Financial Statements by Insurance Company (Form N-VPFS)

Commonwealth Annuity and Life Insurance Company

Separate Accounts D E F

Financial Statements

December 31, 2024

Commonwealth Annuity and Life Insurance Company

Separate Accounts D E F

Financial Statements

December 31, 2024

Contents

Report of Independent Registered Public Accounting Firm	SA-1
Audited Financial Statements
Statements of Net Assets	SA-3
Statements of Operations	SA-4
Statements of Changes in Net Assets	SA-5
Notes To Financial Statements	SA-6
Note 1 - Organization	SA-6
Note 2 - Summary of Significant Accounting Policies	SA-6
Note 3 - Expenses and Related Party Transactions	SA-9
Note 4 - Changes In Units Outstanding	SA-10
Note 5 - Purchases and Sales of Investments	SA-11
Note 6 - Financial Highlights	SA-12

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of

Commonwealth Annuity and Life Insurance Company and

Contract Owners of Separate Accounts D E F

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statements of net assets for each of the underlying funds listed in Note 1 to the financial statements (the "Sub-Accounts") of Separate Accounts D E F (the "Separate Account") of Commonwealth Annuity and Life Insurance Company as of December 31, 2024, the related statements of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of each of the Sub-Accounts comprising the Separate Account as of December 31, 2024, and the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

The financial highlights for the year ended December 31, 2020 were audited by other auditors whose report, dated April 6, 2021, expressed an unqualified opinion on those financial highlights.

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Separate Account's management. Our responsibility is to express an opinion on the Separate Account's financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Separate Account in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Separate Account is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Separate Account's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of investments owned as of December 31, 2024, by correspondence with each Sub-Account's fund manager. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Boston, Massachusetts

April 14, 2025

We have served as the auditor of one or more separate accounts of Commonwealth Annuity and Life Insurance Company since 2021.

Separate Accounts D E F

Statements of Net Assets

December 31, 2024

		Columbia Corporate Income Fund				Columbia Strategic Income Fund
ASSETS:
Investments in shares of the Underlying Funds, at fair value		$	2,731			$	373,091
Net assets		$	2,731			$	373,091
Net assets by category:
Accumulation reserves		$	2,731			$	373,091
Net assets		$	2,731			$	373,091
Units outstanding, December 31, 2024			262				26,283
Investments in shares of the Underlying Funds, at cost		$	2,877			$	426,420
Underlying Fund shares held			302				17,217

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

Separate Accounts D E F

Statements of Operations

For the Year Ended December 31, 2024

		Columbia Corporate Income Fund				Columbia Strategic Income Fund
INVESTMENT INCOME:
Dividends		$	292			$	19,263
EXPENSES:
Mortality and expense risk fees			80				4,141
Net investment income (loss)			212				15,122
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Capital gain distributions			-				-
Net realized gain (loss) from sales of investments			(770	)			(2,905	)
Net realized gain (loss)			(770	)			(2,905	)
Change in unrealized gain (loss)			529				(47	)
Net realized and unrealized gain (loss)			(241	)			(2,952	)
Net increase (decrease) in net assets from operations		$	(29	)		$	12,170

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

Separate Accounts D E F

Statements of Changes in Net Assets

For the Years Ended December 31, 2024 and 2023

		Columbia Corporate Income Fund								Columbia Strategic Income Fund
		2024				2023				2024				2023
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss)		$	212			$	444			$	15,122			$	14,582
Net realized gain (loss)			(770	)			(351	)			(2,905	)			(1,384	)
Change in unrealized gain (loss)			529				913				(47	)			16,620
Net increase (decrease) in net assets from operations			(29	)			1,006				12,170				29,818
FROM CONTRACT TRANSACTIONS:
Net purchase payments			-				-				-				-
Terminations and withdrawals			-				-				-				-
Contract benefits			(3,664	)			(3,575	)			(3,921	)			(3,781	)
Contract charges			-				-				-				-
Transfers			(11,115	)			9,920				(11,857	)			10,307
Net increase (decrease) in net assets from Contract transactions			(14,779	)			6,345				(15,778	)			6,526
Net increase (decrease) in net assets			(14,808	)			7,351				(3,608	)			36,344
NET ASSETS:
Beginning of year			17,539				10,188				376,699				340,355
End of year		$	2,731			$	17,539			$	373,091			$	376,699

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

Separate Accounts D E F

Notes To Financial Statements

December 31, 2024

Note 1 - Organization

Separate Accounts D E F of Commonwealth Annuity and Life Insurance Company ("Separate Accounts D E F" or the "Separate Account"), which is a funding vehicle for the Colonial AVA variable annuity contracts, is a separate investment account of Commonwealth Annuity and Life Insurance Company ("Commonwealth Annuity"), established on February 21, 1978, for the purpose of separating from the general assets of Commonwealth Annuity (the "General Account") those assets used to fund the variable portion of certain variable annuity contracts (the "Contracts") issued by Commonwealth Annuity. Commonwealth Annuity is the Sponsor of the Separate Account. Commonwealth Annuity is a wholly-owned indirect subsidiary of Global Atlantic Financial Group Limited ("GAFG"), a Bermuda company. GAFG was a majority-owned subsidiary of KKR & Co., Inc. ("KKR"). On January 2, 2024, KKR acquired all of the remaining minority equity interests of GAFG that KKR did not already own. At the closing of the transaction, GAFG became a wholly-owned subsidiary of KKR. Separate Account F was closed in December, 2007.

Commonwealth Annuity is subject to the laws of the Commonwealth of Massachusetts governing insurance companies and to regulation by the Commissioner of Insurance of Massachusetts. In addition, Commonwealth Annuity is subject to the insurance laws and regulations of other states and jurisdictions in which it is licensed to operate. Under applicable insurance law, the assets and liabilities of the Separate Account are clearly identified and distinguished from the other assets and liabilities of Commonwealth Annuity. The Separate Account cannot be charged with liabilities arising out of any other business of Commonwealth Annuity. The General Account is subject to the claims of creditors.

The Separate Account is registered with the Securities and Exchange Commission ("SEC") as a unit investment trust under the Investment Company Act of 1940, as amended (the "1940 Act"). Global Atlantic Distributors, LLC is the principal underwriter for the Separate Account. Global Atlantic Distributors, LLC, an affiliate of Commonwealth Annuity, is a wholly-owned indirect subsidiary of GAFG.

The Separate Account is divided into Sub-Accounts, each of which invests exclusively in an Underlying Fund. Purchase payments for the Separate Account are allocated to one or more of the Sub-Accounts that comprise the Separate Account. Two Sub-Accounts were offered by the Separate Account during 2024, all of which had activity.

The following underlying funds had net assets as of or during the year ended December 31, 2024:

Underlying Fund		Class
Columbia Corporate Income Fund		Class A
Columbia Strategic Income Fund		Class A

Each Sub-Account invests exclusively in one of the Underlying Funds that are part of the following fund group:

Fund Group

Columbia Funds Series Trust I

Note 2 - Summary of Significant Accounting Policies

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and Financial Accounting Standards Board ("FASB") Accounting Standards Codification 946 "Financial Services - Investment Companies". The following is a summary of significant accounting policies followed by the Separate Account in the preparation of its financial statements.

Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates at the date of the financial statements. Actual results could differ from those estimates.

Subsequent Events

D E F Notes To Financial Statements
December 31, 2024

Note 2 - Summary of Significant Accounting Policies (Continued)

For the year ended December 31, 2024, Commonwealth Annuity evaluated subsequent events through April 14, 2025; the issuance date of the financial statements. There are no subsequent events requiring accounting adjustments or disclosure.

Investments

Investment transactions are recorded as of the trade date. Investments held by the Sub-Accounts are recorded at fair value based on the stated net asset value per share ("NAV") of the Underlying Funds. The change in the difference between cost and fair value is reflected in unrealized gain (loss) in the statements of operations. Realized investment gains and losses are determined using the average cost method. Dividend income and capital gain distributions are recorded on the ex-distribution date and are reinvested in additional shares of the Underlying Funds at NAV. Investment income receivable represents dividends receivable by, but not yet reinvested in, the Underlying Funds.

Financial Instruments

The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). The best evidence of fair value is a quoted price in an active market. If listed prices or quotations are not available, fair value is determined by reference to prices of similar instruments and quoted prices or recent prices in less active markets.

U.S. GAAP establishes a three-level valuation hierarchy based upon observable and non-observable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. The fair value hierarchy prioritizes inputs to the valuation techniques used to measure fair value, giving the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. A financial instrument's level in the fair value hierarchy is based on the lowest level of any input that is significant to fair value measurement of the financial instrument. The three levels of the fair value hierarchy are described below:

Basis of Fair Value Measurement
	Level 1	Inputs are unadjusted quoted prices in active markets to which Commonwealth Annuity had access at the measurement date for identical, unrestricted assets or liabilities.
	Level 2	Inputs to valuation techniques are observable either directly or indirectly through quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
	Level 3	Model-derived where one or more inputs to the valuation techniques are significant and unobservable.

The Underlying Funds in the Separate Account produce a daily NAV that is validated with a sufficient level of observable activity to support classification of the fair value measurement as level 1.

Annuitized Contracts

Net assets allocated to Contracts in the payout phase ("Payout Reserves") involving life contingencies are computed according to either the 1983A, Annuity 2000, or 2012 IAR mortality tables. The assumed investment return is 3.5

Separate Accounts D E F

Notes To Financial Statements

December 31, 2024

Note 2 - Summary of Significant Accounting Policies (Continued)

percent. The mortality risk is fully borne by Commonwealth Annuity and may result in greater amounts being transferred into the Separate Account by Commonwealth Annuity to cover greater than expected longevity of annuitants. Conversely, if amounts allocated exceed amounts required, transfers may be made to Commonwealth Annuity.

Statements of Changes in Net Assets

Contract owners may allocate their Contract values to variable investment options in the Separate Account. Entering the payout phase Contract owners may elect to transfer their Contract values to the Fixed Account. The Fixed Account is part of the General Account that guarantees principal and a fixed minimum interest rate.

Net purchase payments represent payments by Contract owners under the Contracts reduced by applicable deductions, charges, and state premium taxes. Terminations and withdrawals are payments to Contract owners and beneficiaries made under the terms of the Contracts and amounts that Contract owners have requested to be withdrawn and paid to them. Contract charges are deductions from Contract values for optional rider benefits and annual Contract fees. Contract benefits are payments made to Contract owners and beneficiaries under the terms of the Contracts. Transfers include amounts that Contract owners have directed to be moved among variable Sub-Accounts, along with certain transfers from and to Contracts in the annuitization phase, reserve adjustments, and withdrawal charges.

Federal Income Taxes

The operations of the Separate Account are included in the federal income tax return of Commonwealth Annuity, which is taxed as a life insurance company under Subchapter L of the Internal Revenue Code ("IRC"). Under the current provisions of the IRC, Commonwealth Annuity does not expect to incur federal income taxes on the earnings or realized capital gains attributable to the Separate Account. Based on this, no Federal income tax provision is required. Commonwealth Annuity will review periodically the status of this policy in the event of changes in the tax law. A charge may be made in future years for any federal income taxes that would be attributable to the Contracts. The Separate Account did not record any changes in and had no recorded liabilities for uncertain tax benefits or related interest and penalties as of and for the year ended December 31, 2024.

Diversification Requirement

Under the provisions of Section 817(h) of the IRC, a variable annuity contract will not be treated as an annuity contract for federal income tax purposes for any period for which the investments of the segregated asset account on which the contract is based are not adequately diversified. The IRC provides that the "adequately diversified" requirement may be met if the underlying investments satisfy either a statutory safe harbor test or diversification requirements set forth in regulations issued by the Secretary of the Treasury. The Internal Revenue Service has issued regulations under Section 817(h) of the IRC. Commonwealth Annuity believes that the Separate Account satisfies the current requirements of the regulations, and it intends that it will continue to meet such requirements.

Segment Reporting

The Separate Account adopted FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" ("ASU 2023-07") in 2024. ASU 2023-07 intends to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The Separate Account's adoption of the new standard impacted financial statement disclosures only and did not affect the Sub-Accounts' financial position or results of operations.

The Separate Account is engaged in a single line of business as a funding vehicle for the Colonial AVA variable annuity contracts, established for the purpose of separating from the General Account those assets used to fund the variable portion of the Contracts issued by Commonwealth Annuity. The President of Commonwealth Annuity acts as the chief operating decision maker ("CODM"), who is responsible for ensuring the Separate Account

Separate Accounts D E F

Notes To Financial Statements

December 31, 2024

Note 2 - Summary of Significant Accounting Policies (Continued)

maintains compliance with its Contract agreements and meets applicable regulations and reporting requirements. Each Sub-Account's operations constitute a single operating segment, and therefore, a single reportable segment, because the CODM manages the business using Net Increase in net assets from operations as their performance measure, in order to make operational decisions of each of the Sub-Accounts within the Separate Account. Refer to the Statements of Net Assets, Statements of Operations and Statements of Changes in Net Assets and related notes for each Sub-Account's operating segment assets, revenues, and significant expenses.

Note 3 - Expenses and Related Party Transactions

Commonwealth Annuity assesses a fee to compensate for certain mortality and expense risks it has assumed. The mortality risk assumed by Commonwealth Annuity is that annuitants may live for a longer time than anticipated, and that Commonwealth Annuity therefore will pay an aggregate amount of benefit payments greater than anticipated. The expense risk assumed is that the expenses incurred in issuing and administering the Contracts will exceed the amounts realized from the administrative charges provided in the Contracts. If the fee for mortality and expense risks is not sufficient to cover actual mortality experience and expenses, Commonwealth Annuity will absorb the losses. If costs are less than the amounts charged, the difference will be a profit to Commonwealth Annuity. This charge is made during the accumulation phase and the annuity payout phase. Commonwealth Annuity may also charge other one-time fees for certain Contract transactions, which are not listed in the following table.

Fees and charges may be deducted daily, monthly, or annually. They may be deducted from the net assets of each Sub-Account ("Unit Fair Value") or deducted from individual Contracts ("Individual Contract"). Current fees and charges are summarized in the following table.

			Colonial AVA
Mortality and Expense Risk Fee
Frequency			Daily
Deduction Method			Unit Fair Value
Financial Statement Line			Statements of Operations, Mortality and expense risk fees
Rate (Annual)			1.10%

The Contracts provide that a surrender charge may be deducted from the accumulated value of the Contract in the case of surrender or partial redemption of the Contract, or at the time annuity payments begin. The amount charged was determined by the length of time the Contract has been in force. The maximum charge did not exceed 7% of the amount surrendered or redeemed. All Contracts are now beyond the surrender charge period.

Some states and municipalities impose premium taxes, which currently range up to 3.5%, on variable annuity contracts.

There are other fees and charges that may be assessed at the discretion of Commonwealth Annuity, in accordance with Contract terms.

Separate Accounts D E F

Notes To Financial Statements

December 31, 2024

Note 4 - Changes In Units Outstanding

The changes in units outstanding were as follows:

						2024												2023
										Net												Net
		Units				Units				Increase				Units				Units				Increase
Sub-Account		Issued				Redeemed				(Decrease)				Issued				Redeemed				(Decrease)
Columbia Corporate Income Fund			-				(1,446	)			(1,446	)			1,002				(366	)			636
Columbia Strategic Income Fund			-				(1,141	)			(1,141	)			792				(291	)			501

Separate Accounts D E F

Notes To Financial Statements

December 31, 2024

Note 5 - Purchases and Sales of Investments

The cost of purchases and proceeds from sales of shares of the Underlying Funds of the Separate Account during the year ended December 31, 2024 were as follows:

Investment Portfolios		Purchases				Sales
Columbia Corporate Income Fund		$	292			$	14,859
Columbia Strategic Income Fund			19,263				19,919

Separate Accounts D E F

Notes To Financial Statements

December 31, 2024

Note 6 - Financial Highlights

Unit fair values, units outstanding, income and expense ratios and total returns for the Separate Account were as follows:

		At December 31												For the year ended December 31
		Units				Unit Fair Values ($)				Net Assets ($)				Investment Income Ratios (%) (1)(4)				Expense Ratios (%) (2)(4)				Total Returns (%) (3)(4)
Columbia Corporate Income Fund
2024			262				10.41				2,731				4.16				1.10				1.36
2023			1,708				10.27				17,539				3.91				1.10				8.11
2022			1,072				9.50				10,188				2.91				1.10				(16.52	)
2021			1,254				11.38				14,278				1.92				1.10				(2.07	)
2020			1,516				11.62				17,619				2.33				1.10				9.52
Columbia Strategic Income Fund
2024			26,283				14.19				373,091				5.17				1.10				3.28
2023			27,424				13.74				376,699				5.19				1.10				8.70
2022			26,923				12.64				340,355				3.68				1.10				(12.34	)
2021			27,172				14.42				391,849				2.87				1.10				0.42
2020			27,276				14.36				391,583				3.41				1.10				5.82

(1)

These amounts represent the dividends, excluding distributions of capital gains, received by the Sub-Account from the Underlying Fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense risk fees, that result in direct reductions in the unit fair values. The recognition of investment income by the Sub-Account is affected by the timing of the declaration of dividends by the Underlying Fund in which the Sub-Accounts invest. Investment income ratio has not been annualized for periods less than one year.

(2)

These ratios represent the annualized Contract expenses of the Separate Account, consisting primarily of mortality and expense risk fees, for each period indicated. The ratios include only those expenses that result in a direct reduction to unit fair values. See Note 3 for a list of all unit fair value charges. Charges made directly to Contract owner accounts through the redemption of units and expenses of the Underlying Fund are excluded.

(3)

These amounts represent the total return for the periods indicated, including changes in the value of the Underlying Fund, and reflect deductions for all items included in the expense ratio. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented. Investment options with a date notation indicate the effective date of that investment option in the variable account. The total return is calculated for the period indicated or from the effective date through the end of the reporting period. Total return has not been annualized for periods less than one year.

(4)

Investment income ratios for closed or liquidated Sub-Accounts with periods less than one year are calculated using the average net assets for the period. Expense ratios for closed or liquidated Sub-Accounts with periods less than one year have been annualized. Total returns for closed or liquidated Sub-Accounts with periods less than one year are calculated using the final unit values.

COMMONWEALTH ANNUITY AND LIFE INSURANCE COMPANY

STATUTORY FINANCIAL STATEMENTS

As of December 31, 2024 and 2023 and for the Years Ended

December 31, 2024, 2023 and 2022 and Supplemental Information

As of and for the Year Ended December 31, 2024

Commonwealth Annuity and Life Insurance Company

(A wholly-owned subsidiary of Global Atlantic Financial Group Limited)

Index to Statutory Financial Statements

Independent Auditor's Report	3
Statutory Statements of Admitted Assets, Liabilities, 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 Financial Statements - Statutory Basis	11
Supplementary Information	71
Supplemental Schedule of Selected Statutory Basis Financial Data	72
Supplemental Schedule of Investment Risk Interrogatories	76
Summary Investment Schedule	81
Supplemental Schedule of Reinsurance Disclosures	83

	Deloitte & Touche LLP
	115 Federal Street, Winthrop Center
	Floors 12-15
	Boston, MA 02110
	USA
	Tel: + 1 617 437 2000
	Fax: + 1 617 437 2111
	www.deloitte.com

INDEPENDENT AUDITOR'S REPORT

To the Audit Committee of The Global Atlantic Financial Group LLC:

Opinions

We have audited the statutory financial statements of Commonwealth Annuity and Life Insurance Company (the "Company"), which comprise the statutory statements of admitted assets, liabilities, capital and surplus as of December 31, 2024 and December 31, 2023, and the related statutory statements of operations, changes in capital and surplus, and cash flows for the years ended December 31, 2024, 2023, and 2022, and the related notes to the statutory financial statements (collectively referred to as the "statutory financial statements").

Unmodified Opinion on Statutory Accounting

In our opinion, the accompanying statutory financial statements present fairly, in all material respects, the admitted assets, liabilities, and capital and surplus of the Company as of December 31, 2024 and December 31, 2023, and the results of its operations and its cash flows for the years ended December 31, 2024, 2023, and 2022, in accordance with the accounting practices prescribed or permitted by the Division of Insurance of the Commonwealth of Massachusetts described in Note 2.

Adverse Opinion on Accounting Principles Generally Accepted in the United States of America

In our opinion, because of the significance of the matter described in the Adverse Opinion on Accounting Principles Generally Accepted in the United States of America section of our report, the statutory 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 as of December 31, 2024 and December 31, 2023, or the results of its operations or its cash flows for the years ended December 31, 2024, 2023, and 2022.

Basis for Opinions

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 Statutory 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.

Basis for Adverse Opinion on Accounting Principles Generally Accepted in the United States of America

As described in Note 2 to the statutory financial statements, the statutory financial statements are prepared by the Company using the accounting practices prescribed or permitted by the Division of Insurance of the Commonwealth of Massachusetts, which is a basis of accounting other than accounting principles generally accepted in the United States of America, to meet the requirements of the Division of Insurance of the Commonwealth of Massachusetts. The effects on the statutory financial statements of the variances between the statutory 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 and pervasive.

Responsibilities of Management for the Statutory Financial Statements

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

In preparing the statutory 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 concern for one year after the date that the statutory financial statements are issued.

Auditor's Responsibilities for the Audit of the Statutory Financial Statements

Our objectives are to obtain reasonable assurance about whether the statutory 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 statutory financial statements.

In performing an audit in accordance with GAAS, we:

●

Exercise professional judgment and maintain professional skepticism throughout the audit.

●

Identify and assess the risks of material misstatement of the statutory 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 statutory financial statements.

●

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 statutory 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 on Supplemental Schedules

Our 2024 audit was conducted for the purpose of forming an opinion on the 2024 statutory financial statements as a whole. The supplemental schedule of selected statutory financial data, the supplemental schedule of investment risk interrogatories, the supplemental summary investment schedule, and the supplemental schedule of reinsurance disclosures as of and for the year ended December 31, 2024, are presented for purposes of additional analysis and are not a required part of the 2024 statutory financial statements. These schedules are the responsibility of the Company's management and were derived from and relate directly to the underlying accounting and other records used to prepare the statutory financial statements. Such schedules have been subjected to the auditing procedures applied in our audit of the 2024 statutory financial statements and certain additional procedures, including comparing and reconciling such schedules directly to the underlying accounting and other records used to prepare the statutory financial statements or to the statutory financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, such schedules are fairly stated in all material respects in relation to the 2024 statutory financial statements as a whole.

April 1, 2025

Commonwealth Annuity and Life Insurance Company

(A wholly-owned subsidiary of Global Atlantic Financial Group Limited)

STATUTORY STATEMENTS OF ADMITTED ASSETS, LIABILITIES, CAPITAL AND SURPLUS
As of December 31, 2024 and 2023

(Dollars in thousands, except share data)		Notes				2024				2023
ASSETS
Bonds			3,4			$	55,466,817			$	43,765,029
Preferred stocks			4				145,123				64,665
Affiliated common stock			4				4,860,194				3,650,335
Unaffiliated common stock			4				8,240				18,046
Mortgage loans			3,4				21,744,184				14,773,971
Real estate			4				34,650				-
Cash, cash equivalents, and short term investments			3,4				2,727,915				4,723,732
Policy loans			3,4				574,788				575,566
Derivatives			3,4				488,091				334,575
Other invested assets including receivables for securities			3,4,12				1,939,265				1,558,962
Subtotal, cash and invested assets							87,989,267				69,464,881
Investment income due and accrued							653,717				464,076
Premiums due and deferred			8				1,693				1,899
Reinsurance receivable							3,893,943				2,742,558
Net deferred tax asset			6				748,192				559,273
Current federal and foreign income tax recoverable							-				4,104
Deposit accounting receivable							7,015,040				2,760,351
Other assets			15				86,073				131,075
Separate account assets			17				2,176,042				1,805,542
Total admitted assets						$	102,563,967			$	77,933,759
LIABILITIES
Reinsurance payables						$	61,978,119			$	50,042,298
Aggregate reserve for life policies and contracts			9				18,682,417				16,687,732
Aggregate reserve for accident and health policies			10				4,831,617				184,895
Deposit funds and other contract liabilities							4,456,328				764,271
Claims payable							9,898				9,111
Dividends payable to policyholders							334				377
General expenses and commissions payable							9,164				12,548
Transfers from separate accounts due or accrued							(11,328	)			(12,859	)
Taxes, licenses and fees payable							2,912				(1,194	)
Asset valuation reserve							570,218				371,360
Derivative collateral			3,4				439,151				344,834
Current federal income taxes payable							175,091				-
Deposit contracts payable							2,906,205				2,954,954
Other liabilities			15				177,390				455,917
Payable to parent, subsidiaries and affiliates, net							5,258				-
Separate account liabilities			17				2,176,042				1,805,542
Total liabilities						$	96,408,816			$	73,619,786
CAPITAL AND SURPLUS
Common stock, $1,000 par value, 10,000 shares authorized, 2,526 shares issued and outstanding							2,526				2,526
Paid in surplus							5,507,011				3,965,011
Unassigned surplus							(1,029,868	)			(698,609	)
Surplus notes							1,645,000				1,045,000
Admitted disallowed IMR							30,437				-
Other							45				45
Total capital and surplus			11				6,155,151				4,313,973
Total liabilities, capital, and surplus						$	102,563,967			$	77,933,759

Commonwealth Annuity and Life Insurance Company

(A wholly-owned subsidiary of Global Atlantic Financial Group Limited)

STATUTORYSTATEMENTS OF OPERATIONS

For the Years Ended December 31, 2024, 2023 and 2022

(Dollars in thousands)		Notes				2024				2023				2022
REVENUE
Premiums and annuity considerations						$	8,045,363			$	2,155,129			$	8,177,938
Net investment income			3				4,025,007				2,958,237				2,127,303
Amortization of interest maintenance reserve			3				(14,515	)			(110	)			2,205
Commissions, expense allowances and reserve adjustments on reinsurance ceded							506,280				1,129,664				147,716
Investment management and administration fees from separate accounts							37,166				25,160				36,172
Policyholder fee income							41,369				40,672				41,656
Other income			15				92,295				157,516				203,795
Total revenue						$	12,732,965			$	6,466,268			$	10,736,785
BENEFITS AND EXPENSES
Benefits paid or provided for:
Surrender benefits							2,119,635				1,057,567				500,539
Annuity payments							360,835				328,262				214,476
Death benefits							68,163				55,824				54,327
Interest and adjustments on contract or deposit-type contract funds							122,513				25				16
Disability benefits							19,678				24,044				29,002
Supplementary contracts							2				2				2
Change in policy reserves, deposit funds and other							6,641,406				1,465,839				7,743,318
Total benefits							9,332,232				2,931,563				8,541,680
Commissions on premiums, annuity considerations and deposit liabilities							3,652				3,570				4,197
Change in loading expenses							43				(147	)			(55	)
Commissions and expense allowances on reinsurance assumed							663,162				1,276,094				491,748
General insurance expenses							241,857				252,465				213,500
Insurance taxes, licenses and fees							11,184				8,183				7,339
Net transfers to/(from) separate accounts			17				172,373				(94,084	)			(65,746	)
Change in reserve - modified coinsurance and funds withheld adjustment							2,394,472				2,225,917				1,485,915
Total benefits and expenses							12,818,975				6,603,561				10,678,578
Net Income (Loss) from operations before dividends, federal income taxes and realized capital gains							(86,010	)			(137,293	)			58,207
Dividends to policyholders							1,890				951				965
Net Income (Loss) from operations before federal income taxes and realized capital gains							(87,900	)			(138,244	)			57,242
Federal and foreign income tax expense (benefit)			6				213,794				167,360				127,967
Net Income (Loss) from operations before realized capital gains							(301,694	)			(305,604	)			(70,725	)
Net realized capital (losses) / gains, net of tax and transfers to interest maintenance reserve							(251,799	)			(465,445	)			(421,100	)
Net income (loss)						$	(553,493	)		$	(771,049	)		$	(491,825	)

Commonwealth Annuity and Life Insurance Company

(A wholly-owned subsidiary of Global Atlantic Financial Group Limited)

STATUTORY STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS

For the Years Ended December 31, 2024, 2023 and 2022

(Dollars in thousands)

		Common Stock				Paid in Surplus				Surplus Notes				Other				Unassigned Surplus				Total Capital and Surplus
Balance at December 31, 2021		$	2,526			$	2,500,011			$	820,000			$	45			$	565,575			$	3,888,157
Net income			-				-				-				-				(491,825	)			(491,825	)
Change in net unrealized capital gains			-				-				-				-				1,242				1,242
Unrealized foreign exchange capital loss			-				-				-				-				(630	)			(630	)
Change in net deferred income tax			-				-				-				-				133,731				133,731
Change in non-admitted assets			-				-				-				-				(39,750	)			(39,750	)
Change in unauthorized reinsurance			-				-				-				-				(682	)			(682	)
Cumulative effect of changes in accounting principles			-				-				-				-				7,870				7,870
Change in asset valuation reserve			-				-				-				-				(101,548	)			(101,548	)
Capital contribution			-				800,000				-				-				-				800,000
Change as a result of reinsurance			-				-				-				-				(5,047	)			(5,047	)
Other changes to capital and surplus			-				-				-				-				325				325
Balance at December 31, 2022			2,526				3,300,011				820,000				45				69,261				4,191,843
Net loss			-				-				-				-				(771,049	)			(771,049	)
Change in net unrealized capital gains			-				-				-				-				(164,398	)			(164,398	)
Unrealized foreign exchange capital loss			-				-				-				-				3,021				3,021
Change in net deferred income tax			-				-				-				-				244,154				244,154
Change in non-admitted assets			-				-				-				-				10,740				10,740
Change in unauthorized reinsurance			-				-				-				-				230				230
Change in asset valuation reserve			-				-				-				-				(84,009	)			(84,009	)
Capital contribution			-				665,000				-				-				-				665,000
Change as a result of reinsurance			-				-				-				-				(4,709	)			(4,709	)
Change in surplus note			-				-				225,000				-				-				225,000
Prior year adjustment			-				-				-				-				(1,850	)			(1,850	)
Balance at December 31, 2023			2,526				3,965,011				1,045,000				45				(698,609	)			4,313,973
Net loss			-				-				-				-				(553,493	)			(553,493	)
Change in net unrealized capital gains			-				-				-				-				206,318				206,318
Unrealized foreign exchange capital loss			-				-				-				-				(4,803	)			(4,803	)
Change in net deferred income tax			-				-				-				-				289,538				289,538
Change in non-admitted assets			-				-				-				-				(60,839	)			(60,839	)
Change in unauthorized reinsurance			-				-				-				-				(3,594	)			(3,594	)
Change in asset valuation reserve			-				-				-				-				(198,858	)			(198,858	)
Capital contribution			-				1,542,000				-				-				-				1,542,000
Change as a result of reinsurance			-				-				-				-				75,202				75,202
Change in surplus in separate accounts			-				-				-				-				(26,101	)			(26,101	)
Change in surplus notes			-				-				600,000				-				-				600,000
Prior year adjustment			-				-				-				-				12,865				12,865
Other changes to capital and surplus			-				-				-				30,437				(67,494	)			(37,057	)
Balance at December 31, 2024			2,526				5,507,011				1,645,000				30,482				(1,029,868	)			6,155,151

Commonwealth Annuity and Life Insurance Company

(A wholly-owned subsidiary of Global Atlantic Financial Group Limited)

STATUTORYSTATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2024, 2023 and 2022

(Dollars in thousands)		2024				2023				2022
CASH FROM OPERATIONS
Premiums and annuity considerations		$	3,959,921			$	4,458,139			$	9,080,344
Net investment income			3,739,069				2,877,887				2,008,628
Other income			(556,902	)			(350,608	)			819,196
Claims, surrenders and other benefits			(1,535,987	)			138,722				(587,193	)
Commissions and expenses paid			(3,456,787	)			(3,338,629	)			(2,144,622	)
Surplus note interest			(65,400	)			(51,250	)			(51,250	)
Dividends paid to policyholders			(1,932	)			(973	)			(987	)
Net transfers from separate accounts			(196,943	)			95,411				73,743
Federal income taxes recovered / (paid)			(24,487	)			(29,162	)			(69	)
Net cash from operations			1,860,552				3,799,537				9,197,790
CASH FROM INVESTMENTS
Proceeds from investments sold, matured or repaid
Bonds			22,561,971				10,773,439				17,104,502
Stocks			32,899				30,308				2,691
Mortgage loans			1,879,677				1,800,062				2,396,852
Other invested assets			574,998				1,272,023				1,058,430
Net gains or (losses) on cash, cash equivalents, and short-term investments			(1,218	)			-				-
Miscellaneous proceeds			218,617				-				177,322
Total investment proceeds			25,266,944				13,875,832				20,739,797
Cost of investments acquired
Bonds			(26,000,154	)			(11,814,933	)			(17,671,286	)
Stocks			(1,174,927	)			(355,286	)			(150,521	)
Mortgage loans			(8,105,690	)			(4,108,539	)			(6,226,816	)
Other invested assets			(898,715	)			(962,963	)			(1,758,284	)
Real Estate			(1,564	)			-				-
Miscellaneous applications			(285,635	)			(894,970	)			-
Total cost of investments acquired			(36,466,685	)			(18,136,691	)			(25,806,907	)
Net change in policy loans			779				1,251				15,970
Net cash (used in) / from investments			(11,198,962	)			(4,259,608	)			(5,051,140	)
CASH FROM FINANCING AND OTHER SOURCES
Surplus notes, capital notes			600,000				225,000				-
Capital and paid in surplus, less treasury stock			1,542,000				665,000				800,000
Net deposits / (withdrawals) on deposit type contracts			980,072				(14,598	)			(17,481	)
Borrowed funds			(182,919	)			182,919				-
Net change in derivative collateral			94,316				260,636				(55,343	)
Net change in funds held for reinsurers			4,310,553				1,172,360				(3,800,392	)
Other cash provided / (applied)			(1,429	)			314,793				(64,848	)
Net cash from financing and other sources			7,342,593				2,806,110				(3,138,064	)
Net change in cash, cash equivalents, and short term investments			(1,995,817	)			2,346,039				1,008,586
Beginning of the year			4,723,732				2,377,693				1,369,107
End of the year		$	2,727,915			$	4,723,732			$	2,377,693

Commonwealth Annuity and Life Insurance Company

(A wholly-owned subsidiary of Global Atlantic Financial Group Limited)

(Dollars in thousands)			2024				2023				2022
SUPPLEMENTAL SCHEDULE OF NON-CASH OPERATING ACTIVITIES
Assumed premiums from reinsurance transactions		$	6,724,953			$	3,288,795			$	2,758,789
Non-cash premiums ceded on a funds withheld basis			(2,407,753	)			(5,635,165	)			(3,855,948	)
Accrued NII on assumed reinsurance			(102,998	)			(12,937	)			(27,108	)
Assumed commission on reinsurance assumed			-				(478,918	)			(19,000	)
Non-cash ceded commission			141,203				-				-
Non-cash ceded reinsurance receivable			-				442,999				(29,709	)
Non-cash aggregate write-ins for deductions			290,301				-
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES
Assumption transfer of bonds assumed reinsurance transactions			(8,511,092	)			(2,473,915	)			(2,697,956	)
Mortgages received to settle reinsurance transactions			(822,847	)			(86,655	)			-
Contract loans on assumed reinsurance			-				(236,370	)			(14,725	)
Non-cash investment transactions - bonds			(1,843,854	)			(611,959	)			(3,584,107	)
Non-cash investment transactions - mortgages			(181,936	)			(164,480	)			(329,963	)
Non-cash investment transactions - other invested assets			(111,825	)			(18,180	)			(336,284	)
Non cash investment transactions - CML reclass			-				(11,500	)			-
Non cash investment transactions - real estate			(9,463	)			-				-
Paid in kind interest-bonds			(23,852	)			-				(17,477	)
Paid in kind interest - mortgages			(25,682	)			-				(199	)
Paid in kind interest - other invested assets			(8,543	)			-				(1,677	)
Reclass of residual tranches			-				(17,226	)			(720,379	)
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES
Deposit liabilities on reinsurance assumed		$	2,711,984			$	-			$	-
FWH payable and deposit assets on reinsurance ceded			1,976,249				5,192,165				3,885,657

Commonwealth Annuity and Life Insurance Company

(A wholly-owned subsidiary of Global Atlantic Financial Group Limited)

Notes to Financial Statements - Statutory Basis

For the Years Ended December 31, 2024, 2023 and 2022

(Dollars in thousands)

1.	ORGANIZATION AND NATURE OF OPERATIONS

Commonwealth Annuity and Life Insurance Company, a Massachusetts domiciled life insurance company (the Company) a wholly owned indirect subsidiary of The Global Atlantic Financial Company LLC, a Bermuda company (Global Atlantic, which shall mean The Global Atlantic Financial Group LLC and, unless otherwise indicated or the context otherwise requires, its applicable subsidiaries). Global Atlantic is majority owned by KKR & Co. Inc (KKR).

On February 1, 2021. KKR & Co. Inc. ("KKR") indirectly acquired a majority interest in the Company following the merger of Global Atlantic Financial Group Limited ("GAFGL") and Magnolia Merger Sub Limited, with GAFGL as the surviving entity of the merger transaction. Prior to the merger transaction, Magnolia Merger Sub Limited was a Bermuda exempted company, a direct wholly owned subsidiary of Magnolia Parent LLC (now known as The Global Atlantic Financial Group, LLC or "TGAFGL" and an indirect subsidiary of KKR. Accordingly, TGAFGL is now the holding company of GAFGL and KKR is deemed the ultimate controlling person of Commonwealth Annuity.

On January 2, 2024, KKR acquired all the remaining equity interests in Global Atlantic that KKR did not already own. As of January 2, 2024, KKR owns 100.0% of Global Atlantic.

The Company directly owns all outstanding shares of Accordia Life and Annuity Company (Accordia), an Iowa domiciled company, First Allmerica Financial Life Insurance Company (FAFLIC), a Massachusetts domiciled company, and Forethought Life Insurance Company (FLIC), an Indiana domiciled insurance company.

The Company insures and reinsures blocks of fixed and variable annuities, universal and variable universal life insurance, traditional life insurance and group retirement products.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying financial statements have been prepared in conformity with statutory accounting practices prescribed or permitted by the Division of Insurance of the Commonwealth of Massachusetts (MADOI), which differ in some respects from accounting principles generally accepted in the United States of America (GAAP). Prescribed statutory accounting practices (SAP) include publications of the National Association of Insurance Commissioners "Accounting Practices and Procedures Manual" (NAIC SAP), state laws, regulations and general administrative rules. The more significant of these differences are as follows:

●

Bonds which are "available-for-sale" or "trading" are carried at fair value under GAAP, and are carried at amortized cost under NAIC SAP, except for bonds in or near default which are carried at the lower of fair value or amortized cost under NAIC SAP;

●

Derivatives for which the Company employs fair value accounting are carried at fair value. However, changes in unrealized capital gains and losses are not recognized in net income, but as changes to surplus;

●

The Asset Valuation Reserve (AVR) is required under NAIC SAP to offset potential credit-related investment losses on bonds, mortgage loans, stocks, real estate, and other invested assets. The AVR is recorded as a liability with changes in the reserve accounted for as direct increases or decreases in surplus. Under GAAP, no such reserve is required;

Commonwealth Annuity and Life Insurance Company (A wholly-owned subsidiary of Global Atlantic Financial Group Limited) Notes to Financial Statements - Statutory Basis For the Years Ended December 31, 2024, 2023 and 2022 (Dollars in thousands)

●

The Interest Maintenance Reserve (IMR) is required under NAIC SAP to defer recognition of realized gains and losses (net of applicable federal income taxes) on short and long term fixed income investments resulting from interest rate changes. The deferred gain and loss is amortized over the expected remaining life (maturity) of the investment sold. In the event that realized capital losses exceed gains on a cumulative basis, negative IMR is reclassified to Other Assets on the Statement of Admitted Assets and Liabilities and admitted to extent that it is within 10% of an adjusted surplus. Any admitted balance is presented as "admitted disallowed IMR" in the sections of Surplus and is excluded from Unassigned surplus for the purposes of establishing level of dividends which may be paid by the Company. Under GAAP, no such reserve is required;

●

Policy acquisition costs, such as commissions, and other costs that are directly related to the successful efforts of acquiring new business are deferred under GAAP. Under NAIC SAP, such items are recorded as expenses when incurred;

●

Benefit reserves are determined using statutorily prescribed interest, morbidity and mortality assumptions under NAIC SAP, except under certain principles-based reserve methodologies. With respect to variable annuities, VM-21 prescribes various approaches for setting assumptions related to policyholder and economic behavior that can vary by reserve component (Stochastic Reserve and Standard Projection Amount). With respect to life insurance products, valuation assumptions are prudent estimates used in determining Stochastic and Deterministic reserve components as prescribed by VM-20. In all cases the Company follows these prescribed practices. Under US GAAP, reserves and related balances are generally calculated using assumptions that are based on best estimates, which in some cases require appropriate adjustments that are required under certain FASB Accounting Standards. Effective January 1, 2023, public company reporting for long duration insurance contracts changed under the new long duration targeted improvements (LDTI) insurance accounting standard. LDTI requires the unlocking of assumptions for traditional life and limited pay contracts, requiring more frequent update to best estimates;

●

Under NAIC SAP, amounts recoverable from reinsurers for unpaid losses are not recorded as assets, but as offsets against the respective policyholder liabilities. Under GAAP, amounts recoverable from reinsurers for unpaid losses are recorded as assets and not offset against the respective policyholder liabilities. Reinsurance balance amounts deemed to be uncollectible are written off through a charge to operations. Under GAAP, an allowance for amounts deemed uncollectible would be established through a charge to earnings;

●

Deferred income taxes, which provide for book/tax temporary differences, are charged directly to unassigned surplus under NAIC SAP, whereas under GAAP, they are included as a component of net income. Deferred tax assets are also subject to an admissibility test under NAIC SAP;

●

Under NAIC SAP, certain items are designated as "non-admitted" assets (such as furniture and equipment, prepaid expenses, bills receivable, computer system software, and agents' balance, etc.) and are excluded from assets by a direct charge to surplus. Under GAAP, such assets are carried on the balance sheet with appropriate valuation allowances;

●

Under GAAP acquisition accounting, an intangible asset can be assigned a value representing the cost to duplicate, create or replace the asset, assigned a finite life, and amortized accordingly. NAIC SAP does not recognize this type of transaction but recognizes any amount paid in excess of the subsidiary's underlying statutory capital and surplus as unamortized goodwill on the parent company's books. Goodwill is then amortized into unrealized capital gains and losses, on a straight line basis for a period which the acquiring entity benefits economically, not to exceed 10 years;

Commonwealth Annuity and Life Insurance Company (A wholly-owned subsidiary of Global Atlantic Financial Group Limited) Notes to Financial Statements - Statutory Basis For the Years Ended December 31, 2024, 2023 and 2022 (Dollars in thousands)

●

Under GAAP accounting, the Company's assets and liabilities were remeasured at fair value upon the close of the KKR acquisition. This resulted in the recognition of Value of Business Acquired (VOBA), which is generally amortized on a constant level basis using policy count over the estimated lives of the contracts, and goodwill, which is not amortized but assessed for impairment annually or more frequently if circumstances indicate impairment may have occurred, for GAAP. There was no such remeasurement of assets and liabilities for Statutory reporting. Under NAIC SAP, consideration in excess of the net book value of business acquired is recognized as a ceding commission. Ceding commission expenses are recognized in income on the date of the transaction. Ceding commission revenues are recognized as a separate surplus item on a net of tax basis and are subsequently amortized into income as earnings from the business emerge;

●

Under NAIC SAP, revenues for annuity contracts and universal life policies consist of the entire premium received, and benefits incurred represent the total of death benefits paid, surrenders (net of surrender charges), and the change in policy reserves. Under GAAP, premiums received for annuity contracts and universal life that do not include significant mortality risk would not be recognized as premium revenue and benefits would represent the excess of benefits paid over the policy account value and interest credited to the account values. Charges for mortality expenses and surrenders for both types of policies would be recognized as revenue under GAAP;

●

Policyowner dividends are recognized when declared under NAIC SAP rather than over the term of the related policies as required by GAAP;

●

Under GAAP the Company has elected to carry the funds withheld assets at fair value while for statutory treatment the Company carries the funds withheld assets at amortized cost;

●

Under NAIC SAP, cash and short-term investments in the statements of cash flows represent cash balances and investments with initial maturities of one year or less. Under GAAP, the corresponding caption of cash and cash equivalents includes cash balances and investments with initial maturities of three months or less;

●

Investments in subsidiaries where the Company has the ability to exercise control are consolidated for GAAP reporting. Under NAIC SAP, the equity value of subsidiaries is recorded as other invested assets and investments in common stocks of affiliated entities;

●

Surplus notes are instruments which have characteristics of both debt and equity, and are subject to strict control by the reporting entity's domiciliary regulator. Under NAIC SAP, surplus notes issued by a reporting entity are classified as an increase to surplus, and accrued interest payable is recognized only when approval to pay such interest has been obtained by the regulator. Under GAAP, surplus notes are classified as debt, and interest payable is incurred on a straight-line basis.

●

Bond portfolios, separate account assets, and associated liabilities comprising guaranteed separate accounts, also referred to as market value adjusted annuities (MVA), are included in separate accounts for NAIC SAP, whereas these are classified under the Company's general account under GAAP.

The effects on the financial statements of the variances between statutory and GAAP, although not readily determinable, are presumed to be material.

Commonwealth Annuity and Life Insurance Company (A wholly-owned subsidiary of Global Atlantic Financial Group Limited) Notes to Financial Statements - Statutory Basis For the Years Ended December 31, 2024, 2023 and 2022 (Dollars in thousands)

Use of Estimates

The preparation of financial statements in accordance with statutory accounting principles 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 reported period. Actual results could differ significantly from those estimates. Significant estimates included in the accompanying statutory basis financial statements are assumptions and judgments utilized in determining if declines in fair values of investments are other-than-temporary, valuation methods for infrequently traded securities and private placements, policy liabilities, accruals relating to legal and administrative proceedings and estimates to establish the reserves for future policy benefits.

Commonwealth Annuity and Life Insurance Company (A wholly-owned subsidiary of Global Atlantic Financial Group Limited) Notes to Financial Statements - Statutory Basis For the Years Ended December 31, 2024, 2023 and 2022 (Dollars in thousands)

Investments

Bonds

The NAIC classifies bonds into six quality categories and 20 subcategories. These categories range from 1A (the highest) to 5C (the lowest) for non-defaulted bonds, and category 6 for bonds in and near default. Bonds in default are required to be carried at the lower of amortized cost or NAIC fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Bonds and preferred stocks, excluding loan-backed and structured securities (LBASS), are stated at amortized cost using the modified scientific method, or fair value in accordance with the "Purposes and Procedures Manual (P & P Manual) of the NAIC Capital Markets and Investment Analysis Office" (CMIAO). Fair values are measured in accordance with the Statements of Statutory Accounting Principles (SSAP) No. 100 Fair Value Measurements (SSAP No.100). Short-term investments are highly liquid investments readily convertible to cash, with maturities of greater than 90 days and less than one year at time of purchase and are reported at amortized cost.

LBASS are stated at amortized cost or fair value in accordance with the P & P Manual of the CMIAO. Prepayment assumptions are primarily obtained from external sources or internal estimates, and are consistent with the current interest rate and economic environment. The prospective adjustment method is used on most non-agency LBASS. Fair values are based on quoted market prices. If a quoted market price is not available, fair values are estimated using independent pricing sources or internally developed pricing models, based on discounted cash flow analysis. The Company reviews securities at least quarterly for other-than-temporary impairments (OTTI) using current cash flow assumptions.

The NAIC has contracted with Blackrock for non-agency Residential Mortgage Backed Securities (RMBS) and Commercial Mortgage Backed Securities (CMBS), to provide expected loss information, which the Company must use to determine the appropriate NAIC designations for accounting, and risk-based capital (RBC) calculations.

Preferred Stock

Preferred stocks are carried at cost or amortized costs except those rated NAIC class 4 or lower quality, which are carried at the lower of cost or fair value. Changes to preferred stock values are reported as an adjustment to surplus.

Common Stock

Affiliated common stock is carried at statutory surplus plus any admitted goodwill established in accordance with SSAP No. 68, Business Combinations and Goodwill (SSAP No. 68) and SSAP No. 97, Investments in Subsidiary, Controlled, and Affiliated Entities (SSAP No. 97). Changes to statutory surplus of affiliates, net of amortization of goodwill, are reported as an adjustment to surplus.

Unaffiliated common stocks are reported at fair value based on quoted market prices or determined internally utilizing available market data and financial information pertaining to the underlying company except for Federal Home Loan Bank (FHLB) common stock which is valued at cost. The related net unrealized gains or losses are reported in unassigned surplus. The related adjustment for federal income taxes is included in deferred income taxes in unassigned surplus.

Mortgage Loans

Mortgage loans on real estate are carried at unpaid principal balances, net of discounts/premiums and valuation allowances, and are secured. Specific valuation allowances are established for the excess carrying value of the mortgage loan over its estimated fair value, when it is probable that based on current information and events, the Company will be unable to collect all amounts due under the contractual terms of the loan agreement. Specific valuation allowances are based on the fair value of the collateral. Fair value is determined by discounting the projected cash flows for each property to determine the current net present value.

Commonwealth Annuity and Life Insurance Company (A wholly-owned subsidiary of Global Atlantic Financial Group Limited) Notes to Financial Statements - Statutory Basis For the Years Ended December 31, 2024, 2023 and 2022 (Dollars in thousands)

Commercial mortgage loans (CMLs) acquired at a premium or discount are carried at amortized cost using the effective interest rate method. CMLs held by the Company are diversified by property type and geographic area throughout the United States. CMLs are considered impaired when it is probable that the Company will not collect amounts due according to the terms of the original loan agreement. The Company assesses the impairment of loans individually for all loans in the portfolio. The Company estimates the fair value of the underlying collateral using internal valuations generally based on discounted cash flow analyses.

Repurchase Agreements

Repurchase agreements are accounted for in accordance with SSAP No. 103, Transfers and Servicing of Financial Assets and Extinguishment of Liabilities (SSAP No. 103). The transactions are accounted for as collateralized borrowings in which the underlying securities continue to be reported as investments by the Company and the proceeds from the sale are recorded as a liability

Financial Instruments and Derivatives

In the normal course of business, the Company enters into transactions involving various types of financial instruments including derivatives. Derivatives are instruments that derive their value from underlying asset prices, indices, reference rates and other inputs or a combination of these factors. Derivatives may be privately negotiated contracts, which are usually referred to as over-the-counter (OTC) derivatives, or they may be listed and traded on an exchange (exchange-traded). Exchange-traded equity futures are transacted through a regulated exchange. From time to time, futures contracts are terminated. The clearinghouse guarantees the performance of both counterparties, which mitigates credit risk.

The Company uses OTC and listed derivatives to hedge its exposure to annuity and life insurance products, foreign investment, and macro-economic factors such as interest rates, foreign exchange rates and equity. More specifically for general business hedges of rates and equity movements, the Company utilizes listed futures, OTC swaps & swaptions, OTC & listed options and total return swaps (TRS). Other block rate hedges utilize OTC swaps and listed futures. For the VA block the Company utilizes OTC swaps listed futures, OTC / listed options. In accordance with SSAP No. 86, Derivatives (SSAP No. 86), the Company has elected to account for these derivatives using the fair value method of accounting. Under such treatment, the derivatives are marked to market, with changes in fair value recorded as unrealized investment gains or losses. Upon termination, the unrealized investment gains and losses are reclassified to realized gains and losses in earnings. The Company values the OTC options utilizing the Black-Scholes and Heston models. The Company also compares the derivative valuations to the daily counterparty marks to validate the model outputs. The parties with whom the Company enters into OTC option contracts are highly rated financial institutions. Contracts are also fully supported by collateral, which minimizes the credit risk associated with such contracts.

The Company entered interest rate swaps hedging Federal Home Loan Bank liabilities which employs hedge accounting. In addition, the Company has designated cash flow hedge interest rate swaps to hedge the interest rate risk associated with floating rate investments and fair value hedge cross currency swaps to hedge the foreign currency risk associated with foreign currency-denominated bonds. The derivatives that hedge those assets and liabilities are valued in a manner consistent with the underlying hedged item, which are carried at amortized cost. The Company has also designated bond forwards to hedge the interest rate risk associated with the planned purchase of debt securities in a cash flow hedge. The bond forwards were recorded at cost. Following the qualifying purchases of securities, the fair value of the portion of the bond forward associated with each purchase will be adjusted to the book values, and accretion or amortization will be recognized over the life of the securities using the effective interest method.

Policy Loans

Policy loans are carried at unpaid principal balances.

Commonwealth Annuity and Life Insurance Company (A wholly-owned subsidiary of Global Atlantic Financial Group Limited) Notes to Financial Statements - Statutory Basis For the Years Ended December 31, 2024, 2023 and 2022 (Dollars in thousands)

Other Invested Assets

Other invested assets consist primarily of collateral loans, which are carried at amortized costs; residual tranche investments, which are carried at the lower of fair value or amortized cost; and investments in partnerships and LLCs, which are accounted for using the equity method of accounting.

Cash and Short-Term Investments

Cash and short-term investments include cash on hand, amounts due from banks, and highly liquid short-term investments. The Company considers all investments with an original maturity of 90 days or less as cash equivalents. Cash equivalent investments are stated at amortized cost. The Company considers all investments with an original maturity of greater than 90 days and less than one year as short-term investments. Short-term investments are stated at amortized cost.

Investment Income

Investment income is recognized on an accrual basis. Any investment income which is over 90 days past due is excluded from surplus. Investments in bonds that are delinquent are placed on non-accrual status, and thereafter interest income is recognized only when cash payments are received. Interest income on policy loans is recorded as earned using the contractually agreed upon interest rate and is included in accrued investment income until the policy's anniversary date at which point the interest is capitalized and added to principal.

Capital Gains and Losses

Realized capital gains and losses are determined on the basis of specific identification and are recorded net of related federal income taxes. The AVR is established by the Company to provide for potential losses in the event of default by issuers of certain invested assets. These amounts are determined using a formula prescribed by the NAIC and are reported as a liability. The formula for the AVR provides for a corresponding adjustment for realized gains and losses. Under a formula prescribed by the NAIC, the Company defers, to the IMR, the portion of realized gains and losses on sales of fixed income investments, principally bonds and mortgage loans, attributable to changes in the general level of interest rates and amortizes those deferrals over the remaining period to maturity of the security.

The Company acquires IMR associated with certain assumed blocks of business through reinsurance transactions. Should realized capital losses exceed gains on a cumulative basis, the resulting negative IMR is reclassified to other assets and recorded as an admitted asset up to 10% of the Company's prior period adjusted capital and surplus.

Dividends declared by or received from a subsidiary are recognized in investment income to the extent that these are not in excess of the affiliate's unassigned surplus. Dividends in excess of the affiliate's unassigned surplus are offset against the carrying amount of the investment.

Impairments

The Company evaluates mortgages for impairment based on the credit quality of the borrowers ability to pay, common stocks, which are primarily affiliated companies, based on the underlying financial condition of those companies, and joint ventures, partnerships and Limited Liability Companies (LLCs) when it is probable that it will be unable to recover the carrying amount of the investment or there is evidence indicating inability of the investee to sustain earnings that would justify the carrying value of the investment.

Commonwealth Annuity and Life Insurance Company (A wholly-owned subsidiary of Global Atlantic Financial Group Limited) Notes to Financial Statements - Statutory Basis For the Years Ended December 31, 2024, 2023 and 2022 (Dollars in thousands)

At least quarterly, management reviews impaired securities for OTTI. The Company considers several factors when determining if a security is other-than-temporarily impaired, including but not limited to the following: its intent and ability to hold the impaired security until an anticipated recovery in value; the issuer's ability to meet current and future principal and interest obligations for bonds; the length and severity of the impairment; and, the financial condition and near term and long-term prospects for the issuer. The review process involves monitoring market events that could impact issuers' credit ratings, business climate, management changes, litigation and government actions and other similar factors. The process also involves monitoring late payments, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts and cash flow projections as indicators of credit issues. Additional factors are considered when evaluating the unique features that apply to certain structured securities, including but not limited to the quality of underlying collateral, expected prepayment speeds, current and forecasted loss severity, consideration of the payment terms of the underlying loans or assets backing a particular security, and the payment priority with the tranche structure of the security.

Recognition of Premium Income and Acquisition Costs

Life premiums are recognized as income over the premium-paying period of the related polices. Annuity considerations are recognized as income when received. Deposits on deposit-type contracts, such as funding agreements, supplemental contracts, dividend accumulations, and premium and other deposit funds, are recorded as a liability when received. Health premiums are earned ratably over the terms of the related insurance and reinsurance contracts or policies. Considerations for inforce block liabilities assumed are recognized as premium income when received. Expenses incurred in connection with acquiring new insurance business, including acquisition costs such as sales commissions, are charged to operations as incurred.

Reinsurance premiums and benefits paid or provided are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts.

Deposit Accounting

In accordance with SSAP No. 61R, Life, Deposit-Type and Accident and Health Reinsurance (SSAP No. 61R), deposits and returns of deposits are recorded directly to the balance sheet. Fee income and expenses are recorded as earned / incurred. The liabilities under applicable treaties are categorized as deposit liabilities rather than reserves, and any unpaid settlements are categorized as other payables or receivables rather than reinsurance payables or receivables. P & P Manual Appendix A-791 "Life and Health Reinsurance Contracts", allows for increase in surplus net of tax to be identified separately as a surplus item.

Reinsurance and Modified Coinsurance and Funds Withheld Reserve Adjustment

Reinsurance premiums, commissions, expense reimbursement, claims, and claims adjustment expenses related to reinsured business are accounted for on a basis consistent with that used in accounting for the original policies issued and with the terms of the reinsurance contracts and are reported net of amounts ceded to other companies. A liability has been provided for unsecured policy reserves on reinsurance ceded to companies not authorized to assume business in the state of domicile. Changes in this liability are reported directly in unassigned surplus. Policy and contract liabilities ceded have been reported as reductions of the related reserves rather than as assets as would be required under GAAP.

In accordance with SSAP No. 61R, the cedant retains the assets supporting the ceded reserves for modified coinsurance or funds withheld coinsurance. The counterparties settle the statutory net income. The significant contributors to this settlement are transfers from separate accounts, change in statutory reserves, mark-to-market of the derivative portfolio and other investment returns.

Policy and Contract Claims

The liability for policy and contract claims is based on actual claims submitted but not paid on the statement date and an estimate of claims that had been incurred but not been reported on the statement date.

Commonwealth Annuity and Life Insurance Company (A wholly-owned subsidiary of Global Atlantic Financial Group Limited) Notes to Financial Statements - Statutory Basis For the Years Ended December 31, 2024, 2023 and 2022 (Dollars in thousands)

Insurance Reserves and Annuity and Other Fund Reserves

Reserving Practices

Reserves for life insurance, annuities, and accident and health insurance are established in amounts adequate to meet the estimated future obligations of policies in force based upon accepted actuarial methods. These liabilities are computed based upon mortality, morbidity, withdrawal, and interest rate assumptions applicable to this coverage. Reserves for life insurance and annuity policies are computed using interest rates ranging from 0.0% to 6.5% for life insurance policies and 0.25% to 11.75% for annuity contracts. Mortality, morbidity, and withdrawal assumptions for all policies are based on industry standards and assumptions prescribed by statute. The assumptions vary by plan, age at issue, year of issue and duration.

For non-universal life plans and universal life accidental death and waiver of premium features, tabular interest, tabular less actual reserve released and tabular costs are calculated by formulas as set by the NAIC. For universal life, tabular interest and tabular cost are equal to actual credits and charges to the policies. Tabular interest on funds not involving life contingencies is calculated by formula.

For individual life insurance, claim reserves are established equal to 100% of the benefit payable, net of amounts recoverable from reinsurers portfolio of life settlement policies and investments in partnerships.

Claim reserves are computed based on historical experience modified for expected trends in frequency and severity. Withdrawal characteristics of annuity and other fund reserves vary by contract. At December 31, 2024 and 2023, approximately 45.4% and 40.0% of the account value, respectively, of the contracts (included in both the general account and separate accounts of the Company) were not subject to discretionary withdrawal or were subject to withdrawal at book value less surrender charge.

The Company's variable annuity contracts contain guaranteed minimum death benefit (GMDB) features. Approximately 96% of the net amounts at risk of these contracts reduce the death benefit proportionately in the event of a partial withdrawal. For all variable annuity contracts, including those that reduce the death benefit on a dollar-for-dollar basis, reserves are calculated in accordance with the Commissioners Annuity Reserve Valuation Method (CARVM) and VM-21 (CARVM for variable annuities). The adoption of VM-21 did not have a significant impact on the Company.

Waiver of Premiums, and Gross Premiums less than Net Premiums

The Company waives deduction of deferred fractional premiums at policyholder death and returns any portion of the final premium paid beyond the month of death. Surrender values are not promised in excess of the legally computed reserves.

As of December 31, 2024 and 2023, the Company had $62,905 and $66,546, respectively, of insurance in force for which the gross premiums are less than the net premiums according to the standard valuation required by the Commonwealth of Massachusetts.

Other increases reflect significant items for changes in adjustment from fund value to reserve for annuities and universal life insurance.

Policy liabilities and accruals are based on the various estimates discussed above. Although the adequacy of these amounts cannot be assured, the Company believes that policy liabilities and accruals will be sufficient to meet future obligations of policies in force. The amount of liabilities and accruals, however, could be revised in the near term if the estimates discussed above are revised.

Commonwealth Annuity and Life Insurance Company (A wholly-owned subsidiary of Global Atlantic Financial Group Limited) Notes to Financial Statements - Statutory Basis For the Years Ended December 31, 2024, 2023 and 2022 (Dollars in thousands)

Substandard Policies

For universal life, extra premiums are assessed for substandard lives in addition to the standard mortality charges. Mean reserves include (1) the standard mean reserve plus (2) the excess of the mean reserve calculated using the appropriate multiple of the 1958 or 1980 CSO Mortality Table and/or the appropriate additional mortality charge per 1,000 and 4.5%, 5.5% or 6% interest over the standard mean reserve. In no event is the total reserve less than the policy's cash surrender value.

For other life products, extra premiums are assessed for substandard lives in addition to the standard gross premium. Mean reserves for policies and riders based on table ratings include (1) the regular mean reserve for the plan and (2) the excess, if any, of the mean reserve calculated using the appropriate multiple of the 1958 or 1980 CSO Mortality Table and 4.0%, 5.0% or 5.5% interest over the standard mean reserve. In the case of flat extra premium ratings, mean reserves are equal to (1) the regular mean reserve and (2) 1/2 of the net extra premium.

Federal Income Taxes

Deferred federal income taxes are calculated as defined by SSAP No. 101, Income Taxes (SSAP No. 101). SSAP No. 101 establishes deferred tax assets and liabilities based on differences between statutory and tax bases of reporting. The deferred tax assets are then subject to an admissibility test, which can limit the amount of deferred tax assets that are recorded. The deferred federal income taxes result primarily from insurance reserves, policy acquisition expenses, and ceding commissions.

Separate Accounts

Separate account assets and liabilities represent segregated funds administered and invested by the Company for the benefit of certain variable annuity and variable life insurance contract holders. Assets consist principally of bonds, common stocks, mutual funds, and short-term obligations and are generally stated at fair value. The investment income gains and losses of these accounts generally accrue to the contract holders and therefore, are not included in the Company's net income. Appreciation and depreciation of the Company's interest in the separate accounts, including undistributed net investment income, is reflected as other income. The fair value of assets and liabilities held in separate accounts is based on quoted market prices. Separate account assets representing contract holder funds are measured at fair value and reported as a summary total in the Statements of Admitted Assets, Liabilities, Capital and Surplus, with an equivalent summary total reported for separate account liabilities.

The Company receives fees for assuming mortality and certain expense risks. Such fees are included in Other Income in the accompanying Statement of Operations. Reserves in the separate accounts for variable annuity contracts are provided in accordance with the Variable Annuity Commissioners' Annuity Reserve Valuation Method (VA CARVM) under Actuarial Guideline 43 (AG 43).

Transfers from Separate Accounts Due or Accrued, and Accrued Expense Allowance

The Company records a negative liability due from the separate accounts which primarily represents amounts that are held for policy account values in excess of statutory reserves, and certain other policy charges, including cost of insurance charges, administrative charges and GMDB charges, partially offset by associated reinsurance credits. This negative liability due from the separate accounts also includes assumed and ceded business. Amounts held in excess of the statutory reserves cannot be transferred from the separate account unless the policy is terminated or the policy account value is withdrawn.

Guaranty Fund Assessments

Guaranty fund assessments are paid to various states. The assessments are amortized against the premium tax benefit period.

Commonwealth Annuity and Life Insurance Company (A wholly-owned subsidiary of Global Atlantic Financial Group Limited) Notes to Financial Statements - Statutory Basis For the Years Ended December 31, 2024, 2023 and 2022 (Dollars in thousands)

Goodwill

As a result of the acquisitions of FLIC and Accordia, the Company recognized an asset for goodwill, which was accounted for based on the statutory purchase method.

Affiliated Entities and Related Parties

The Company recognizes entities which are under common control as affiliated entities consistent with SSAP No. 25 - Affiliates and Other Related Parties guidance. In addition, entities in which the company or affiliated companies own at least 10% of the voting interests are considered to be related parties even if there is no control or affiliation, and are disclosed consistent with related party disclosure guidelines in SSAP No. 25 guidance.

Recently Adopted Accounting Standards

In March, 2024, the NAIC Statutory Accounting Principles Working Group adopted revisions to SSAP No. 21R - Other Admitted Assets which provides guidance for debt securities that do not qualify as bonds under the Principles-Based Bond definition and measurement method guidance for all residual interests regardless of legal form, with a January 1, 2025 effective date. The Company has adopted accounting and presentation changes for the annual 2025 reporting period.

In August & March, 2024, the NAIC Statutory Accounting Principles Working Group adopted revisions to expand and amend guidance on New Markets Tax Credit Project within SSAP No. 93 - Low-Income Housing Tax Credit Property Investments to include all tax credit investments regardless of structure and type of state or federal tax credit program. Revisions to SSAP No. 94R - Transferable and Non-Transferable Stat Tax credits expand and amend guidance to include both purchased state and federal tax credits. The Company has adopted these changes for the annual 2024 reporting period.

In February, 2024, the NAIC Statutory Accounting Principles Working Group adopted revisions to SSAP No. 21R - Other Admitted Assets which incorporates a collateral loan disclosure that details admitted and nonadmitted collateral loans with the underlying collateral supporting the loan. The Company has adopted this disclosure change as appropriate.

In January, 2024, the NAIC Statutory Accounting Principles Working Group adopted revisions to SSAP No. 61R - Life, Deposit-Type and Accident and Health Reinsurance which provides guidance for the specific 2023 liquidation of U.S. based life reinsurer Scottish Re. The Company has adopted accounting and presentation changes to balances from this reinsurer as appropriate.

In December, 2023, the NAIC Statutory Accounting Principles Working Group adopted revisions to SSAP No. 30 - Unaffiliated Common Stock and SSAP No. 32 - Preferred Stock to address residual tranche investments which may be reported as preferred stock and common stock. Also, in September, 2023, the NAIC Statutory Accounting Principles Working Group adopted revisions to SSAP No. 48 - Joint Ventures, Partnerships, and Limited Liability Companies to address residual tranche investments which may be reported as equity method investments. These clarifications state that structures that are in-substance residual interests will be reported residual tranche investments. The Company has adopted these changes for the annual 2023 reporting period.

In October, 2023, the NAIC Statutory Accounting Principles Working Group adopted revisions to SSAP No. 20 - Nonadmitted Assets and SSAP No. 21R - Other Admitted Assets to clarify guidance on collateral loan accounting and reporting. The adopted revisions clarify that all collateral assets must qualify as admitted invested assets if they were owned directly and provides additional details about documentation required for the collateral assets. The Company has adopted these changes for the annual 2023 reporting period, and updated policies and procedures as appropriate.

Commonwealth Annuity and Life Insurance Company (A wholly-owned subsidiary of Global Atlantic Financial Group Limited) Notes to Financial Statements - Statutory Basis For the Years Ended December 31, 2024, 2023 and 2022 (Dollars in thousands)

In August, 2023, the NAIC Statutory Accounting Principles Working Group adopted revisions to SSAP No. 34 - Investment Income Due and Accrued, which requires new disclosure around aggregate paid-in-kind (PIK) interest included in asset balances. The Company has included such disclosures in 2023 financial statements as appropriate.

In August, 2023, the NAIC Statutory Accounting Principles Working Group adopted revisions to SSAP No. 7 - Asset Valuation and Interest Maintenance Reserve which allows for the temporary admittance of a net negative interest maintenance reserve (IMR). Outlined in INT 23-01T, this guidance allows the admittance of negative IMR up to 10% of adjusted capital and surplus and provides additional accounting and reporting guidance. Pending any future adoptions, this interpretation will be automatically nullified on January 1, 2026. The Company has adopted these changes for the annual 2023 reporting period.

In August, 2023, the NAIC Statutory Accounting Principles Working Group adopted revisions to SSAP 43R - Loan-Backed and Structured Securities which add collateralized loan obligations (CLOs) to financial modeling guidance and provide clarification that CLOs are not captured as legacy securities. This guidance aligns with changes adopted by the NAIC's Valuation of Securities Task Force in February, 2023. The Company has adopted these changes for the annual 2023 reporting period and there is no significant impact on the financial statements.

In August, 2023, the NAIC Statutory Accounting Principles Working Group adopted revisions to SSAP No. 26R - Bonds, SSAP No. 43R - Loan-Backed and Structured Securities and SSAP No. 21R - Other Admitted Assets which establishes a new principles-based definition of a band for statutory reporting. The Company will continue to monitor principles based bond definition topics and guidance in preparation for the January 1, 2025 implementation date.

Change in Accounting Principle

In 2022, the Company updated its accounting for ceding IMR gains and losses after the inception of the treaty where gains and losses transferred to a counterparty are now assessed on an accrual basis whereas previously we assessed that transfer on a cash basis. Under the new method, the Company has applied an adjustment to IMR for all such ceded gains, whereas previously we made no adjustment to IMR and instead set up a different liability. Because the other liability was stated on a pretax basis, and the IMR liability is stated at an after tax basis, there was an impact to surplus arising from the change of $7,870, which has been captured as the cumulative impact of the change in accounting principle and recorded as a change in surplus in the current year.

Correction of Errors

During 2024, the company discovered reporting errors for the prior year balances resulting in a $1,044 increase in insurance taxes, licenses, and fees. As a result, $404 of state income tax payable were written off. The impact of these errors has been reported as an adjustment to opening surplus per SSAP No. 3, Accounting Changes and Corrections of Errors, paragraph 10, which states: "Correction of errors in previously issued financial statements shall be reported as adjustments to unassigned funds (surplus) in the period an error is detected." The Company does not believe these errors are significant to capital and surplus at December 31, 2024, or in prior years.

During 2024, the company discovered reporting errors for the prior year balances resulting in a $14,313 increase in net realized capital gains and losses. The impact of these errors has been reported as an adjustment to opening surplus per SSAP No. 3, Accounting Changes and Corrections of Errors, paragraph 10, which states: "Correction of errors in previously issued financial statements shall be reported as adjustments to unassigned funds (surplus) in the period an error is detected." The Company does not believe these errors are significant to capital and surplus at December 31, 2024, or in prior years.

Commonwealth Annuity and Life Insurance Company (A wholly-owned subsidiary of Global Atlantic Financial Group Limited) Notes to Financial Statements - Statutory Basis For the Years Ended December 31, 2024, 2023 and 2022 (Dollars in thousands)

Revision and reclassification

The Company has revised footnote 7. Reinsurance for the year ended December 31, 2022 as a result of an issue identified during the 2023 audit. The Company revised the balances of the assumed and ceded modco reserves as of December 31, 2022. The modco reserves assumed increased $589,703 and ceded increased $2,913,239. The revision did not change the Company's assets, liabilities, or capital and surplus in 2022.

Certain previously reported amounts have been reclassified to conform with the current year position.

Commonwealth Annuity and Life Insurance Company (A wholly-owned subsidiary of Global Atlantic Financial Group Limited) Notes to Financial Statements - Statutory Basis For the Years Ended December 31, 2024, 2023 and 2022 (Dollars in thousands)

3.

INVESTMENTS

Bonds

Book Adjusted/Carrying Values and Fair Values

The book adjusted/carrying value and fair value of investment in long term, short-term (excludes non-bond investments of $187,891 and $3,720) and cash equivalent bonds (excludes non-bond cash and cash equivalent investments of $2,493,046 and $4,684,459) are as follows:

		Book/ Adjusted Carrying Value				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
December 31, 2024
Long term, short-term and cash equivalent bonds
United States Government and agencies		$	2,367,791			$	1,183			$	(196,116	)		$	2,172,858
State and political subdivisions			2,131,553				11,633				(293,424	)			1,849,762
Foreign government			143,847				3,729				(37,702	)			109,874
Corporate securities			22,704,473				318,931				(2,765,991	)			20,257,413
Hybrid			165,151				385				(14,140	)			151,396
Parent, Subsidiaries and Affiliates			11,188,065				37,883				(567,232	)			10,658,716
Asset-backed securities			5,615,110				44,279				(103,303	)			5,556,086
Commercial mortgage-backed securities			4,752,186				22,725				(215,073	)			4,559,838
Residential mortgage-backed securities			6,398,641				90,630				(118,200	)			6,371,071
Total long term bonds			55,466,817				531,378				(4,311,181	)			51,687,014
Short-term bonds			46,978				53				(9	)			47,022
Total long term, short-term and cash equivalent bonds		$	55,513,795			$	531,431			$	(4,311,190	)		$	51,734,036

Commonwealth Annuity and Life Insurance Company (A wholly-owned subsidiary of Global Atlantic Financial Group Limited) Notes to Financial Statements - Statutory Basis For the Years Ended December 31, 2024, 2023 and 2022 (Dollars in thousands)

		Book/ Adjusted Carrying Value				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
December 31, 2023
Long term, short-term and cash equivalent bonds
United States Government and agencies		$	1,112,539			$	49,606			$	(31,435	)		$	1,130,710
State and political subdivisions			2,456,610				37,839				(272,757	)			2,221,692
Foreign government			128,185				3,258				(33,817	)			97,626
Corporate securities			18,006,859				380,164				(2,534,062	)			15,852,961
Hybrid			155,384				-				(15,666	)			139,718
Parent, Subsidiaries and Affiliates			9,713,967				6,046				(891,762	)			8,828,251
Asset-backed securities			4,717,146				16,946				(216,990	)			4,517,102
Commercial mortgage-backed securities			3,581,393				4,327				(376,447	)			3,209,273
Residential mortgage-backed securities			3,892,945				79,826				(113,021	)			3,859,750
Total long term bonds			43,765,028				578,012				(4,485,957	)			39,857,083
Short-term bonds			28,629				9				-				28,638
Cash equivalent bonds			6,924				1				-				6,925
Total long term, short-term and cash equivalent bonds		$	43,800,581			$	578,022			$	(4,485,957	)		$	39,892,646

At December 31, 2024 and 2023, respectively, 96.6% and 96.4% of debt securities were rated by the NAIC as investment grade (1 or 2).

The book adjusted/carrying value and fair value of bonds by contractual maturity at December 31, 2024 are shown below. Actual maturities may differ from contractual maturities since borrowers may have the right to call or prepay obligations with or without call or prepayment penalties or the Company may have the right to put or sell the obligations back to the issuers. Mortgage-backed securities are included in their own distinct category.

		Book/ Adjusted Carrying Value				Fair Value
Due in one year or less		$	482,505			$	481,971
Due after one year through five years			4,153,096				4,128,466
Due after five years through ten years			5,064,613				4,888,999
Due after ten years			18,544,006				15,777,434
Mortgage-backed and asset-backed securities			27,269,575				26,457,166
Total		$	55,513,795			$	51,734,036

Continuous Losses

The following tables provide information about the Company's bonds that have been continuously in an unrealized loss position.

Commonwealth Annuity and Life Insurance Company (A wholly-owned subsidiary of Global Atlantic Financial Group Limited) Notes to Financial Statements - Statutory Basis For the Years Ended December 31, 2024, 2023 and 2022 (Dollars in thousands)

		Less than or Equal to Twelve Months								Greater than Twelve Months								Total
		Fair Value				Gross Unrealized Losses				Fair Value				Gross Unrealized Losses				Fair Value				Gross Unrealized Losses
December 31, 2024
Long term, short-term and cash equivalent bonds:
United States Government and agencies		$	1,955,406			$	(150,112	)		$	81,458			$	(46,004	)		$	2,036,864			$	(196,116	)
State and political subdivisions			209,579				(4,652	)			1,324,117				(288,772	)			1,533,696				(293,424	)
Foreign government			15,583				(199	)			102,742				(37,504	)			118,325				(37,702	)
Corporate securities			8,400,472				(266,225	)			8,633,859				(2,499,766	)			17,034,331				(2,765,991	)
Hybrid			26,999				(936	)			99,672				(13,204	)			126,671				(14,140	)
Parent, Subsidiaries and Affiliates			5,801,226				(426,473	)			1,651,055				(140,759	)			7,452,281				(567,231	)
Asset-backed securities			673,825				(6,055	)			1,945,439				(97,248	)			2,619,264				(103,303	)
Commercial mortgage-backed securities			682,913				(3,004	)			1,597,477				(212,069	)			2,280,390				(215,073	)
Residential mortgage-backed securities			1,769,060				(29,926	)			846,751				(88,275	)			2,615,810				(118,201	)
Total long term bonds			19,535,063				(887,582	)			16,282,570				(3,423,601	)			35,817,632				(4,311,181	)
Short-term bonds			8,156				(9	)			-				-				8,156				(9	)
Cash equivalent bonds			-				-				-				-				-				-
Total long term, short-term and cash equivalent bonds		$	19,543,219			$	(887,591	)		$	16,282,570			$	(3,423,601	)		$	35,825,788			$	(4,311,190	)

		Less than or Equal to Twelve Months								Greater than Twelve Months								Total
		Fair Value				Gross Unrealized Losses				Fair Value				Gross Unrealized Losses				Fair Value				Gross Unrealized Losses
December 31, 2023
Long term, short-term and cash equivalent bonds:
United States Government and agencies		$	83,840			$	(1,485	)		$	95,644			$	(29,950	)		$	179,484			$	(31,435	)
State and political subdivisions			50,445				(281	)			1,504,648				(272,476	)			1,555,093				(272,757	)
Foreign government			-				-				114,546				(33,817	)			114,546				(33,817	)
Corporate securities			1,658,279				(90,359	)			11,777,139				(2,443,703	)			13,435,418				(2,534,062	)
Hybrid			45,745				(563	)			93,973				(15,103	)			139,718				(15,666	)
Parent, Subsidiaries and Affiliates			4,428,848				(432,182	)			3,826,797				(459,579	)			8,255,645				(891,761	)
Asset-backed securities			522,666				(10,152	)			2,873,809				(206,838	)			3,396,475				(216,990	)
Commercial mortgage-backed securities			265,494				(8,924	)			2,544,970				(367,524	)			2,810,464				(376,448	)
Residential mortgage-backed securities			402,727				(17,825	)			864,848				(95,196	)			1,267,575				(113,021	)
Total long term bonds			7,458,044				(561,771	)			23,696,374				(3,924,186	)			31,154,418				(4,485,957	)
Short-term bonds			11				-				-				-				11				-
Cash equivalent bonds			-				-				-				-				-				-
Total long term, short-term and cash equivalent bonds		$	7,458,055			$	(561,771	)		$	23,696,374			$	(3,924,186	)		$	31,154,429			$	(4,485,957	)

The Company has the intent and ability to hold all bonds in an unrealized loss position until amortized costs basis is recovered.

As of December 31, 2024 and 2023, the number of securities in an unrealized loss position for over 12 months consisted of 2,531 and 3,221, respectively.

In the course of the Company's asset management, no securities have been sold and reacquired within 30 days of the sale date to enhance the Company's yield on its investment portfolio.

Commonwealth Annuity and Life Insurance Company (A wholly-owned subsidiary of Global Atlantic Financial Group Limited) Notes to Financial Statements - Statutory Basis For the Years Ended December 31, 2024, 2023 and 2022 (Dollars in thousands)

Insurer Self-Certified Securities

The following represents securities for which the Company does not have all information required for the NAIC to provide a NAIC designation, but for which the Company is receiving timely payments of principal and interest. These securities are referred to as "5GI Securities".

The Company's 5GI securities as of December 31, 2024 and 2023, respectively, were as follows:

		Number of 5GI Securities								Aggregate BACV								Aggregate Fair Value
Investment		Current Year				Prior Year				Current Year				Prior Year				Current Year				Prior Year
Bonds - AC			-				-			$	-			$	-			$	-			$	-
LBASS - AC			24				7				171,548				80,183				137,414				52,797
Total			24				7			$	171,548			$	80,183			$	137,414			$	52,797

AC - Amortized cost

BACV - Book adjusted carrying value

Subprime Mortgage Related Risk Exposure

While the Company holds no direct investments in subprime mortgage loans, the Company has limited exposure to subprime borrowers, through direct investments in primarily investment grade securities with underlying subprime exposure. The Company's definition of subprime is predominantly based on borrower statistics from a residential pool of mortgages. Included in the statistics evaluated is the average credit score of the borrower, the loan-to-value ratio, the debt-to-income statistics, and the diversity of all these statistics across the borrower profile. As is true for all securities in the Company's portfolio, the Company reviews the entire portfolio for impairments at least quarterly. Included in that analysis are current delinquency and default statistics, as well as the current and original levels of subordination on the security.

The Company has indirect subprime exposure through the following investments:

		Actual Cost				Book / Adjusted Carrying Value (excluding interest)				Fair Value				Other Than Temporary Impairment Losses Recognized
December 31, 2024
Residential mortgage-backed securities		$	204,805			$	196,215			$	189,668			$	-
Total		$	204,805			$	196,215			$	189,668			$	-

		Actual Cost				Book / Adjusted Carrying Value (excluding interest)				Fair Value				Other Than Temporary Impairment Losses Recognized
December 31, 2023
Residential mortgage-backed securities		$	188,705			$	182,377			$	176,398			$	-
Total		$	188,705			$	182,377			$	176,398			$	-

Commonwealth Annuity and Life Insurance Company (A wholly-owned subsidiary of Global Atlantic Financial Group Limited) Notes to Financial Statements - Statutory Basis For the Years Ended December 31, 2024, 2023 and 2022 (Dollars in thousands)

Mortgage Loans

Maturities

The maturity distribution for mortgages is as follows:

		Year Ended December 31,
		2024				Percentage
2025		$	1,578,698				7.26	%
2026			3,437,282				15.81	%
2027			2,818,074				12.96	%
2028			527,121				2.42	%
2029 and thereafter			13,383,009				61.55	%
Total		$	21,744,184				100.00	%

Impairments

The Company evaluates all of its mortgage loans for impairment. This evaluation considers the borrower's ability to pay and the value of the underlying collateral. When a loan is impaired, its impaired value is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate, except that as a practical expedient, the impaired value may be based on a loan's observable market price (where available), or the fair value of the collateral if the loan is a collateral-dependent loan. An allowance is established for the difference between the loan's impaired value and its current carrying value. Additional allowance amounts established for incurred but not specifically identified impairments in the mortgage portfolio, based on analysis of market loss rate data, adjusted for specific characteristics of the Company's portfolio and changes in economic conditions. When all or a portion of a loan is deemed uncollectible, the uncollectible portion of the carrying amount of the loan is charged off against the allowance.

The Company established specific allowances of $3,880 on 1 high-risk commercial mortgage loan, $34,942 on 4 high risk commercial mortgage loans, and $9,737 on 2 high-risk commercial mortgage loans, during 2024, 2023, and 2022, respectively.

The Company did not recognize impairments on mortgage loans as of December 31, 2024, 2023 or 2022.

Regions and Type

The Company diversifies its mortgage loan portfolio by both geographic region and property type to reduce the risk of concentration.

The following tables present the Company's mortgage loans by geographic region and property type.

Commonwealth Annuity and Life Insurance Company (A wholly-owned subsidiary of Global Atlantic Financial Group Limited) Notes to Financial Statements - Statutory Basis For the Years Ended December 31, 2024, 2023 and 2022 (Dollars in thousands)

The mortgage loans were concentrated in the following regions:

		Year Ended December 31,
		2024				Percentage				2023				Percentage
East North Central		$	563,809				2.59	%		$	418,457				2.83	%
East South Central			424,534				1.95	%			268,552				1.82	%
Mid Atlantic			2,475,687				11.39	%			1,879,071				12.72	%
Mountain			1,740,939				8.01	%			1,376,043				9.31	%
New England			479,415				2.20	%			385,808				2.61	%
Pacific			5,247,468				24.13	%			3,660,246				24.77	%
South Atlantic			5,507,608				25.34	%			3,907,260				26.45	%
West North Central			170,437				0.78	%			134,885				0.91	%
West South Central			2,484,799				11.43	%			1,737,860				11.76	%
Various			2,649,491				12.18	%			1,005,790				6.81	%
Total		$	21,744,184				100.00	%		$	14,773,971				100.00	%

The mortgage loans by type are as follows:

		Year Ended December 31,
		2024				Percentage				2023				Percentage
Apartment/multifamily		$	6,859,210				31.55	%		$	4,738,802				32.08	%
Industrial			2,424,806				11.15	%			1,769,402				11.98	%
Office			2,610,281				12.00	%			1,871,337				12.67	%
Retail			223,852				1.03	%			438,864				2.97	%
Residential			9,061,095				41.66	%			5,396,184				36.52	%
Mixed use			227,478				1.05	%			197,963				1.34	%
Self storage			144,615				0.67	%			107,695				0.73	%
Other			192,847				0.89	%			253,723				1.72	%
Total		$	21,744,184				100.00	%		$	14,773,971				100.00	%

The maximum and minimum lending rates for new mortgage loans made during 2024 were 13.50% and 1.50%, respectively. The maximum percentage of any one loan to the value of the security at the time of the loan was 100.68%. There were no taxes, assessments or other amounts advances that were no included in the mortgage total.

Commonwealth Annuity and Life Insurance Company (A wholly-owned subsidiary of Global Atlantic Financial Group Limited) Notes to Financial Statements - Statutory Basis For the Years Ended December 31, 2024, 2023 and 2022 (Dollars in thousands)

Real Estate

The company owned real estate investments as follows:

		Year ended December 31,
		2024				2023
Held for the production of income			34,650				-
Total			34,650				-

Derivatives and Hedging Activities

The Company utilizes various derivative instruments to hedge risk identified in the normal course of its insurance business. The Company's derivative instruments are primarily used to hedge a wide range of risks including interest rate risk, equity market risk and foreign currency exchange rate risk. The Company receives collateral from its derivative counterparties to limit the risk of nonperformance by the counterparties.

The Company manages its equity market risk by entering certain OTC derivatives, primarily equity options and swaps, as well as exchange traded equity options and futures. The Company trades exchange-traded fixed income future contracts, OTC swaps, forwards and swaptions to protect against interest rate risk. The Company entered currency forwards and cross currency swaps to limit its currency exposure from foreign currency denominated assets. The total net carrying value of derivative assets, net of derivative liabilities, was $447,014 and $205,199 as of December 31, 2024 and 2023, respectively.

Under SSAP No. 86, Derivatives, the Company has elected to account for its derivatives using the fair value method of accounting, with changes in fair value recorded as unrealized investment gains or losses. The realized gains or losses are recorded upon the derivative contract expiry. The Company entered interest rate swaps hedging Federal Home Loan Bank liabilities which employs hedge accounting. In addition, the Company has designated cash flow hedge interest rate swaps to hedge the interest rate risk associated with floating rate investments and fair value hedge cross currency swaps to hedge the foreign currency risk associated with foreign currency-denominated bonds. The derivatives that hedge those assets and liabilities are valued in a manner consistent with the underlying hedged item, which are carried at amortized cost. The Company has designated bond forwards to hedge the interest rate risk associated with the planned purchase of debt securities in a cash flow hedge. The bond forwards were recorded at cost.

The current credit exposure of the Company's OTC derivative contracts is limited to the fair value of $107,638 as of December 31, 2024. Credit risk is managed by entering into transactions with creditworthy counterparties and obtaining net collateral of $398,142 from counterparties as of December 31, 2024. In the event of the nonperformance by the counterparties, the Company has the right to the collateral pledged by counterparties. The exchange-traded derivatives are affected through a regulated exchange and positions are marked to market on a daily basis, the Company has little exposure to credit-related losses in the event of nonperformance by counterparties to such financial instruments.

The fair value of the derivative assets and liabilities by risk hedged, prior to derivative netting through same counterparties, were as follows:

Commonwealth Annuity and Life Insurance Company (A wholly-owned subsidiary of Global Atlantic Financial Group Limited) Notes to Financial Statements - Statutory Basis For the Years Ended December 31, 2024, 2023 and 2022 (Dollars in thousands)

December 31, 2024
Risk Hedged		Derivative Assets				Derivative Liabilities				Notional Amounts
Equity/index		$	422,214			$	115,243			$	9,798,232
Currency			38,627				6,700				835,757
Interest rates			236,049				127,933				12,840,481
Gross fair value of derivative instruments		$	696,890			$	249,876			$	23,474,470
Derivative collateral			-				-
Offset per SSAP No. 64			(208,799	)			(208,799	)
Net fair value of derivative instruments		$	488,091			$	41,077

December 31, 2023
Risk Hedged		Derivative Assets				Derivative Liabilities				Notional Amounts
Equity/index		$	392,089			$	220,261			$	11,324,964
Currency			13,186				16,031				393,565
Interest rates			177,335				141,120				9,782,488
Gross fair value of derivative instruments		$	582,610			$	377,412			$	21,501,017
Derivative collateral			-				-
Offset per SSAP No. 64			(248,035	)			(248,035	)
Net fair value of derivative instruments		$	334,575			$	129,377