FINANCIAL CONDITION REPORT ON EXAMINATION
OF THE
GREAT – WEST LIFE & ANNUITY INSURANCE
COMPANY OF NEW YORK
AS OF DECEMBER 31, 2020
EXAMINER: ERIC C. DERCHER, CFE
DATE OF REPORT: JUNE 29, 2022
TABLE OF CONTENTS
ITEM
PAGE NO.
1.
Executive summary
2
2.
Scope of examination
3
3.
Description of Company
5
A. History
5
B. Holding company
6
C. Organizational chart
7
D. Service agreements
8
E. Management
9
4.
Territory and plan of operations
12
A. Statutory and special deposits
12
B. Direct operations
12
C. Reinsurance
13
5.
Financial statements
14
A. Independent accountants
14
B. Net admitted assets
15
C. Liabilities, capital and surplus
16
D. Condensed summary of operations
17
E. Capital and surplus account
18
6.
Subsequent events
19
June 29, 2022
Honorable Adrienne A. Harris
Superintendent of Financial Services
New York, New York 10004
Dear Adrienne A. Harris:
In accordance with instructions contained in Appointment No. 32311, dated October 1, 2021, and
annexed hereto, an examination has been made into the condition and affairs of
Great-West Life & Annuity Insurance Company of New York, hereinafter referred to as “the
Company”. The Company’s home office is located at 370 Lexington Avenue, Suite 703, New
York, NY 10017. Due to the COVID-19 pandemic, the examination was conducted remotely.
Wherever “Department” appears in this report, it refers to the New York State Department of
Financial Services.
The report indicating the results of this examination is respectfully submitted.
2
1. EXECUTIVE SUMMARY
The material comments contained in this report are summarized below.
• Effective June 1, 2019, the Company completed the sale, via indemnity reinsurance, of
substantially all of its life insurance and annuity business to Protective Life and Annuity
Insurance Company (“Protective”). (See item 3 of this report.)
• On December 31, 2020, the Company completed the acquisition, via indemnity
reinsurance, of the retirement services business of Massachusetts Mutual Life Insurance
Company (“MassMutual”). (See item 3 of this report.)
• Effective January 19, 2021, the Company received its foreign insurance license to write
life insurance business in the state of Colorado. Also, on October 5, 2021, the Company
received its accredited reinsurance status in New Jersey. (See item 6 of this report.)
3
2. SCOPE OF EXAMINATION
The examination of the Company was a full-scope examination as defined in the National
Association of Insurance Commissioner’s (“NAIC’s”) Financial Condition Examiner’s
Handbook, 2021 Edition (the “Handbook”). The examination covers the five-year period from
January 1, 2016, to December 31, 2020. The examination was conducted observing the guidelines
and procedures in the Handbook and, where deemed appropriate by the examiner, transactions
occurring subsequent to December 31, 2020, but prior to the date of this report (i.e., the completion
date of the examination) were also reviewed.
The examination was conducted on a risk-focused basis in accordance with the provisions
of the Handbook published by the NAIC. The Handbook guidance provides for the establishment
of an examination plan based on the examiner’s assessment of risk in the insurer’s operations and
utilizing that evaluation in formulating the nature and extent of the examination. The examiner
planned and performed the examination to evaluate the current financial condition as well as
identify prospective risks that may threaten the future solvency of the insurer. The examiner
identified key processes, assessed the risks within those processes and evaluated the internal
control systems and procedures used to mitigate those risks. The examination also included
assessing the principles used and significant estimates made by management, evaluating the
overall financial statement presentation, and determining management’s compliance with New
York statutes and Department guidelines, Statutory Accounting Principles as adopted by the
Department, and annual statement instructions.
The examination was called by the Colorado Department of Regulatory Agencies
(“Colorado”) in accordance with the Handbook guidelines, through the NAIC’s Financial
Examination Electronic Tracking System. The examination was conducted in conjunction with
the examination of the Company’s parent, Great-West Life and Annuity Insurance Company
(“GWLA”), a Colorado domestic insurance company. Colorado served as the lead state with
participation from the states of New York, Pennsylvania, Michigan, and South Carolina. Since
the lead and participating states are all accredited by the NAIC, all states deemed it appropriate to
rely on each other’s work.
Information about the Company’s organizational structure, business approach and control
environment were utilized to develop the examination approach. The Company’s risks and
4
management activities were evaluated incorporating the NAIC’s nine branded risk categories.
These categories are as follows:
• Pricing/Underwriting
• Reserving
• Operational
• Strategic
• Credit
• Market
• Liquidity
• Legal
• Reputational
The Company was audited annually, for the years 2016 through 2020, by the accounting
firm of Deloitte & Touche LLP (“Deloitte”). The Company received an unqualified opinion in all
years.
Certain audit workpapers of the accounting firm were reviewed and relied upon in
conjunction with this examination. The Company shares an internal audit department with its
parent which was given the task of assessing the internal control structure and compliance with
the Sarbanes Oxley Act of 2002 (“SOX”). Where applicable, SOX workpapers and reports were
reviewed and relied upon for this examination.
Certain audit workpapers of the accounting firm were reviewed and relied upon in
conjunction with this examination.
The examiner reviewed the prior report on examination which did not contain any
violations, recommendations, or comments.
This report on examination is confined to financial statements and comments on those
matters which involve departure from laws, regulations, or rules, or which require explanation or
description.
5
3. DESCRIPTION OF COMPANY
A. History
The Company, under the name of Canada Life Insurance Company of New York
(“CLINY”), was incorporated as a stock life insurance company under the laws of New York on
June 7, 1971, was licensed on December 14, 1971, and commenced business on January 1, 1972.
Initial resources of $3,000,000, consisting of common capital stock of $1,000,000 and paid in and
contributed surplus of $2,000,000, were provided through the sale of 100,000 shares of common
stock (with a par value of $10 each) for $30 per share by Canada Life Assurance Company
(“CLACO”), a Canadian mutual insurance company.
In 1999, Canada Life Financial Corporation (“CLFC”) acquired control of CLACO and its
subsidiaries. CLFC was established to convert CLACO from a mutual life insurance company to
a stock life insurance company. On July 10, 2003, Great-West Lifeco Inc. (“Lifeco”), a Canadian
holding company, completed its acquisition of CLFC and then transferred all of the common shares
of CLFC to its Canadian subsidiary, The Great-West Life Assurance Company (“GWL”). On
December 31, 2003, all of the outstanding common shares of CLINY were transferred to GWLA.
Effective December 31, 2005, CLINY merged with First Great-West Life & Annuity
Insurance Company (“FGWLA”). Prior to the merger both insurers were wholly-owned U.S.
subsidiaries of GWLA. Upon completion of the merger, CLINY, the surviving company, adopted
the First Great-West Life & Annuity Insurance Company name. On August 12, 2012, the
Company’s name was changed to Great-West Life & Annuity Insurance Company of New York.
Effective June 1, 2019, the Company completed the sale, via indemnity reinsurance, of
substantially all of its life insurance and annuity business to Protective. The business transferred
included bank-owned and corporate-owned life insurance, single premium life insurance,
individual annuities as well as closed block life insurance and annuities. The Company retained a
block of participating life insurance policies, which are now administered by Protective.
On December 31, 2020, the Company completed the acquisition, via indemnity
reinsurance, of the retirement services business of MassMutual in line with its shift in focus to the
defined contribution retirement and asset management markets.
6
As of December 31, 2020, the Company had capital stock in the amount of $2,500,000,
which consisted of 2,500 shares of common stock with a par value of $1,000 each and paid in and
contributed surplus amounted to $32,450,000.
B. Holding Company
The Company is a wholly owned subsidiary of GWLA, a Colorado stock life insurer.
GWLA is a wholly owned subsidiary of GWL&A Financial Inc., a Delaware holding company,
which in turn is an indirect wholly owned subsidiary of Lifeco, a Canadian holding company.
Lifeco is a member of the Power Financial Corporation group of companies, a diversified
management and holding company based in Montreal, Canada, which currently holds 67.4% of
Lifeco. The ultimate controlling company is Power Corporation of Canada.
7
C. Organizational Chart
An organization chart reflecting the relationship between the Company and significant entities in its holding company system as
of December 31, 2020, follows:
Power Corporation of
Canada
Power Financial
Corporation
Great-West Lifeco
Inc.
Canada Life
Assurance Company
Canada Life
Assurance Company-
U.S. Branch (MI)
Canada Life
Reinsurance
Company (PA)
Great-West Lifeco
U.S. Inc.
GWL&A Financial Inc.
Great-West Life &
Annuity Insurance
Company
Great-West Life &
Annuity Insurance
Company of New
York
Great-West Life &
Annuity Insurance
Company of South
Carolina
Empower
Retirement, LLC
Advised Assets
Group, LLC
Putnam Investments,
LLC
8
D. Service Agreements
The Company had five service agreements in effect with affiliates during the examination
period.
Type of
Agreement and
Department
File Number
Effective
Date
Provider(s)
of
Service(s)
Recipient(s)
of
Service(s)
Specific
Service(s)
Covered
Income/
(Expense)* For Each
Year of the
Examination
Administrative
Services
Agreement
File No. 30772
08/01/2003
(Amended
10/05/2005)
GWLA
(and
certain
affiliates)
The
Company
Underwriting,
policy owner
services, claims,
marketing,
accounting,
corporate
support,
functional
support, and
investment
services.
2016 $(13,648,279)
2017 $ (9,918,269)
2018 $(12,957,145)
2019 $(16,349,113)
2020 $(29,525,729)
Administrative
and Recording
Keeping
agreement
File No. 47399
10/01/2013
The
Company
GWLA
Recording
keeping and
other
administrative
services,
including plan
participant
recording
keeping and
client services.
2016 $2,096,059
2017 $2,422,539
2018 $2,550,616
2019 $2,327,620
2020 $1,201,426
Service
Agreement
File No. 48128
01/01/2014
Advised
Assets
Group,
LLC
The
Company
Marketing,
preparation of
investment
option data,
recommendation
of investment
options, and
delivery of
investment
performance
reports.
2016 $0**
2017 $0
2018 $0
2019 $0
2020 $0
9
Type of
Agreement and
Department File
Number
Effective
Date
Provider(s)
of
Service(s)
Recipient(s)
of
Service(s)
Specific
Service(s)
Covered
Income/
(Expense)* For Each
Year of the
Examination
Administration
Services
Agreement
File No. 48129
04/01/2016
Empower
Retirement,
LLC
(formerly
named
FASCore,
LLC)
The
Company
Administrative
services agent
for certain
products,
including
collection
processing,
accounting,
auditing, records,
disbursements,
claims,
compliance, and
reports.
2016 $ (6,042,783)
2017 $ (1,487,231)
2018 $(11,069,414)
2019 $(12,917,994)
2020 $ (7,870,358)
Administrative
Services
File No. 27974
09/06/2000
Canada Life
Assurance
Company
The
Company
Agency
marketing and
support services,
claims services,
and
policy/contract
owner services.
2016 $ 0***
2017 $(66,376)
2018 $(47,780)
2019 $(10,331)
2020 $ 0***
* Amount of Income or (Expense) Incurred by the Company
** The Company generated no volume under the investment options covered by the agreement
during the examination period.
*** The agreement was dormant prior to 2017 and was no longer active after the sale of the
Company’s life and annuity business to Protective in 2019. The Company is conducting a review
to confirm that there is no further or potential business purpose for the agreement before a decision
is made regarding termination.
The Company participates in a federal tax allocation agreement with its parent and
affiliates.
E. Management
The Company’s by-laws provide that the board of directors shall be comprised of not less
than 7 and not more than 21 directors. Directors are elected for a period of one year at the annual
meeting of the stockholders held in June of each year. As of December 31, 2020, the board of
directors consisted of nine members. Meetings of the board are held quarterly.
10
The nine board members and their principal business, as of December 31, 2020, were as
follows:
Name and Residence
Principal Business Affiliation
Year First
Elected
Marcia D. Alazraki, Esq. *
New York, New York
Attorney
Manatt, Phelps & Philips, LLP
2009
John L. Bernbach *
Miami, Florida
President and Founder
Not Traditional Media, Inc.
2007
André R. Desmarais
President and Co-Chief Executive Officer
2009
Westmount, Québec, Canada
Power Corporation of Canada
Paul G. Desmarais, Jr
Chairman and Co-Chief Executive Officer
2009
Westmount, Québec, Canada
Power Corporation of Canada
Stuart Z. Katz, Esq. *
New York, New York
Attorney
Fried, Frank, Harris, Shriver & Jacobson LLP
2009
Robert J. Orr
President and Chief Executive Officer
2008
Montreal, Québec, Canada
Power Financial Corporation
Thomas T. Ryan, Jr. *
Bal Harbour, Florida
President and Chief Executive Officer
Securities Industry & Financial Markets
Association
2014
Jerome J. Selitto *
Philadelphia, Pennsylvania
Former President and Chief Executive Officer
PHH Corporation
2012
Brian E. Walsh *
Managing Partner
2009
Stamford, Connecticut
Titan Advisors, LLC
* Not affiliated with the Company or any other company in the holding company system
The examiner’s review of the minutes of the meetings of the board of directors and its
committees indicated that meetings were well attended, and that each director attended a majority
of meetings.
11
The following is a listing of the principal officers of the Company as of December 31,
2020:
Name
Title
Andra S. Bolotin
President and Chief Executive Officer
Terry G. Homenuik
Vice President and Corporate Actuary
Kara Roe
Chief Financial Officer
Richard G. Schultz
General Counsel, Chief Legal Officer and Secretary
Ken Schindler *
Chief Compliance Officer
*Designated consumer services officer per Section 216.4(c) of 11 NYCRR 216 (Insurance
Regulation 64)
12
4. TERRITORY AND PLAN OF OPERATIONS
The Company is authorized to write life insurance, annuities and accident and health
insurance as defined in paragraphs 1, 2 and 3 of Section 1113(a) of the New York Insurance Law.
The Company is licensed to transact business in New York. Effective August 23, 2019,
the Company received its foreign insurance license to write life insurance business in the state
Illinois. Also, on December 16, 2020, the Company received its accredited reinsurance status in
Massachusetts. In 2020, 93.1% of life premiums and 92.1% of annuity considerations were
received from New York. Policies are written on a non-participating basis.
A. Statutory and Special Deposits
As of December 31, 2020, the Company had $1,500,000 (par value) of United States
Treasury Bonds on deposit with the state of New York, its domiciliary state, for the benefit of all
policyholders, claimants, and creditors of the Company.
B. Direct Operations
The Company’s principal lines of business during the examination period were group
variable annuity, individual variable annuity, variable universal life, universal life and term life
insurance. Currently, the Company does not sell group accident and health insurance, although it
has a closed block of business with fewer than 10 dental insurance policies and fewer than 10 long
term disability insurance policies in force. There is also a small block of medical conversion
policies. Excess loss policies are sold to employers who sponsor self-funded accident and health
plans. The Company’s agency operations are conducted on a general agency basis. The group
variable annuity products are sold through broker-dealers and registered brokers. The individual
annuity products are sold through The Charles Schwab Corporation (“Charles Schwab”), a bank
and a brokerage firm. The individual term life products are sold by agents through branch offices.
The Company’s agency operations are conducted on a general agency basis.
The group variable annuity products are sold through broker-dealers and registered
brokers. The individual annuity products are sold through Charles Schwab. The individual term
life products are sold by agents through branch offices.
13
C. Reinsurance
As of December 31, 2020, the Company had reinsurance treaties in effect with ten
companies, of which nine were authorized, accredited, or certified. The Company’s life, accident
and health business is reinsured on a coinsurance, modified-coinsurance, and yearly renewable
term basis. Reinsurance is provided on an automatic and facultative basis.
The maximum retention limit for individual life contracts is $250,000. The total face
amount of life insurance ceded was $3,249,493,772, which represents 94% of the total face amount
of life insurance in force, and of which $2,510,728,723, or 77%, was ceded to Protective. Total
reserve credits taken were $700,811,566, of which $684,788,900, or 98%, was ceded to Protective.
Total reserve credits taken for reinsurance ceded to unauthorized companies was $517,740.
As of December 31, 2020, the Company assumed reserves amounting to $1,662,615,929
and premiums amounting to $1,336,028,795 as a result of the MassMutual transaction.
14
5. FINANCIAL STATEMENTS
The following statements show the assets, liabilities, capital and surplus as of December
31, 2020, as contained in the Company’s 2020 filed annual statement, a condensed summary of
operations and a reconciliation of the capital and surplus account for each of the years under
review. The examiner’s review of a sample of transactions did not reveal any differences which
materially affected the Company’s financial condition as presented in its financial statements
contained in the December 31, 2020, filed annual statement.
A. Independent Accountants
Deloitte was retained by the Company to audit the Company’s combined statutory basis
statements of financial position of the Company as of December 31
st
of each year in the
examination period, and the related statutory-basis statements of operations, capital and surplus,
and cash flows for the year then ended.
Deloitte concluded that the statutory financial statements presented fairly, in all material
respects, the financial position of the Company at the respective audit dates. Balances reported in
these audited financial statements were reconciled to the corresponding years’ annual statements
with no discrepancies noted.
15
B. Net Admitted Assets
Bonds
$1,864,853,504
Stocks:
Preferred stocks
842,000
Mortgage loans on real estate:
First liens
238,563,691
Cash, cash equivalents and short-term investments
516,224,450
Contract loans
16,033,537
Derivatives
248,446
Other invested assets
14,382,367
Receivable for securities
5,038,828
Securities lending reinvested collateral assets
3,794,363
Investment income due and accrued
14,215,093
Premiums and considerations:
Uncollected premiums and agents’ balances in the course of collection
79,529
Deferred premiums, agents’ balances and installments booked but
deferred and not yet due
304,583
Reinsurance:
Funds held by or deposited with reinsured companies
256,738,547
Current federal and foreign income tax recoverable and interest thereon
472,997
Net deferred tax asset
3,691,331
Guaranty funds receivable or on deposit
533
Receivables from parent, subsidiaries and affiliates
11,908
Other assets
6,837,063
Premium tax refund
1,526,886
From separate accounts, segregated accounts and protected cell accounts
$ 674,708,085
Total admitted assets
$3,618,567,741
16
C. Liabilities, Capital and Surplus
Aggregate reserve for life policies and contracts
$2,163,677,784
Liability for deposit-type contracts
447,107,269
Contract claims:
Life
1,359,824
Provision for policyholders’ dividends and coupons payable in
following calendar year – estimated amounts
Dividends apportioned for payment
1,800,000
Contract liabilities not included elsewhere:
Other amounts payable on reinsurance
27,845,624
Interest maintenance reserve
94,771,342
Commissions to agents due or accrued
915,139
General expenses due or accrued
1,239,609
Transfers to separate accounts due or accrued
(15,148)
Taxes, licenses and fees due or accrued, excluding federal income taxes
882,739
Amounts withheld or retained by company as agent or trustee
7,183
Remittances and items not allocated
96,503
Miscellaneous liabilities:
Asset valuation reserve
8,238,364
Payable to parent, subsidiaries and affiliates
1,743,054
Derivatives
357,329
Payable for Securities Lending
3,794,363
Accrued interest on outstanding claims
32,979
Miscellaneous liabilities:
389,360
Annuity surrenders in process
439,022
From Separate Accounts statement
674,554,248
Total liabilities
$3,429,236,587
Common capital stock
2,500,000
Gross paid in and contributed surplus
253,014,513
Unassigned funds (surplus)
(66,183,359)
Surplus
$ 186,831,154
Total capital and surplus
$ 189,331,154
Total liabilities, capital and surplus
$3,618,567,741
17
D. Condensed Summary of Operations
2016
2017
2018
2019
2020
Premiums and considerations
$371,134,167
$328,538,723
$267,966,606
$(395,941,868)
$1,653,527,318
Investment income
43,445,850
49,221,730
51,543,068
40,565,123
36,250,454
Commissions and reserve
adjustments on reinsurance ceded
108,658
104,979
101,336
4,783,400
7,282,437
Miscellaneous income
13,014,061
13,195,994
14,981,792
13,151,589
7,150,687
Total income
$427,702,736
$391,061,426
$334,592,802
$(337,441,756)
$1,704,210,896
Benefit payments
$170,099,894
$216,315,098
$243,823,338
$ 290,716,568
$ 249,223,839
Increase in reserves
204,746,392
134,473,572
72,545,074
(577,235,789)
1,347,799,385
Commissions
14,928,600
15,938,508
14,482,279
12,710,586
191,136,318
General expenses and taxes
16,495,978
15,009,757
16,279,306
13,291,890
14,275,596
Increase in loading on deferred and
uncollected premiums
(56,479)
(20,137)
(28,400)
(17,295)
245
Net transfers to (from) Separate
Accounts
20,510,713
1,434,996
(10,144,511)
(69,379,408)
(49,023,232)
Miscellaneous deductions
0
0
0
(21,652,694)
92,484,769
Total deductions
$426,725,098
$383,151,794
$336,957,086
$(351,566,142)
$1,845,896,920
Net gain (loss)
$ 977,638
$ 7,909,632
$ (2,364,284)
$ 14,124,386
$ (141,686,024)
Dividends
2,646,460
3,065,088
2,131,721
1,938,696
1,497,905
Federal and foreign income taxes
incurred
275,074
1,715,728
952,385
(14,242,727)
1,283,054
Net gain (loss) from operations
before net realized capital gains
$ (1,943,896)
$ 3,128,816
$ (5,448,390)
$ 26,428,417
$ (144,466,983)
Net realized capital gains (losses)
0
0
(175,769)
(596,220)
0
Net income
$ (1,943,896)
$ 3,128,816
$ (5,624,159)
$ 25,832,197
$ (144,466,983)
18
E. Capital and Surplus Account
2016
2017
2018
2019
2020
Capital and surplus, December 31,
prior year
$89,704,164
$86,725,470
$87,513,748
$ 81,441,588
$110,196,546
Net income
$(1,943,896)
$ 3,128,816
$ (5,624,159)
$ 25,832,197
$(144,466,983)
Change in net unrealized capital
gains (losses)
24,251
133,997
0
0
0
Change in net unrealized foreign
exchange capital gain (loss)
0
0
0
0
(86,031)
Change in net deferred income tax
2,472,490
(5,876,396)
2,612,933
(12,707,079)
12,811,670
Change in non-admitted assets and
related items
(1,810,501)
4,476,188
(2,270,712)
7,891,348
(10,372,153)
Change in asset valuation reserve
(806,870)
(1,087,440)
(781,647)
2,699,237
(2,999,814)
Surplus (contributed to), withdrawn
from
Separate Accounts during period
14,753
5,575
0
0
338
Other changes in surplus in Separate
Accounts statement
(10,601)
7,538
(8,575)
15,048
15,189
Surplus adjustments:
Paid in
0
0
0
0
220,564,513
Change in surplus as a result of
reinsurance
0
0
0
5,024,207
3,667,879
Adjustment for prior year
corrections, net of income taxes
(918,320)
0
0
0
0
Net change in capital and surplus for
the year
$(2,978,694)
$ 788,278
$(6,072,160)
$ 28,754,958
$ 79,134,608
Capital and surplus, December 31,
current year
$86,725,470
$87,513,748
$81,441,588
$110,196,546
$189,331,154
19
6. SUBSEQUENT EVENTS
Effective January 19, 2021, the Company received its foreign insurance license to write
life insurance business in the state of Colorado. Also, on October 5, 2021, the Company received
its accredited reinsurance status in New Jersey.
Respectfully submitted,
/s/
Courtney Williams
Principal Insurance Examiner
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
Courtney Williams, being duly sworn, deposes and says that the foregoing report,
subscribed by him, is true to the best of his knowledge and belief.
/s/
Courtney Williams
Subscribed and sworn to before me
this day of
APPOINTMENT NO. 32311
NEW YORK STATE
DEPARTMENT OF FINANCIAL SERVICES
I, ADRIENNE A. HARRIS, Acting Superintendent of Financial Services of the
State of New York, pursuant to the provisions of the Financial Services Law and the
Insurance Law, do hereby appoint:
ERIC C. DERCHER
(NOBLE CONSULTING SERVICES, INC.)
as a proper person to examine the affairs of the
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY OF NEW YORK
and to make a report to me in writing of the condition of said
COMPANY
with such other information as he shall deem requisite.
In Witness Whereof, I have hereunto subscribed my name
and affixed the official Seal of the Department
at the City of New York
this 1st day of October, 2021
ADRIENNE A. HARRIS
Acting Superintendent of Financial Services
By:
MARK MCLEOD
DEPUTY CHIEF - LIFE BUREAU
