. Inputs that are derived principally from or corroborated by observable market data through correlation or other means.

Level 3 Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These measurements include circumstances in which there is little, if any, market activity for the asset or liability and reflect management’s own judgments about the assumptions a market participant would use in pricing the asset or liability.

At the end of each reporting period, the Company evaluates whether or not an event has occurred that would transfer any of these securities between Level 1 and Level 2. This policy also applies to transfers in and out of Level 3.

24

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

Fair Values of Financial Instruments and its Levels within Fair Value Hierarchy

The following table provides information as of December 31, 2022 and 2021 about the fair values and certain admitted values of the Company’s financial instruments and its levels within the fair value hierarchy:

(in thousands of dollars)	2022
Type of Financial Instrument	Aggregate Fair Value		Admitted Assets		Level 1		Level 2		Level 3		Not Practicable (Carrying Value)
Assets
Fixed maturities	$	857,315	$	912,911	$	—	$	853,513	$	3,802	$	—
Cash, cash equivalents and short-term investments		83,377		83,377		64,866		18,511		—		—
Receivable for securities		1,394		1,394		1,394		—		—		—
Contract loans		176,496		176,496		—		—		—		176,496
Investment income due and accrued		20,212		20,212		20,212		—		—		—
Separate account assets		15,695,452		15,695,452		2,178,197		11,943,898		1,573,357		—
Total assets	$	16,834,246	$	16,889,842	$	2,264,669	$	12,815,922	$	1,577,159	$	176,496
Liabilities
Deposit type contracts	$	4,230	$	4,230	$	—	$	4,230	$	—	$	—
Separate account liabilities		15,695,452		15,695,452		—		15,695,452		—		—
Total liabilities	$	15,699,682	$	15,699,682	$	—	$	15,699,682	$	—	$	—

(in thousands of dollars)	2021
Type of Financial Instrument	Aggregate Fair Value		Admitted Assets		Level 1		Level 2		Level 3		Not Practicable (Carrying Value)
Assets
Fixed maturities	$	1,018,472	$	978,169	$	—	$	1,015,913	$	2,559	$	—
Cash, cash equivalents and short-term investments		65,638		65,638		65,638		—		—		—
Receivable for securities		2		2		2		—		—		—
Contract loans		176,642		176,642		—		—		—		176,642
Investment income due and accrued		14,671		14,671		14,671		—		—		—
Separate account assets		15,521,673		15,521,673		2,662,302		11,516,480		1,342,891		—
Total assets	$	16,797,098	$	16,756,795	$	2,742,613	$	12,532,393	$	1,345,450	$	176,642
Liabilities
Deposit type contracts	$	4,538	$	4,538	$	—	$	4,538	$	—	$	—
Separate account liabilities		15,521,673		15,521,673		—		15,521,673		—		—
Total liabilities	$	15,526,211	$	15,526,211	$	—	$	15,526,211	$	—	$	—

25

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

Changes in Level 3 Assets Measured at Fair Value

The following table summarizes the changes in Separate Account assets classified as Level 3 for the years ended December 31, 2022 and 2021. Gains and losses reported in this table may include changes in fair value that are attributable to both observable and unobservable inputs.

(in thousands of dollars)	Separate Account Assets
	Beginning Fair Value		Total Gains/ (Losses) Included in Net Income			Total Gains/ (Losses) Included in Surplus		Purchases		Sales			Transfer in/(out) of Level 3		Ending Fair Value
2022	$	1,342,891	$	(66,195	)	$	12,578	$	340,132	$	(56,049	)	$	—	$	1,573,357
2021	$	1,030,100	$	113,497		$	6,797	$	243,146	$	(50,649	)	$	—	$	1,342,891

Methods and Assumptions to Estimate Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of financial instruments as of December 31, 2022 and 2021:

• Fixed maturities - The estimated fair value of fixed maturities is valued in accordance with the NAIC’s Purposes and Procedures Manual of the Securities Valuation Office (“SVO”). Fair value is based upon quoted market prices, dealer quotes, and prices obtained from independent pricing services, generally broker dealers. Unless representative trades of securities actually occurred at year end, these quotes are generally estimates of fair value based on an evaluation of appropriate factors such as trading in similar securities, yields, credit quality, coupon rate, maturity, type of issues and other market data.

• Cash, cash equivalents and short-term investments - The carrying amounts of these items approximate fair value.

• Contract loans - The carrying amounts of these items approximate fair market values because interest rates are generally variable and based on current market rates.

• Deposit-type contracts - The estimated fair value is currently equal to book value and is based on the present value of the future payments.

• The separate account assets are carried at fair value based on the reported NAV per share of the respective portfolios at December 31, 2022 and 2021. Accumulation values are computed daily based on the change in fair market value of the NAV of the subaccount less mortality and expense risk charges for the subaccount. The carrying amounts of the separate account liabilities are a reasonable estimate of their fair value.

26

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

5. Income Taxes

Components of DTAs and DTLs at December 31, 2022 and 2021, as well as the related changes, comprise the following components:

(in thousands of dollars)	2022
	Ordinary		Capital		Total
Gross deferred tax assets	$	168,845	$	1,677	$	170,522
Deferred tax assets nonadmitted		161,907		141		162,048
Subtotal net admitted deferred tax asset		6,938		1,536		8,474
Deferred tax liabilities		6,938		1		6,939
Net admitted deferred tax asset	$	—	$	1,535	$	1,535

(in thousands of dollars)	2021
	Ordinary		Capital		Total
Gross deferred tax assets	$	161,764	$	1,160	$	162,924
Deferred tax assets nonadmitted		154,943		105		155,048
Subtotal net admitted deferred tax asset		6,821		1,055		7,876
Deferred tax liabilities		6,821		—		6,821
Net admitted deferred tax asset	$	—	$	1,055	$	1,055

(in thousands of dollars)	Change
	Ordinary		Capital		Total
Gross deferred tax assets	$	7,081	$	517	$	7,598
Deferred tax assets nonadmitted		6,964		36		7,000
Subtotal net admitted deferred tax asset		117		481		598
Deferred tax liabilities		117		1		118
Net admitted deferred tax asset	$	—	$	480	$	480

27

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

The SSAP No. 101 admission calculation components at December 31, 2022 and 2021 are as follows:

(in thousands of dollars)	2022
	Ordinary		Capital		Total
(a) Federal income taxes paid in prior years recoverable through loss carrybacks	$	—	$	1,535	$	1,535
(b) Adjusted gross deferred tax assets expected to be realized after application of the threshold limitation		—		—		—
(b.i) Adjusted gross deferred tax assets expected to be realized following the balance sheet date		—		—		—
(b.ii) Adjusted gross deferred tax assets allowed per limitation threshold		N/A		N/A		22,537
(c) Adjusted gross deferred tax assets offset by gross deferred tax liabilities		6,938		1		6,939
(d) Deferred tax assets admitted as the result of application of SSAP No. 101	$	6,938	$	1,536	$	8,474
Ratio percentage used to determine recovery period and threshold limitation amount						748	%
Amount of adjusted capital and surplus used to determine recovery period and threshold limitation					$	150,248

(in thousands of dollars)	2021
	Ordinary		Capital		Total
(a) Federal income taxes paid in prior years recoverable through loss carrybacks	$	—	$	1,055	$	1,055
(b) Adjusted gross deferred tax assets expected to be realized after application of the threshold limitation		—		—		—
(b.i) Adjusted gross deferred tax assets expected to be realized following the balance sheet date		—		—		—
(b.ii) Adjusted gross deferred tax assets allowed per limitation threshold		N/A		N/A		24,878
(c) Adjusted gross deferred tax assets offset by gross deferred tax liabilities		6,821		—		6,821
(d) Deferred tax assets admitted as the result of application of SSAP No. 101	$	6,821	$	1,055	$	7,876
Ratio percentage used to determine recovery period and threshold limitation amount						836	%
Amount of adjusted capital and surplus used to determine recovery period and threshold limitation					$	165,853

28

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

(in thousands of dollars)	Change
	Ordinary		Capital		Total
(a) Federal income taxes paid in prior years recoverable through loss carrybacks	$	—	$	480	$	480
(b) Adjusted gross deferred tax assets expected to be realized after application of the threshold limitation		—		—		—
(b.i) Adjusted gross deferred tax assets expected to be realized following the balance sheet date		—		—		—
(b.ii) Adjusted gross deferred tax assets allowed per limitation threshold		N/A		N/A		(2,341	)
(c) Adjusted gross deferred tax assets offset by gross deferred tax liabilities		117		1		118
(d) Deferred tax assets admitted as the result of application of SSAP No. 101	$	117	$	481	$	598
Ratio percentage used to determine recovery period and threshold limitation amount						-88	%
Amount of adjusted capital and surplus used to determine recovery period and threshold limitation					$	(15,605	)

The Company does not employ reinsurance related tax planning strategies.

The Company is currently recognizing all deferred tax liabilities.

Current income taxes incurred consist of the following major components for the years ended December 31, 2022 and 2021:

(in thousands of dollars)	2022			2021			Change
Federal	$	3,418		$	(17,754	)	$	21,172
Foreign		—			—			—
Subtotal		3,418			(17,754	)		21,172
Federal income tax on net capital gains (losses)		(4,306	)		800			(5,106	)
Federal and foreign income taxes incurred	$	(888	)	$	(16,954	)	$	16,066

29

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

As of December 31, 2022 and 2021, the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are as follows:

(in thousands of dollars)	2022			2021			Change
Deferred tax assets
Ordinary:
Unearned premium reserves	$	—		$	5		$	(5	)
Policyholder reserves		87,480			87,179			301
Deferred acquisition costs		79,149			73,544			5,605
Nonadmitted assets		1,340			172			1,168
Compensation and benefits accrual		—			253			(253	)
Accruals not currently deductible		360			62			298
Other		516			549			(33	)
		168,845			161,764			7,081
Nonadmitted deferred tax assets		(161,907	)		(154,943	)		(6,964	)
Admitted ordinary deferred tax assets		6,938			6,821			117
Capital:
Investments		1,017			588			429
Other		660			572			88
		1,677			1,160			517
Nonadmitted deferred tax assets		(141	)		(105	)		(36	)
Admitted capital deferred tax assets		1,536			1,055			481
Admitted deferred tax assets		8,474			7,876			598
Deferred tax liabilities
Ordinary:
Policyholder reserves		1,210			1,613			(403	)
Fixed assets		—			1			(1	)
Investments		970			728			242
Deferred and uncollected premium		4,352			4,479			(127	)
Other		406			—			406
		6,938			6,821			117
Capital:
Other		1			—			1
		1			—			1
Total deferred tax liabilities		6,939			6,821			118
Net admitted deferred tax assets	$	1,535		$	1,055		$	480

The change in net deferred income taxes, net of any valuation allowance, is composed of the following:

(in thousands of dollars)	2022		2021		Change
Total deferred tax assets	$	170,522	$	162,924	$	7,598
Total deferred tax liabilities		6,939		6,821		118
Net deferred tax asset	$	163,583	$	156,103		7,480
Tax effect of unrealized gains						—
Change in net deferred income tax asset					$	7,480

30

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

The provision for federal income taxes incurred is different from that which would be obtained by applying the statutory federal income tax rate at 21% for 2022, 2021 and 2020 to income before income taxes. The significant items causing this difference are as follows:

(in thousands of dollars)	2022			2021			2020
Pre-tax loss from operations	$	(7,539	)	$	(18,318	)	$	(18,866	)
Pre-tax realized capital (losses) gains before transfer to IMR		(23,062	)		2,259			2,741
Total pre-tax loss	$	(30,601	)	$	(16,059	)	$	(16,125	)
Provision computed at statutory rate	$	(6,426	)	$	(3,372	)	$	(3,386	)
Amortization of interest maintenance reserve		(39	)		(682	)		1,632
Separate accounts dividend received deduction		(288	)		(639	)		(749	)
Ceding commission included in surplus		(91	)		(85	)		(78	)
Nonadmitted assets		(1,168	)		313			(89	)
Provision to return		(390	)		(296	)		(22,138	)
Internal Revenue Service (“IRS”) audit adjustment		(33	)		(38	)		—
Life loss carryback - CARES Act		—			—			(9,087	)
Other		67			(234	)		29
Total statutory income taxes	$	(8,368	)	$	(5,033	)	$	(33,866	)
Federal income tax expense (benefit)	$	3,418		$	(17,754	)	$	60,245
Tax on capital (losses) gains		(4,306	)		800			2,776
Less: Change in net deferred income tax		(7,480	)		11,921			(96,887	)
Total statutory income taxes	$	(8,368	)	$	(5,033	)	$	(33,866	)

As of December 31, 2022, the Company did not have any operating loss carryforwards.

There was no aggregate amount of deposits reported as admitted assets under Section 6603 of the IRS code as of December 31, 2022.

31

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

The Company’s federal income tax return is consolidated with the following entities, with ZHCA as the parent:

American Guarantee and Liability Insurance Company	Zurich Agency Services, Inc.
American Zurich Insurance Company	Zurich Alternative Asset Management, LLC
Colonial American Casualty & Surety Company	Zurich American Insurance Company
Empire Fire and Marine Insurance Company	Zurich American Insurance Company of Illinois
Empire Indemnity Insurance Company	Zurich American Life Insurance Company
Fidelity & Deposit Company of Maryland	Zurich American Life Insurance Company of New York
Hoplite Reinsurance Company of Vermont, Inc.	Zurich CZI Management Holding, Ltd.
Rural Community Insurance Company	Zurich E & S Insurance Brokerage, Inc.
Special Insurance Services, Inc.	Zurich F & I Reinsurance T & C Limited
Steadfast Insurance Company	Zurich Global, Ltd.
The Zurich Services Corporation	Zurich Global Investment Management Inc.
Universal Underwriters Insurance Company	Zurich Holding Company of America, Inc.
Universal Underwriters of Texas Insurance Company	Zurich Latin America Corporation
Universal Underwriters Service Corporation	Zurich Realty, Inc.
Vehicle Dealer Solutions, Inc.

A written agreement sets out the method of allocating tax between the companies. In general, the allocation is based upon a separate return calculation with an immediate benefit for a taxable loss. Intercompany tax balances are settled within thirty days after the filing of the consolidated federal income tax return, the payment of an estimated payment, an additional assessment of the consolidated tax liability, a refund of the consolidated tax liability or any other reduction to the member’s apportioned tax liability in accordance with the tax sharing agreement.

The Company joins with its U.S. parent, ZHCA and other affiliates, in filing a consolidated U.S. federal income tax return. The statutes of limitations for all income tax returns through tax year 2017 are closed, and all IRS examinations are closed through tax year 2019. The Company is not currently under any IRS income tax audits.

Corporate Alternative Minimum Tax (“CAMT”) is a part of the Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022. The controlled group of corporations of which the Company is a member has not yet been determined, as of the reporting date, if they will be liable for CAMT in 2023. The fourth quarter 2022 financial statements do not include the estimated impact of the CAMT, because a reasonable estimate cannot be made. Based upon projected adjusted financial statement income for 2023, the controlled group of corporations has determined that average “adjusted financial statement income” is above the thresholds for the 2023 tax year such that they expect to be required to perform the CAMT calculations.

At December 31, 2022, the Company did not have any uncertain tax positions. Based upon existing information, the Company does not anticipate any expected development for uncertain tax positions in the next twelve months.

As of December 31, 2022, the Company has not recognized any amounts for interest or penalties related to uncertain tax positions. However, in the event the Company determines a change in liability is appropriate in the future, interest or penalty related to an uncertain tax position will be recognized as a component of the income tax provision.

32

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

The Company does not have any tax loss contingencies for which it is reasonably possible that the total liability will significantly increase within twelve months of the reporting date.

6. Information Concerning Parent, Subsidiaries and Affiliates

On September 2, 2010, the Company established ZALICONY. The carrying value of ZALICONY as of December 31, 2022 and 2021 is $22,144,649 and $20,266,915, respectively. The Company has entered into a related party services agreement with ZALICONY.

There were no capital contributions made to the Company in 2022 or 2021.

On August 6, 2020, the Company received a capital contribution of $35,000,000 from ZAC. On September 18, 2020, and December 15, 2020, two additional capital contributions of $20,000,000 each were received from ZAC.

At December 31, 2022 and 2021, the Company reported the following amounts due from or to related parties:

(in thousands of dollars)	2022			2021
Zurich Global Employee Benefits Solutions	$	424		$	270
Zurich American Life Insurance Company of New York		57			77
Other related parties		2			—
Receivables from related parties	$	483		$	347
Zurich American Insurance Company	$	(5,965	)	$	(3,645	)
Zurich Global Investment Management Inc.		(396	)		(184	)
Zurich Benefit Finance LLC		(125	)		—
ZNA Services, LLC		(67	)		(73	)
Zurich Services US LLC		(14	)		(16	)
The Zurich Services Corporation		(5	)		—
Zurich Holding Company of America, Inc.		—			(6,538	)
Centre Group Holdings (U.S.) Limited		—			(34	)
Other related parties		—			(20	)
Payables to related parties	$	(6,572	)	$	(10,510	)
Net payables to related parties	$	(6,089	)	$	(10,163	)

33

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

For the years 2022, 2021 and 2020, the Company incurred the following amounts of expense in association with services, such as administrative services, advisory services, claim services and risk engineering services, provided by related parties:

(in thousands of dollars)	2022			2021			2020
Zurich American Insurance Company	$	15,154		$	15,497		$	8,998
Zurich Global Investment Management Inc.		1,080			885			892
Zurich Insurance Group		847			847			690
ZNA Services, LLC		786			752			1,158
Zurich Benefit Finance LLC		325			—			—
Zurich Investment Services Ltd		238			268			327
Farmers Group, Inc.		220			114			131
Zurich Services US LLC		190			183			290
The Zurich Services Corporation		11			—			14
Zurich American Life Insurance Company of New York		(555	)		(759	)		(708	)
Zurich Global Employee Benefit Solutions		(2,028	)		(1,137	)		(988	)
Expenses incurred in association with services provided by related parties	$	16,268		$	16,650		$	10,804

Related party receivables and payables are settled as provided in its agreements, generally within 45 days from date of invoice.

The Company has a service agreement, technology support agreement, and license and service agreement with Bancorp and ZBF. Bancorp is responsible for certain administrative functions on certain of the Company’s private placement variable life insurance policies. ZBF is appointed to be the product technology support provider in the administration of certain private placement variable life insurance policies issued by the Company. The Company’s license and service agreement with Bancorp and ZBF governs the terms and conditions under which certain technology may be used in the administration of certain private placement variable life insurance policies issued by the Company that includes illustration software license.

The Company has a principal underwriter agreement and service agreements with BFPS. BFPS is the principal underwriter for a closed block of the Company’s variable, fixed and market value-adjusted annuities. BFPS provides certain services for the distribution of the Company’s private placement variable life insurance and variable annuity policies. BFPS also provides certain services relating to certain employees and independent contractors of the Company becoming and remaining registered representatives of BFPS.

The Company has a Stable Value Protection Option Master Agreement (whereby the Company is acting on behalf of the sub-divisions of the Stable-Value-Protected Divisions of the ZALICO Variable Series I Separate Account) with ZIC.

The Company has a Real Estate Advisory Agreement with its affiliate Zurich Global Investment Management Inc. (“ZGIM”), under which ZGIM may provide certain services on real estate activities to the Company on an ongoing basis.

The Company has service agreements with its affiliates ZIC, Farmers New World Life (“FNWL”), Zurich American Insurance Company (“ZAIC”), and ZALICONY for each to perform administrative services reasonably necessary in the ordinary course of business.

34

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

The Company has an investment advisory service agreement with its affiliate, Zurich Investment Services Ltd. (“ZIS”) and ZGIM, to perform investment advisory services reasonably necessary in the ordinary course of business.

The Company has a customer service level overview agreement with its affiliate, ZFUS Services, LLC (“ZFUS”), for ZFUS to provide management, administrative and general services.

The Company has a service agreement with its affiliate, Zurich Life Insurance Company Ltd (“ZLIC”), for the Company to provide referral, sales support and other administrative services for ZLIC.

The Company has a service agreement with The Zurich Services Corporation (“ZSC”) pursuant to which the Company receives services from ZSC that may include claim services, risk engineering services, care center services and other services.

The Company has a service agreement with its affiliate, Zurich Services US LLC (“ZSUS”), for ZSUS to provide human resources services, administrative and general services.

The Company has a Multilateral Data Protection Agreement for Data Transfers in Business Systems with ZIG. The agreement governs the handling of personal data sent cross border within the Zurich global organization.

See footnote 8 for the disclosure regarding the Company’s reinsurance activities with affiliates.

7. Life Reserves

Life reserves are based on mortality tables approved by the NAIC using statutory specified interest rates and valuation methods that provide, in aggregate, reserves that are greater than or equal to the minimum required by the Illinois Department of Insurance. The aggregate reserves for life policies and contracts have been computed primarily utilizing the CARVM based on the statutory maximum valuation interest rates and minimum statutory mortality rates which were allowed by state authorities at the time the policies were issued.

Tabular Interest, Tabular less Actual Reserve Released and Tabular Cost have been determined by formulas in accordance with the NAIC Annual Statement Instructions.

For the determination of Tabular Interest on funds not involving life contingencies for each valuation rate of interest, the Tabular Interest is calculated as one hundredth of the product of such valuation rate of interest multiplied by the mean of the amount of funds subject to such valuation rate of interest held at the beginning and end of the year of valuation.

35

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

The reconciliation of total actuarial reserves and other liabilities as of December 31, 2022 and 2021 were as follows:

(in thousands of dollars)	2022		2021
Policy Liabilities in the General Account
Life insurance	$	303,842	$	302,496
Accidental death benefits		1		1
Disability—active lives		83		88
Annuities (excluding supplementary contracts)		100,542		99,586
Supplementary contracts with life contingencies		200,712		213,099
Supplemental contracts without life contingencies		4,230		4,538
Miscellaneous reserves		927		983
Claims and benefits payable to policyholders		82,316		77,842
Total general account		692,653		698,633
Policy Liabilities in the Separate Account
Life insurance		12,680,309		12,432,142
Annuities (excluding supplementary contracts)		2,962,931		3,052,884
Supplementary contracts including life contingencies		1,788		2,220
Liability for deposit-type contracts		126		236
Other liabilities		50,298		34,191
Total separate account		15,695,452		15,521,673
Total policy liabilities	$	16,388,105	$	16,220,306

The Company’s universal life policies with secondary guarantees (“SGUL policies”) in force at December 31, 2022 and 2021, were calculated under Actuarial Guideline XXXVIII (“AG38”), paragraphs 8D and 8E, which take into account the shadow accounts used for the lapse protection. In addition, a single deterministic projection was run as required in AG38 paragraph 8D, which was required for policies issued through December 31, 2012. This is a gross premium valuation using best estimate assumptions plus conservative margins and the asset assumptions include limitations with respect to the particular assets and asset yields.

The gross premium valuation was used for policies issued prior to December 31, 2012, since it exceeded the formulaic reserve. The Company’s gross reserves for all SGUL policies were $103,760,000 and $96,703,000 as of December 31, 2022 and 2021, respectively. The Company cedes 100% of this business to ZIC.

In June 2016, the NAIC adopted a recommendation to activate a principles-based reserving (“PBR”) approach for life insurance products in order to more accurately reflect the risks or costs of the liability or obligations of the insurer. During 2020, the Company implemented PBR for individual life policies under Section 20 of the Valuation Manual (“VM-20”) with issue dates of January 1, 2020 and later. Due to the Company’s reinsurance agreements currently in place, there was no material impact to the Company.

The Company also implemented PBR for variable annuity contracts and certain other policies and contracts under Section 21 of the Valuation Manual (“VM-21”) for all contracts in force. Due to the Company’s reinsurance agreements currently in place, the Company has only retained $3.9 million of such reserves as of December 31, 2020. The valuation methodology used to value certain variable annuity reserves prior to the adoption of PBR was Actuarial Guideline 43 (“AG-43”). The Company did not elect the 36-month phase-in period option provided in VM-21.

36

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

Analysis of General Account Life Actuarial Reserves by Withdrawal Characteristics

Life actuarial reserves by withdrawal characteristics as of December 31, 2022 and 2021 were as follows:

(in thousands of dollars)
2022 General Account		Account Value		Cash Value		Reserve
A.	Subject to discretionary withdrawal, surrender
	values or policy loans:
	1. Term policies with cash value	$	—	$	—	$	—
	2. Universal life		283,661		282,358		290,133
	3. Universal life with secondary guarantees		31,211		26,571		103,134
	4. Indexed universal life		693,725		562,098		705,547
	5. Indexed universal life with secondary guarantees		—		—		—
	6. Indexed life		—		—		—
	7. Other permanent cash value life insurance		28,156		28,156		29,780
	8. Variable life		—		—		—
	9. Variable universal life		206,861		206,861		210,759
	10. Miscellaneous reserves		—		—		12,154
B.	Not subject to discretionary withdrawal or no cash values:
	1. Term policies with cash value		—		—		79,806
	2. Accidental death benefits		—		—		1
	3. Disability - active lives		—		—		91
	4. Disability - disabled lives		—		—		177
	5. Miscellaneous reserves		—		—		5,896
C.	Total (gross: direct + assumed)		1,243,614		1,106,044		1,437,478
D.	Reinsurance ceded		981,700		844,130		1,132,625
E.	Total (net) * (C)-(D)	$	261,914	$	261,914	$	304,853

37

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

(in thousands of dollars)
2022
Separate Account Nonguaranteed		Account Value		Cash Value		Reserve
A.	Subject to discretionary withdrawal, surrender
	values or policy loans:
	1. Term policies with cash value	$	—	$	—	$	—
	2. Universal life		—		—		—
	3. Universal life with secondary guarantees		—		—		—
	4. Indexed universal life		—		—		—
	5. Indexed universal life with secondary guarantees		—		—		—
	6. Indexed life		—		—		—
	7. Other permanent cash value life insurance		—		—		—
	8. Variable life		—		—		—
	9. Variable universal life		12,680,309		12,680,309		12,680,309
	10. Miscellaneous reserves		—		—		—
B.	Not subject to discretionary withdrawal or no cash values:
	1. Term policies with cash value		—		—		—
	2. Accidental death benefits		—		—		—
	3. Disability - active lives		—		—		—
	4. Disability - disabled lives		—		—		—
	5. Miscellaneous reserves		—		—		—
C.	Total (gross: direct + assumed)		12,680,309		12,680,309		12,680,309
D.	Reinsurance ceded		—		—		—
E.	Total (net) * (C)-(D)	$	12,680,309	$	12,680,309	$	12,680,309

38

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

(in thousands of dollars)
2021
General Account		Account Value		Cash Value		Reserve
A.	Subject to discretionary withdrawal, surrender
	values or policy loans:
	1. Term policies with cash value	$	—	$	—	$	—
	2. Universal life		301,287		299,825		312,390
	3. Universal life with secondary guarantees		32,571		25,336		96,703
	4. Indexed universal life		615,894		479,756		606,424
	5. Indexed universal life with secondary guarantees		—		—		—
	6. Indexed life		—		—		—
	7. Other permanent cash value life insurance		28,758		28,758		30,458
	8. Variable life		—		—		—
	9. Variable universal life		201,095		201,095		204,896
	10. Miscellaneous reserves		—		—		10,953
B.	Not subject to discretionary withdrawal or no cash values:
	1. Term policies with cash value		—		—		80,432
	2. Accidental death benefits		—		—		1
	3. Disability - active lives		—		—		97
	4. Disability - disabled lives		—		—		173
	5. Miscellaneous reserves		—		—		10,104
C.	Total (gross: direct + assumed)		1,179,605		1,034,770		1,352,631
D.	Reinsurance ceded		922,603		777,768		1,049,063
E.	Total (net) * (C)-(D)	$	257,002	$	257,002	$	303,568

39

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

(in thousands of dollars)
2021
Separate Account Nonguaranteed		Account Value		Cash Value		Reserve
A.	Subject to discretionary withdrawal, surrender
	values or policy loans:
	1. Term policies with cash value	$	—	$	—	$	—
	2. Universal life		—		—		—
	3. Universal life with secondary guarantees		—		—		—
	4. Indexed universal life		—		—		—
	5. Indexed universal life with secondary guarantees		—		—		—
	6. Indexed life		—		—		—
	7. Other permanent cash value life insurance		—		—		—
	8. Variable life		—		—		—
	9. Variable universal life		12,432,142		12,432,142		12,432,142
	10. Miscellaneous reserves		—		—		—
B.	Not subject to discretionary withdrawal or no cash values:
	1. Term policies with cash value		—		—		—
	2. Accidental death benefits		—		—		—
	3. Disability - active lives		—		—		—
	4. Disability - disabled lives		—		—		—
	5. Miscellaneous reserves		—		—		—
C.	Total (gross: direct + assumed)		12,432,142		12,432,142		12,432,142
D.	Reinsurance ceded		—		—		—
E.	Total (net) * (C)-(D)	$	12,432,142	$	12,432,142	$	12,432,142

The reconciliation of life actuarial reserves by type as of December 31, 2022 and 2021 were as follows:

(in thousands of dollars)	2022		2021
Life Actuarial Reserves
Life insurance	$	303,842	$	302,496
Accidental death benefits		1		1
Disability - active lives		83		88
Miscellaneous reserves		927		983
Total life	$	304,853	$	303,568

40

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

Analysis of Annuity Actuarial Reserves and Deposit Liabilities by Withdrawal Characteristics

Annuity actuarial reserves and deposit-type contract funds and other liabilities without life or disability contingencies by withdrawal characteristics as of December 31, 2022 and 2021 were as follows:

(in thousands of dollars)
2022 Individual Annuities		General Account		Separate Account With Guarantees		Separate Account Nonguaranteed		Total		% of Total
A.	Subject to discretionary withdrawal:
	1. With market value adjustment	$	44,444	$	1,773	$	—	$	46,217		1.23	%
	2. At book value less surrender charge of 5% or more		1,564		—		—		1,564		0.04	%
	3. At fair value		—		—		1,876,869		1,876,869		49.92	%
	4. Total with adjustment or at market value (total of 1 through 3)		46,008		1,773		1,876,869		1,924,650		51.19	%
	5. At book value without adjustment (minimal or no charge or adjustment)		1,353,116		—		—		1,353,116		35.99	%
B.	Not subject to discretionary withdrawal		480,185		—		1,788		481,973		12.82	%
C.	Total (gross: direct + assumed)		1,879,309		1,773		1,878,657		3,759,739		100.00	%
D.	Reinsurance ceded		1,662,583		—		—		1,662,583
E.	Total (net) * (C)-(D)	$	216,726	$	1,773	$	1,878,657	$	2,097,156
	Annuities (excluding supplementary contracts)	$	16,014	$	1,773	$	1,876,869	$	1,894,656
	Supplementary contracts with life contingencies		200,712		—		1,788		202,500
	Total (net)	$	216,726	$	1,773	$	1,878,657	$	2,097,156

41

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

(in thousands of dollars)
2022 Group Annuities		General Account		Separate Account With Guarantees		Separate Account Nonguaranteed		Total		% of Total
A.	Subject to discretionary withdrawal:
	1. With market value adjustment	$	11,293	$	4,647	$	—	$	15,940		1.10	%
	2. At book value less surrender charge of 5% or more		84		—		—		84		0.01	%
	3. At fair value		—		—		1,079,642		1,079,642		74.61	%
	4. Total with adjustment or at market value (total of 1 through 3)		11,377		4,647		1,079,642		1,095,666		75.72	%
	5. At book value without adjustment (minimal or no charge or adjustment)		125,937		—		—		125,937		8.70	%
B.	Not subject to discretionary withdrawal		225,435		—		—		225,435		15.58	%
C.	Total (gross: direct + assumed)		362,749		4,647		1,079,642		1,447,038		100.00	%
D.	Reinsurance ceded		278,221		—		—		278,221
E.	Total (net) * (C)-(D)	$	84,528	$	4,647	$	1,079,642	$	1,168,817
	Annuities (excluding supplementary contracts)	$	84,528	$	4,647	$	1,079,642	$	1,168,817
	Supplementary contracts with life contingencies		—		—		—		—
	Total (net)	$	84,528	$	4,647	$	1,079,642	$	1,168,817

(in thousands of dollars)
2022 Deposit-Type Contracts		General Account		Separate Account With Guarantees		Separate Account Nonguaranteed		Total		% of Total
A.	Subject to discretionary withdrawal:
	1. With market value adjustment	$	—	$	—	$	—	$	—		0.00	%
	2. At book value less surrender charge of 5% or more		—		—		—		—		0.00	%
	3. At fair value		—		—		—		—		0.00	%
	4. Total with adjustment or at market value (total of 1 through 3)		—		—		—		—		0.00	%
	5. At book value without adjustment (minimal or no charge or adjustment)		9,503		—		—		9,503		31.99	%
B.	Not subject to discretionary withdrawal		20,077		—		126		20,203		68.01	%
C.	Total (gross: direct + assumed)		29,580		—		126		29,706		100.00	%
D.	Reinsurance ceded		25,350		—		—		25,350
E.	Total (net) * (C)-(D)	$	4,230	$	—	$	126	$	4,356

42

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

(in thousands of dollars)
2021 Individual Annuities		General Account		Separate Account With Guarantees		Separate Account Nonguaranteed		Total		% of Total
A.	Subject to discretionary withdrawal:
	1. With market value adjustment	$	59,299	$	1,133	$	—	$	60,432		1.55	%
	2. At book value less surrender charge of 5% or more		5,448		—		—		5,448		0.14	%
	3. At fair value		—		—		1,966,504		1,966,504		50.43	%
	4. Total with adjustment or at market value (total of 1 through 3)		64,747		1,133		1,966,504		2,032,384		52.12	%
	5. At book value without adjustment (minimal or no charge or adjustment)		1,512,310		—		—		1,512,310		38.78	%
B.	Not subject to discretionary withdrawal		352,740		—		2,319		355,059		9.10	%
C.	Total (gross: direct + assumed)		1,929,797		1,133		1,968,823		3,899,753		100.00	%
D.	Reinsurance ceded		1,701,981		—		—		1,701,981
E.	Total (net) * (C)-(D)	$	227,816	$	1,133	$	1,968,823	$	2,197,772
	Annuities (excluding supplementary contracts)	$	14,717	$	1,133	$	1,966,603	$	1,982,453
	Supplementary contracts with life contingencies		213,099		—		2,220		215,319
	Total (net)	$	227,816	$	1,133	$	1,968,823	$	2,197,772

43

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

(in thousands of dollars)
2021 Group Annuities		General Account		Separate Account With Guarantees		Separate Account Nonguaranteed		Total		% of Total
A.	Subject to discretionary withdrawal:
	1. With market value adjustment	$	—	$	5,372	$	—	$	5,372		0.37	%
	2. At book value less surrender charge of 5% or more		—		—		—		—		0.00	%
	3. At fair value		—		—		1,079,776		1,079,776		74.79	%
	4. Total with adjustment or at market value (total of 1 through 3)		—		5,372		1,079,776		1,085,148		75.17	%
	5. At book value without adjustment (minimal or no charge or adjustment)		—		—		—		—		0.00	%
B.	Not subject to discretionary withdrawal		358,518		—		—		358,518		24.83	%
C.	Total (gross: direct + assumed)		358,518		5,372		1,079,776		1,443,666		100.00	%
D.	Reinsurance ceded		273,649		—		—		273,649
E.	Total (net) * (C)-(D)	$	84,869	$	5,372	$	1,079,776	$	1,170,017
	Annuities (excluding supplementary contracts)	$	84,869	$	5,372	$	1,079,776	$	1,170,017
	Supplementary contracts with life contingencies		—		—		—		—
	Total (net)	$	84,869	$	5,372	$	1,079,776	$	1,170,017

(in thousands of dollars)
2021 Deposit-Type Contracts		General Account		Separate Account With Guarantees		Separate Account Nonguaranteed		Total		% of Total
A.	Subject to discretionary withdrawal:
	1. With market value adjustment	$	—	$	—	$	—	$	—		0.00	%
	2. At book value less surrender charge of 5% or more		—		—		—		—		0.00	%
	3. At fair value		—		—		—		—		0.00	%
	4. Total with adjustment or at market value (total of 1 through 3)		—		—		—		—		0.00	%
	5. At book value without adjustment (minimal or no charge or adjustment)		—		—		—		—		0.00	%
B.	Not subject to discretionary withdrawal		33,548		236		—		33,784		100.00	%
C.	Total (gross: direct + assumed)		33,548		236		—		33,784		100.00	%
D.	Reinsurance ceded		29,010		—		—		29,010
E.	Total (net) * (C)-(D)	$	4,538	$	236	$	—	$	4,774

44

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

Variable Annuities with Guaranteed Living Benefits

The Company’s variable annuities with guaranteed living benefits for DESTINATIONS products at December 31, 2022 and 2021 are as follows:

(in thousands of dollars)	Guaranteed Living Benefits
Benefit and Type of Risk	Subjected Account Value		Amount of Reserve Held – Net		Total Reinsurance Ceded
Guaranteed retirement income benefit (“GRIB”) (Waiting period 7, 10 or 15 years)
December 31, 2022	$	540,496	$	7,097	$	255,336
December 31, 2021	$	728,543	$	3,937	$	240,717

The GRIB base is the greatest of account value, greatest anniversary value or net deposits accumulated at 5%. As of December 31, 2022 and 2021, the Company ceded $204,269,000 and $192,574,000 of this business to ZIC, with the remainder ceded to unaffiliated insurance companies.

8. Reinsurance

The Company has assumed and ceded business using yearly renewable term contracts, accidental death and disability contracts and coinsurance contracts to affiliate and third party reinsurers. The Company remains primarily responsible to its policyholders for all future claims and policyholder benefits related to the blocks of business ceded and is not relieved of its obligations to the extent any reinsurer does not meet its obligation to the Company.

Failure of the reinsurers to honor their obligations could result in losses to the Company; consequently, estimates are established for amounts deemed or estimated to be uncollectible. To minimize its exposure to significant losses from reinsurance insolvencies, the Company utilizes several reinsurers to minimize concentration of credit risk and evaluates the financial condition of its reinsurers and concentration of credit risk of its reinsurers. Several reinsurance contracts require the reinsurer to maintain assets in a security trust whose market value matches or exceeds the book value of the reinsured liability.

There was no reinsurance in unauthorized and certified companies in 2022 or 2021. There was $316,852 of reinsurance in unauthorized and certified companies in 2020.

45

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

The following is a breakdown of direct, assumed and ceded premiums by major affiliated and unaffiliated insurance companies for the years ended December 31, 2022, 2021 and 2020:

(in thousands of dollars)	2022			2021			2020
Direct and assumed premiums:	$	1,300,874		$	1,247,590		$	952,090
Ceded premiums:
Affiliated insurance companies		(176,680	)		(197,956	)		(125,889	)
Unaffiliated insurance companies		(194,575	)		(186,837	)		(212,101	)
Total premiums ceded		(371,255	)		(384,793	)		(337,990	)
Premiums and annuity considerations	$	929,619		$	862,797		$	614,100
Breakdown of ceded premiums:
Affiliated insurance companies:
ZIC:
Recapture of CLP liabilities	$	—		$	—		$	95,624
All other activity		(176,680	)		(197,956	)		(221,513	)
Total affiliated insurance companies	$	(176,680	)	$	(197,956	)	$	(125,889	)
Unaffiliated insurance companies:
Aflac	$	(120,191	)	$	(100,083	)	$	(122,673	)
Protective Life		(58,870	)		(72,003	)		(75,244	)
All others		(15,514	)		(14,751	)		(14,184	)
Total unaffiliated insurance companies	$	(194,575	)	$	(186,837	)	$	(212,101	)

As of December 31, 2022, 2021 and 2020, amounts assumed from unaffiliated insurance companies for life, annuity and disability products were as follows:

(in thousands of dollars)	2022		2021		2020
Premiums assumed	$	339	$	299	$	333
Benefits assumed		159		169		164
Reserves assumed		2,166		2,157		36

The Company did not assume any amounts from affiliated insurance companies during 2022, 2021 or 2020.

46

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

As of December 31, 2022, 2021 and 2020, amounts associated with reinsurance reserves ceded to affiliated and unaffiliated insurance companies, including the related collateral held for such reserves for life, annuity and disability products were as follows:

(in thousands of dollars)	2022		2021		2020
Reserves ceded as of December 31,
Affiliated insurance companies	$	1,294,273	$	1,199,475	$	1,122,344
Unaffiliated insurance companies		1,959,667		1,978,166		1,980,578
Total reserves ceded	$	3,253,940	$	3,177,641	$	3,102,922
Breakdown of total reserves ceded by liability type:
Individual annuities	$	1,662,583	$	1,701,981	$	1,739,702
Group annuities		278,221		273,649		314,358
Deposit-type contracts		25,350		29,010		30,261
Life contract actuarial reserves		1,132,625		1,049,063		928,461
Accident and health		155,161		123,938		90,140
Total reserves ceded	$	3,253,940	$	3,177,641	$	3,102,922
Breakdown of total reserves ceded by key reinsurer:
Affiliated insurance companies:
ZIC:
Variable universal life liabilities	$	770,438	$	676,768	$	561,935
Variable annuity liabilities		208,139		227,517		240,719
GRIB liabilities		204,269		192,574		228,451
SGUL liabilities		103,760		96,703		86,760
CLP liabilities		7,667		5,913		4,479
Total affiliated insurance companies	$	1,294,273	$	1,199,475	$	1,122,344
Unaffiliated insurance companies:
Protective Life	$	1,688,920	$	1,737,183	$	1,759,852
Fidelity Life Association (“FLA”)		69,489		72,213		75,386
Aflac		146,205		116,921		84,789
All others		55,053		51,849		60,551
Total unaffiliated insurance companies	$	1,959,667	$	1,978,166	$	1,980,578
Collateral held for total reserves ceded:
ZIC Security Trust account	$	1,380,794	$	1,294,947	$	1,242,134
Protective Life Security Trust account		1,630,445		1,710,147		1,811,235
All other third party trust accounts		1,311		1,311		1,311
All other third party letters of credit		8,750		8,000		6,500

ZIC established a Security Trust account for the exclusive benefit of the Company. The Bank of New York is the trustee. The trust account is funded with assets equal to at least 102% of the statutory reserve credit assumed by ZIC. The basis of the valuation of all collateral held is market value.

47

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

The collateral for the GRIB liabilities provided by ZIC, and the related list of assets held for the benefit of ZIC, as of December 31, 2022 and 2021 are as follows:

(in thousands of dollars)
	Variable Annuities Reserve		Total Collateral
2022
Bonds	$	204,269	$	1,153,709
Equities		—		8,080
Money market		—		17,055
Unconditional letters of credit		—		201,950
Total assets - for the benefit of the cedent	$	204,269	$	1,380,794
2021
Bonds	$	192,574	$	1,060,844
Equities		—		33,906
Money market		—		747
Unconditional letters of credit		—		199,450
Total assets - for the benefit of the cedent	$	192,574	$	1,294,947

The face amount of insurance in force associated with reinsurance ceded to affiliated and unaffiliated insurance companies for life insurance in force at December 31, 2022 and 2021 were as follows:

(in thousands of dollars)	2022		2021
Direct and assumed	$	94,477,048	$	93,023,968
Ceded to
Affiliated insurance companies	$	52,074,009	$	52,482,987
Unaffiliated insurance companies		28,616,379		26,913,732
Total ceded	$	80,690,388	$	79,396,719

As of December 31, 2022, 2021 and 2020, amounts associated with reinsurance benefits ceded to affiliated and unaffiliated insurance companies for life, annuity and disability products were as follows:

(in thousands of dollars)	2022		2021		2020
Benefits ceded to affiliated insurance companies	$	51,833	$	67,090	$	70,912
Benefits ceded to unaffiliated insurance companies		330,256		352,052		308,504
Total benefits ceded	$	382,089	$	419,142	$	379,416

ZIC

On November 17, 2006, and as amended on December 22, 2008, the Company entered into a reinsurance agreement with ZIC (“ZIC Agreement”) to reinsure the net amounts at risk for the GRIB options and other related life and annuity reserves related to the Company’s DESTINATIONS product for policies issued from May 1, 2000 through February 28, 2003.

48

Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

On September 30, 2013, the Company and ZIC entered into a reinsurance treaty in which the Company ceded 100% of its universal life business issued after January 1, 2010. The treaty is retrospective, covering all Independent Financial Advisors (“IFA”) in-force policies from inception.

To facilitate the sale of the CLP business to Aflac, ZALICO recaptured CLP net liabilities previously ceded to ZIC as of November 2, 2020. On a pre-tax basis, ZALICO recorded ceded premiums of $95.6 million (which included $82.2 million of cash transferred from ZIC equal to the net liabilities recaptured), $93.8 million of claims incurred, and other expenses of $1.9 million. In exchange, ZALICO paid ZIC a recapture fee of $88.7 million.

Further, the Company has several reinsurance agreements with ZIC covering the Company’s individual life and group life, accidental death and disability businesses.

The Company’s affiliated reinsurance transactions with ZIC have all been approved by the Illinois Department of Insurance.

Aflac

On March 19, 2020, an agreement was executed between the Companies, ZHCA, ZIC, Aflac and Aflac NY to sell the Companies’ CLP business. The transaction closed on November 2, 2020. Part of the transaction required the recapture of CLP net liabilities previously ceded to ZIC as of the closing date, as discussed above. Subsequently, the Companies ceded 100% of the in-force net CLP liabilities to Aflac and Aflac NY through reinsurance agreements dated as of November 2, 2020.

Protective Life Insurance Company

Effective September 3, 2003, ZALICO transferred certain of its business, as well as the capital stock of its wholly owned subsidiaries, to a former affiliate, FKLA. In a contemporaneous transaction, FKLA and ZALICO entered into a coinsurance agreement under which FKLA administers the business and the records of, and 100% reinsures, certain lines of business issued by ZALICO, including certain registered variable annuity contracts that are funded through the Company’s Separate Account. These transfers were part of a larger transaction under which the capital stock of FKLA was sold to Bank One. On July 1, 2004, Bank One merged into JP Morgan Chase & Co., and FKLA changed its name to Chase Insurance.

On July 3, 2006, Protective Life purchased Chase Insurance. Effective April 1, 2007, Chase Insurance merged with and into Protective Life.

The initial ceding commission on the coinsurance agreement with Protective Life was $120 million. This initial ceding commission was not transferred to the Company from Protective Life, but rather was withheld from the assets transferred from the Company to Protective Life as part of the transferred coinsurance assets. As of December 31, 2022 and 2021, the remaining balance of the initial ceding commission amounted to $3.9 million and $4.3 million, respectively. The remaining balance of the initial ceding commission, net of tax, and the IMR related to the transferred coinsurance assets reflected in surplus, are being amortized into operations. Amortization of the initial ceding commission was approximately $434,000, $406,000 and $370,000 for the years ended December 31, 2022, 2021 and 2020, respectively. Amortization of the IMR related to the transferred coinsurance assets was approximately $244,000, $229,000 and $208,000 for the years ended December 31, 2022, 2021 and 2020, respectively.

As part of the coinsurance agreement with Protective Life, most reinsurance agreements with outside reinsurers were novated to Protective Life as part of the Purchase Agreement. As of December 31, 2022, and 2021, the Company’s separate account assets subject to the coinsurance agreement with Protective Life were approximately $829,113,000 and $1,131,531,000, respectively.

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Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

A Security Trust Account was established for the exclusive benefit of the Company. The Security Trust Account is funded with assets equal to the general account statutory reserves adjusted for policy loans and interest maintenance reserves reinsured by Protective Life, adjusted on a quarterly basis. Protective Life is required to maintain the Security Trust Account until the Company’s general account statutory reserves of the Reinsured Policies are $400,000,000 or less.

Fidelity Life Association

As part of the overall Protective Life transaction, the Company also entered into a reinsurance agreement with Fidelity Life Association (“FLA”) related to certain fixed-rate annuity liabilities. FLA is a mutual insurance company which was an affiliate of FKLA.

9. Capital and Surplus

The amount of dividends that can be paid by the Company to its stockholder without prior approval of the Illinois Department of Insurance is limited to the greater of (i) 10% of its statutory unassigned surplus or (ii) statutory net income from the preceding calendar year. A dividend paid that does not meet the above specifications is defined as an “extraordinary dividend” and requires advance approval from the Illinois Department of Insurance. The Company did not pay any dividends in 2022, 2021 or 2020. The Company has no surplus debentures. The Company also has no restrictions on surplus or any stock held by the Company for any special purposes.

10. Retirement Plans and Other Post Retirement Benefits Plans

Effective in 2004, the Company’s employees began participating in a qualified, noncontributory defined benefit pension plan sponsored by ZAIC.

11. Separate Accounts

General Nature and Characteristics of Separate Accounts

The assets and liabilities of the Company’s Separate Accounts represent segregated funds administered and invested by the Company for purposes of funding flexible payment, individual and group variable annuity contracts, market value adjusted deferred annuity contracts, variable supplemental contracts and individual and group variable life insurance contracts for the exclusive benefit of variable annuity contract holders and variable life insurance policy holders.

The Company receives fees from the Separate Accounts which consist of charges for mortality and expense risk, certain minimum guaranteed death benefits, certain guaranteed retirement benefits, record maintenance fees and other administrative charges. The Company also retains varying amounts of withdrawal charges to cover expenses in the event of early withdrawals by contract holders. The negative liability for transfers to Separate Accounts due or accrued amounted to $13,000 and $18,000 as of December 31, 2022 and 2021, respectively, which represents CARVM.

The assets and liabilities of the Separate Accounts are carried at fair value at December 31, 2022 and 2021.

The Company has marketed non-registered individual and group variable life policies and a series of individual and group variable annuity contracts. This business impacted premiums, separate accounts fees, net transfers to separate accounts, insurance taxes, licenses and fees and income tax expense. The non-registered products also have premium tax and deferred acquisition costs (“DAC”) tax expense load charges which are deducted from the contract holder’s premiums to compensate the Company for premium taxes and DAC tax expenses incurred by the Company.

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Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

Under statutory accounting, transfers to the separate accounts are reported net of premium and DAC tax loads. There is a corresponding offset to the premium tax load in insurance taxes, licenses and fees.

Certain separate account products have guarantees that are backed by the general accounts. The Company has entered into reinsurance agreements for all of this guaranteed business. At the end of December 31, 2022, the general account of the Company had a maximum guarantee for the separate account liabilities of $42.5 billion. To compensate the general account for the risk taken, the separate account has paid risk charges as follows for the past five years:

(in thousands of dollars)
Risk Charges
2022	$	386,896
2021		326,962
2020		462,893
2019		347,628
2018		327,395

As all of the guarantees have been reinsured, the above risk charges have also been ceded.

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Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

Information regarding the reserves included in the separate accounts of the Company as of December 31, 2022 and 2021 were as follows:

(in thousands of dollars)	2022
	Indexed		Nonindexed Guarantee Less Than/ Equal to 4%		Nonindexed Guarantee More Than 4%		Nonguaranteed Separate Accounts		Total
Premiums, considerations or deposits for year ended December 31, 2022	$	—	$	40	$	—	$	926,833	$	926,873
Reserves at December 31, 2022 for accounts with assets at:
Fair value	$	—	$	6,420	$	—	$	15,689,032	$	15,695,452
Amortized cost		—		—		—		—		—
Total reserves	$	—	$	6,420	$	—	$	15,689,032	$	15,695,452
By withdrawal characteristics:
With market value adjustment	$	—	$	6,420	$	—	$	—	$	6,420
At book value without market value adjustment and with current surrender charge of 5% or more		—		—		—		—		—
At fair value		—		—		—		15,689,032		15,689,032
At book value without market value adjustment and with current surrender charge less than 5%		—		—		—		—		—
Subtotal		—		6,420		—		15,689,032		15,695,452
Not subject to discretionary withdrawal		—		—		—		—		—
	$	—	$	6,420	$	—	$	15,689,032	$	15,695,452

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Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

(in thousands of dollars)	2021
	Indexed		Nonindexed Guarantee Less Than/ Equal to 4%		Nonindexed Guarantee More Than 4%		Nonguaranteed Separate Accounts		Total
Premiums, considerations or deposits for year ended December 31, 2021	$	—	$	125	$	—	$	876,901	$	877,026
Reserves at December 31, 2021 for accounts with assets at:
Fair value	$	—	$	6,505	$	—	$	15,515,168	$	15,521,673
Amortized cost		—		—		—		—		—
Total reserves	$	—	$	6,505	$	—	$	15,515,168	$	15,521,673
By withdrawal characteristics:
With market value adjustment	$	—	$	6,505	$	—	$	—	$	6,505
At book value without market value adjustment and with current surrender charge of 5% or more		—		—		—		—		—
At fair value		—		—		—		15,515,168		15,515,168
At book value without market value adjustment and with current surrender charge less than 5%		—		—		—		—		—
Subtotal		—		6,505		—		15,515,168		15,521,673
Not subject to discretionary withdrawal		—		—		—		—		—
	$	—	$	6,505	$	—	$	15,515,168	$	15,521,673

The following is a reconciliation of net transfers from the Company’s separate accounts for the years ended December 31, 2022, 2021 and 2020:

(in thousands of dollars)	2022			2021			2020
Transfers as reported in the summary of operations of the separate accounts annual statement
Transfers to separate accounts	$	1,020,466		$	985,276		$	664,017
Transfers from separate accounts		(232,675	)		(259,448	)		(240,220	)
Net transfers to separate accounts		787,791			725,828			423,797
Reconciling adjustments
Experience rated refunds reinvested in separate accounts		(86,097	)		(112,382	)		(44,280	)
Change in termination value of separate accounts		—			—			(49	)
Separate accounts trading gain (loss)		6			5			(2	)
Transfers required to support benefits		(2,482	)		(1,983	)		7,503
Fee income from premium taxes and other DAC tax charges		2,764			1,528			(9,903	)
Other		349			(98	)		(163	)
Net transfers to separate accounts as reported in the statement of operations	$	702,331		$	612,898		$	376,903

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Zurich American Life Insurance Company

Notes to Statutory Financial Statements

As of and For the Twelve Months Ended December 31, 2022, 2021 and 2020

12. Premiums Due and Deferred

Gross due and deferred premiums represent life insurance premiums due to be received from policyholders through the next respective policy anniversary dates. Net deferred and uncollected premiums represent only the portion of gross premiums related to mortality charges and interest.

Due and deferred premiums at December 31, 2022 and 2021 are as follows:

(in thousands of dollars)	2022						2021
	Gross			Net			Gross			Net
Ordinary renewal	$	5,790		$	5,492		$	5,447		$	5,214
Group life		6,452			6,452			8,088			8,088
Accident and health		8,875			8,875			8,184			8,184
Nonadmitted assets		(293	)		(293	)		(9	)		(9	)
	$	20,824		$	20,526		$	21,710		$	21,477

13. Commitments and Contingencies

The Company is subject to lawsuits arising from the normal course of its business activities. These actions are in various stages of discovery and development, and some seek punitive as well as compensatory damages. In the opinion of management, the Company has not engaged in any conduct that should warrant the award of any material punitive or compensatory damages. The Company intends to defend vigorously its position in each case, and management believes that, while it is not possible to predict the outcome of such matters with absolute certainty, ultimate disposition of these proceedings should not have a material adverse effect on the Company’s financial position.

14. Subsequent Events

On March 28, 2023, the Company received a capital contribution of $12.0 million from ZHCA.

The Company has evaluated subsequent events through April 24, 2023, the date the financial statements were available to be issued.

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