4'%14&8QNWOG0Q

%QNQTCFQ5RTKPIU/GGVKPI ,WPG

5GUUKQP2& /CPCIKPI.QPI6GTO%CTG2GTUKUVGPE[4KUM
6TCEM -G[YQTFU /QFGTCVQT 2CPGNKUVU 4GEQTFGT *GCNVJ .QPI6GTO%CTG2TQFWEVU4KUM%NCUUKHKECVKQP )#4;.%14.+55 2#64+%+#,(#; 2'));.*#75'4 )#4;.%14.+55

5RGCMGTUYKNNEQOOGPVQP
HKPFKPIUHTQOVJG51#.QPI6GTO%CTG4GRQTV
 RTKEKPIKORNKECVKQPUCPF
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
%QR[TKIJV l  5QEKGV[ QH #EVWCTKGU
0QVG

6JG EJCTVU TGHGTTGF VQ KP VJG VGZV ECP DG HQWPF CV VJG GPF QH VJG OCPWUETKRV

 4'%14&8QNWOG

6JGVCDNGUVJCVHQNNQYKPENWFGFCVCD[KUUWG[GCTD[KUUWGCIGD[GNKOKPCVKQP RGTKQFCPFD[IGPFGT(QTGCEJVCDNGVJGFCVCJCUDGGPITQWRGFD[UKZFWTCVKQPU &WTCVKQPQPGNCRUGUYGTGFGHKPGFCUCP[VGTOKPCVKQPQEEWTTKPIKPVJGUVVQVJG VJOQPVJCHVGTKUUWGFWTCVKQPVYQVJGTGHQTGYQWNFDGVGTOKPCVKQPUKPVJGVJ VQVJGVJOQPVJCHVGTKUUWG 6JGUVWF[KPENWFGUFCVCHTQOFKHHGTGPVEQORCPKGUKPENWFKPIDQVJITQWR CPFKPFKXKFWCNYTKVGTU5KZQHVJGUGEQORCPKGUYJKEJEQPVTKDWVGFFCVCJCXGPQV RTQXKFGFCP[WRFCVGFGZRGTKGPEG6JWUVJGFCVCVJCVYCUEQPVTKDWVGFHQTVJG UVWF[JCUDGGPKPENWFGFKPQPN[VJGHKTUVHQWTFWTCVKQPUQHVJKUUVWF[1H VJGTGOCKPKPIGKIJVEQORCPKGUKPENWFGFVJTGGCTGDTCPFPGYEQPVTKDWVQTU6JG TGOCKPKPIHKXGEQORCPKGUKPENWFGFRTQXKFGFWRFCVGUVQVJGKTFCVCYJKEJYCU UWDOKVVGFHQTVJGUVWF[ #NNQHVJKUFCVCYCUCEEGRVGFKPCTCYWPGFKVGFUVCVG6JGEQOOKVVGGFKFPQV CVVGORVVQOCMGCP[EQTTGEVKQPU+POQUVECUGUTGUWNVUCRRGCTTGCUQPCDNG JQYGXGTVJGTGYCUQPGUGVQHFCVCUKIPKHKECPVN[JKIJGTVJCPCP[QVJGTUGVGURGEKCNN[ KPVJGHKHVJCPFUKZVJFWTCVKQPU6JGUGFCVCYGTGGZENWFGFHTQOVJGUVWF[ RTGUGPVGFJGTG6JGEQOOKVVGGYKNNFKUEWUUVJGUGTGUWNVUYKVJVJGEQPVTKDWVQTVQ XGTKH[VJCVVJGFCVCJCXGDGGPKPVGTRTGVGFEQTTGEVN[CPFCTGCRRTQRTKCVGVQKPENWFGKP VJGHKPCNUVWF[#PQVJGTRQKPVQHECWVKQPKUVJCVFCVCJCXGDGGPCIITGICVGFHTQO OCP[FKHHGTGPVEQORCPKGUYKVJFKHHGTGPVFKUVTKDWVKQPOGVJQFUFKHHGTGPVRTQFWEVU FKHHGTGPVRTKEKPINGXGNUCPFFKHHGTGPVVCTIGVOCTMGVU#P[QPGQHVJGUGHCEVQTUPGGFU VQDGEQPUKFGTGFYJGPFGVGTOKPKPIYJGVJGTVJGFCVCCTGCRRTQRTKCVGHQT[QWT EQORCP[#FFKVKQPCNN[FGRGPFKPIQPJQYVJGFCVCCTGEQFGFOQTVCNKV[EQWNF WPKPVGPVKQPCNN[DGKPENWFGF 6CDNGEQORCTGUVJGCXGTCIGNCRUGTCVGD[FWTCVKQPDGVYGGPVJGVYQUVWFKGU #XGTCIGNCRUGTCVGUJCXGFGETGCUGFCVGCEJFWTCVKQPYKVJCVQVCNFGETGCUGQH
HTQOVQKPFKECVKPIVJCVGZRGTKGPEGJCUDGGPKORTQXKPI*QYGXGTVJG UVWF[KPENWFGUCUNKIJVN[FKHHGTGPVOKZQHEQORCPKGUVJCVOC[CEEQWPVHQT CRQTVKQPDWVPQVCNNQHVJKUFGETGCUG+PRCTVKEWNCTVJGGZENWUKQPQHVJGFCVCUGV FKUEWUUGFRTGXKQWUN[CEEQWPVUHQTVJGOCLQTKV[QHVJGFGETGCUGKPFWTCVKQPHQWT #FFKVKQPCNN[VJGVTGPFQHFGETGCUKPINCRUGTCVGUYKVJKPETGCUKPIFWTCVKQPENGCTN[ EQPVKPWGUCPFKUGXGPOQTGRTQPQWPEGFKPVJGOQTGTGEGPVUVWF[

/CPCIKPI.QPI6GTO%CTG2GTUKUVGPE[4KUM
TABLE 1 COMPARISON OF AVERAGE LAPSE RATES 198491 198693 Duration Study Study Difference -1.9% 15.5% 17.4% 1 -1.6 11.3 12.9 2 -2.5 10.1 12.5 3 -5.0 9.1 14.1 4 8.3 5 6.0 6 -2.5% 12.5% 15.0% Total

%JCTVUCPFCTGITCRJUQHVJGFCVCHTQO6CDNG%JCTVTGRTGUGPVUVJG UVWF[%JCTVKUVJGPGYGTUVWF[6JGEGPVGTNKPGKPDQVJITCRJU
KPFKECVGFD[VJGUSWCTGRQKPVUKUVJGCXGTCIGNCRUGTCVGU#ICKPVJGVTGPFQH FGETGCUKPINCRUGTCVGUYKVJKPETGCUKPIFWTCVKQPUKUENGCTN[KNNWUVTCVGF6JGDQVVQO CPFVQRNKPGTGRTGUGPVVJGHKTUVCPFVJKTFSWCTVKNG
OCTMGFD[FKCOQPFCPFVTKCPIWNCT RQKPVUTGURGEVKXGN[6JGHKTUVSWCTVKNGKUFGHKPGFUWEJVJCVQHVJGEQORCPKGUKP VJGUVWF[JCFTGUWNVUNQYGTVJCPVJGKTCXGTCIGNCRUGTCVGCPFQHVJGEQORCPKGU JCFTGUWNVUJKIJGT6JGVJKTFSWCTVKNGKUFGHKPGFCUVJGRQKPVYJGTGQHVJG EQORCPKGUJCFNCRUGTCVGUJKIJGTVJCPVJGCXGTCIG6JGFKHHGTGPEGUDGVYGGPVJGUG NKPGUCTGRTGVV[UKIPKHKECPVFGOQPUVTCVKPIVJCVVJGTGKUCNQVQHEQORCP[VQEQORCP[ XCTKCVKQPDGVYGGPVJGNCRUGTCVGU1PGENCTKHKECVKQPKUGXGT[EGNNKPENWFGFKPVJG UVWF[JCFVQJCXGCVNGCUVGZRQUWTGU6JKUOKPKOK\GUVJGFKUVQTVKQPFWGVQ FCVCYKVJNKVVNGETGFKDKNKV[ %JCTVKNNWUVTCVGUVJGNCRUGTCVGUD[KUUWG[GCTCPFQPN[KPENWFGUTGUWNVUHTQOVJG UVWF[%NGCTN[NCRUGTCVGUJCXGEQPUKUVGPVN[FGETGCUGFYKVJGCEJPGY KUUWG[GCT6JKUKUOQUVNKMGN[VJGTGUWNVUQHTGRNCEGOGPVQHQNFGTRQNKEKGUWRITCFGU QTEQPXGTUKQPU6JGOCTMGVEQPVKPWGUVQFGXGNQRPGYHGCVWTGUCPFRQNKEKGUPQV KPENWFGFKPQNFGTRQNKEKGUKPFWEKPINCRUCVKQP %JCTVUCPFKNNWUVTCVGNCRUGTCVGUD[KUUWGCIG6JGUGITCRJUFGOQPUVTCVGVJCV NCRUGTCVGUCTGFKTGEVN[EQTTGNCVGFYKVJKUUWGCIG $QVJUVWFKGUCTGEQPUKUVGPVCPFFGETGCUGD[FWTCVKQPCVGXGT[KUUWGCIGCUYGNN #NUQPQVGVJCVVJGNCRUGTCVGUUVCTVVQEQNNCRUGYKVJKPETGCUGFFWTCVKQPU6JKUOC[DG VJGUVCTVQHCVTGPFUQYGYKNNPGGFVQOQPKVQTHWVWTGTGUWNVU+VOC[KPFKECVGVJCV CHVGTUQOGUGNGEVRGTKQFNCRUGTCVGUCTGKPFGRGPFGPVQHKUUWGCIGQTUQOGQVJGT HCEVQTU (TQOVJG(NQQT2CVCTGVJGTGCP[TGUWNVUHQTWPFGTNKMGQTYCUVJGTGPQV GPQWIJGZRQUWTG!

 4'%14&8QNWOG

/U(C[6JGTGCTGPQVOCP[EQORCPKGUYKVJGPQWIJFCVCKPVJGUGEGNNU6CDNG EQORCTGUNCRUGTCVGUD[FKHHGTGPVGNKOKPCVKQPRGTKQFU6JGFCVCJCXGDGGPITQWRGF KPVQVJTGGECVGIQTKGU\GTQFC[UFC[GNKOKPCVKQPRGTKQFUCPFFC[ GNKOKPCVKQPRGTKQFU

TABLE 2 COMPARISON OF LAPSE RATES BY ELIMINATION PERIOD Duration 198491 198693 0 Days 1 2 3 4 5 6 Total 27.4% 19.8 19.3 20.1 23.5% 25.6% 17.6 15.3 14.7 12.7 7.6 20.0% 1545 Days 1 2 3 4 5 6 Total 15.1% 12.2 13.1 13.9 13.8% 14.2% 11.0 10.6 9.7 9.6 6.8 12.1% 60+ Days 1 2 3 4 5 6 Total 12.8% 9.5 8.9 10.9 11.0% 12.0% 8.9 7.6 7.1 7.0 7.2 9.6% -0.8% -0.6 -1.3 -3.8 -1.4% -0.9% -1.2 -2.5 -4.2 -1.7% -1.8% -2.2 -4.0 -5.4 -3.5% Difference

(QTGXGT[GNKOKPCVKQPRGTKQFVJGCXGTCIGNCRUGTCVGJCUFGETGCUGFCP[YJGTGHTQO VQ.CRUGTCVGUHQTVJG\GTQFC[GNKOKPCVKQPRGTKQFCTGCOWEJJKIJGTVJCP HQTGNKOKPCVKQPRGTKQFUQHQTOQTGFC[U6JKUUKIPKHKECPVFKHHGTGPEGD[ GNKOKPCVKQPRGTKQFUKNNWUVTCVGUVJGGHHGEVUQHFKHHGTGPVNCRUGTCVGU%QORCPKGUPGGFVQ VCMGVJGUGHCEVQTUKPVQEQPUKFGTCVKQPYJGPEQORCTKPIRWDNKUJGFNCRUGTCVGUVQVJGKT GZRGTKGPEG

/CPCIKPI.QPI6GTO%CTG2GTUKUVGPE[4KUM

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

 4'%14&8QNWOG
TABLE 3 COMPARISON OF LAPSE RATES BY SEX

Duration

198491

198693 Males

Difference

1 2 3 4 5 6 Total

17.8% 13.3 12.8 14.4 13.1%

14.9% 10.7 9.4 8.7 7.9 6.5 11.9% Females

-2.9% -2.6 -3.4 -5.7 -1.2%

1 2 3 4 5 6 Total

16.8% 12.3 11.9 13.7 15.4%

15.8% 11.5 10.2 9.4 9.0 7.4 12.7%

-1.0% - 0.8 - 1.7 - 4.3 -2.7%

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

/CPCIKPI.QPI6GTO%CTG2GTUKUVGPE[4KUM

QPIQKPIDWUKPGUUVJCVFKFTGPGY6JGPVJG[VWTPGFKVQXGTVQWUCUVJG CFOKPKUVTCVQT9JGPGXGT[QWJCXGCEJCPIGQHCFOKPKUVTCVQTUCEJCPIGKP RGTUKUVGPE[KUVQDGGZRGEVGF2GQRNGIGVEQPEGTPGFYJGPVJGTGKUCEJCPIG 6JGUGEQPFEQORCP[YCUCJGCNVJQPN[EQORCP[VJCVUQNFCXCTKGV[QHKPFKXKFWCN RTQFWEVUDWVOQUVN[UGPKQTRTQFWEVUNKMG/GFKECTGUWRRNGOGPVCPFNQPIVGTOECTG 6JKUEQORCP[CNUQJCFRQQTENCKOGZRGTKGPEGCPFCDQWVC[GCTRTKQTVQQWT KPXQNXGOGPVJCFDGGPRWVVKPITCVGKPETGCUGUKPVQGHHGEV6JGPVJG[YGTG RWVWPFGTUVCVGLWTKUFKEVKQPCPFYGTGFGENCTGFKPUQNXGPV6JG0CVKQPCN)WCTCPVGG #UUQEKCVKQPUGNGEVGFQWTVJKTFRCTV[CFOKPKUVTCVQTVQOCPCIGVJGDWUKPGUUQPVJGKT DGJCNH4CVGKPETGCUGUEQPVKPWGFHQTCNOQUVQPG[GCTWPFGTQWTCFOKPKUVTCVKQPCU VJGRTGXKQWUN[CRRTQXGFKPETGCUGUDGECOGFWG6JG)WCTCPVGG#UUQEKCVKQP FGVGTOKPGFVJCVVJGTGYQWNFDGPQDTQMGTUEQORGPUCVKQPRC[CDNGHQTVJGDWUKPGUU VJCVUVC[UQPVJGDQQMU +FNKMGVQIKXGCPQXGTXKGYQHVJGVYQECUGUVWFKGU1PGJCUCTCVGKPETGCUG CPFDTQMGTUDGKPIRCKFEQOOKUUKQPU6JGQVJGTJCUCTCVGKPETGCUGHQTCP KPUQNXGPVEQORCP[YJGTGVJGDTQMGTUCTGPQVDGKPIRCKFEQORGPUCVKQP+NQQMCV VJGNGXGNQHUVTGUUQHVJGUGVYQDNQEMUCUDGKPIIGPGTCNN[CDQWVGSWCN+XG EQODKPGFVJGKTGZRGTKGPEGVQUJCTGYKVJ[QW6JGTGUWNVUQPRQNKE[JQNFGTU YGTGHQNNQYGFQXGTCHQWT[GCTRGTKQFQHVKOG $GHQTGUJQYKPI[QWUQOGPWODGTU+LWUVYCPVVQOCMGCHGYEQOOGPVUCDQWV EJCPIGUQHCFOKPKUVTCVQTU+VFQGUPVOCVVGTYJGVJGTKVUKPVGTPCNVQCEQORCP[QT GZVGTPCNVQCPQVJGTQTICPK\CVKQP%GTVCKPVJKPIUJCRRGPYJGPDWUKPGUUKUVWTPGF QXGT9GJCXGVQNNHTGGVGNGRJQPGNKPGUVJCVEQOGFKTGEVN[KPVQQWTENCKO FGRCTVOGPVWPFGTYTKVKPICTGCCPFDKNNKPICPFEQNNGEVKQPWPKVCUUQQPCUVJG CPPQWPEGOGPVIQGUQWVVJCVCPGYCFOKPKUVTCVQTKUIQKPIVQDGVCMKPIQXGT 9GJCXGCNQVQHRQNKE[JQNFGTUVJCVCTGCPF[GCTUQNFYJQJCXGVKOGVQTGCF VJGUGNGVVGTU6JG[JCXGVKOGVQOCMGVGNGRJQPGECNNUGURGEKCNN[VQVQNNHTGG PWODGTUCPFVJG[FQ6JGOCKPQDLGEVKXGDGJKPFVJGECNNUYJGVJGTVJG[CTGQP ENCKOQTPQVQPENCKOKUVQUGGYJGVJGTVJGTGTGCNN[KUUQOGDQF[CVVJGQVJGTGPFQH VJCVVQNNHTGGPWODGT9GCNYC[UURGPFCITGCVCOQWPVQHVKOGCUUWTKPIRGQRNGVJCV YGCTGVJGTGTGCF[VQJGNRCPFVJCVVJGQTICPK\CVKQPDGJKPFVJGKTRQNKE[KU TGRWVCDNGCPFYKNNJQPQTVJGKTENCKO5GEQPFCT[VQCUUWTCPEGYGOC[CPUYGT UQOGSWGUVKQPUCDQWVVJGEQXGTCIGUVJCVVJG[FQJCXG5QOGRGQRNGJCXGGXGP HQTIQVVGPVJCVVJG[JCFRWTEJCUGFUQOGVJKPIECNNGFNQPIVGTOECTGKPUWTCPEG6JG[ MPQYVJG[TGRC[KPIRTGOKWOUDWVVJG[FQPVCNYC[UMPQYGZCEVN[YJCVRTQVGEVKQP VJG[CTGRC[KPIHQT

 4'%14&8QNWOG

#U+UJCTGCHGYVCDNGUCDQWVVJGGZRGTKGPEGQHVJGUGVYQDNQEMUMGGRKPOKPFVJG PWODGTUHTQO2CVURTGUGPVCVKQP5JGRQKPVGFQWVJQYVJGNCRUGGZRGTKGPEG EQNNCRUGUQXGTVKOGFGETGCUKPID[FWTCVKQPVQCNQYGTCPFCDQWVGSWCNNGXGN TGICTFNGUUQHCXCTKGV[QHVJKPIU5JGCNUQFGOQPUVTCVGFCFKHHGTGPEGD[KUUWGCIGC FKHHGTGPEGD[GNKOKPCVKQPRGTKQFCPFCFKHHGTGPEGD[IGPFGT (QTVJGUGUVTGUUGFDNQEMUQHDWUKPGUUVJGPGYCFOKPKUVTCVQTECOGKPCVXCTKQWU RQNKE[FWTCVKQPUDWVCNYC[UCHVGTVJGHKTUVRQNKE[[GCT6CDNGKPFKECVGUVJGNCRUG TCVGUD[RQNKE[FWTCVKQP.CRUGUCTGGZVTGOGN[JKIJCVKPRQNKE[[GCTVYQ .CRUGUFGETGCUGUVGCFKN[CUVJGRQNKE[CIGUGXGPCHVGTVGP[GCTU#HVGT[GCTUVJG GZRGTKGPEGDGEQOGUOQTGUKOKNCTVQHKTUVCPFUGEQPFRQNKE[FWTCVKQPTGUWNVU V[RKECNN[UGGP6JGKPVGTGUVKPIQDUGTXCVKQPKUVJCVVJGNQPIGTCRGTUQPJCUCRQNKE[ HQTYJCVGXGTVJGTGCUQPVJG[FQKPETGCUKPIN[VGPFVQJQNFQPVQVJGKTRQNKE[ TGICTFNGUUQHTCVGKPETGCUGUQTEJCPIGUKPCFOKPKUVTCVQTU
TABLE 4 STRESSED LAPSATION BY POLICY DURATION Duration Lapse Rate 1 2 3 4 5 6 7 8 9 10 11 12 13 73% 49 42 37 35 34 30 30 26 21 21 15

6CDNGRTGUGPVUNCRUGTCVGUD[IGPFGTVQFGVGTOKPGYJGVJGTVJGTGKUCP[FKHHGTGPEG DGVYGGPOCNGUCPFHGOCNGU6JGTGKUCFKHHGTGPEG/CNGRQNKE[JQNFGTUVGPFVQ NCRUGOQTGHTGSWGPVN[VJCPHGOCNGU+DGNKGXGUQOGVJKPIJCRRGPUJGTGVJCVYGCNN YQWNFRTQDCDN[CPVKEKRCVGYQWNFJCRRGP#URQNKE[FWTCVKQPIGVUNQPIGTVJG RTQRQTVKQPQHHGOCNGUEQXGTGFKPETGCUGUFWGVQFGCVJUCOQPIUVVJGOCNGU6JCV V[RKECNN[NGCXGUVJGHGOCNGDGJKPF6JGTGUGGOUVQDGCRTGVV[EQPUKUVGPVRCVVGTP 9QOGPEQPVKPWGVQRC[DGVVGTCPFKPCTGNCVKXGUGPUGCPFNQPIGTVJCPOCNG EQWPVGTRCTVU 6CDNGRTGUGPVUNCRUGTCVGUD[KUUWGCIGITQWRKPI+P2GII[URTGUGPVCVKQP[QWYKNN UGGUQOGEQOOGPVUCDQWVFKHHGTGPEGUD[KUUWGCIGCTQWPFVJGUCOGEGPVTCNCIGUQH

/CPCIKPI.QPI6GTO%CTG2GTUKUVGPE[4KUM

CPF/QUVQHVJGGZRGTKGPEGYCUQPKUUWGCIGUQXGT2GQRNGYJQ RWTEJCUGCV[QWPIGTCIGUFQJCXGUOCNNGTNCRUGUCPFVJWUITGCVGTRGTUKUVGPE[2CV UJQYGF[QWVJCVUCOGRJGPQOGPQPHTQOVJG+PVGTEQORCP[5VWF[6JGITGCVGUV NCRUGENGCTN[QEEWTUCVVJGQNFGTCIGU

TABLE 5 STRESSED LAPSATION BY GENDER Duration Male Female 1 2 3 4 5 6 7 8 9 10 11 12 13 76% 51 39 41 42 36 31 33 25 17 0 0 72% 48 44 35 33 33 29 26 24 23 22 0

TABLE 6 STRESSED LAPSATION BY ISSUE AGE Duration Total 57 67 77 1 2 3 4 5 6 7 8 9 10 11 12 13 73% 49 42 37 35 34 30 30 26 21 21 15 100% 29 38 20 28 8 67 0 0 67 63% 54 37 30 30 29 24 31 13 0 17 22 75% 50 51 41 41 37 34 30 37 25 21 12

6CDNGUJQYUVJGTGUWNVUD[GNKOKPCVKQPRGTKQF6JGHKTUV+PVGTEQORCP[5VWF[ TGNGCUGFKP,CPWCT[CPFVJGOQTGTGEGPVTGUWNVURTGUGPVGFD[2CVXGTKH[C FKHHGTGPEGD[GNKOKPCVKQPRGTKQF 4GICTFNGUUQHOQTDKFKV[OQTVCNKV[QTRGTUKUVGPE[VJGYQTUGNCRUGGZRGTKGPEGKU HQWPFEQPVKPWCNN[KPRQNKEKGUUQNFYKVJPQGNKOKPCVKQPRGTKQF6JKUUVTGUUGFDNQEM

4'%14&8QNWOG

EQPVKPWGUVQUJQYIGPGTCNN[NQYGTNCRUCVKQPHQTCNNQVJGTGNKOKPCVKQPRGTKQFRNCPU DWVPQVD[OWEJ
TABLE 7 STRESSED LAPSATION BY ELIMINATION PERIOD Duration 0 Day All Others 1 2 3 4 5 6 7 8 9 10 11 12 13 74% 49 42 36 36 33 30 30 27 21 21 15 70% 47 42 36 31 37 28 28 0

1WTDGUVIWGUUNQQMKPICVVJGFCVCHTQOCNNVJGUVWFKGUKUVJCV\GTQFC[GNKOKPCVKQP DWUKPGUUKUJGCXKN[UQNFD[UGPKQTURGEKCNKUVUCPFUGPKQTDTQMGTUCPFNGUUD[ECTGGT CIGPVU6JGVYQDNQEMU+COFKUEWUUKPIYGTGUQNFD[DTQMGTU/C[DGVJGTGUWNVUHQT VJKUDNQEMCTGENQUGTDGECWUGVJGXCTKCDNGD[UCNGUHQTEGOC[DGGNKOKPCVGFKPVJKU UVWF[ 6CDNGRTGUGPVUCPGYUNCPVEQORCTKPIPQPUVTGUUGFGZRGTKGPEGYKVJUVTGUUGF GZRGTKGPEG+VUJQYUVJGNCRUGGZRGTKGPEGD[KUUWG[GCTQHUCNGUHQTPQPUVTGUUGF DWUKPGUUKPQWTHKNGUEQORCTGFVQVJGUVTGUUGFDNQEMYGJCXGDGGPFKUEWUUKPI

TABLE 8 NONSTRESSED LAPSATION BY POLICY DURATION & ISSUE YEAR Duration 198690 1991 94 Stressed 1 2 3 4 5 6 7 8 9 28% 19 14 12 13 11 11 6 4 15% 9 10 11 73% 49 42 37 35 34 30 30

4GOGODGTHTQO2CVURTGUGPVCVKQPJQYHQTGCEJ[GCTENQUGTVQVJGRTGUGPVFC[VJG JKIJGTVJGRGTUKUVGPE[GZRGTKGPEGIGVU(QTRTGUGPVCVKQPYGUGRCTCVGFVJG

/CPCIKPI.QPI6GTO%CTG2GTUKUVGPE[4KUM

GZRGTKGPEGKPVQVYQUGIOGPVU1PGUGIOGPVKUHQTKUUWG[GCTUHTQOVQ FWTKPIYJKEJVJGTGYCUCRTGRQPFGTCPEGQHRQNKE[KUUWGUCPFCNQVQHEJCPIGUKP RTQFWEVQHHGTKPIUD[PGYECTTKGTU6JGUGEQPFUGIOGPVKUHTQOVQYJGTG YGCTGKPVQVJGOQTGOQFGTPGTCQHRTQFWEVU9JCV+YCPVGFVQFGOQPUVTCVGYCU VJGTGUWNVUHQTUQOGDWUKPGUUVJCVYGXGVCMGPQXGTYJGTGVJGEQORCP[OC[JCXG IQVVGPQWVQHVJGDWUKPGUUDWVVJGTGYGTGPQTCVGKPETGCUGUCUUQEKCVGFYKVJVJG DWUKPGUU1PVJGHCTTKIJVJCPFUKFGQH6CDNGVJGPWODGTUCTGTGRGCVGFHQTVJG UVTGUUGFDNQEMU6JGQVJGTVYQEQNWOPUCTGVJGPQPUVTGUUGFTGUWNVU+PCYC[YG OC[QDVCKPCUGPUGHQTYJCVTCVGKPETGCUGUFQVQCDNQEMQHDWUKPGUU+VYQWNF CRRGCTVJCVRQUUKDN[PGYCFOKPKUVTCVQTUOC[PQVJCXGCPGPQTOQWUKORCEVQP RGTUKUVGPE[TGUWNVU6JGTGUWNVUCTGXGT[UKOKNCTVQVJGTGUWNVUVJCVCTG HQWPFKPVJG51#+PVGTEQORCP[UVWF[ /U2GII[.*CWUGT#U)CT[OGPVKQPGFGCTNKGT+YKNNVCNMCDQWVVJGKORCEVQH RGTUKUVGPE[TCVGUQPRTKEKPI
VJCVKUJQYFKHHGTGPVNCRUGTCVGUYKNNCHHGEVRTGOKWO TCVGUCPFKH[QWRTKEGYKVJQPGUGVQHNCRUGTCVGUYJCVOKIJVJCRRGPKHVJQUGNCRUG TCVGUFQPVCEVWCNN[OCVGTKCNK\G6QUJQYVJGUGKORCEVU+RGTHQTOGFUGXGTCN UGPUKVKXKV[VGUVU(KTUV+VGUVGFVJTGGUGVUQHNCRUGTCVGUEGPCTKQUCJKIJCOGFKWO CPFCNQYDCUGFQPTGUWNVUHTQOVJG+PVGTEQORCP[5VWF[CPFYJCV+JCXGQDUGTXGF EQORCPKGUWUGKPRTKEKPI+CNUQVGUVGFVJGKORCEVQHNCRUGTCVGUCUUWORVKQPUQP RTGOKWOTCVGUHQTKPHNCVKQPDGPGHKVU(KPCNN[+VGUVGFVQUGGYJKEJNCRUGTCVGUECWUGF FKHHGTGPEGU(QTGZCORNGFQFKHHGTGPEGUQEEWTFWGVQVJGNCRUGTCVGUKPVJGKPKVKCN [GCTUQTKUKVDGKPIECWUGFD[VJGWNVKOCVGNCRUGTCVG! 6JGHKTUVVGUVKPIKUYKVJVJGJKIJOGFKWOCPFNQYNCRUGTCVGU6JGUGCUUWORVKQPU CTGUJQYPKP6CDNG6JGJKIJUGVQHNCRUGTCVGUUVCTVQHHCVKPVJGHKTUVRQNKE[ [GCTCPFITCFGUFQYPVQCPWNVKOCVGTCVGQH6JGUGCUUWORVKQPUTGRTGUGPVVJG JKIJGUVUGVQHTCVGUVJCV+XGUGGPCEQORCP[CEVWCNN[WUGKPRTKEKPI6JG[OC[PQV DGVJGJKIJGUVDWVVJG[YGTGVJGJKIJGUVVJCV+JCFHQWPF6JGOGFKWOUGVQHNCRUG TCVGUCTGEQPUKUVGPVYKVJYJCVVJG+PVGTEQORCP[5VWF[RTQFWEGF(KPCNN[VJGNQY UGVQHNCRUGTCVGUYJKEJUVCTVQWVCVCPFITCFGFQYPVQCPWNVKOCVGQHCTG HCKTN[EQPUKUVGPVKPVJGGCTN[FWTCVKQPUYKVJVJGKPVGTEQORCP[TGUWNVUHQTVJGHKTUV SWCTVKNGQHEQORCPKGUKPVJGOQTGTGEGPVUVWF[6JGNCRUGTCVGUTGRTGUGPVRQNKE[ NCRUGUXGTUWURTGOKWONCRUG6JGUGTCVGUCTGHQTNCRUGQPN[9JGP+FKFVJG UGPUKVKXKV[VGUVKPI+CFFGFKPFGCVJUCPF+WUGFVJGDCUKEVCDNG

4'%14&8QNWOG
TABLE 9 LAPSE RATES High Medium 25% 20 17 14 13 12 14% 12 10 8 6 5

Duration 1 2 3 4 5 6+

Low 9% 7 5 4 3 3

6JGWNVKOCVGNCRUGTCVGCUUWORVKQPKUNQYGTVJCPVJGTGUWNVURTQFWEGFHTQOVJG HKTUVSWCTVKNGQHEQORCPKGUKPVJGKPVGTEQORCP[UVWF[*QYGXGTVJKUWNVKOCVGTCVG TGRTGUGPVUVJGNQYGUVNCRUGTCVGVJCV+JCXGUGGPEQORCPKGUWUKPIKPCEVWCNRTCEVKEG (QTUKORNKEKV[KPO[VGUVKPI+FKFPQVXCT[VJGNCRUGTCVGCUUWORVKQPUD[KUUWGCIG D[GNKOKPCVKQPRGTKQFQTD[IGPFGT+YQWNFPVTGEQOOGPFFQKPIVJKUDGECWUGKVKU CRRCTGPVHTQO2CVURTGUGPVCVKQPQHVJG+PVGTEQORCP[5VWF[TGUWNVUVJCVNCRUGTCVGU OC[XCT[D[VJQUGXCTKCDNGU+NNTGKVGTCVGVJCVVJGUGCTGVJGNCRUGCUUWORVKQPUHQTCNN KUUWGCIGU6CDNGUJQYUYJCVJCRRGPUVQVJGCEVWCNRTGOKWOU+VUJQYUVJCVCV VJG[QWPIGUVKUUWGCIGCIGVJGRTGOKWOPGGFUVQDGJKIJGTKHVJGNQYGT UGVQHNCRUGTCVGUKUWUGF
TABLE 10 RATIO OF PREMIUMS TO MEDIUM LAPSE SCENARIO Lapse Scenario Issue Age 57 67 77 High 0.77 0.81 0.93 Medium 1.00 1.00 1.00 Low 1.15 1.10 1.04

(TQOVJG(NQQT9JCVCTG[QWTRTKEKPIIQCNU! /U*CWUGT+RTKEGFHQTCEQPUKUVGPVKPVGTPCNTCVGQHTGVWTP+UJQWNFECXGCVVJCV [QWOKIJVPQVIGVVJGUCOGTGUWNVUCV[QWTEQORCP[WUKPI[QWTCUUWORVKQPU6JG TGUWNVUQHVJKUUGPUKVKXKV[VGUVKPIYKNNXCT[EQPUKFGTCDN[FGRGPFKPIQPVJGRTQHKV QDLGEVKXG+H[QWTGRTKEKPIQPCRTGVCZRTQHKVXGTUWUCPKPVGTPCNTCVGQHTGVWTPVJGTG YKNNDGCUKIPKHKECPVFKHHGTGPEGKPTGUWNVU(WTVJGTOQTGKH[QWTGRTKEKPIHQTCP KPVGTPCNTCVGQHTGVWTPTGUWNVUYKNNXCT[FGRGPFKPIQPUWTRNWUTGSWKTGOGPVUCPF GZRGPUGUVTWEVWTG +RTKEGFHQTCEQPUKUVGPVKPVGTPCNTCVGQHTGVWTPWUKPIKPFWUVT[CXGTCIGGZRGPUGUURNKV KPVQHKTUV[GCTCPFTGPGYCNGZRGPUGU+FKFPQVEJCPIGCP[QVJGTCUUWORVKQPU DGVYGGPVJGUGVGUVU2GTJCRUVJGEQORCP[VJCVHKNGFVJGKTCEVWCTKCNOGOQTCPFWO

/CPCIKPI.QPI6GTO%CTG2GTUKUVGPE[4KUM

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
TABLE 11 IMPACT ON PROFITABILITY USING HIGH LAPSE SCENARIO PREMIUMS
Internal Rates of Return12% Target High Medium Low 12% 12 12 6% 5 7 4% 3 5 Pretax Profit as a Percentage of Premium High Medium Low 21% 16 9 7% 2 5 (4%) (6) 2

Issue Age 57 67 77

0GZV+VGUVGFVJGKORCEVQHNCRUGUQPRTKEKPIHQTCEQORQWPFKPHNCVKQPDGPGHKV+ ECNEWNCVGFRTGOKWOUYKVJCEQORQWPFKPHNCVKQPDGPGHKVEQORQWPFGFCPPWCNN[ HQTVJGNKHGQHVJGRQNKE[6JGP+ECNEWNCVGFVJGTCVKQQHCDCUGRNCPRNWURTGOKWO KPHNCVKQPVQVJGDCUGRNCPRTGOKWO6JGUGTCVKQUCTGUJQYPKP6CDNG+FKFPQV EJCPIGCP[QVJGTCUUWORVKQPU6JGTGHQTG+WUGFVJGUCOGUGVQHNCRUGTCVGUVJG UCOGUGVQHGZRGPUGCUUWORVKQPUCPFVJGUCOGKPVGTPCNTCVGQHTGVWTP6CDNG UJQYUVJCVCVVJG[QWPIGTCIGUVJGNCRUGTCVGJCUCUKIPKHKECPVKORCEVQPVJG RTGOKWOVJCVUTGSWKTGFVQHWPFVJGKPHNCVKQPDGPGHKV6JGFKHHGTGPEGKUPVSWKVGCU UKIPKHKECPVCVKUUWGCIG*QYGXGTKVYQWNFDGXGT[FCPIGTQWUVQWUGVJGJKIJUGV QHNCRUGUCPFGZRGTKGPEGVJGNQYUGVQHNCRUGUCVKUUWGCIG

4'%14&8QNWOG
TABLE 12 5% COMPOUND INFLATION BENEFIT PREMIUM LOADS Issue Age High Medium Low 57 67 77 2.16 1.80 1.42 2.74 2.04 1.52 3.00 2.14 1.57

0GZV+FKFUQOGVGUVKPIVQFGVGTOKPGVJGECWUGQHVJGNCTIGRTGOKWOFKHHGTGPEGU RTQFWEGFWPFGTVJGVJTGGNCRUGTCVGUEGPCTKQU#TGVJG[FTKXGPD[VJGNCRUGTCVGUKP VJGKPKVKCN[GCTUQTD[VJGWNVKOCVGNCRUGCUUWORVKQPU!6CDNGUJQYUVJGOGFKWO UGVQHNCRUGTCVGUHQTFWTCVKQPUVJTGGCPFNCVGTCPFVJGXCTKCVKQPKPVJGNCRUGTCVGUHQT [GCTUQPGCPFVYQ8CNWGUCVVJGDQVVQOQH6CDNGUJQYVJGRTQRQTVKQPQHNKXGU GPVGTKPIRQNKE[[GCTVJTGGIKXGPNCRUGUKPVJGKPKVKCNVYQ[GCTU.CRUGTCVGUKPVJG HKTUVVYQRTQFWEGCFKHHGTGPEGQHDGVYGGPVJGNQYNCRUGTCVGUEGPCTKQCPFVJG JKIJNCRUGTCVGUEGPCTKQ0GXGTVJGNGUUTGUWNVUUJQYVJCVVJKUFKHHGTGPEGFQGUPQV JCXGOWEJQHCPKORCEVQPVJGRTGOKWO/[KPKVKCNNQYNCRUGTCVGUEGPCTKQJCF UVCTVGFQHHYKVJCHKTUV[GCTCPFCUGEQPF[GCT+VYQWNFPQVDGTGCNKUVKEKP VJKUVGUVVQUVCTVYKVJPKPGUGXGPCPFVJGPIQWRVQVGP5QKPVJKUVGUVKPI+WUGF 
TABLE 13 VARY LAPSE RATES IN INITIAL TWO YEARS ONLY Duration High Medium Low 1 2 3 4 5 6+ Percentage starting policy year 3 25% 20 10 8 6 5 59% 14% 12 10 8 6 5 74% 10% 10 10 8 6 5 80%

6CDNGUJQYUVJCVVJGKPKVKCN[GCTNCRUGTCVGUTGCNN[FKFPQVJCXGCDKIKORCEVQP RTGOKWO9GOKIJVJCXGGZRGEVGFVJCVVJGRTGOKWOUHQTVJGJKIJNCRUGTCVG UEGPCTKQYQWNFKPETGCUGUKPEGYGXGNQUVCNQVQHRGQRNGCPFOC[PQVDGCDNGVQ TGEQWRCUOWEJQHVJGCESWKUKVKQPGZRGPUG#IGUJQYUCKPETGCUGKPVJG TGSWKTGFRTGOKWOYJKEJKUJCTFN[UKIPKHKECPV+YQWNFJCXGGZRGEVGFKPKVKCN[GCT NCRUGTCVGUVQJCXGCDKIIGTKORCEV

/CPCIKPI.QPI6GTO%CTG2GTUKUVGPE[4KUM
TABLE 14 RATIO OF PREMIUMS Initial Two-Year Lapse Scenario Issue Age 57 67 77 High 1.01 1.00 1.00 Medium 1.00 1.00 1.00 Low 1.00 1.00 1.00

(KPCNN[+VGUVGFYJCVJCRRGPUKH+WUGVJGOGFKWOUEGPCTKQHQTVJGHKTUVVYQRQNKE[ [GCTUDWVVJGPXCT[VJGWNVKOCVGNCRUGTCVG6JGTGUWNVUNQQMXGT[UKOKNCTVQVJG TGUWNVURTQFWEGFD[XCT[KPINCRUGTCVGUKPCNN[GCTU

6CDNGUCPF
TABLE 15 VARY LAPSE RATES IN YEARS 3 AND LATER Duration High Medium Low 1 2 3 4 5 6+ 14% 12 12 12 12 12 14% 12 10 8 6 5 14% 12 5 4 3 3

TABLE 16 RATIO OF PREMIUMS Ultimate Lapse Rate Scenario Issue Age 57 67 77 High 0.76 0.82 0.93 Medium 1.00 1.00 1.00 Low 1.15 1.09 1.04

+PEQPENWUKQPUKPEGYGTGCNN[FQPVMPQYCVVJKURQKPVYJCVVJGWNVKOCVGNCRUGTCVG YKNNDGQPVJGUGRQNKEKGUCPFVJGWNVKOCVGTCVGUJCXGVJGITGCVGUVKORCEVQP RTQHKVCDKNKV[KVUGGOUVJGUGCUUWORVKQPUYCTTCPVUGTKQWUEQPUKFGTCVKQPKPRTKEKPI 6JGKPFWUVT[JCUOCFGITGCVUVTKFGUYKVJVJG+PVGTEQORCP[5VWF[$WVCU2CV OGPVKQPGFKPJGTRTGUGPVCVKQPVJGTGCTGUVKNNUQOGHCEVQTUKPVJGUVWF[VJCVOKIJV ECWUGVJGTGUWNVKPINCRUGTCVGUHTQOVJGUVWF[VQDGJKIJ (WTVJGTOQTGGXGPKHYGJCXGCJCPFNGQPVJGNCRUGTCVGUKPVJGHKTUVVYQ[GCTUUKPEG YGJCXGOQTGETGFKDKNKV[CPFOQTGGZRQUWTGKPVJGHKTUVEQWRNG[GCTUQHVJGUVWF[ VJQUG[GCTUCTGPVJCXKPIVJCVITGCVQHCPKORCEVQPRTGOKWOUCPFRTQHKVCDKNKV[CU VJGTCVGUKPWNVKOCVG[GCTU+HQWPFVJKUUGPUKVKXKV[VGUVKPIXGT[KPVGTGUVKPI

4'%14&8QNWOG

(TQOVJG(NQQT9JCVKUVJGUQWTEGQH[QWTCUUWORVKQPU! /U*CWUGT+TGXKGYGFFCVCYGJCFEQNNGEVGFKPJQWUGHTQOXCTKQWUENKGPVUCPF QVJGTCEVWCTKCNOGOQTCPFWOU+VTKGFVQEJQQUGRGTRQNKE[GZRGPUGCUUWORVKQPU VJCVYQWNFDGOKFFNGQHVJGTQCF (TQOVJG(NQQT9JCVKU[QWTHGGNKPICUVQVJGKORCEVQPRGTUKUVGPE[FWGVQ FKHHGTGPVV[RGUQHPQPHQTHGKVWTGDGPGHKVU! /U*CWUGT+JCXGPVFQPGCNQVQHUGPUKVKXKV[VGUVKPIQHVJGKORCEVQHNCRUGTCVGUQT PQPHQTHGKVWTGDGPGHKVU6JGTGCTGCEQWRNGQHVJKPIUVQEQPUKFGT9JGPYGCTG RTKEKPICPQPHQTHGKVWTGDGPGHKVYGYKNNV[RKECNN[UNQYFQYPVJGNCRUGTCVGULWUVRTKQT VQYJGPVJGPQPHQTHGKVWTGDGPGHKVKUCXCKNCDNGCPFVJGPWUGUNKIJVN[JKIJGTNCRUG TCVGUVJGTGCHVGT+JCXGPVFQPGUGPUKVKXKV[VGUVKPIVQMPQYKHVJCVYQWNFDTKPIVJGUG TGUWNVUENQUGTVQIGVJGT (TQOVJG(NQQT;QWPGGFVQWUGCNQYNCRUGTCVGKPRTKEKPIDGECWUG+ECPUC[HTQO GZRGTKGPEGKVECPDGCUNQYCUQHVJQUGNCRUGTCVGU[QWXGWUGF%CP[QW UWIIGUVYJCVEQORCPKGUFQVQDGEQORGVKVKXGYJGPVJG[JCXGXGT[NQYNCRUGTCVGU! /U*CWUGT+H[QWYCPVVQJCXGEQORGVKVKXGRTGOKWOUCPF[QWJCXGGZRGTKGPEGF NQYNCRUGTCVGU[QWOC[JCXGVQGKVJGTNQYGT[QWTRTQHKVQDLGEVKXGEWV[QWT GZRGPUGUQTTGFWEG[QWTOQTDKFKV[RGTJCRUD[KORTQXKPIWPFGTYTKVKPI;QWOWUV KPVGTPCNN[FGVGTOKPGJQY[QWECPOCMGVJGGSWCVKQPYQTM#EQWRNGYC[UVQ TGFWEGOQTDKFKV[YQWNFDGVQOCMGUWTG[QWCTGCFLWFKECVKPIENCKOUCUYGNNCU RQUUKDNGCPFFQKPICIQQFLQDQHWPFGTYTKVKPI /T&CXKF95KODTQ+VJKPMUQOGQHVJQUGCUUWORVKQPU[QWXGUJQYPQP EQORCP[GZRGPUGKUKPHQTOCVKQPVJCVOC[DGIQQFWRVQFWTCVKQPUKZQTFWTCVKQP UGXGP+MPQYKPQWTQVJGTNKPGUQHDWUKPGUUYGFQJCXGHCKTN[NQYNCRUGTCVGUDWV VJG[FGHKPKVGN[FQPVDQVVQOQWVCVFWTCVKQPUKZQTFWTCVKQPUGXGP#VQWTEQORCP[ KVHNCVVGPUQWVCTQWPFFWTCVKQPVGP+OYQPFGTKPIKHEQORCPKGUCTGHKPFKPIVJCVQT CTGVJG[CUUWOKPIHCKTN[HNCVNCRUGTCVGUCHVGTFWTCVKQPUKZQTFWTCVKQPUGXGP! /U*CWUGT9JCV+JCXGUGGPKUVJCVEQORCPKGUV[RKECNN[DQVVQOQWVVJGNCRUGTCVG 5QOGOKIJVIQQWVCNKVVNGDKVNQPIGTVQOC[DGFWTCVKQPVGP6[RKECNN[VJGOQTVCNKV[ KUCFFGFVQVJGNCRUGDWV+JCXGPVUGGPCNQVQHCP[XCTKCVKQPKPVJGWNVKOCVGNCRUG TCVGDG[QPFFWTCVKQPVGP /T%QTNKUU6JGRTKEKPIOGOQUYGXGTGXKGYGFHQTTGKPUWTCPEGRWTRQUGUCTGHCKTN[ EQPUKUVGPVCPF+ECPVVJKPMQHQPGVJCVFQGUPVHNCVVGPQWVD[FWTCVKQPUKZ

/CPCIKPI.QPI6GTO%CTG2GTUKUVGPE[4KUM

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4'%14&8QNWOG

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/CPCIKPI.QPI6GTO%CTG2GTUKUVGPE[4KUM
CHART 1 198491 INTERCOMPANY EXPERIENCE STUDY LAPSE RATE BY DURATION

CHART 2 19861993 INTERCOMPANY EXPERIENCE STUDY LAPSE RATE BY DURATION

4'%14&8QNWOG
CHART 3 19861993 INTERCOMPANY EXPERIENCE STUDY LAPSE RATES BY ISSUE YEAR

CHART 4 19841991 INTERCOMPANY EXPERIENCE STUDY LAPSE RATE BY ISSUE AGE

/CPCIKPI.QPI6GTO%CTG2GTUKUVGPE[4KUM
CHART 5 19861993 INTERCOMPANY EXPERIENCE STUDY LAPSE RATE BY ISSUE AGE

CHART 6 19841991 INTERCOMPANY EXPERIENCE STUDY LAPSE RATE BY ELIMINATION PERIOD

4'%14&8QNWOG
CHART 7 19861993 INTERCOMPANY STUDY LAPSE RATE BY ELIMINATION PERIOD