Separate Account Imo of First Allmerica Financial Life Insurance Co.

04/15/2025 | Press release | Distributed by Public on 04/15/2025 06:27

Financial Statements by Insurance Company (Form N-VPFS)

First Allmerica Financial Life Insurance Company

Separate Account IMO

Financial Statements

December 31, 2024

First Allmerica Financial Life Insurance Company

Separate Account IMO

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-5
Statements of Changes in Net Assets SA-7
Notes To Financial Statements SA-9
Note 1 - Organization SA-9
Note 2 - Summary of Significant Accounting Policies SA-11
Note 3 - Expenses and Related Party Transactions SA-13
Note 4 - Changes In Units Outstanding SA-16
Note 5 - Purchases and Sales of Investments SA-17
Note 6 - Financial Highlights SA-18

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of

First Allmerica Financial Life Insurance Company and

Policy Owners of Separate Account IMO

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statements of net assets for each of the underlying funds, which had net assets as of or during the year ended December 31, 2024, listed in Note 1 to the financial statements (the "Sub-Accounts") of Separate Account IMO (the "Separate Account") of First Allmerica Financial Life Insurance Company as of December 31, 2024, the related statements of operations for the year then ended, the statements 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

SA-1

We have served as the auditor of one or more separate accounts of First Allmerica Financial Life Insurance Company since 2021.

SA-2

Separate Account IMO

Statements of Net Assets

December 31, 2024

AB VPS Large
Cap Growth
Portfolio 		Fidelity VIP
Equity-Income
Portfolio 		Goldman Sachs
VIT Core Fixed
Income Fund 		Goldman Sachs
VIT International
Equity Insights
Fund 		Goldman Sachs
VIT Mid Cap
Growth Fund
ASSETS:
Investments in shares of the Underlying Funds, at fair value $ 12,472 $ 2,184 $ 1,283 $ 776 $ 9,712
Net assets $ 12,472 $ 2,184 $ 1,283 $ 776 $ 9,712
Net assets by category:
Accumulation reserves $ 12,472 $ 2,184 $ 1,283 $ 776 $ 9,712
Net assets $ 12,472 $ 2,184 $ 1,283 $ 776 $ 9,712
Units outstanding, December 31, 2024 1,196 405 667 293 923
Investments in shares of the Underlying Funds, at cost $ 9,707 $ 2,026 $ 1,402 $ 742 $ 10,988
Underlying Fund shares held 156 86 136 88 882

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

SA-3

Separate Account IMO

Statements of Net Assets

December 31, 2024

Goldman Sachs
VIT Mid Cap
Value Fund
ASSETS:
Investments in shares of the Underlying Funds, at fair value $ 3,895
Net assets $ 3,895
Net assets by category:
Accumulation reserves $ 3,895
Net assets $ 3,895
Units outstanding, December 31, 2024 576
Investments in shares of the Underlying Funds, at cost $ 3,819
Underlying Fund shares held 228

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

SA-4

Separate Account IMO

Statements of Operations

For the Year Ended December 31, 2024

AB VPS Large
Cap Growth
Portfolio 		Fidelity VIP
Equity-Income
Portfolio 		Goldman Sachs
VIT Core Fixed
Income Fund 		Goldman Sachs
VIT International
Equity Insights
Fund 		Goldman Sachs
VIT Mid Cap
Growth Fund
INVESTMENT INCOME:
Dividends $ - $ 34 $ 44 $ 22 $ -
Net investment income (loss) - 34 44 22 -
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Capital gain distributions 529 127 - 28 1,088
Net realized gain (loss) from sales of investments 56 - - - (33 )
Net realized gain (loss) 585 127 - 28 1,055
Change in unrealized gain (loss) 1,947 99 (33 ) (14 ) 599
Net realized and unrealized gain (loss) 2,532 226 (33 ) 14 1,654
Net increase (decrease) in net assets from operations $ 2,532 $ 260 $ 11 $ 36 $ 1,654

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

SA-5

Separate Account IMO

Statements of Operations

For the Year Ended December 31, 2024

Goldman Sachs
VIT Mid Cap
Value Fund
INVESTMENT INCOME:
Dividends $ 28
Net investment income (loss) 28
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Capital gain distributions 217
Net realized gain (loss) from sales of investments -
Net realized gain (loss) 217
Change in unrealized gain (loss) 145
Net realized and unrealized gain (loss) 362
Net increase (decrease) in net assets from operations $ 390

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

SA-6

Separate Account IMO

Statements of Changes in Net Assets

For the Years Ended December 31, 2024 and 2023

AB VPS Large Cap Growth Portfolio Fidelity VIP Equity-Income Portfolio Goldman Sachs VIT Core Fixed
Income Fund
2024 2023 2024 2023 2024 2023
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ - $ - $ 34 $ 27 $ 44 $ 25
Net realized gain (loss) 585 664 127 47 - -
Change in unrealized gain (loss) 1,947 2,019 99 73 (33 ) 28
Net increase (decrease) in net assets from operations 2,532 2,683 260 147 11 53
FROM Policy TRANSACTIONS:
Net purchase payments - - 324 324 259 259
Terminations and withdrawals - - - - - -
Mortality and expense risk fees (6 ) (5 ) (1 ) (1 ) (1 ) -
Insurance and other charges (287 ) (268 ) (47 ) (41 ) (28 ) (26 )
Transfers - - - - - -
Net increase (decrease) in net assets from Policy transactions (293 ) (273 ) 276 282 230 233
Net increase (decrease) in net assets 2,239 2,410 536 429 241 286
NET ASSETS:
Beginning of year 10,233 7,823 1,648 1,219 1,042 756
End of year $ 12,472 $ 10,233 $ 2,184 $ 1,648 $ 1,283 $ 1,042

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

SA-7

Separate Account IMO

Statements of Changes in Net Assets

For the Years Ended December 31, 2024 and 2023

Goldman Sachs VIT International
Equity Insights Fund 		Goldman Sachs VIT Mid Cap Growth
Fund 		Goldman Sachs VIT Mid Cap Value
Fund
2024 2023 2024 2023 2024 2023
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 22 $ 14 $ - $ - $ 28 $ 21
Net realized gain (loss) 28 - 1,055 (24 ) 217 70
Change in unrealized gain (loss) (14 ) 74 599 1,330 145 198
Net increase (decrease) in net assets from operations 36 88 1,654 1,306 390 289
FROM Policy TRANSACTIONS:
Net purchase payments 130 130 - - 584 584
Terminations and withdrawals - - - - - -
Mortality and expense risk fees - - (4 ) (4 ) (2 ) (1 )
Insurance and other charges (20 ) (16 ) (216 ) (225 ) (85 ) (77 )
Transfers - - - - - -
Net increase (decrease) in net assets from Policy transactions 110 114 (220 ) (229 ) 497 506
Net increase (decrease) in net assets 146 202 1,434 1,077 887 795
NET ASSETS:
Beginning of year 630 428 8,278 7,201 3,008 2,213
End of year $ 776 $ 630 $ 9,712 $ 8,278 $ 3,895 $ 3,008

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

SA-8

Separate Account IMO

Notes To Financial Statements

December 31, 2024

Note 1 - Organization

Separate Account IMO of First Allmerica Financial Life Insurance Company ("Separate Account IMO" or the "Separate Account"), which is a funding vehicle for the Allmerica Select Life Plus variable life insurance policies, is a separate investment account of First Allmerica Financial Life Insurance Company ("FAFLIC"), established on May 1, 2002, for the purpose of separating from the general assets of FAFLIC (the "General Account") those assets used to fund the variable portion of certain flexible premium variable life insurance policies (the "Policies") issued by FAFLIC. FAFLIC is the Sponsor of the Separate Account. FAFLIC is a wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company ("Commonwealth Annuity"). 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.

FAFLIC 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, FAFLIC 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 FAFLIC. The Separate Account cannot be charged with liabilities arising out of any other business of FAFLIC. 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 FAFLIC, 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. Twenty-seven Sub-Accounts were offered by the Separate Account during 2024, of which six had activity. Twenty-one Sub-Accounts had no Policy owner activity during the year and a zero balance at December 31, 2024.

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

Underlying Fund Class
AB VPS Large Cap Growth Portfolio Class B
Fidelity VIP Equity-Income Portfolio Service Class 2
Goldman Sachs VIT Core Fixed Income Fund Service Shares
Goldman Sachs VIT International Equity Insights Fund Service Shares
Goldman Sachs VIT Mid Cap Growth Fund Service Shares
Goldman Sachs VIT Mid Cap Value Fund Service Shares

The following underlying funds had no assets as of or during the year ended December 31,2024:

Underlying Fund Class
AB VPS Discovery Value Portfolio Class B
AB VPS Relative Value Portfolio Class B
FT VIP Franklin Mutual Shares VIP Fund Class 2
FT VIP Franklin Small Cap Value VIP Fund Class 2
FT VIP Franklin Small-Mid Cap Growth VIP Fund Class 2
FT VIP Templeton Foreign VIP Fund Class 2
Goldman Sachs VIT Government Money Market Fund Service Shares
Goldman Sachs VIT Strategic Growth Fund Service Shares
Goldman Sachs VIT U.S. Equity Insights Fund Service Shares

SA-9

Separate Account IMO

Notes To Financial Statements

December 31, 2024

Note 1 - Organization (Continued)

Underlying Fund (continued) Class
Invesco V.I. American Franchise Fund Series II Shares
Invesco V.I. American Value Fund Series II Shares
Invesco V.I. Capital Appreciation Fund Series II
Invesco V.I. Conservative Balanced Fund Series II
Invesco V.I. Core Equity Fund Series II Shares
Invesco V.I. Equity and Income Fund Series II Shares
Invesco V.I. Global Fund Series II
Invesco V.I. Global Strategic Income Fund Series II
Invesco V.I. Main Street Fund® Series II
MFS® Mid Cap Growth Series Service Class
MFS® New Discovery Series Service Class
MFS® Total Return Series Service Class

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

Fund Group

AB Variable Products Series Fund, Inc.

Aim Variable Insurance Funds (Invesco Variable Insurance Funds)

Fidelity Variable Insurance Products Funds

Franklin Templeton Variable Insurance Products Trust

Goldman Sachs Variable Insurance Trust

MFS® Variable Insurance Trust

In 2024 the following Underlying Fund of a Sub-Account was merged:

Date Surviving Fund Closed Fund
April 26, 2024 Invesco V.I. Equity and Income Fund Invesco V.I. Conservative Balanced Fund

Underlying Fund mergers are effectively corporate actions of the related Sub-Account investments. Upon the date of the Underlying Fund merger the net assets of the Sub-Account investing in the closed fund are transferred to the Sub-Account investing in the surviving fund. These transfers are reflected in the Transfers line of the Statements of Changes in Net Assets. Note that for periods presented throughout the financial statements and financial highlights, Sub-Accounts investing in closed funds are presented from January 1, 2024 through the merger date referenced above and Sub-Accounts investing in the surviving fund are presented from the merger date through December 31, 2024.

In 2024 an additional investment option was made available under the Separate Account. The Sub-Account will invest exclusively in shares of the following Underlying Fund:

Date New Investment
April 26, 2024 Invesco V.I. Equity and Income Fund

SA-10

Separate Account IMO

Notes To Financial Statements

December 31, 2024

Note 1 - Organization (Continued)

From time to time FAFLIC reviews its product offerings, particularly with regard to the utilization of its Sub-Account offerings, and determines if it is necessary to discontinue certain Sub-Accounts. The following Sub-Account is closed to new payment allocations and transfers:

Closed Sub-Account
AB VPS Discovery Value Portfolio

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

For the year ended December 31, 2024, FAFLIC 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:

SA-11

Separate Account IMO

Notes To Financial Statements

December 31, 2024

Note 2 - Summary of Significant Accounting Policies (Continued)

Basis of Fair Value Measurement
Level 1

Inputs are unadjusted quoted prices in active markets to which FAFLIC 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.

Statements of Changes in Net Assets

Policy owners may allocate their Policy values to variable investment options in the Separate Account and to the Fixed Account, which is a part of the General Account that guarantees principal and a fixed minimum interest rate.

Net purchase payments represent payments by Policy owners under the Policies (excluding amounts allocated to the Fixed Account) reduced by refunds made during the initial free-look period, and by applicable deductions, charges, and state premium taxes. Terminations and withdrawals are payments to Policy owners and beneficiaries made under the terms of the Policies and amounts that Policy owners have requested to be withdrawn and paid to them. Mortality and expense risk fees are deductions from Policy values for FAFLIC's assumption of risks associated with adverse mortality experience. The expense risk assumed is that expenses incurred in issuing and administering the Policies exceed the amounts realized from administration charges. Insurance and other charges are deductions from Policy values for Policy fees such as Cost of Insurance. Cost of Insurance are charges based on individual characteristics such as the age, Policy year, underwriting class, face amount and sex of the insured. Transfers include amounts that Policy owners have directed to be moved among funds, including permitted transfers from and to the Fixed Account, along with Policy loan activity and death claims.

Federal Income Taxes

The operations of the Separate Account are included in the federal income tax return of FAFLIC, which is taxed as a life insurance company under Subchapter L of the Internal Revenue Code ("IRC"). Under the current provisions of the IRC, FAFLIC 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. FAFLIC 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 Policies. 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 life insurance policy, other than a policy issued in connection with certain types of employee benefit plans, will not be treated as a variable life insurance policy for federal income tax purposes for any period for which the investments of the segregated asset account on which the policy is based are not adequately diversified. The IRC provides that the "adequately diversified" requirement may

SA-12

Separate Account IMO

Notes To Financial Statements

December 31, 2024

Note 2 - Summary of Significant Accounting Policies (Continued)

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. FAFLIC 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 Allmerica Select Life Plus variable life insurance policies, established for the purpose of separating from the General Account those assets used to fund the variable portion of the Policies issued by FAFLIC. The President of FAFLIC acts as the chief operating decision maker ("CODM"), who is responsible for ensuring the Separate Account maintains compliance with its Policy 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

FAFLIC deducts a Cost of Insurance Charge for the cost of insurance protection under the Policies; an Expense Charge as reimbursement for underwriting and acquisition costs; an Administrative Charge as reimbursement for expenses related to issuance and maintenance of the Policies; a Mortality and Expense Risk Fee as compensation for assuming mortality and expense risks for variable interests in the Policies; and Charges for Optional Benefits added by riders. FAFLIC may also charge other one-time fees for certain Policy transactions, which are not listed in the following table.

The Mortality and Expense Risk Fee compensates FAFLIC for assuming mortality and expense risks for variable interests in the Policy. The mortality risk assumed by FAFLIC is that insureds may live for a shorter time than anticipated, and that FAFLIC therefore will pay an aggregate amount of death proceeds greater than anticipated. The expense risk assumed is that the expenses incurred in issuing and administering the Policies will exceed the amounts realized from the administrative charges provided in the Policies. If the fee for mortality and expense risks is not sufficient to cover mortality experience and expenses, FAFLIC absorbs the losses. If the charge is higher than mortality and expense risk expenses, the difference is a profit to FAFLIC. The Charges for Optional Benefits vary depending upon the optional benefits selected and by the underwriting classification of the insured.

The Policy owner may allocate the Policy deductions to any number of Sub-Accounts and to the Fixed Account. In the absence of allocation instructions, or if the Sub-Accounts chosen do not have sufficient funds to cover the Policy deductions, FAFLIC makes a pro-rata allocation among the Sub-Accounts in the Policy. Policy fees may be waived by FAFLIC in certain cases at its discretion, and where permitted by law.

Fees and charges may be deducted daily, monthly, or annually. They are deducted from individual Policies ("Individual Policy"). Current fees and charges are summarized in the following table.

SA-13

Separate Account IMO

Notes To Financial Statements

December 31, 2024

Note 3 - Expenses and Related Party Transactions (Continued)

Allmerica Select Life Plus
Mortality and Expense Risk Fee
Frequency Monthly
Deduction Method Individual Policy
Financial Statement Line Statements of Changes in Net Assets, Mortality and expense risk fees
Rate (Annual) 0.35% for years 1-10; 0.05% thereafter
Cost of Insurance Charge
Frequency Monthly
Deduction Method Individual Policy
Financial Statement Line Statements of Changes in Net Assets, Insurance and other charges
Rate (Annual) Varies by Policy
Expense Charge
Frequency Monthly
Deduction Method Individual Policy
Financial Statement Line Statements of Changes in Net Assets, Insurance and other charges
Rate (Annual) Varies by Policy
Charges for Optional Benefits
Frequency Monthly
Deduction Method Individual Policy
Financial Statement Line Statements of Changes in Net Assets, Insurance and other charges
Rate (Annual) Varies by Policy
Administrative Charge
Frequency Monthly
Deduction Method Policy
Financial Statement Line Statements of Changes in Net Assets, Insurance and other charges
Maximum Annual Fee $7.50

SA-14

Separate Account IMO

Notes To Financial Statements

December 31, 2024

Note 3 - Expenses and Related Party Transactions (Continued)

A surrender charge may be deducted upon request of a full surrender of the Policy or a decrease in the face amount if less than a certain number of years have lapsed from the date of issue or from the effective date of any increase in the face amount.

Some states and municipalities impose premium taxes, which currently range up to 5%, on variable life policies.

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

SA-15

Separate Account IMO

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)
AB VPS Large Cap Growth Portfolio - (30 ) (30 ) - (37 ) (37 )
Fidelity VIP Equity-Income Portfolio 53 - 53 65 - 65
Goldman Sachs VIT Core Fixed Income Fund 121 - 121 126 - 126
Goldman Sachs VIT International Equity Insights Fund 41 - 41 49 - 49
Goldman Sachs VIT Mid Cap Growth Fund - (23 ) (23 ) - (29 ) (29 )
Goldman Sachs VIT Mid Cap Value Fund 77 - 77 91 - 91

SA-16

Separate Account IMO

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
AB VPS Large Cap Growth Portfolio $ 529 $ 294
Fidelity VIP Equity-Income Portfolio 436 -
Goldman Sachs VIT Core Fixed Income Fund 275 -
Goldman Sachs VIT International Equity Insights Fund 160 -
Goldman Sachs VIT Mid Cap Growth Fund 1,088 220
Goldman Sachs VIT Mid Cap Value Fund 741 -

SA-17

Separate Account IMO

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)
AB VPS Large Cap Growth Portfolio
2024 1,196 10.43 12,472 N/A N/A 24.91
2023 1,226 8.35 10,233 N/A N/A 34.89
2022 1,263 6.19 7,823 N/A N/A (28.69 )
2021 1,302 8.68 11,308 N/A N/A 28.59
2020 1,335 6.75 9,014 N/A N/A 35.27
Fidelity VIP Equity-Income Portfolio
2024 405 5.39 2,184 1.73 N/A 15.17
2023 352 4.68 1,648 1.95 N/A 10.38
2022 287 4.24 1,219 1.96 N/A (5.36 )
2021 218 4.48 976 1.88 N/A 24.79
2020 144 3.59 518 2.12 N/A 6.21
Goldman Sachs VIT Core Fixed Income Fund
2024 667 1.92 1,283 3.76 N/A 0.52
2023 546 1.91 1,042 2.87 N/A 6.11
2022 420 1.80 756 1.47 N/A (14.29 )
2021 293 2.10 615 1.10 N/A (2.33 )
2020 175 2.15 377 2.04 N/A 9.69
Goldman Sachs VIT International Equity Insights Fund
2024 293 2.65 776 2.91 N/A 6.00
2023 252 2.50 630 2.71 N/A 18.48
2022 203 2.11 428 3.46 N/A (13.88 )
2021 147 2.45 359 3.04 N/A 11.87
2020 96 2.19 209 2.00 N/A 6.31
Goldman Sachs VIT Mid Cap Growth Fund
2024 923 10.52 9,712 N/A N/A 20.23
2023 946 8.75 8,278 N/A N/A 18.56
2022 975 7.38 7,201 N/A N/A (26.35 )
2021 1,005 10.02 10,073 N/A N/A 11.46
2020 1,031 8.99 9,266 N/A N/A 44.30

SA-18

Separate Account IMO

Notes To Financial Statements

December 31, 2024

Note 6 - Financial Highlights (Continued)

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)
Goldman Sachs VIT Mid Cap Value Fund
2024 576 6.76 3,895 0.80 N/A 12.29
2023 499 6.02 3,008 0.81 N/A 11.07
2022 408 5.42 2,213 0.48 N/A (10.26 )
2021 312 6.04 1,885 0.24 N/A 30.45
2020 211 4.63 976 0.65 N/A 8.18
(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 Policy 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 Policy owner accounts through the redemption of units and expenses of the Underlying Fund are excluded. This separate account assesses all fees at the Policy level.
(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.

SA-19

FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(a wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

STATUTORY FINANCIAL STATEMENTS as of December 31, 2024 and 2023 and for the years ended December 31, 2024 and 2023 and Supplemental Information as of and for the Year Ended December 31, 2024

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

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 Statutory Financial Statements - Statutory Basis 11
Supplemental Information 67
Supplemental Schedule of Selected Statutory Financial Data 68
Supplemental Schedule of Investment Risks Interrogatories 71
Summary Investment Schedule 76
Supplemental Schedule of Reinsurance Disclosures 78
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 Global Atlantic Financial Group LLC

Opinions

We have audited the statutory financial statements of First Allmerica Financial Life Insurance Company (the "Company"), which comprise the statutory statements of admitted assets, liabilities, capital and surplus as of December 31, 2024 and 2023, and the related statutory statements of operations, changes in capital and surplus, and cash flows for the years then ended, 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 2023, and the results of its operations and its cash flows for the years then ended, 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 Basis for 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 2023, or the results of its operations or its cash flows for the years then ended.

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 Account 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 accounting described in Note 2 and accounting principles generally accepted in the United States of America, although not readily determinable, are presumed to be material and pervasive.

Emphasis of Matter

As discussed in Note 1 to the statutory financial statements, since the Company is a member of a controlled group of affiliated companies, its results may not be indicative of those of a stand-alone entity. Our opinion is not modified with respect to this matter.

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 9, 2025

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

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 $ 9,029,595 $ 10,843,454
Common stock 5,000 3,091
Mortgage loans 3,4 3,698,031 1,281,913
Other invested assets including receivables for securities 3,4 253,491 122,331
Cash and short-term investments 3,4 519,468 1,841,280
Policy loans 3,4 551,782 536,813
Derivatives 3,4 21,106 -
Subtotal, cash and invested assets 14,078,473 14,628,882
Investment income due and accrued 128,996 139,131
Deferred and uncollected premiums 8 1,616 1,819
Reinsurance receivable and funds withheld receivable 742,676 796,888
Net deferred tax asset 6 17,856 17,657
Current federal and foreign income tax recoverable 55,007 30,885
Other assets 15 15,665 15,699
Separate account assets 16 121,401 113,751
Total admitted assets $ 15,161,690 $ 15,744,712
LIABILITIES
Aggregate reserve for life policies and contracts $ 1,922,049 $ 1,875,646
Deposit funds and other contract liabilities 266,842 286,323
Policy and contract claims 16,239 17,836
Dividends payable to policyholders 358 365
Reinsurance payable 12,608,332 13,241,875
General expenses and commissions payable 3,454 12,303
Transfers to separate accounts due or accrued (1,251 ) (1,644 )
Payable to parent, subsidiaries, and affiliate 1,035 6,054
Asset valuation reserve 63,652 39,087
Derivative collateral 3,4 3,340 -
Other liabilities 15 19,344 17,744
Separate account liabilities 16 121,401 113,751
Total liabilities $ 15,024,795 $ 15,609,340
CAPITAL AND SURPLUS
Common stock, $10 par value, 1,000,000 shares authorized, 500,001 shares issued and outstanding 5,000 5,000
Paid in surplus 349,062 349,062
Unassigned surplus ( deficit) (228,931 ) (230,727 )
Special contingency reserves 2,250 2,250
Admitted disallowed IMR 9,514 9,787
Total capital and surplus $ 136,895 $ 135,372
Total liabilities, capital, and surplus $ 15,161,690 $ 15,744,712

The accompanying notes are an integral part of these financial statements

Page 6

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

STATUTORY STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands) Notes 2024 2023
REVENUE
Premiums and annuity considerations $ 126,030 $ 1,017,330
Considerations for supplementary contracts 77 49
Net investment income 3 812,203 364,927
Amortization of interest maintenance reserve 3 (4,368 ) (1,111 )
Investment management and administration fees from separate accounts 31,941 22,405
Commissions and expense allowance on reinsurance ceded 117,843 1,812,163
Policyholder fee income 29,759 21,699
Other income 108,128 64,023
Funds withheld net investment income / (loss) 3,471 (4,498 )
Total revenue $ 1,225,084 $ 3,296,987
BENEFITS AND EXPENSES
Benefits paid or provided for:
Surrender benefits $ 100,095 $ 114,804
Annuity payments 53,396 30,064
Death benefits 11,803 12,449
Disability benefits 62 66
Interest and adjustments on deposit-type contract funds (1,458 ) 3,140
Change in policy reserves 46,403 895,809
Total benefits 210,301 1,056,332
Change in loading expenses 8 222 112
Commissions and expense allowances 115,769 1,900,674
General insurance expenses 16,013 11,970
Insurance taxes, licenses and fees 3,376 2,833
Expense as a result of reinsurance 900,282 354,576
Other expenses 15 1,838 1,775
Net transfers to/(from) separate accounts 16 343 (11,861 )
Total benefits and expenses $ 1,248,144 $ 3,316,411
Net (loss) / gain from operations before dividends, federal income taxes and realized capital gains/(losses) (23,060 ) (19,424 )
Dividends to policyholders 92 93
Net (loss) / gain from operations before federal income taxes and realized capital gains/(losses) (23,152 ) (19,517 )
Federal and foreign income tax expense (benefit) 6 (54,256 ) (36,369 )
Net (loss) / gain from operations before realized capital gains/(losses) 31,104 16,852
Net realized capital gains/(losses), net of tax and transfers to interest maintenance reserve 3 (278 ) (9,280 )
Net income/(loss) $ 30,826 $ 7,572

The accompanying notes are an integral part of these financial statements

Page 7

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

STATUTORY STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands) Common
Stock 		Paid in
Surplus 		Special
Contingency
Reserve 		Other Unassigned
Surplus
(Deficit) 		Total Capital
and Surplus
Balance at December 31, 2022 $ 5,000 $ 147,062 $ 2,250 $ - $ (64,641 ) $ 89,671
Net income - - - - 7,572 7,572
Change in net unrealized capital gains - - - - (1,772 ) (1,772 )
Change in net deferred income tax - - - - (8,803 ) (8,803 )
Change in asset valuation reserve - - - - (16,544 ) (16,544 )
Change in non-admitted assets - - - - (159,380 ) (159,380 )
Change as a result of reinsurance - - - - 22,464 22,464
Additional paid in capital - 202,000 - - - 202,000
Prior year reserve correction - - - - 164 164
Balance at December 31, 2023 5,000 349,062 2,250 - (220,940 ) 135,372
Net income - - - - 30,826 30,826
Change in net unrealized capital gains - - - - (4,523 ) (4,523 )
Change in net unrealized foreign exchange capital gain (loss) - - - - (346 ) (346 )
Change in net deferred income tax - - - - (22,115 ) (22,115 )
Change in asset valuation reserve - - - - (24,565 ) (24,565 )
Change in non-admitted assets - - - - 38,386 38,386
Change in unauthorized reinsurance - - - - (3 ) (3 )
Change as a result of reinsurance - - - - (15,056 ) (15,056 )
Other changes to capital and surplus - - - 9,514 (9,514 ) -
Prior year reserve correction - - - - (1,081 ) (1,081 )
Balance at December 31, 2024 $ 5,000 $ 349,062 $ 2,250 $ 9,514 $ (228,931 ) $ 136,895

The accompanying notes are an integral part of these financial statements

Page 8

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

STATUTORY STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands) 2024 2023
CASH FROM OPERATIONS
Premiums and annuity considerations $ 141,020 $ 857,386
Net investment income 732,678 331,710
Funds withheld net investment income 2,186 6,808
Other (loss) / income 124,020 567,757
Claims, surrenders and other benefits (125,637 ) 70,686
Commissions and expenses paid (1,048,219 ) (583,554 )
Net transfers from separate accounts 50 12,241
Dividends to policyholders (99 ) (102 )
Federal income taxes (paid) / recovered (551 ) (138,888 )
Net cash provided by operations (174,552 ) 1,124,044
CASH FROM INVESTMENTS
Proceeds from investments sold, matured or repaid
Bonds 8,434,009 4,199,440
Mortgage loans 252,407 100,221
Other invested assets 25,361 20,591
Net gains or (losses) on cash, cash equivalents, and short-term investments 497 -
Miscellaneous proceeds 95,275 -
Total investment proceeds 8,807,549 4,320,252
Cost of investments acquired
Bonds (6,460,964 ) (2,918,194 )
Stocks (1,909 ) (1,546 )
Mortgage loans (2,664,383 ) (1,113,878 )
Other invested assets (204,342 ) (43,776 )
Miscellaneous applications (19,112 ) (97,643 )
Total cost of investments acquired (9,350,710 ) (4,175,037 )
Net change in policy loans (13,140 ) (2,311 )
Net cash (used in) / from investments (556,301 ) 142,904
CASH FROM FINANCING AND OTHER SOURCES
Net withdrawals on deposit type contracts and other liabilities (19,480 ) 13,603
Capital and paid in surplus, less treasury stock - 202,000
Net change in fund held for reinsurers (577,244 ) (59,587 )
Other cash provided / (applied) 5,765 26,338
Net cash (used in) / provided by financing and other sources (590,959 ) 182,354
Net change in cash and short-term investments (1,321,812 ) 1,449,302
Beginning of the year 1,841,280 391,978
End of the year $ 519,468 $ 1,841,280

The accompanying notes are an integral part of these financial statements

Page 9

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

STATEMENTS OF CASH FLOWS - STATUTORY BASIS (Continued)

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands) 2024 2023
SUPPLEMENTAL SCHEDULE OF NON-CASH OPERATING ACTIVITIES
Non-cash premiums assumed from reinsurance transactions - (9,731,007 )
Non-cash accrued investment income assumed to settle reinsurance transactions - 67,800
Non-cash assumed commissions - 1,748,112
Non-cash premiums ceded from reinsurance transactions - 9,552,044
Non-cash ceded commissions - (1,225,380 )
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES
Non-cash bonds received to settle reinsurance transactions - 7,358,807
Non-cash mortgages received to settle reinsurance transactions - 111,246
Assumed contract loans from reinsurance transactions - 445,042
Non cash investment transactions - bonds 123,228 16,952
Non cash investment transactions - mortgages 44,893 12,820
Non cash investment transactions - other invested assets 3,187 696
Paid in kind interest - bonds 6,156 -
Paid in kind interest - mortgages 6,207 -
Paid in kind interest - other invested assets 1,400 -
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES
Non-cash funds withheld payable and deposit assets on reinsurance ceded - (8,326,664 )

The accompanying notes are an integral part of these financial statements

Page 10

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

1. ORGANIZATION AND NATURE OF OPERATIONS

First Allmerica Financial Life Insurance Company, a Massachusetts domiciled life insurance company (the Company), is a wholly owned subsidiary of Commonwealth Annuity and Life Insurance Company, a Massachusetts domiciled life insurance company (Commonwealth Annuity), which in turn is a wholly owned indirect subsidiary of The Global Atlantic Financial Group 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 FAFLIC

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 insures and reinsures blocks of traditional life insurance, universal life insurance, fixed annuities, group retirement products, variable annuities, variable universal life insurance, and an exited accident and health (A&H) business with external parties as well as affiliates. The results of operations may not be indicative of a stand alone entity.

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;
Page 11

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

● 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;
● 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;
Page 12

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

● 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;
● 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;
Page 13

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

● Bond portfolios and associated liabilities comprising guaranteed separate accounts, also referred to as market value adjusted annuities, 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.

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.

Page 14

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(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.

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.

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.

Page 15

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

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 primarily uses derivatives to hedge its exposure to indexed universal life insurance products with potential growth in interest linked to market indexes. OTC call options and call spreads are purchased to hedge the growth in interest credited to the customer as a direct result of increases in the related indices. Upon exercise, the Company will receive the fair value of the call options and call spreads. 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 also owns foreign currency denominated bonds that generate exposure to FX risk. The Company has hedged this risk by entering into foreign currency swaps. Under the terms of the swaps, the Company pays fixed and floating rate terms denominated in foreign currency and receives fixed USD. The Company considers these derivatives to be cash flow hedges. Under such treatment, the unrealized gains and losses on are recorded consistent with the bonds hedged.

Policy Loans

Policy loans are carried at unpaid principal balances.

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.

Page 16

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

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.

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.

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.

Page 17

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

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 or 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) and P & P Manual Appendix A-791 "Life and Health Reinsurance Contracts", 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.

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 cedent retains invested assets supporting the ceded reserves for modified coinsurance and funds withheld coinsurance. The counterparties settle statutory basis policyholder activity, investment activity and agreed upon fees. Significant contributors to periodic settlements are transfers from separate accounts, change in statutory reserves, mark-to-market of the derivative portfolio, other investment returns, and administration fees.

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.

Page 18

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(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 these coverages. Reserves for life insurance and annuity policies are computed using interest rates ranging from 2.5% to 6% for life insurance policies and 1.00% to 9.5% 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.

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 25.62% and 25.73% 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 greater than 5%.

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.

For individual life insurance, claim reserves are established equal to 100% of the benefit payable.

The Company's variable annuity contracts contain guaranteed minimum death benefit features. 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). However, the adoption of VM-21 did not have an impact as these contracts are 100% ceded.

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.

For universal life, except for accidental death and waiver of premium features, 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.

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

For the years ended December 31, 2024 and 2023, the Company's assumed participating policies were approximately 1.6% and 1.6%, respectively of the total life insurance in force. The method of accounting for policyholder dividends is based upon dividends credited annually to policyholders on their policy anniversary date plus the change from the prior period on one year's projected dividend liability on policies in force at the statement date. Source data is produced from the cedant's policy administration system. The amount of dividend expense incurred for the year ended December 31, 2024 and the year ended December 31, 2023 was $92 and $93, respectively. There was no additional income allocated to participating policyholders.

Page 19

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

Waiver of Premiums, and Gross Premiums less than Net Premiums

The Company waives deduction of deferred fractional premiums at 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 $1,856,666 and $1,815,943, 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.

Substandard Policies

Extra premiums are assessed for substandard lives in addition to the standard mortality charges. Mean reserves for universal life policies 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% and 6% interest over the standard mean reserve. In no event is the total reserve less than the policy's cash surrender value.

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, variable life insurance, and pension 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.

Page 20

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

The Company receives fees for assuming mortality and certain expense risks. Such fees are included in investment management and administration fees from separate accounts 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 (VACARVM) under VM-21. However, the adoption of VM-21 did not have an impact as these contracts are 100% ceded.

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 guaranteed minimum death benefit (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 reserve cannot be transferred from the separate account unless the policy is terminated or the policy account value is withdrawn.

Closed Block

The Company established and began operating a closed block for the benefit of participating policies, consisting of certain individual life insurance participating policies, individual deferred annuity contracts and supplementary contracts not involving life contingencies which were in force as of the Company's demutualization on October 16, 1995.

The purpose of the closed block is to benefit certain classes of policies and contracts for which the Company has a dividend scale payable. The closed block will continue to be in effect until none of the closed block policies is in force, except in the event that the Massachusetts Commissioner of Insurance consents to an earlier termination. The Company allocated to the closed block assets in an amount that is expected to produce cash flows which, together with future revenues from the closed block, are reasonably sufficient to support the closed block, including provision for payment of policy benefits, certain future expenses and taxes, and for continuation of policyholder dividend scales as payable in 1994 so long as the experience underlying such dividend scales continues. The Company expects that the factors underlying such experience will fluctuate in the future and policyholder dividend scales for the closed block will be set accordingly.

Effective December 1, 2015, the Company entered into a coinsurance agreement whereby it ceded substantially all risk in the closed block. The net retained closed block balances and activity are included in the Company's financial statements. A presentation of the entire closed block financial schedules are included in footnote 18 of the financial statements.

Page 21

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

Dividends to Policyholders

Prior to demutualization, the Company issued certain life, health and annuity insurance policies that contained dividend payment provisions which enabled the policyholder to participate in the earnings of the Company. The amount of policyholders' dividends to be paid was determined annually by the Board of Directors. The aggregate amount of policyholders' dividends was related to the actual interest, mortality, morbidity, and expense experience for the year and the Company's judgment as to the appropriate level of statutory surplus to be retained. Upon demutualization, certain participating individual life policies, individual annuity, and supplemental contracts were transferred to the Closed Block. The Closed Block was funded to protect the dividend expectations of such policies and contracts. Accordingly, these policies no longer participate in the earnings and surplus of the remaining block. Prior to demutualization, the Company ceased issuance of participating policies.

Guaranty Fund Assessments

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

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.

Page 22

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

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.

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.

Page 23

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

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. Since both are acceptable interpretations of the standard, the Company has accounted for this as a change in accounting principle and 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. There was an impact to surplus

arising from the change due to the IMR liability being stated at an after tax amount whereas the other liability had been stated without an adjustment for tax. An adjustment to surplus of $1,575 has been captured as the cumulative impact of the change in accounting principle.

Correction of Errors

During 2024, the company discovered reporting errors for the prior year balances resulting in a $1 increase in insurance taxes, licenses, and fees. As a result, $1,079 of state income tax payable were written off. The impact of this error 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.

Page 24

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

3. INVESTMENTS

Bonds

Book/Adjusted Carrying Value and Fair Values

The book/adjusted carrying value and fair value of investment in long term bonds, short-term (excludes non-bond investments of $7,830) and cash equivalent bonds (excludes non-bond cash and cash equivalent investments of $478,847) are as follows:

Book / Adjusted
Carrying Value 		Gross Unrealized
Gains 		Gross Unrealized
Losses 		Fair Value
December 31, 2024
Long term bonds:
United States government and agencies $ 789,268 $ - $ (97,202 ) $ 692,066
State and political subdivisions 281,775 3,704 (22,220 ) 263,259
Foreign government 62,156 2,877 (3,859 ) 61,174
Corporate securities 4,410,546 29,562 (272,144 ) 4,167,964
Hybrid 35,576 724 (1,902 ) 34,398
Parent, subsidiaries and affiliates 1,442,028 16,242 (12,038 ) 1,446,232
Asset-backed securities 571,981 4,658 (1,406 ) 575,233
Commercial mortgage-backed securities 659,497 15,160 (2,765 ) 671,892
Residential mortgage-backed securities 776,768 16,797 (4,275 ) 789,290
Total long term bonds 9,029,595 89,724 (417,811 ) 8,701,508
Short-term bonds 18,565 9 (82 ) 18,492
Cash equivalent bonds - - - -
Total long term, short-term and cash equivalent bonds $ 9,048,160 $ 89,733 $ (417,893 ) $ 8,720,000
Book / Adjusted
Carrying Value 		Gross Unrealized
Gains 		Gross Unrealized
Losses 		Fair Value
December 31, 2023
Long term bonds:
United States government and agencies $ 2,077,609 $ 190,160 $ (1,542 ) $ 2,266,227
State and political subdivisions 1,324,958 75,327 (13,696 ) 1,386,589
Foreign government 60,684 4,254 (3,034 ) 61,904
Corporate securities 6,077,682 276,972 (160,669 ) 6,193,985
Hybrid 77,253 4,127 (2,597 ) 78,783
Parent, subsidiaries and affiliates 241,831 1,170 (22,814 ) 220,187
Asset-backed securities 167,317 440 (2,112 ) 165,645
Commercial mortgage-backed securities 384,706 5,635 (5,244 ) 385,097
Residential mortgage-backed securities 431,415 14,313 (5,134 ) 440,594
Total long term bonds 10,843,455 572,398 (216,842 ) 11,199,011
Short-term bonds 126,859 193 (10 ) 127,042
Cash equivalent bonds 9,993 - (1 ) 9,992
Total long term, short-term and cash equivalent bonds $ 10,980,307 $ 572,591 $ (216,853 ) $ 11,336,045
Page 25

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

At December 31, 2024 and 2023, respectively, 96.4% and 99.6% of debt securities were rated by the NAIC as investment grade (1 or 2 by the NAIC).

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 $ 44,373 $ 44,467
FDue after one year through five years 407,869 403,506
Due after five years through ten years 207,430 191,828
Due after ten years 4,949,435 4,608,730
Mortgage-backed and asset-backed securities 3,439,053 3,471,469
Total $ 9,048,160 $ 8,720,000

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

Less than or equal to
Twelve Months 		Greater than
Twelve Months 		Total
December 31, 2024 Fair
Value 		Gross
Unrealized
Losses 		Fair
Value 		Gross
Unrealized
Losses 		Fair
Value 		Gross
Unrealized
Losses
Long term bonds:
United States government and agencies $ 688,388 $ (97,009 ) $ 3,678 $ (192 ) $ 692,066 $ (97,201 )
State and political subdivision 29,839 (623 ) 136,954 (21,597 ) 166,793 (22,220 )
Foreign government 1,652 (1 ) 23,259 (3,858 ) 24,911 (3,859 )
Corporate securities 1,894,350 (68,941 ) 1,079,155 (203,201 ) 2,973,505 (272,142 )
Hybrid - - 16,630 (1,902 ) 16,630 (1,902 )
Parent, subsidiaries and affiliates 232,521 (8,380 ) 54,032 (3,658 ) 286,553 (12,038 )
Asset-backed securities 121,094 (629 ) 37,591 (777 ) 158,685 (1,406 )
Commercial mortgage-backed securities 29,286 (397 ) 18,373 (2,368 ) 47,659 (2,765 )
Residential mortgage-backed securities 69,681 (894 ) 36,249 (3,382 ) 105,930 (4,276 )
Total long term bonds 3,066,811 (176,874 ) 1,405,921 (240,935 ) 4,472,732 (417,809 )
Short-term bonds 6,916 (83 ) - - 6,916 (83 )
Cash equivalent bonds - - - - - -
Total long term, short-term and cash equivalent bonds $ 3,073,727 $ (176,957 ) $ 1,405,921 $ (240,935 ) $ 4,479,648 $ (417,892 )
Page 26

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

Less than or equal to
Twelve Months 		Greater than
Twelve Months 		Total
December 31, 2023 Fair
Value 		Gross
Unrealized
Losses 		Fair
Value 		Gross
Unrealized
Losses 		Fair
Value 		Gross
Unrealized
Losses
Long term bonds:
United States government and agencies $ 38,051 $ (1,530 ) $ 238 $ (12 ) $ 38,289 $ (1,542 )
State and political subdivision 26,245 (482 ) 139,670 (13,215 ) 165,915 (13,697 )
Foreign government - - 24,123 (3,034 ) 24,123 (3,034 )
Corporate securities 199,253 (2,229 ) 1,125,531 (158,439 ) 1,324,784 (160,668 )
Hybrid - - 16,024 (2,597 ) 16,024 (2,597 )
Parent, subsidiaries and affiliates 98,819 (17,072 ) 31,671 (5,741 ) 130,490 (22,814 )
Asset-backed securities 100,736 (897 ) 25,539 (1,215 ) 126,275 (2,112 )
Commercial mortgage-backed securities 50,302 (1,609 ) 29,524 (3,634 ) 79,826 (5,243 )
Residential mortgage-backed securities 25,810 (846 ) 37,131 (4,288 ) 62,941 (5,134 )
Total long term bonds $ 539,216 $ (24,665 ) $ 1,429,451 $ (192,175 ) $ 1,968,667 $ (216,841 )
Short-term bonds 3,773 (10 ) - - 3,773 (10 )
Cash equivalent bonds 9,992 (1 ) - - 9,992 (1 )
Total long term, short-term and cash equivalent bonds $ 552,981 $ (24,676 ) $ 1,429,451 $ (192,175 ) $ 1,982,432 $ (216,852 )

The Company has the intent and ability to hold all bonds in an unrealized loss position until amortized cost 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 445 and 457, respectively.

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

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
LBASS - AC 14 34,558 33,409
Total 14 - 34,558 - 33,409 -

AC - Amortized cost

BACV - Book adjusted carrying value

Page 27

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

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 $ 7,258 $ 5,920 $ 7,997 $ -
Total $ 7,258 $ 5,920 $ 7,997 $ -
Actual Cost Book / Adjusted
Carrying Value
(excluding interest) 		Fair Value Other Than
Temporary
Impairment Losses
Recognized
December 31, 2023
Residential mortgage-backed securities $ 7,535 $ 6,371 $ 8,398 $ -
Total $ 7,535 $ 6,371 $ 8,398 $ -

Mortgage Loans

Maturities

Year Ended December 31,
2024 Percentage
2025 $ 41,368 1.12 %
2026 251,566 6.80 %
2027 1,055,102 28.53 %
2027 12,585 0.34 %
2029 and thereafter 2,337,410 63.21 %
Total $ 3,698,031 100.00 %
Page 28

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

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 did not recognize impairments or establish specific allowances on mortgage loans as of December 31, 2024 or 2023.

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.

The mortgage loans were concentrated in the following regions:

Year Ended December 31,
2024 Percentage 2023 Percentage
East North Central $ 46,184 1.25 % $ 27,256 2.13 %
East South Central 38,515 1.04 % 20,566 1.60 %
Middle Atlantic 384,373 10.39 % 203,407 15.87 %
New England 63,717 1.72 % 50,193 3.92 %
Pacific 720,115 19.47 % 424,771 33.14 %
South Atlantic 850,617 23.00 % 302,724 23.62 %
Mountain 269,345 7.28 % 153,354 11.96 %
West North Central 17,445 0.47 % 6,101 0.48 %
West South Central 379,505 10.26 % 91,308 7.12 %
Various 928,215 25.12 % 2,233 0.17 %
Total $ 3,698,031 100.00 % $ 1,281,913 100.00 %
Page 29

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

The mortgage loans by type are as follows:

Year Ended December 31,
2024 Percentage 2023 Percentage
Office building $ 412,328 11.15 % $ 112,626 8.79 %
Retail 23,509 0.64 % 64,851 5.06 %
Industrial 787,737 21.31 % 101,768 7.94 %
Apartment / Multifamily 2,457,853 66.46 % 985,871 76.91 %
Self storage 8,656 0.23 % 7,785 0.61 %
Other 7,948 0.21 % 9,011 0.70 %
Total $ 3,698,031 100.00 % $ 1,281,913 100.00 %

In 2024 the minimum and maximum rates of interest received for commercial and residential loans were 1.5% and 13.5%. The maximum percentage of any one loan to the value of the security at the time of the loan was 100.0%. There were no taxes, assessments or other amounts advances that were not included in the mortgage total.

Derivative 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 limits its net exposure to equity market risk by entering into equity index futures. The Company uses cross currency swaps and currency forwards to hedge currency risk. The Company utilizes interest rate swaps to hedge exposure to interest rate risk. The Company receives collateral from its derivative counterparties to limit the risk of nonperformance by the counterparties. The Company limits the general business risk by entering into equity index futures. The total carrying values of derivative assets were $21,106 and $0 as of December 31, 2024 and 2023, respectively.

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 are valued in a manner consistent with the underlying hedged item, which are carried at amortized cost. The Company also enters into the derivatives that do not qualify for hedge accounting under SSAP 86, including currency forwards, cross currency swaps, and equity index future as economic hedges. These derivatives are accounted for under the fair value method of accounting, with changes in fair value recorded as unrealized investment gains or losses.

The current credit exposure of the Company's OTC derivative contracts is limited to the fair value of $(1,819) as of December 31, 2024. Credit risk is managed by entering into transactions with creditworthy counterparties and obtaining full collateral of $3,340 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.

Page 30

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

The fair value of the derivative assets and liabilities by risk hedged were as follows:

As of December 31, 2024
Risk Hedged Derivative
Assets 		Derivative
Liabilities 		Notional Amounts
Equity/index $ - $ - $ 594
Currency 17,815 198 444,123
Interest Rates 3,489 - 115,000
Gross fair value of derivative instruments $ 21,304 $ 198 $ 559,717
Offset per SSAP No. 64 (198 ) (198 )
Net Fair value included within derivatives $ 21,106 $ -
As of December 31, 2023
Risk Hedged Derivative
Assets 		Derivative
Liabilities 		Notional Amounts
Equity/index $ - $ - $ 482
Gross fair value of derivative instruments $ - $ - $ 482
Offset per SSAP No. 64 - -
Net Fair value included within derivatives $ - $ -
Page 31

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

The fair value of the derivative assets and liabilities by instrument were as follows:

As of December 31, 2024
Derivative Instruments Derivative Assets Derivative Liabilities Notional Amounts
Equity index options $ - $ - $ -
Currency Swaps / Forwards 17,815 198 444,123
Interest Rate Swaps 3,489 - 115,000
Futures - - 594
Gross fair value of derivative instruments $ 21,304 $ 198 $ 559,717
Offset per SSAP No. 64 (198 ) (198 )
Net Fair value included within derivatives $ 21,106 $ -
As of December 31, 2023
Derivative Instruments Derivative Assets Derivative Liabilities Notional Amounts
Equity index options $ - $ - $ -
Futures - - 482
Gross fair value of derivative instruments $ - $ - $ 482
Offset per SSAP No. 64 - -
Net Fair value included within derivatives $ - $ -

The derivative gains and losses by investment were as follows:

As of December 31, 2024
Derivative Instruments Amount of
Realized Gain /
(Loss) on
Derivatives 		Amount of
Unrealized Gain /
(Loss) on
Derivatives
Equity index options $ - $ -
Currency Swaps / Forwards 2,220 17,272
Interest Rate Swaps (3,694 ) 3,489
Futures 119 (33 )
Total gains (losses) $ (1,355 ) $ 20,728
As of December 31, 2023
Derivative Instruments Amount of
Realized Gain /
(Loss) on
Derivatives 		Amount of
Unrealized Gain /
(Loss) on
Derivatives
Equity index options $ - $ -
Futures (47 ) (31 )
Total gains (losses) $ (47 ) $ (31 )
Page 32

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

The Company's off balance sheet credit risk is the risk of nonperformance by OTC counterparties. The Company limits this risk by utilizing and managing collateral according to a Credit Support Annex agreement (CSA). The company negotiates the CSA agreement with each highly rated counterparty prior to trading. Collateral is managed to CSA standards by the Company's derivative custodian.

As of December 31, 2024, the Company had collateral cash on deposit with its custodian with a fair value of $3,340.

Other Investments

Other Invested Assets

Other invested assets on the Company's Statements of Admitted Assets, Liabilities, Capital and Surplus consist of interests in partnerships, term notes and loans and receivable for bonds and other securities. The carrying value of these investments for the years ended December 31, were as follows:

Year Ended December 31,
2024 2023
Collateral loans $ 133,747 $ 6,572
Partnerships 6,379 758
Receivable for bonds and stocks 2,171 98,129
Residual tranches 111,194 16,872
Total $ 253,491 $ 122,331
Page 33

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

Collateral Loans

Consistent with disclosure requirements adopted in 2024, the table below details admitted and nonadmitted collateral loan investments, based on the qualifying investment collateral type.

Year ended December 31,
2024
Collateral Type Aggregate Collateral
Loan 		Admitted Nonadmitted
Mortgage loans - unaffiliated 104,644 104,644 -
Joint ventures, partnerships, and LLCs - unaffiliated 29,103 29,103 -
Total 133,747 133,747 -

Cash and Short-Term Investments

Cash and short-term investments held at December 31, were as follows:

Year Ended December 31,
2024 2023
Cash and cash equivalents $ 493,073 $ 1,691,916
Short-term investments 26,395 149,364
Total $ 519,468 $ 1,841,280

Restricted Assets

The Company has securities on deposit with various state and governmental authorities. The statement value of these securities as of December 31, 2024 and 2023 was $12,134 and $12,221, respectively.

Proceeds, Net Investment Income and Capital Gains and Losses

Proceeds from the sale of bonds and related capital gains and losses were as follows:

Year Ended December 31,
2024 2023
Proceeds $ 8,035,869 $ 3,889,600
Gross realized gains 163,104 36,973
Gross realized losses (14,114 ) (24,307 )
Total net realized gains/(losses) $ 148,990 $ 12,666
Page 34

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

Major categories of net investment income are summarized below:

Year Ended December 31,
2024 2023
Bonds $ 575,146 $ 302,829
Stocks 236 -
Policy loans 32,455 7,364
Short-term and cash equivalent investments 46,028 27,623
Mortgage loans 186,622 31,105
Derivatives 603
Other invested assets 15,878 1,281
Miscellaneous income 765 19,102
Gross investments income 857,733 389,304
Less investment expenses 45,530 24,377
Net investment income before IMR amortization 812,203 364,927
IMR amortization (4,368 ) (1,111 )
Net investment income after IMR amortization $ 807,835 $ 363,816

There were no amounts excluded from investment income for bonds where collection of interest was uncertain at December 31, 2024 and 2023.

The Company did not have any due and accrued amounts over 90 days past due to exclude from surplus at December 31, 2024 and 2023, respectively.

The cumulative amounts of paid-in-kind (PIK) interest included in the current principal balance is $14,250 as of December 31, 2024.

Realized gains and losses, net of amounts transferred to the IMR and federal income tax, are as follows:

Year Ended December 31,
2024 2023
Realized gains (losses)
Bonds $ 144,111 $ (8,765 )
Derivatives 1,994 (72 )
Mortgages (1,330 ) (402 )
Other invested assets - -
Cash, cash equivalents and short-term investments 497 (45 )
Total realized gains (losses) on investments 145,272 (9,284 )
Less amount transferred to IMR (net of related taxes of ($30,534) in 2024 and $1,009 in 2023) 114,865 (3,795 )
Total realized gains (losses) on investments 30,407 (5,489 )
Federal income tax expense (benefit) 30,685 3,791
Net realized gains (losses) $ (278 ) $ (9,280 )
Page 35

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

The change in unrealized gains and losses on investments recorded in unassigned surplus is as follows:

Year Ended December 31,
2024 2023
Bonds $ (707 ) $ -
Stocks $ - $ -
Derivative instruments $ (33 ) $ 31
Other invested assets (1,840 ) (1,699 )
Total change in unrealized gains (losses) (2,580 ) (1,668 )
Capital gains tax expense (benefit) 1,943 104
Change in unrealized gains (losses), net of taxes $ (4,523 ) $ (1,772 )

The Company employs a systematic methodology to evaluate declines in fair values below amortized cost for all investments. The Company evaluates the ability and intent to hold the investment to maturity, the issuer's overall financial condition, the issuer's credit and financial strength ratings, the issuer's financial performance including earnings trends, dividend payments, and asset quality, weakening of the general market conditions in the industry or geographic region in which the issuer operates, the length of time in which the fair value of an issuer's securities remains below cost, and, with respect to fixed maturity investments, any factors that might raise doubt about the issuer's ability to pay all amounts due according to the contractual terms. The Company applies these factors to all securities, as necessary.

The Company recognized $66 and $2,005 losses for OTTI of bonds and other invested assets at December 31, 2024 and 2023.

There were no loan backed securities with a recognized OTTI held by the Company at December 31, 2024 and 2023, with the present value of cash flows expected to be less than amortized cost.

Page 36

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

The following is the aggregate amount of unrealized losses and related fair value of impaired loan-backed securities (the fair value is less than cost or amortized cost) for which an other-than-temporary impairment has not been recognized in earnings as a realized loss as of December 31, 2024 and 2023:

December 31, 2024
Less than 12 Months 12 Months or More Total
Fair Value Unrealized
Losses 		Fair Value Unrealized
Losses 		Fair Value Unrealized
Losses
Loan-backed and structured securities $ 708,048 $ (12,532 ) $ 98,317 $ (7,006 ) $ 806,365 $ (19,538 )
December 31, 2023
Less than 12 Months 12 Months or More Total
Unrealized Unrealized Unrealized
Fair Value Losses Fair Value Losses Fair Value Losses
Loan-backed and structured securities $ 236,672 $ (8,181 ) $ 165,295 $ (20,583 ) $ 401,967 $ (28,764 )
4. FAIR VALUE OF 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 fair value hierarchy under SSAP No. 100 prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

The three levels of the fair value hierarchy are described below:

Basis of Fair Value Measurement

Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities
Level 2 Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly.
Level 3 Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Page 37

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

Summary of Fair Value Methodologies

The following methods and assumptions were used by the Company in estimating fair value for financial instruments:

Bonds, preferred stock and common stock - Fair values are based on quoted market prices. If quoted market prices are not available, fair values are estimated using independent pricing sources or internally developed pricing models using discounted cash flow analyses, which utilize current interest rates for similar financial instruments having comparable terms and credit. Bonds rated a 6 in accordance with the P&P Manual of the NAIC CMIAO are carried at the lower of amortized cost or fair value.

Cash, cash equivalents, and short-term investments - For these investments, the carrying amounts reported in the Statements of Admitted Assets, Liabilities, Capital and Surplus approximate fair value.

Mortgage loans - The fair value of mortgage loans is estimated by discounting future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Derivatives - The Company values the OTC options utilizing the Black-Scholes models implemented in the SunGard derivative system with index marks updated daily. The Company's OTC equity options trade in liquid markets, resulting in calculations that do not involve significant management judgment and valuations that generally can be verified. The Company also compares the derivative valuations to the daily counterparty marks to validate the model outputs. Such instruments are typically classified within Level 2 of the fair value hierarchy maturities.

Policy loans - The estimated fair value for policy loans with variable interest rates approximates the carrying value due to the absence of borrower credit risk and the short time period between interest rate resets, which presents minimal risk of a material change in estimated fair value due to changes in market interest rates. The estimated fair value for policy loans with fixed interest rates is based on discounted cash flows.

Policy and contract liabilities - Fair values of the Company's liabilities under contracts not involving significant mortality or morbidity risks (principally, annuities and supplementary contracts) are stated at the cost the Company would incur to extinguish the liability (i.e., the cash surrender value).

Separate accounts - The estimated fair value of assets 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 related liabilities. Based on the level of observable activity, these assets will be measured at either level 1 or level 2.

Page 38

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

Financial Instruments Held at Fair Value

As of December 31, 2024, the Company's assets carried at fair value consist of bonds, derivative instruments and separate account funds on a recurring basis. The following table presents, by level within the fair value hierarchy, financial assets and liabilities held at fair value.

Level 1 Level 2 Level 3 Total
December 31, 2024
Financial Assets
Derivatives $ - $ 21,106 $ - $ 21,106
Separate account assets 121,401 - - 121,401
Total assets at fair value $ 121,401 $ 21,106 $ - $ 142,507
Financial Liabilities
Derivatives liabilities - - - -
Total liabilities at fair value $ - $ - $ - $ -
Level 1 Level 2 Level 3 Total
December 31, 2023
Financial Assets
Derivatives $ - $ - $ - $ -
Separate account assets 113,751 - - 113,751
Total assets at fair value $ 113,751 $ - $ - $ 113,751
Financial Liabilities
Derivatives liabilities - - - -
Total liabilities at fair value $ - $ - $ - $ -

Transfers Into or Out of Level 3

Overall, transfers into and/or out of level 3 are attributable to a change in the observability of inputs. Assets and liabilities are transferred into level 3 when a significant input cannot be corroborated with market observable data. This occurs when market activity decreases significantly and underlying inputs cannot be observed, current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred out of level 3 when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant increase in market activity, a specific event, or one or more significant input(s) becoming observable. Transfers into and/or out of any level are assumed to occur at the beginning of the period.

The Company did not hold any Level 3 financial assets or liabilities carried at fair value, nor were there any transfers into or out of Level 3 for the year ended December 31, 2024.

Page 39

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

Fair Value of All Financial Instruments

The aggregate fair value of the Company's financial instruments and the level within the fair value hierarchy in which the fair value measurements fall, together with the related admitted values, are presented in the following tables. Pursuant to SSAP No. 100R, insurance contracts have been excluded.

Aggregate Fair
Value 		Admitted
Assets 		Level 1 Level 2 Level 3 Not Practicable
(carrying value)
December 31, 2024
Financial Assets
Bonds $ 8,701,508 $ 9,029,595 $ - $ 6,843,110 $ 1,858,398 $ -
Common stock 5,000 5,000 - - 5,000 -
Separate account assets 121,401 121,401 121,401 - - -
Short-term investments 26,322 26,395 - 18,492 7,830 -
Cash and cash equivalents 493,072 493,072 493,072 - - -
Mortgage loans 3,706,923 3,698,031 - - 3,706,923 -
Derivatives 21,106 21,106 - 21,106 - -
Other invested assets 281,994 247,112 2,171 - 279,823 6,415 *
Policy loans 551,782 551,782 - - 551,782 -
Financial Liabilities
Derivative liabilities - - - - - -
Other contract deposit funds 19,372 19,372 - - 19,372
Aggregate Fair
Value 		Admitted
Assets 		Level 1 Level 2 Level 3 Not Practicable
(carrying value)
December 31, 2023
Financial Assets
Bonds $ 11,199,013 $ 10,843,454 $ 2,266,227 $ 8,662,407 $ 270,379 $ -
Common stock 3,091 3,091 - - 3,091 -
Separate account assets 113,751 113,751 113,751 - - -
Short-term investments 149,546 149,364 - 127,042 22,505 -
Cash and cash equivalents 1,691,916 1,691,916 1,691,916 - - -
Mortgage loans 1,272,922 1,281,913 - - 1,272,922 -
Derivatives - - - - - -
Other invested assets 136,388 121,575 98,129 - 38,257 - *
Policy loans 536,813 536,813 - - 536,813 -
Financial Liabilities
Derivative liabilities - - - - - -
Other contract deposit funds 25,345 25,345 - - 25,345

* Not practicable as there are no available quoted market prices for these assets.

Page 40

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

Financial Instruments Held at Carrying Value

The following is the estimated fair values of financial instruments held at carrying value:

December 31,
2024 2023
Carrying
Value 		Fair
Value 		Carrying
Value 		Fair
Value
Financial Assets
Short-term investments $ 26,395 $ 26,322 $ 149,364 $ 149,546
Common stock 5,000 5,000 3,091 3,091
Bonds 9,029,595 8,701,509 10,843,454 11,199,012
Mortgage loans 3,698,031 3,706,923 1,281,913 1,272,922
Other invested assets 247,111 281,994 121,574 136,387
Policy loans 551,782 551,782 536,813 536,813
Cash and equivalents 493,072 493,072 1,691,916 1,691,916
Total $ 14,050,986 $ 13,766,602 $ 14,628,125 $ 14,989,687
Financial Liabilities
Premium deposit funds $ 246,741 $ 278,020 $ 260,243 $ 288,698
Other deposit funds 20,101 20,101 26,080 26,080
Total $ 266,842 $ 298,121 $ 286,323 $ 314,778
5. FEDERAL HOME LOAN BANK

The Company is a member of the Federal Home Loan Bank (FHLB) Boston. Through its membership, the Company has the ability to conduct business activity (borrowings with the FHLB). It is part of the Company's strategy to utilize these funds as a key source of liquidity and to promote liability- driven duration management. The Company has determined the actual/estimated maximum borrowing capacity as $1,214,000. The Company calculated this amount in accordance with current and potential acquisitions of FHLB capital stock.

December 31, 2024 December 31, 2023
FHLB stock purchased/owned as part of the agreement $ 5,000 $ 3,091
Funding capacity currently available 1,214,000 1,243,000
Agreement assets and liabilities
General account assets 5,000 3,091
General account liabilities - -
Page 41

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

6. FEDERAL INCOME TAXES

Components of Net Deferred Tax Asset/ (Liability)

The components of the net deferred tax asset /liability at December 31, 2024 and 2023 and the change is comprised of the following components:

December 31, 2024
Ordinary Capital Total
Gross deferred tax assets $ 156,173 $ 7,559 $ 163,732
Statutory valuation allowance adjustments - - -
Adjusted gross deferred tax assets 156,173 7,559 163,732
Deferred tax assets nonadmitted 105,619 5,291 110,910
Subtotal net admitted deferred tax asset 50,554 2,268 52,822
Gross deferred tax liabilities 34,966 - 34,966
Net admitted deferred tax asset / (liability) $ 15,588 $ 2,268 $ 17,856
December 31, 2023
Ordinary Capital Total
Gross deferred tax assets $ 164,729 $ 5,341 $ 170,070
Statutory valuation allowance adjustments - - -
Adjusted gross deferred tax assets 164,729 5,341 170,070
Deferred tax assets nonadmitted 132,457 2,711 135,168
Subtotal net admitted deferred tax asset 32,272 2,630 34,902
Gross deferred tax liabilities 17,245 - 17,245
Net admitted deferred tax asset / (liability) $ 15,027 $ 2,630 $ 17,657
Change
Ordinary Capital Total
Gross deferred tax assets $ (8,556 ) $ 2,218 $ (6,338 )
Statutory valuation allowance adjustments - - -
Adjusted gross deferred tax assets (8,556 ) 2,218 (6,338 )
Deferred tax assets nonadmitted (26,838 ) 2,580 (24,258 )
Subtotal net admitted deferred tax asset 18,282 (362 ) 17,920
Gross deferred tax liabilities 17,721 - 17,721
Net admitted deferred tax asset / (liability) $ 561 $ (362 ) $ 199

The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which the temporary differences are deductible and prior to the expiration of capital loss, net operating loss and tax credit carry-forwards. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carry-back and carry-forward periods), projected taxable income, and tax planning strategies in making this assessment. Management believes it is more likely than not that all deferred tax assets will be realized based on projected taxable income and available tax planning strategies. There were no tax planning strategies used related to reinsurance.

Page 42

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

Components of Admission Calculation

The admission calculation components under SSAP No. 101 are as follows:

December 31, 2024
Ordinary Capital Total
Federal income taxes paid in prior years recoverable through loss carrybacks $ - $ - $ -
Adjusted gross deferred tax assets expected to be realized (Excluding threshold limitation) 15,589 2,267 17,856
Adjusted gross deferred tax assets expected to be realized following the balance sheet date 32,990 2,267 35,257
Adjusted gross deferred tax assets allowed per limitation 17,856
Adjusted gross deferred tax assets (excluding the amount of deferred taxes from above) offset by gross liabilities 34,965 - 34,965
Deferred tax assets admitted as the result of application of SSAP No. 101 $ 50,554 $ 2,267 $ 52,821
December 31, 2023
Ordinary Capital Total
Federal income taxes paid in prior years recoverable through loss carrybacks $ - $ - $ -
Adjusted gross deferred tax assets expected to be realized (Excluding threshold limitation) 15,027 2,630 17,657
Adjusted gross deferred tax assets expected to be realized following the balance sheet date 41,099 2,630 43,729
Adjusted gross deferred tax assets allowed per limitation 17,657
Adjusted gross deferred tax assets (excluding the amount of deferred taxes from above) offset by gross liabilities 17,245 - 17,245
Deferred tax assets admitted as the result of application of SSAP No. 101 $ 32,272 $ 2,630 $ 34,902
Change
Ordinary Capital Total
Federal income taxes paid in prior years recoverable through loss carrybacks $ - $ - $ -
Adjusted gross deferred tax assets expected to be realized (Excluding threshold limitation) 562 (363 ) 199
Adjusted gross deferred tax assets expected to be realized following the balance sheet date (8,109 ) (363 ) (8,472 )
Adjusted gross deferred tax assets allowed per limitation 199
Adjusted gross deferred tax assets (excluding the amount of deferred taxes from above) offset by gross liabilities 17,720 - 17,720
Deferred tax assets admitted as the result of application of SSAP No. 101 $ 18,282 $ (363 ) $ 17,919

Other Admissibility Criteria

December 31,
2024 2023
Ratio percentage used to determine recovery period 829.55 % 582.72 %
Ratio percentage used to determine recovery period and threshold limitation amount $ 200,593 $ 174,460
Page 43

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

Impact of tax planning strategies

December 31, 2024
Ordinary Capital Total
Determination of adjusted gross deferred tax assets and net admitted deferred tax assets, by tax character as a percentage
Adjusted Gross DTAs $ 156,173 $ 7,559 $ 163,732
Percentage of adjusted gross DTAs by tax character attributable to the impact of tax planning strategies. 0.2 % 30 % 1.5 %
Net Admitted Adjusted Gross DTAs $ 50,554 $ 2,268 $ 52,822
Percentage of net admitted adjusted gross DTAs by tax character admitted because of the impact of tax planning strategies 0.5 % 100 % 4.8 %
December 31, 2023
Ordinary Capital Total
Determination of adjusted gross deferred tax assets and net admitted deferred tax assets, by tax character as a percentage
Adjusted Gross DTAs $ 164,729 $ 5,341 $ 170,070
Percentage of adjusted gross DTAs by tax character attributable to the impact of tax planning strategies. 2.9 % 49.3 % 4.3 %
Net Admitted Adjusted Gross DTAs $ 32,272 $ 2,630 $ 34,902
Percentage of net admitted adjusted gross DTAs by tax character admitted because of the impact of tax planning strategies 14.7 % 99.8 % 21.1 %
Change
Ordinary Capital Total
Determination of adjusted gross deferred tax assets and net admitted deferred tax assets, by tax character as a percentage
Adjusted Gross DTAs $ (8,556 ) $ 2,218 $ (6,338 )
Percentage of adjusted gross DTAs by tax character attributable to the impact of tax planning strategies. (2.9 )% (19.3 )% (2.8 )%
Net Admitted Adjusted Gross DTAs $ 18,282 $ (362 ) $ 17,920
Percentage of net admitted adjusted gross DTAs by tax character admitted because of the impact of tax planning strategies (14.2 )% 0.2 % (16.4 )%

There are no temporary differences for which deferred tax liabilities are not recognized.

Current Tax Expense and Change in Deferred Tax

Current income taxes incurred consist of the following categories:

2024 2023
Federal income tax expense (benefit) on operations (54,256 ) $ (36,390 )
Federal income tax (benefit) on net capital gains 30,685 3,792
Current year income tax expense/(benefit) $ (23,571 ) $ (32,577 )
Page 44

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

The main components of the deferred tax amounts from book/tax differences are as follows:

December 31,
2024 2023 Change
Deferred tax assets
Policyholder reserves $ 28,091 $ 21,362 $ 6,729
Deferred acquisition costs 112,616 126,317 (13,701 )
Policyholders dividends accrual 1,668 1,440 228
Receivables - nonadmitted 486 1,152 (666 )
Ceding Commission 12,760 13,947 (1,187 )
Investments - 30 (30 )
Other 552 481 71
Total gross ordinary deferred tax assets 156,173 164,729 (8,556 )
Nonadmitted 105,619 132,457 (26,838 )
Admitted ordinary deferred tax assets 50,554 32,272 18,282
Capital - - -
Investments 7,559 5,341 2,218
Net capital loss carry-forward - - -
Total gross capital deferred tax assets 7,559 5,341 2,218
Nonadmitted 5,291 2,711 2,580
Admitted capital deferred tax assets 2,268 2,630 (362 )
Admitted deferred tax asset $ 52,822 $ 34,902 $ 17,920
Deferred tax liabilities
Investments $ 31,559 $ 12,459 $ 19,100
Deferred and uncollected premium 357 442 (85 )
Policyholder reserves 1,294 2,588 (1,294 )
Other - - -
Acquired reserve basis 1,756 1,756 -
34,966 17,245 17,721
Capital - - -
Deferred tax liabilities 34,966 17,245 17,721
Net deferred tax assets $ 17,856 $ 17,657 $ 199

The change in deferred income taxes reported in surplus before consideration of non-admitted assets is comprised of the following components:

2024 2023
Ordinary Capital Total Ordinary Capital Total Change
Total deferred tax assets (admitted and non-admitted) $ 156,173 $ 7,559 $ 163,732 $ 164,729 $ 5,341 $ 170,070 $ (6,338 )
Total deferred tax liabilities 34,966 - 34,966 17,245 - 17,245 17,721
Net deferred tax assets/ (liabilities) $ 121,207 $ 7,559 $ 128,766 $ 147,484 $ 5,341 $ 152,825 $ (24,059 )
Tax effect of unrealized (gains) / losses 1,944
Tax effect of balance sheet only adjustments -
Change in net deferred income tax $ (22,115 )
Page 45

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

Reconciliation of Federal Income Tax Rate to Actual Rate

The significant items causing a difference between the statutory federal income tax rate and the Company's effective income tax rate are as follows:

December 31, 2024
Amount Tax Effect Effective Rate
Provision computed at statutory rate $ 7,256 $ 1,524 21.00 %
IMR 11,233 2,359 32.51 %
Ceding commission (15,057 ) (3,162 ) (43.58 )%
Return to provision true up (permanent) 38 8 0.11 %
Tax Credits (1,314 ) (276 ) (3.80 )%
Tax on non-admitted assets 3,171 666 9.18 %
DREs (14,733 ) (3,094 ) (42.64 )%
Nontaxable income (4,052 ) (851 ) (11.73 )%
Deferred validation - - - %
Subpart F inclusion 7,043 1,479 20.38 %
Other permanent adjustments (519 ) (109 ) (1.50 )%
Total $ (6,934 ) $ (1,456 ) (20.07 )%
Federal income taxes incurred (54,256 ) (747.74 )%
Realized capital gains (losses) tax 30,685 422.89 %
Change in net deferred income taxes 22,115 304.78 %
Total statutory income tax expense / (benefit) $ (1,456 ) (20.07 )%
December 31, 2023
Amount Tax Effect Effective Rate
Provision computed at statutory rate $ (25,005 ) $ (5,251 ) 21.00 %
IMR (66,476 ) (13,960 ) 55.83 %
Ceding commission 22,462 4,717 (18.86 )%
Return to provision true up (permanent) (238 ) (50 ) 0.20 %
Tax Credits (42,905 ) (9,010 ) 36.03 %
Tax on non-admitted assets (400 ) (83 ) 0.34 %
DREs 924 194 (0.78 )%
Nontaxable Income (981 ) (206 ) 0.82 %
Deferred Validation 310 65 (0.26 )%
Other Permanent Adjustments (900 ) (188 ) 0.76 %
Total $ (113,210 ) $ (23,774 ) 95.08 %
Federal income taxes incurred (36,369 ) 145.45 %
Realized capital gains (losses) tax 3,792 (15.17 )%
Change in net deferred income taxes 8,803 (35.21 )%
Total statutory income tax expense / (benefit) $ (23,774 ) 95.08 %

At December 31, 2024, the Company has $0 in net operating loss carry-forwards, $0 in foreign tax credit carry-forwards and has $0 of capital loss carry-forwards.

Page 46

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

As a result of tax reform (TCJA), the Company can no longer carry back future net operating losses (capital losses are still eligible for carry back), therefore there are no available taxes for recoupment.

The Company will file in a consolidated life/non-life federal income tax return with its parent, Global Atlantic Limited (Delaware), and its affiliates for the period ending December 31, 2024. The Company is a party to a written agreement, approved by the Company's Board of Directors, which sets forth the manner in which the total combined federal income tax is allocated to each entity within the consolidated group.

The Company recognizes interest and penalties accrued related to unrecognized tax benefits as a component of its income tax provision. As of December 31, 2024 and 2023, the Company has no amounts accrued for the payment of interest and penalties, which does not include the federal tax benefit of interest deductions, where applicable. The Company had no unrecognized tax benefits as of December 31, 2024 and 2023.

The IRS routinely audits the Company's federal income tax returns, and when appropriate, provisions are made in the financial statements in anticipation of the results of these audits. The Company believes that its income tax filing positions and deductions will be sustained on audit, and does not anticipate any adjustments that will result in a material, adverse effect on the Company's financial condition, results of operations, or cash flow. Therefore, no reasonable estimate can be made for tax loss contingencies and none has been recorded.

The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2020. The Company has no tax positions for which it believes it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months.

In June 2007, the Financial Accounting Standard Board (FASB) issued FASB interpretation (FIN) No. 48, According for Uncertainty in Income Taxes (FIN No. 48). The NAIC is still evaluating the applicability of FIN No. 48 to Statutory Financial Reporting. The Company continues to recognize tax benefits and related reserves in accordance with SSAP No. 5R, Liabilities, Contingencies and Impairments of Assets (SSAP No. 5R). The Company believes that its income tax filing positions and deductions will be sustained in audit, and does not anticipate any adjustments that will results in a material, adverse effect on the Company's financial condition, results of operations, or cash flow. Therefore, no contingent tax liabilities have been recorded pursuant to SSAP No. 5R as modified by SSAP No. 101.

On August 16, 2022, the Inflation Reduction Act (the "IRA") was signed into law. The IRA enacted a new 15% corporate minimum tax ("CAMT") on the "adjusted financial statement income" of certain large corporations, which became effective on January 1, 2023. As required under the authoritative guidance of ASC 740, Income Taxes, we reviewed the impact on income taxes due to the change in legislation and concluded there was no material impact to the financial statements for the years ended December 31, 2024 and 2023.

Page 47

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

7. REINSURANCE

The Company seeks to diversify risk and limit its overall financial exposure by reinsuring certain levels of risk through acquisition and cessions with other insurance companies or reinsurers. In addition, consistent with the overall business strategy, the Company assumes certain policy risks written by other insurance companies on a coinsurance basis. Under a coinsurance arrangement, depending upon the terms of the contract, the reinsurer may share in the risk of loss due to mortality or morbidity, lapses, and the investment risk, if any, inherent in the underlying policy. Modified coinsurance and funds withheld coinsurance differ from coinsurance in that the ceding company retains the assets supporting the reserves while the risk is transferred to the reinsurer.

Effective November 1, 2023, the Company entered into a coinsurance agreement with the Metropolitan Life Insurance Company whereby it assumed universal life and fixed annuity business. The total assumed reserves were $10,254,863. Subsequently the Company entered into retrocession agreements where reserves of $9,485,748 were ceded to an affiliated party and a modified coinsurance treaty with a third-party where the company ceded $3,658,948 of separate account reserves and $356,831 of general account reserves.

Effective April 1, 2023, the Company entered into a coinsurance agreement with Mutual of America Life Insurance Company whereby it assumed payout group annuities. The total assumed reserves were $777,512. Subsequently the Company entered into a retrocession agreement where reserves of $719,199 were ceded to an affiliated party.

The Company cedes on a coinsurance basis 100% of a block of variable annuity and life insurance business to Commonwealth Annuity. At December 31, 2024 and 2023, the Company ceded $27,549 and $29,419, respectively, in reserves pursuant to the aforementioned agreement.

Reinsurance assumed for the years ended December 31, is as follows:

December 31,
2024 2023
Coinsurance reserves 16,930,128 17,380,077
Modco reserves assumed 13,547,318 11,866,169

Reinsurance ceded for the years ended December 31, is as follows:

December 31,
2024 2023
Deduction from insurance liabilities including reinsurance recoverable on unpaid claims 16,121,973 16,551,907
Reinsurance recoverable on paid losses 18,706 21,267
Modco reserves ceded 12,701,867 11,103,070
Page 48

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

The effects of reinsurance premiums for the years ended December 31, were as follows:

December 31,
2024 2023
Life and accident and health insurance
Direct $ 39,350 $ 44,139
Reinsurance assumed - non - affiliated 260,321 10,196,093
Reinsurance assumed - affiliated - -
Less: Reinsurance ceded - non - affiliated (260,797 ) (94,129 )
Less: Reinsurance ceded - affiliated 87,156 (9,128,773 )
Net premiums $ 126,030 $ 1,017,330

As of December 31, 2024 and 2023 our net reserves pertaining to affiliate activity was ($15,228,821) and ($15,630,346), respectively. As of December 31, 2024 and 2023 our net modco reserves pertaining to affiliate activity was ($5,725,100) and ($4,793,167) respectively.

In the normal course of business, the Company seeks to reduce the loss that may arise from events that cause unfavorable underwriting results by ceding certain levels of risk in various areas of exposure with other insurance enterprises or reinsurers.

Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policy. Reinsurance contracts do not relieve the Company from its obligations to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company; consequently, allowances are established for amounts deemed uncollectible. The Company determines the appropriate amount of reinsurance based on evaluation of the risks accepted and analyses prepared by consultants and reinsurers and on market conditions (including the availability and pricing of reinsurance). The Company also believes that the terms of its reinsurance contracts are consistent with industry practice in that they contain standard terms with respect to lines of business covered, limit and retention, arbitration and occurrence. Based on the Company's review of its reinsurers' financial statements and reputations in the reinsurance marketplace, the Company believes that its reinsurers are financially sound. There was no allowance for uncollectible amounts at December 31, 2024 and 2023.

8. PREMIUM AND ANNUITY CONSIDERATIONS DEFERRED AND UNCOLLECTED

Deferred and uncollected life insurance premiums represent annual or fractional premiums, either due and uncollected or not yet due, where policy reserves have been provided on the assumption that the full life insurance premium for the current policy year has been collected. Gross premiums as represented below are net of reinsurance. Loading is the amount added to premiums to cover operating expenses. Net deferred and uncollected premiums represent only the portion of gross premiums related to mortality charges and interest. As of December 31, 2024 and 2023, the Company had deferred and uncollected life insurance premiums (excluding accident and health) as follows:

Year Ended December 31,
2024 2023
Gross Loading Net Non-
Admitted 		Net
Admitted 		Gross Loading Net Non-
Admitted 		Net
Admitted
Traditional life $ 1,448 $ 251 $ 1,699 $ (83 ) $ 1,616 $ 1,634 $ 474 $ 2,108 $ (289 ) $ 1,819
Total $ 1,448 $ 251 $ 1,699 $ (83 ) $ 1,616 $ 1,634 $ 474 $ 2,108 $ (289 ) $ 1,819
Page 49

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

9. ANNUITY RESERVES AND DEPOSIT LIABILITIES BY WITHDRAWAL CHARACTERISTICS

As December 31, 2024, the Company's annuity reserves, supplementary contract reserves and deposit liabilities that are subject to discretionary withdrawal (without adjustment) and not subject to discretionary withdrawal provisions are summarized as follows:

Individual Annuities:

Year Ended December 31, 2024
General
Account 		Separate Account
With Guarantee 		Separate Account
Without Guarantee 		Total % of Total
Subject to discretionary withdrawal
With market value adjustment $ 446,694 $ - $ - $ 446,694 8.0 %
At book value less surrender charge of 5% or more 35,678 - - 35,678 0.6 %
At fair value - - 20,264 20,264 0.4 %
Total with adjustment or at market value 482,372 - 20,264 502,636 9.0 %
At book value without adjustment (minimal or no charge or adjustment) 3,726,560 - - 3,726,560 66.6 %
Not subject to discretionary withdrawal 1,363,561 - 347 1,363,908 24.4 %
Total (gross) 5,572,493 - 20,611 5,593,104 100.0 %
Less: reinsurance ceded 4,567,639 - - 4,567,639
Total (net) $ 1,004,854 $ - $ 20,611 $ 1,025,465
Group Annuities:
General
Account 		Separate Account
With Guarantee 		Separate Account
Without Guarantee 		Total % of Total
Subject to discretionary withdrawal
With market value adjustment $ - $ 116 $ - $ 116 - %
At book value less surrender charge of 5% or more 1,799 - - 1,799 0.1 %
At fair value - - 43,361 43,361 1.3 %
Total with adjustment or at market value 1,799 116 43,361 45,276 1.4 %
At book value without adjustment (minimal or no charge or adjustment) 2,506,540 - - 2,506,540 75.0 %
Not subject to discretionary withdrawal 788,949 - 706 789,655 23.6 %
Total (gross) 3,297,288 116 44,067 3,341,471 100.0 %
Less: reinsurance ceded 2,987,207 - - 2,987,207
Total (net) $ 310,081 $ 116 $ 44,067 $ 354,264
Page 50

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

Total Deposit-type Contracts:

General
Account 		Separate Account
With Guarantee 		Separate Account
Without Guarantee 		Total % of Total
Subject to discretionary withdrawal
With market value adjustment $ - $ - $ - $ - - %
At book value less surrender charge of 5% or more - - - - - %
At fair value - - 3,262 3,262 0.6 %
Total with adjustment or at market value - - 3,262 3,262 0.6 %
At book value without adjustment (minimal or no charge or adjustment) 316,054 - - 316,054 56.3 %
Not subject to discretionary withdrawal 241,816 - - 241,816 43.1 %
Total (gross) 557,870 - 3,262 561,132 100.0 %
Less: reinsurance ceded 291,028 - - 291,028
Total (net) $ 266,842 $ - $ 3,262 $ 270,104

Reconciliation of total annuity actuarial reserves and deposit fund liabilities amounts:

Year Ended December 31, 2024
General
Account 		Separate
Account 		Total
Life, accident & health, and supplemental contracts with life contingencies 1,581,777 - 1,581,777
Separate Accounts - 68,056 68,056
Total annuity actuarial reserves and deposit liabilities $ 1,581,777 $ 68,056 $ 1,649,833
Page 51

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

As of December 31, 2024, the Company's life reserves, that are subject to discretionary withdrawal (without adjustment) and not subject to discretionary withdrawal provisions are summarized as follows:

Year Ended December 31, 2024 Year Ended December 31, 2024
General Account Separate Account-Guaranteed and
Nonguaranteed
Account
Value 		Cash Value Reserve Account
Value 		Cash Value Reserve
Subject to discretionary withdrawal, surrender values, or policy loans:
Term Policies with Cash Value $ - $ 56,597 $ 68,132 $ - $ - $ -
Universal Life 1,165,494 1,171,767 1,261,768 - - -
Universal Life with Secondary Guarantees 1,006,110 971,590 4,456,918 - - -
Indexed Universal Life with 101,971 100,722 88,244 - - -
Indexed Universal Life with Secondary Guarantees 298,532 294,299 889,981 - - -
Other permanent cash value life insurance - 353,190 369,373 - - -
Variable Universal Life 594,154 593,996 448,793 52,086 52,086 49,279
Not subject to discretionary withdrawal or no cash value:
Term Policies without Cash Value - - 65,346 - - -
Accidental Death Benefits - - 335 - - -
Disability-Active Lives - - 2,085 - - -
Disability-Disabled Lives - - 3,840 - - -
Miscellaneous Reserves - - 681,181 - - 2,998
Total (gross) 3,166,261 3,542,161 8,335,996 52,086 52,086 52,277
Less: reinsurance ceded 2,805,770 3,226,620 7,751,230 - - -
Total (net) $ 360,491 $ 315,541 $ 584,766 $ 52,086 $ 52,086 $ 52,277

Reconciliation of total life & accident & health reserves

Year Ended December 31, 2024
General
Account 		Separate
Account
without
Guarantees 		Total
Life insurance reserves $ 557,163 $ 49,279 $ 606,442
Accidental death benefit reserves 300 - 300
Disability-active lives reserves 161 - 161
Disability-disabled lives reserves 264 - 264
Miscellaneous reserves 26,878 2,998 29,876
Total life and accident & health reserves 584,766 52,277 637,043
Page 52

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

As December 31, 2023, the Company's annuity reserves, supplementary contract reserves and deposit liabilities that are subject to discretionary withdrawal (without adjustment) and not subject to discretionary withdrawal provisions are summarized as follows:

Individual Annuities:

Year Ended December 31, 2023
General
Account 		Separate Account
With Guarantee 		Separate Account
Without Guarantee 		Total % of Total
Subject to discretionary withdrawal
With market value adjustment $ 729,444 $ - $ - $ 729,444 11.8 %
At book value less surrender charge of 5% or more 35,580 - - 35,580 0.6 %
At fair value - - 18,383 18,383 0.4 %
Total with adjustment or at market value 765,024 - 18,383 783,407 12.8 %
At book value without adjustment (minimal or no charge or adjustment) 3,897,012 - - 3,897,012 62.8 %
Not subject to discretionary withdrawal 1,513,779 - 349 1,514,128 24.4 %
Total (gross) 6,175,815 - 18,732 6,194,547 100.0 %
Less: reinsurance ceded 5,232,366 - - 5,232,366
Total (net) $ 943,449 $ - $ 18,732 $ 962,181

Group Annuities:

General
Account 		Separate Account
With Guarantee 		Separate Account
Without Guarantee 		Total % of Total
Subject to discretionary withdrawal
With market value adjustment $ - $ 171 $ - $ 171 - %
At book value less surrender charge of 5% or more 1,668 - - 1,668 - %
At fair value - - 41,919 41,919 1.2 %
Total with adjustment or at market value 1,668 171 41,919 43,758 1.2 %
At book value without adjustment (minimal or no charge or adjustment) 2,748,360 - - 2,748,360 75.7 %
Not subject to discretionary withdrawal 838,220 - 744 838,964 23.1 %
Total (gross) 3,588,248 171 42,663 3,631,082 100.0 %
Less: reinsurance ceded 3,250,859 - - 3,250,859
Total (net) $ 337,389 $ 171 $ 42,663 $ 380,223
Page 53

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

Total Deposit-type Contracts:

General
Account 		Separate Account
With Guarantee 		Separate Account
Without Guarantee 		Total % of Total
Subject to discretionary withdrawal
With market value adjustment $ - $ - $ - $ - - %
At book value less surrender charge of 5% or more - - - - - %
At fair value - - 3,225 3,225 0.5 %
Total with adjustment or at market value - - 3,225 3,225 0.5 %
At book value without adjustment (minimal or no charge or adjustment) 332,262 - - 332,262 52.1 %
Not subject to discretionary withdrawal 301,745 - - 301,745 47.4 %
Total (gross) 634,007 - 3,225 637,232 100.0 %
Less: reinsurance ceded 347,685 - - 347,685
Total (net) $ 286,322 $ - $ 3,225 $ 289,547

Reconciliation of total annuity actuarial reserves and deposit fund liabilities amounts:

Year Ended December 31, 2023
General
Account 		Separate
Account
With
Guarantee 		Total
Life, accident & health, and supplemental contracts with life contingencies 1,567,160 - 1,567,160
Separate Accounts - 64,791 64,791
Total annuity actuarial reserves and deposit liabilities 1,567,160 64,791 1,631,951
Page 54

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

As December 31, 2023, the Company's life reserves, that are subject to discretionary withdrawal (without adjustment) and not subject to discretionary withdrawal provisions are summarized as follows:

Year Ended December 31, 2023 Year Ended December 31, 2023
General Account Separate Account-Guaranteed and
Nonguaranteed
Account
Value 		Cash Value Reserve Account
Value 		Cash Value Reserve
Subject to discretionary withdrawal, surrender values, or policy loans:
Term Policies with Cash Value $ - $ 57,951 $ 68,500 $ - $ - $ -
Universal Life 1,224,000 1,228,392 1,244,708 - - -
Universal Life with Secondary Guarantees 1,039,548 974,289 4,236,012 - - -
Indexed Universal Life with 106,079 104,442 89,546 - - -
Indexed Universal Life with Secondary Guarantees 297,538 290,899 860,176 - - -
Other permanent cash value life insurance - 362,145 383,966 - - -
Variable Universal Life 595,773 590,506 448,421 47,787 47,787 45,088
Not subject to discretionary withdrawal or no cash value:
Term Policies without Cash Value - - 88,588 - - -
Accidental Death Benefits - - 487 - - -
Disability-Active Lives - - 2,514 - - -
Disability-Disabled Lives - - 3,597 - - -
Miscellaneous Reserves - - 803,701 - - 2,850
Total (gross) 3,262,938 3,608,624 8,230,216 47,787 47,787 47,938
Less: reinsurance ceded 2,890,300 3,284,052 7,652,941 - - -
Total (net) $ 372,638 $ 324,572 $ 577,275 $ 47,787 $ 47,787 $ 47,938

Reconciliation of total life & accident & health reserves

Year Ended December 31, 2023
General
Account 		Separate
Account
without
Guarantees 		Total
Life insurance reserves $ 540,375 $ 45,088 $ 585,463
Accidental death benefit reserves 326 - 326
Disability-active lives reserves 192 - 192
Disability-disabled lives reserves 238 - 238
Miscellaneous reserves 36,144 2,850 38,994
Total life and accident & health reserves 577,275 47,938 625,213
Page 55

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

10. ACCIDENT AND HEALTH POLICY AND CLAIMS LIABILITIES

On January 2, 2009, The Hanover Insurance Group, Inc. (THG) sold all the outstanding shares of capital stock of the Company to Commonwealth Annuity pursuant to a Stock Purchase Agreement entered into on July 30, 2008. Additionally, coincident with the sale transaction, the Company and the Hanover Insurance Company (HIC) entered into a reinsurance contract whereby HIC assumed the Company's accident and health insurance business through a 100% coinsurance agreement. The Company did not have any policy and claims liabilities related to its accident and health business net of reinsurance at both December 31, 2024 and 2023.

The Company regularly updates its estimates of policy and claims liabilities as new information becomes available and further events occur which may impact the resolution of unsettled claims for its accident and health line of business. Changes in prior estimates are generally reflected in results of operations in the year such changes are determined to be needed.

11. CAPITAL AND SURPLUS AND DIVIDEND RESTRICTIONS

Massachusetts has enacted laws governing the payment of dividends and other distributions to stockholders by insurers. These laws affect the dividend paying ability of the Company. Pursuant to Massachusetts statutes, the maximum amount of dividends and other distributions that an insurer may pay in any twelve-month period, without prior approval of the MA DOI, is limited to the greater of the Company's statutory net gains from operations of the preceding December 31 or 10% of the statutory policyholder's surplus as of the preceding December 31. Dividends must be paid from unassigned funds. The maximum ordinary dividend the Company can pay in 2025 is $31,104.

On November 15, 2023, the Company received a $160,000 cash contribution from Commonwealth Annuity.

On September 29, 2023, the Company received a $15,000 cash contribution from Commonwealth Annuity.

On April 11, 2023, the Company received a $27,000 cash contribution from Commonwealth Annuity.

The Company's unassigned surplus was impacted by each item below as follows:

December 31,
2024 2023
Unrealized gains (losses) $ (4,274 ) $ 249
Non-admitted asset values (135,022 ) (173,409 )
Asset valuation reserves (63,652 ) (39,087 )
Page 56

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

The Company must meet minimum capital and surplus requirements under a RBC formula. RBC is the standard measurement of an insurance company's required capital on a statutory basis. It is calculated by using a formula that applies factors to various assets, premium, and statutory reserve items. The formula takes into account the risk characteristics of the insurer, including asset risk, insurance risk, interest rate risk and business risk. Regulatory action is tied to the amount of a company's capital position in relation to required capital as calculated under the RBC formula. Total adjusted capital for life insurance companies is defined as statutory capital and surplus, plus asset valuation reserve plus subsidiary asset valuation reserves, plus 50% of dividends apportioned for payment, plus 50% of subsidiary dividends apportioned for payment, and was $200,593 at December 31, 2024.

12. RELATED PARTY TRANSACTIONS

Service Agreements

The Company entered into a Services and Expense Agreement with GAFG under which GAFG and affiliates agreed to provide personnel, management services, administrative support, the use of facilities and such other services as the parties may agree to from time to time. The agreement was filed with the MA DOI. The Company recognized $15,502 and $16,753 in intercompany charges for 2024 and 2023, respectively.

On February 1, 2021, the Company entered into an investment management agreement with Kohlberg Kravis Roberts & Co. L.P., a Delaware limited partnership and KKR subsidiary. The Company incurred expenses for this agreement of $35,906 and $17,281 for the years ended December 31, 2024 and 2023, respectively.

The Company has funds withheld agreements with related parties. Net amounts due from affiliates related to funds withheld agreements were $1,145 and $38,447 for the years ended December 31, 2024 and 2023, respectively. Net amounts due to affiliates related to funds withheld agreements were $31,913 and $(5,379) for the years ended December 31, 2024 and 2023, respectively. All intercompany balances related to funds withheld agreements are settled in the subsequent quarter.

The Company has agreements with affiliated parties to receive and pay certain fee income and expenses related to policyholder administration. Net income related to these agreements was $25,306 and $12,692 for the years ended December 31, 2024 and 2023, respectively, and net amounts receivable were $8,586 and $2,231 at December 31, 2024 and 2023, respectively.

Payable to/Receivable from Affiliates

The Company reported a net payable to related parties of $1,035 and $6,054 for the years ended December 31, 2024 and 2023 respectively. All intercompany balances shown as payable to or from parent, subsidiaries and affiliates are settled within 30 days of their incurrence under the terms of the intercompany expense sharing agreements.

Page 57

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

The Company and certain subsidiaries and affiliates are part of an intercompany borrowing arrangement whereby companies may borrow from one another on a short-term basis for various purposes.

Affiliated Investments

In 2022, the NAIC clarified that certain investments which are originated, sponsored or managed by affiliated entities shall be reported as affiliated investments even if the underlying assets are unrelated third party investments with no credit exposure to affiliates. The Company holds investments of this type, which are included in invested assets balances as follows:

2024 2023
Bonds 1,442,028 241,831
Mortgages 978,946 144,955
Common stocks - -
Other invested assets 116,837 16,872
$ 2,537,811 $ 403,658
13. COMMITMENTS AND CONTINGENCIES

Litigation

The Company is involved from time to time in judicial, regulatory and arbitration proceedings concerning matters arising in connection with the conduct of its business.

Given the inherent difficulty of predicting the outcome of the Company's litigation and regulatory matters, particularly in cases or proceedings in which substantial or indeterminate damages or fines are sought, the Company cannot estimate losses, or ranges of losses, for cases or proceedings where there is only a reasonable possibility that a loss may be incurred.

Page 58

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

In connection with the process of converting over 500,000 in-force life insurance policies (representing policies for both the Company and Accordia) from systems managed by Athene Holdings Limited to the platform of one of our third party service providers DXC (the Conversion), the Company and Accordia expect to incur a variety of litigation-related costs. On June 28, 2018 a subsidiary of Athene and FAFLIC entered into a consent order with the New York State Department of Financial Services, or "NYSDFS," relating to the NYSDFS' market conduct examination findings that related primarily to disruptions in servicing caused by the Conversion. Pursuant to the consent order, Athene paid the NYSDFS a fine of $15,000 and will also take corrective actions and provide remediation to policyholders impacted by the Conversion. The agreements between the Company, Commonwealth Annuity and Athene provide indemnities to Athene, including for fines and penalties resulting from violations of law. Commonwealth Annuity has reimbursed Athene an amount equal to the NYSDFS fine in July, 2018. As of December 31, 2023 the Company no longer holds reserves for costs related to certain aspects of the corrective actions agreed under the consent order.

In connection with a cybersecurity incident on May 29, 2023, related to services provided to several companies by Pension Benefits Information LLC, and its use of MOVEit software ("PBI/MOVEit Incident"), The Global Atlantic Financial Group LLC or some of its affiliates have received a total of five putative class action complaints alleging failure to properly secure and safeguard customers' sensitive information. Four cases originated in United States District Court for the Southern District of New York: Clancy, Michael v. The Global Atlantic Financial Group LLC (1:23-cv-07975) filed September 8, 2023, Guzman, Marcelina v. The Global Atlantic Financial Group LLC (1:23-cv-08150) filed September 14, 2023, and Hendrix, Eudoice v. Global Atlantic Financial Company, Accordia Life and Annuity Company, Commonwealth Annuity and Life Insurance Company, First Allmerica Financial Life Insurance Company and Forethought Life Insurance Company (1:23-cv-08058) filed September 12, 2023, and Bernstein, Michael v. The Global Atlantic Financial Group LLC (1:23-cv-9868) filed in New York state court September 15, 2023. A fifth case was filed in the United States District Court for the Southern District of Indiana, but subsequently was voluntarily dismissed: Hansa v. Forethought Life Insurance Company, Global Atlantic Insurance Network LLC, and The Global Atlantic Financial Group LLC (1:23-cv-01549) filed August 28, 2023. The Company itself is currently a party only in the Hendrix case. A judicial panel consolidated certain PBI/MOVEit Incident-related litigation in an MDL and transferred the cases to the District of Massachusetts, before Judge Allison Burroughs. This order applies to all matters against The Global Atlantic Financial Group LLC and its affiliates.

However, the Company believes that at the present time there are no pending or threatened lawsuits that are reasonably likely to have a material adverse effect on its financial position or results of operations.

Assessments

Unfavorable economic conditions may contribute to an increase in the number of insurance companies that are under regulatory supervision. This may result in an increase in mandatory assessments by state guaranty funds, or voluntary payments by solvent insurance companies to cover losses to policyholders of insolvent or rehabilitated companies. Mandatory assessments, which are subject to statutory limits, can be partially recovered through a reduction in future premium taxes in some states. The Company is not able to reasonably estimate the potential impact of any such future assessments or voluntary payments.

Page 59

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

Commitments

The Company has an operational servicing agreement with a third party administrator for contract / policy administration of the Company's traditional life business. Additionally, there is a professional services agreement to manage certain aspects of the Company's reinsurance portfolio. As of December 31, 2024 the purchase commitments related to the agreement with the third party administrator were as follows:

2025 $ 1,580
2026 1,512
2027 856
2028 98
2029 86
2030 and thereafter 75
Total $ 4,207

The Company invests in certain joint ventures, limited liability companies (LLCs) and partnerships, and in some cases makes a commitment for additional investment up to a maximum invested amount.

The Company has funding commitments subsequent to December 31, 2024 for the following:

Commercial Mortgage Loans and Other Lending Facilities $ 363,397
Limited Partnerships and LLC's $ 4,489
Collateral Loans $ 18,345
14. SUBSEQUENT EVENTS

The Company has evaluated subsequent events from December 31, 2024 through April 8, 2024, the date that these financial statements were available to be issued, and determined that there are no Type - I Recognized, or Type - II, Non Recognized events.

15. COMPOSITION OF OTHER ASSETS, LIABILITIES AND EXPENSES

Other assets consist of the following:

December 31,
2024 2023
Pension annuity contract $ - $ (1 )
Miscellaneous receivables 5,915 15,666
Admitted disallowed IMR 9,514 -
Unfunded commit accounts receivable 187 -
Guaranty funds receivable or on deposit 49 34
Total other assets $ 15,665 $ 15,699
Page 60

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

The percentage of total net negative (disallowed) IMR admitted in General Account or recognized in Separate Account to adjusted capital and surplus is 10%.

Other liabilities consist of the following:

December 31,
2024 2023
Remittances and items not allocated $ 17,182 $ 15,786
Payable for securities - 683
Miscellaneous liabilities 581 817
Tax liabilities 631 (483 )
Policyholder liabilities 950 941
Total other liabilities $ 19,344 $ 17,744

Other expenses consist of the following:

December 31,
2024 2023
Captive financing fee 1,838 1,775
Total other expenses $ 1,838 $ 1,775

16. SEPARATE ACCOUNTS

The Company utilizes separate accounts to record and account for assets and liabilities for variable annuity and variable life transactions. In accordance with the products/transactions recorded within the separate account, assets are considered legally insulated. The legal insulation of the separate account assets prevents such assets from being generally available to satisfy claims resulting from the general account.

The Company's separate account statement includes legally insulated assets of $121,401 and $113,751 as of December 31, 2024 and 2023, respectively. The assets legally insulated from the general account as of December 31, 2024 are attributed to the following products/transactions:

Product/Transaction Legally Insulated Assets (Not Legally Insulated)
Variable annuities $ 69,139 $ -
Variable life insurance products 52,262 -
Total $ 121,401 $ -

Separate accounts assets held by the Company generally relate to variable annuities or life insurance of a non-guaranteed return nature. The net investment return of the separate account is credited directly to the policyholder and can be positive or negative. The variable annuities generally provide a minimum guaranteed death benefit, the nature of which has varied over time. In 1996, the company began offering a minimum guaranteed death benefit which is adjusted annually to the current account value. The maximum amount associated with death benefit guarantees for 2024 was $1,534 with associated risk charges paid by the separate account to compensate for these risks of $0.

Page 61

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

The maximum amount associated with death benefit guarantees for 2023 was $2,451 with associated risk charges paid by the separate account to compensate for these risks of $0.

The maximum amount associated with death benefit guarantees for 2022 was $10,140 with associated risk charges paid by the separate account to compensate for these risks of $0.

The maximum amount associated with death benefit guarantees for 2021 was $2,365 with associated risk charges paid by the separate account to compensate for these risks of $1.

The maximum amount associated with death benefit guarantees for 2020 was $2,451 with associated risk charges paid by the separate account to compensate for these risks of $1

Information regarding the Separate Accounts of the Company as of December 31, 2024 is as follows:

2024 Indexed Non-Indexed
Guarantee Less
than / equal to
4% 		Non-Indexed
Guarantee More
than 4% 		Non-Guaranteed
Separate Accounts 		Total
Premiums, considerations or deposits $ - $ - $ - $ 1,643 $ 1,643
Reserves
For accounts with assets at:
Fair value - 116 - 116,956 117,072
By withdrawal characteristics
With MV adjustment - 116 - - 116
At fair value - - - 115,903 115,903
Not subject to discretionary withdrawal - - - 1,053 1,053
Total $ - $ 116 $ - $ 116,956 $ 117,072

Reconciliation of net transfers to / (from) separate accounts as reported in the statements of operations for the year ended December 31, 2024 is as follows:

Transfers to separate accounts $ 1,643
Transfers from separate accounts 10,226
Net transfers to/(from) separate accounts (8,583 )
Reconciling adjustments: 296
Administration and policy fees (2,564 )
Matured deferred contracts (232 )
Reinsurance 11,426
Transfers as reported in the statements of operations $ 343
Page 62

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

Information regarding the Separate Accounts of the Company as of December 31, 2023 is as follows:

2023 Indexed Non-Indexed
Guarantee Less
than / equal to
4% 		Non-Indexed
Guarantee More
than 4% 		Non-Guaranteed
Separate Accounts
Total
Premiums, considerations or deposits $ - $ - $ - $ 1,526 $ 1,526
Reserves
For accounts with assets at:
Fair value - 171 - 109,333 109,504
By withdrawal characteristics
With MV adjustment - 171 - - 171
At fair value - - - 108,310 108,310
Not subject to discretionary withdrawal - - - 1,022 1,022
Total $ - $ 171 $ - $ 109,332 $ 109,503

Reconciliation of net transfers to / (from) separate accounts as reported in the statements of operations for the year ended December 31, 2023 is as follows:

Transfers to separate accounts $ 1,526
Transfers from separate accounts 6,375
Net transfers to/(from) separate accounts (4,849 )
Reconciling adjustments: (323 )
Administration and policy fees (2,626 )
Matured deferred contracts (9,801 )
Reinsurance 5,738
Transfers as reported in the statements of operations $ (11,861 )
Page 63

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

17. CLOSED BLOCK

Effective December 1, 2015, and following the approval of the MADOI, the Company entered into a coinsurance agreement with Ameritas Life Insurance Corp whereby it ceded substantially all of its closed block of business. The closed block consists of individual whole life insurance participating policies, term life policies and individual deferred annuity contracts which were inforce as of October 16, 1995. As a result of the transaction, the Company ceded $571,400 policyholder liabilities, and transferred associated assets.

The table below presents financial schedule for the closed block, prior to the impact of reinsurance at December 31, 2024 and 2023.

Summarized financial information of the Closed Block for the years ended December 31, was as follows:

BALANCE SHEET 2024 2023
Assets:
Bonds, at amortized cost $ 347,907 $ 355,512
Cash & short-term investments 10,049 12,903
Policy loans 51,654 49,937
Investment income due & accrued 6,265 6,258
Premiums deferred and uncollected 1,153 1,284
Aggregate write-ins for other than invested assets 8,177 6,122
Current federal & foreign income tax recoverable 2,507 3,514
Total admitted assets $ 427,712 $ 435,530
Liabilities:
Policy liabilities & accruals $ 437,572 $ 449,956
Other liabilities 4,533 4,604
Total liabilities $ 442,105 $ 454,560
INCOME STATEMENT 2024 2023
Revenues:
Premiums and other considerations $ 8,607 $ 9,403
Net investment income 22,515 22,357
Realized gains (1,216 ) -
Total revenue $ 29,906 $ 31,760
Benefits & expenses:
Policy benefits $ 24,288 $ 28,175
Operating & selling expenses (27 ) (50 )
Taxes, excluding capital gains tax 1,007 (172 )
Total benefits & expenses $ 25,268 $ 27,953
Closed Block Net Income $ 4,638 $ 3,807
Page 64

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

CASH FLOWS 2024 2023
Cash from Operations:
Premiums & annuity considerations $ 8,768 $ 9,478
Net investment income 22,702 23,422
Claims, surrenders & other benefits (28,571 ) (37,353 )
Commissions & expenses paid - -
Dividends to policyholders (6,892 ) (7,360 )
Federal income taxes - -
Net cash used in operations $ (3,993 ) $ (11,813 )
Cash from Investments:
Proceeds from investments sold, matured or repaid
Bonds $ 33,130 $ 19,137
Cost of investments acquired
Bonds (26,935 ) -
Net decrease in policy loans (1,717 ) 1,720
Net decrease in receivable for securities - -
Net cash (used in) / provided by investments $ 4,478 $ 20,857
Cash from Financing & Other Sources:
Net deposits on deposit type contracts & other liabilities $ (1,213 ) $ (1,278 )
Other cash applied (2,126 ) (1,054 )
Net cash (used in) / provided by financing and other sources $ (3,339 ) $ (2,332 )
Cash and Short Term Investments
Net Change in cash and short term investments $ (2,854 ) $ 6,712
Beginning of the year 12,903 6,191
End of the year $ 10,049 $ 12,903

Many expenses related to Closed Block operations are charged to operations outside the Closed Block; accordingly, the contribution from the Closed Block does not represent the actual profitability of the Closed Block operations. Operating costs and expenses outside of the Closed Block are, therefore, disproportionate to the business outside the Closed Block.

Page 65

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Notes to Financial Statements- Statutory Basis

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)

18. RECONCILIATION TO ANNUAL STATEMENT

Subsequent to the filing of the annual statement in February 2024 and prior to the issuance of the Company's audited financial statements for the year ended December 31, 2023, the Company identified a reinsurance receivable and payable presentation correction which effectively increased receivable and payable balances on the balance sheet with no impact on surplus which differs from the annual statement as noted below.

A summary reconciliation of the Annual Statement balances to the audited financial statements is as follows:

Capital and
Surplus 		Net Income
(Loss) 		Admitted
Assets 		Liabilities
As reported in the 2023 statutory annual statement $ 135,372 $ 7,572 $ 15,651,384 $ 15,516,012
2023 Adjustments:
Reinsurance recoverable/payable reclass - - 93,328 93,328
As reported in the 2023 audited financial statement $ 135,372 $ 7,572 $ 15,744,712 $ 15,609,340
Page 66

SUPPLEMENTAL INFORMATION

Page 67

First Allmerica Financial Life Insurance Company
(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)
Supplemental Schedule of Selected Statutory Basis Financial Data
December 31, 2024

(Dollars in thousands)

Investment Income Earned
U.S. government bonds $ 62,478
Other bonds (unaffiliated) 468,822
Bonds of affiliates -
Preferred stock 55,183
Mortgage loans 186,622
Premium notes, policy loans and liens 32,454
Cash and short term-investments 34,926
Other invested assets 15,878
Miscellaneous income 767
Derivative instruments 603
Gross investment income $ 857,733
Other long term assets-statement value $ 253,491
Bonds and Short-Term Investments by Maturity and Class by Maturity (weighted based on future cash flows) - Statement Value
Due within one year or less $ 369,506
Over 1 year through 5 years 1,852,553
Over 5 years through 10 years 714,583
Over 10 years through 20 years 1,306,338
Over 20 years 4,805,180
Total by Maturity $ 9,048,160
by Class - Statement Value
Class 1 $ 5,748,602
Class 2 2,968,418
Class 3 220,516
Class 4 74,790
Class 5 34,597
Class 6 1,237
Total by Class $ 9,048,160
Total Publicly Traded $ 4,834,298
Total Privately Traded 4,213,862
Total $ 9,048,160
Mortgage loans on real estate (book value including nonadmitted portion):
Commercial mortgages $ 2,467,304
Residential mortgages 1,230,727
Total $ 3,698,031
Mortgage loans on real estate by standing (book value);
Good standing $ 3,685,235
Good standing with restructured terms -
With overdue interest over 90 days 7,361
In process of foreclosure 5,435
Total $ 3,698,031
Page 68

First Allmerica Financial Life Insurance Company
(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)
Supplemental Schedule of Selected Statutory Basis Financial Data
December 31, 2024

(Dollars in thousands)

Collateral loans $ 133,746
Common stocks - statement value $ 5,000
Collar, swap and forward agreements open - statement value $ -
Short-term investments - book value $ 26,395
Cash equivalents 478,848
Cash on deposit 14,225
Total $ 519,468
Life insurance in force
Ordinary life $ 1,881,540
Group life 10,052
$ 1,891,592
Amount of accidental death insurance in force under ordinary policies $ 2,648,387
Life insurance policies with disability provisions in force
Ordinary life $ 748,927
Group life 3,395
$ 752,322
Supplementary contracts in force
Ordinary - involving life contingencies
Amount on deposit $ -
Amount of income payable 8,646
Ordinary - not involving life contingencies
Amount on deposit $ 18,075
Amount of income payable 3,625
Group - involving life contingencies
Amount on deposit $ -
Amount of income payable 152
Group - not involving life contingencies
Amount on deposit $ -
Amount of income payable -
Page 69

First Allmerica Financial Life Insurance Company
(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)
Supplemental Schedule of Selected Statutory Basis Financial Data
December 31, 2024

(Dollars in thousands)

Annuities:
Ordinary
Immediate - amount of income payable $ 5,545
Deferred - fully paid account balance 872,620
Deferred - not fully paid account balance -
Group
Immediate - amount of income payable $ 18,760
Deferred - fully paid account balance 186,939
Deferred - not fully paid account balance -
Deposit funds and dividend accumulations:
Deposit funds - account balance $ 246,741
Dividend accumulations - account balance 729
Page 70

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Supplemental Schedule of Selected Statutory Basis Financial Data

December 31, 2024

(Dollars in thousands)

Investment Risk Interrogatories

1. The Company's admitted assets as reported in the statutory basis statements of admitted assets, liabilities and capital and surplus is $15,040,289 at December 31, 2024.
2. The 10 largest exposures to a single issuer/borrower/investment, by investment category, excluding: (i) U.S. government, US Government agency securities and those U.S government money market funds listed in the Appendix to the SVO Purposes and Procedures Manual as exempt, (ii) property occupied by the Company and (iii) policy loans:
Investment Category Issuer Amount Percentage of
Total Admitted
Assets
Bonds/Mortgages 2.01 Project Catalyst $ 426,940 2.8 %
Bonds/Other Invested Assets 2.02 JGBY 2024-1 221,299 1.5 %
Bonds 2.03 CRTBS 2024-1 LLC 205,227 1.4 %
Bonds 2.04 INTEL CORP 203,476 1.4 %
Bonds/Mortgages 2.05 Hatteras MOB Portfolio 178,610 1.2 %
Bonds/Other Invested Assets 2.06 Blue Eagle 2022-1D LLC 141,994 0.9 %
Bonds/Other Invested Assets 2.07 JAYP 2020-1A 141,786 0.9 %
Bonds/Other Invested Assets 2.08 PICO 2020-1B 140,183 0.9 %
Other Invested Assets 2.09 AGAMERICA LENDING LLC 104,643 0.7 %
Mortgages 2.10 LBA Fund IX Strategic Logistic 101,377 0.7 %
3. The amount and percentage of the Company's total admitted assets held in bonds, short-term investments and cash equivalents, and by NAIC rating is as follows:
NAIC Rating Amount Percentage
of Total Admitted
Assets
3.01 NAIC-1 $ 5,748,602 38.2 %
3.02 NAIC-2 2,968,418 19.7 %
3.03 NAIC-3 220,516 1.5 %
3.04 NAIC-4 74,790 0.5 %
3.05 NAIC-5 34,597 0.2 %
3.06 NAIC-6 1,237 - %
$ 9,048,160 60.1 %
4. Assets held in foreign investments are as follows:
Amount Percentage
of Total
Admitted
Assets
4.02 Total admitted assets held in foreign investments $ 1,193,691 7.9 %
4.03 Foreign-currency-denominated investments 109,955 0.7 %
4.04 Insurance linked liabilities denominated in that same foreign currency - - %
Page 71

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Supplemental Schedule of Investment Risk Interrogatories

December 31, 2024

(Dollars in thousands)

5. Aggregate foreign investment exposure categorized by NAIC sovereign rating:
Amount Percentage
of Total
Admitted
Assets
5.01 Countries rated NAIC-1 $ 1,186,969 7.9 %
5.02 Countries rated NAIC-2 2,000 0.0 %
5.03 Countries rated NAIC-3 or less 4,722 0.0 %
$ 1,193,691 7.9 %
6. Largest foreign investment exposure to a single country, categorized by the country's NAIC sovereign rating:
Amount Percentage
of Total
Admitted
Assets
Countries rated NAIC-1
6.01 Cayman Islands $ 429,419 2.9 %
6.02 United Kingdom 213,234 1.4 %
Countries rated NAIC-2
6.03 Panama 2,000 0.0 %
Countries rated NAIC-3
6.04 Liberia 4,722 0.0 %
$ 649,375 4.3 %
7-9. Assets held in unhedged foreign currency exposure are less than 2.5% of the Company's total admitted assets.
10. Ten largest non-sovereign (i.e. non-governmental) foreign issues:
Issuer NAIC Rating Amount Percentage
of Total
Admitted
Assets
10.01 WALR 2019-1 1, 2, 3 & NR $ 89,989 0.6 %
10.02 VODAFONE GROUP PLC 2 80,499 0.5 %
10.03 HITR 5A 1 71,443 0.5 %
10.04 Garbe CM2 58,516 0.4 %
10.05 Wallaby (Mileway) CM2 51,439 0.3 %
10.06 CREDIT AGRICOLE SA 2 41,516 0.3 %
10.07 LLOYDS BANKING GROUP PLC 2 41,115 0.3 %
10.08 BPCE SA 1 27,075 0.2 %
10.09 RIO TINTO FIN USA PLC 1 25,227 0.2 %
10.10 CSL FINANCE PLC 1 24,576 0.2 %
$ 511,395 3.5 %
Page 72

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Supplemental Schedule of Investment Risk Interrogatories

December 31, 2024

(Dollars in thousands)

11. Assets held in Canadian investments are as follows:
11.02 Total admitted assets held in Canadian investments 110,365 0.73 %
11.03 Canadian currency-denominated investments
11.04 Canadian-denominated insurance liabilities
11.05 Unhedged Canadian currency exposure

12. Assets held in investments with contractual sales restrictions are less than 2.5% of the Company's total admitted assets.
13. Assets held in equity interests are less than 2.5% of the Company's total admitted assets.
14. Assets held in nonaffiliated, privately placed equities are less than 2.5% of the Company's total admitted assets.
15. Assets held in general partnership interests are less than 2.5% of the Company's total admitted assets.
16. With respect to mortgage loans reported in Schedule B, the Company's ten largest aggregate mortgage interests are as follows: The aggregate mortgage interest represents the combined value of all mortgages secured by the same group of properties:
Type Amount Percentage
of Total
Admitted
Assets
16.01 Commercial 163,306 1.09 %
16.02 Commercial 101,377 0.67 %
16.03 Commercial 98,316 0.65 %
16.04 Commercial 90,693 0.60 %
16.05 Commercial 87,520 0.58 %
16.06 Commercial 84,394 0.56 %
16.07 Commercial 83,092 0.55 %
16.08 Commercial 81,826 0.54 %
16.09 Commercial 76,701 0.51 %
16.10 Commercial 74,270 0.49 %

Amounts and percentages of the Company's total admitted assets held in the following categories of mortgage loans:

Amount Percentage
of Total
Admitted
Assets
16.11 Construction loans - - %
16.12 Mortgage loans over 90 days past due 7,361 0.05 %
16.13 Mortgage loans in the process of foreclosure 5,435 0.04 %
16.14 Mortgage loans foreclosed - - %
16.15 Restructured mortgage loans - - %
Page 73

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Supplemental Schedule of Investment Risk Interrogatories

December 31, 2024

(Dollars in thousands)

17. Aggregate mortgage loans have the following loan-to-value ratios as determined for the most current appraisal as of the statement date:
Residential Commercial Agricultural
Loan to Value Amount Percentage
of Total
Admitted
Assets 		Amount Percentage
of Total
Admitted
Assets 		Amount Percentage
of Total
Admitted
Assets
17.01 above 95% $ 21,131 0.14 % $ 860,782 5.72 % $ - - %
17.02 91 to 95% 2,079 0.01 % - - % - - %
17.03 81 to 90% 43,088 0.29 % - - % - - %
17.04 71 to 80% 472,791 3.14 % 51,645 0.34 % - - %
17.05 below 70% 691,637 4.60 % 1,554,876 10.34 % - - %
1,230,726 8.18 % 2,467,303 16.40 % - - %
18. Assets held in each of the five largest investments in one parcel or group of contiguous parcels of real estate reported in Schedule A are less than 2.5% of the Company's total admitted assets.
19. Assets held in mezzanine real estate loans are more than 2.5% of the Company's total admitted assets.
20. The Company did not have any securities lending, repurchase, reverse repurchase, dollar repurchase and dollar reverse repurchase agreements.
21. Amounts and percentages of the reporting entity's total admitted assets for warrants attached to other financial instruments, options, caps and floors:
Owned Written
Amount Percentage
of Total
Admitted
Assets 		Amount Percentage
of Total
Admitted
Assets
21.01 Hedging $ - 0 % $ - 0 %
21.02 Income generation - 0 % - 0 %
21.03 Other - 0 % - 0 %
22. Amounts and percentages of the reporting entity's total admitted assets of potential exposure for collars, swaps and forwards:
At End of Each Quarter
1st Quarter 2nd Quarter 3rd Quarter
22.01 Hedging $ 263 $ 6,357 $ 7,207
22.02 Income generation - - -
22.03 Replications - - -
22.04 Other - - -
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First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Supplemental Schedule of Investment Risk Interrogatories

December 31, 2024

(Dollars in thousands)

23. Amounts and percentages of the reporting entity's total admitted assets of potential exposure for future contracts:
At Year End At End of Each Quarter
1 2 1st Quarter 2nd Quarter 3rd Quarter
23.01 Hedging $ 29 - % $ 11 $ 11 $ 29
23.02 Income generation - - % - - -
23.03 Replications - - % - - -
23.04 Other - - % - - -
Page 75

First Allmerica Financial Life Insurance Company
(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)
Summary Investment Schedule
December 31, 2024

(Dollars in thousands)

Summary Investment Schedule Admitted Assets as Reported in
Gross Investment Holdings* the Annual Statement
Investment Categories Amount Percentage
of Total
Admitted
Assets 		Amount Percentage
of Total
Admitted
Assets
Long Term Bonds:
U.S. governments 816,335 5.80 % 816,335 5.80 %
All other governments 62,156 0.44 % 62,156 0.44 %
U.S. states, territories and possessions, etc. guaranteed 40,681 0.29 % 40,681 0.29 %
U.S. political subdivisions of states, territories, and possessions, guaranteed 27,233 0.19 % 27,233 0.19 %
U.S. special revenue and special assessment obligations, etc. non-guaranteed 275,111 1.95 % 275,111 1.95 %
Industrial and miscellaneous 6,330,474 44.97 % 6,330,474 44.97 %
Hybrid securities 35,577 0.25 % 35,577 0.25 %
Parent, subsidiaries and affiliates 1,442,028 10.24 % 1,442,028 10.24 %
Total long-term bonds 9,029,595 64.13 % 9,029,595 64.13 %
Preferred Stocks:
Total preferred stocks - - % - - %
Common Stocks:
Industrial and miscellaneous Other (Unaffiliated) 5,000 0.04 % 5,000 0.04 %
Total common stocks 5,000 0.04 % 5,000 0.04 %
Mortgage Loans:
Residential mortgages 1,230,727 8.74 % 1,230,727 8.74 %
Commercial mortgages 2,022,029 14.36 % 2,022,029 14.36 %
Mezzanine real estate loans 445,275 3.16 % 445,275 3.16 %
Total mortgage loans 3,698,031 26.26 % 3,698,031 26.27 %
Real Estate:
Total real estate - - % - - %
Cash 14,225 0.10 % 14,225 0.10 %
Cash equivalents 478,847 3.40 % 478,847 3.40 %
Short-term investments 26,395 0.19 % 26,395 0.19 %
Contract loans 553,662 3.93 % 551,782 3.92 %
Derivatives 21,106 0.15 % 21,106 0.15 %
Other invested assets 251,319 1.78 % 251,319 1.79 %
Receivables for securities 2,171 0.02 % 2,171 0.02 %
Total invested assets 14,080,353 100.00 % 14,078,473 100.00 %

* Gross investment holdings as valued in compliance with the NAIC Accounting Practices and Procedures Manual

Page 76

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Summary Investment Schedule

December 31, 2024

(Dollars in thousands)

The following information regarding reinsurance contracts is presented to satisfy the disclosure requirements in SSAP No. 61R, Life, Deposit-Type and Accident and Health Reinsurance, which apply to reinsurance contracts entered into, renewed or amended on or after January 1, 1996.

1. Has the Company reinsured any risk with any other entity under a reinsurance contract (or multiple contracts with the same reinsurer or its affiliates) that is subject to Appendix A-791, Life and Health Reinsurance Agreements, and includes a provision that limits the reinsurer's assumption of significant risks identified in Appendix A-791?

Examples of risk-limiting features include provisions such as a deductible, a loss ratio corridor, a loss cap, an aggregate limit or similar effect.

Yes ☒ No ☐

If yes, indicate the number of reinsurance contracts to which such provisions apply: _____1_____

If yes, indicate if deposit accounting was applied for all contracts subject to Appendix A-791 that limit significant risks.

Yes ☒ No ☐ N/A ☐

2. Has the Company reinsured any risk with any other entity under a reinsurance contract (or multiple contracts with the same reinsurer or its affiliates) that is not subject to Appendix A-791, for which reinsurance accounting was applied and includes a provision that limits the reinsurer's assumption of risk?

Examples of risk-limiting features include provisions such as a deductible, a loss ratio corridor, a loss cap, an aggregate limit or other provisions that result in similar effects.

Yes ☒ No ☐

If yes, indicate the number of reinsurance contracts to which such provisions apply: _____1_____

If yes, indicate whether the reinsurance credit was reduced for the risk-limiting features.

Yes ☐ No ☐ N/A ☒

3. Does the Company have any reinsurance contracts (other than reinsurance contracts with a federal or state facility) that contain one or more of the following features which result in delays in payment in form or in fact:
a. Provisions that permit the reporting of losses to be made less frequently than quarterly;
b. Provisions that permit settlements to be made less frequently than quarterly;
c. Provisions that permit payments due from the reinsurer to not be made in cash within ninety (90) days of the settlement date (unless there is no activity during the period); or
Page 77

First Allmerica Financial Life Insurance Company

(A wholly-owned subsidiary of Commonwealth Annuity and Life Insurance Company)

Supplemental Schedule of Reinsurance Disclosures

December 31, 2024

(Dollars in thousands)

d. The existence of payment schedules, accumulating retentions from multiple years, or any features inherently designed to delay timing of the reimbursement to the ceding entity.
e.

Yes ☐ No ☒

4. Has the Company reflected reinsurance accounting credit for any contracts that are not subject to Appendix A-791 and not yearly renewable term reinsurance, which meet the risk transfer requirements of SSAP No. 61R?
Type of contract: Response: Identify reinsurance contract(s): Has the insured
event(s) triggering
contract coverage
been recognized?
Assumption reinsurance - new for the reporting period

Yes ☐ No ☒

N/A
Non-proportional reinsurance, which does not result in significant surplus relief

Yes ☐ No ☒

Yes ☐ No ☐ N/A ☒
5. Has the Company ceded any risk in a reinsurance agreement that is not subject to Appendix A-791 and not yearly renewable term reinsurance, under any reinsurance contract (or multiple contracts with the same reinsurer or its affiliates) during the period covered by the financial statements, and either:
a. Accounted for that contract as reinsurance under statutory accounting principles (SAP) and as a deposit under generally accepted accounting principles (GAAP); or

Yes ☐ No ☐ N/A ☒

b. Accounted for that contract as reinsurance under GAAP and as a deposit under SAP?

Yes ☐ No ☐ N/A ☒

If the answer to item (a) or item (b) is yes, include relevant information regarding GAAP to SAP differences to explain why the contract(s) is treated differently for GAAP and SAP below:

Page 78