• | If you take partial withdrawals from your Non-Qualified Contract, the taxable portion of a partial withdrawal is the portion of the payment considered to be gain in the Contract (for example, the difference, if any, between the Contract Value immediately before the withdrawal, unreduced by any withdrawal charges, and the Contract’s cost basis). The withdrawals are generally taxed as though you were paid taxable earnings first, and then as a non-taxable return of Purchase Payments.Distributions from a Roth IRA generally are not subject to income tax if the Roth IRA has been held for five years (starting with the year in which the first contribution is made to any Roth IRA) and the Owner satisfies a triggering event such as attaining age 59 1⁄2, death, disability or a first time homebuyer (subject to a $10,000 lifetime limit). Distribution before satisfying the five year period or triggering event requirement may subject the distribution to taxation. Please be aware that each Roth IRA conversion has its own five year holding period requirement for purposes of determining if the 10% additional federal tax described below applies. 10% Additional Federal Tax Withdrawals, whether partial or full, and Annuity Payments may also be subject to an additional federal tax equal to 10% of the taxable amount, unless an exception applies. If you take a withdrawal before age 59 1⁄2, you may be subject to a 10% additional federal tax, unless you satisfy one of the exceptions. The exceptions are different for Qualified Contracts and Non-Qualified Contracts, and are also different for IRAs and qualified plans. If the Contract is jointly owned, we send one check payable to both Joint Owners and tax report each Joint Owner individually. Tax reporting individually can create a discrepancy in taxation if only one Joint Owner is under age 59 1⁄2 because that Joint Owner will be subject to the 10% additional federal tax.
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
Exceptions to the 10% Additional Federal Tax for Qualified Contracts | 1) | distributions made on or after the date you (or the Annuitant as applicable) reach age 59 1⁄2; | | 2) | distributions following your death or disability (or the Annuitant as applicable) (for this purpose disability is as defined in Section 72(m)(7) of the Code); | | 3) | distributions paid in a series of substantially equal payments made annually (or more frequently) for your life (or life expectancy) or joint lives of you and your designated Beneficiary; | | 4) | distributions made to you after separation from service after reaching age 55 (does not apply to IRAs); | | 5) | distributions made to you to the extent such distributions do not exceed the amount allowed as a deduction under Code Section 213 for amounts paid during the tax year for medical care; | | 6) | distributions made on account of an IRS levy upon the Qualified Contract; | | 7) | distributions from an IRA for the purchase of medical insurance (as described in Section 213(d)(1)(D) of the Code) for you and your spouse and dependents if you have received unemployment compensation for at least 12 weeks (this exception will no longer apply after you have been re-employed for at least 60 days); | | 8) | distributions from an IRA made to you, to the extent such distributions do not exceed your qualified higher education expenses (as defined in Section 72(t)(7) of the Code) for the tax year; | | 9) | distributions from an IRA which are qualified first-time homebuyer distributions (as defined in Section 72(t)(8) of the Code); | | 10) | distributions made to an alternate Payee pursuant to a qualified domestic relations order (does not apply to an IRA); | | 11) | distributions made to a reservist called to active duty after September 11, 2001, for a period in excess of 179 days (or for an indefinite period), from IRAs or amounts attributable to elective deferrals under a 401(k) plan made during such active period; and | | 12) | distributions made during the payment period starting on the birth of a child or the finalization of an adoption (up to $5,000). |
With respect to (12) above, a qualified birth or adoption distribution may be repaid in one or more contributions into an IRA or qualified retirement plan (if you are eligible to make a contribution to the qualified retirement plan). The repayment contribution will be treated as a rollover into the IRA or qualified retirement plan. With respect to (3) above, if the series of substantially equal periodic payments is modified before the later of the Annuitant attaining age 59 1⁄2 or the close of the five year period that began on the date the first payment was received, then the tax for the year of the modification is increased by the 10% additional federal tax, plus interest for the tax years in which the exception was used. A partial withdrawal, partial transfer, or partial rollover taken after a series of substantially equal periodic payments has begun will result in the modification of the series of substantially equal payments and therefore will result in the imposition of the 10% additional federal tax and interest for the period as described above. You should obtain competent tax advice before you take any partial withdrawals from your Contract. Adding Purchase Payments to a Contract that is making substantially equal periodic payments will also result in a modification of the payments. For 2020 only, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, permitted corona-virus related distributions from Qualified Contracts and IRAs up to an aggregate amount of $100,000. This type of distribution was an exception to the 10% federal additional tax. To qualify for the distribution, generally you, your spouse, or dependent had to have been diagnosed with the virus, or you had to have been affected economically in certain ways because of the virus. The tax associated with the distributions may be paid ratably over three years, beginning with the 2020 tax year. The CARES Act also allows you to recontribute the amount you withdrew to an eligible retirement plan (to which you can make a rollover contribution) in one or more payments within three years. Exceptions to the 10% Additional Federal Tax for Non-Qualified Contracts | 1) | paid on or after you reach age 59 1⁄2; | | 2) | paid after you die; | | 3) | paid if you become totally disabled (as that term is defined in Section 72(m)(7) of the Code); | | 4) | paid in a series of substantially equal payments made annually (or more frequently) for your life (or life expectancy) or joint lives of you and your designated Beneficiary; | | 5) | paid as annuity payments under an immediate annuity; or | | 6) | that come from Purchase Payments made before August 14, 1982. |
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021[MMDD, 2022]
• | If you annuitize your Non-Qualified Contract and receive a stream of Annuity Payments, you receive the benefit of the exclusion ratio. The exclusion ratio is a calculation that causes a portion of each Annuity Payment to be non-taxable, based upon the percentage of your Contract Value that is from Purchase Payments. Purchase Payments are treated as a non-taxable return of principal, whereas earnings are taxable. | • | If you take partial withdrawals or annuitize a Qualified Contract, you will be responsible for determining what portion, if any, of the distribution consists of after-tax money. | • | If you take out earnings before age 59 1⁄2, you may be subject to a 10% additional federal tax, unless you take a lifetime annuitization of your Contract or you take money out in a stream of substantially equal payments over your expected life in accordance with the requirements of the Code. If the Contract is jointly owned, we send once check payable to both Joint Owners. For Contracts issued before August 24, 2015, or if the Contract has a number starting with GAZ, we tax both Joint Owner's based on the age of the older Joint Owner. For Contracts issued on or after August 24, 2015 that have a number starting with AV, we tax each Joint Owner individually. Taxing each Joint Owner individually can create a discrepancy in taxation if only one Joint Owner is under age 59 1⁄2 because that Joint Owner will be subject to the 10% additional federal tax. | • | A pledge, assignment, or ownership change of a Contract may be treated as a taxable event. You should discuss any pledge, assignment, or ownership change of a Contract with your tax adviser. | • | If you purchase multiple non-qualified deferred annuity contracts from an affiliated group of companies in one calendar year, these contracts are treated as one contract for purposes of determining the tax consequences of any distribution. | • | Death benefit proceeds from Non-Qualified Contracts are taxable to the beneficiary as ordinary income to the extent of any earnings. Death benefit proceeds must be paid out in accordance with the requirements of the Code. | • | Depending upon the type of Qualified Contract you own, required minimum distributions (RMDs) must be satisfied when you reach a certain age. If you enroll in our minimum distribution program, we make RMD payments to you that are designed to meet this Contract’s RMD requirements. |
With respect to (4) above, if the series of substantially equal periodic payments is modified before the later of your attaining age 59 1⁄2 or the close of the five year period that began on the date the first payment was received, then the tax for the year of the modification is increased by the 10% additional federal tax, plus interest, for the tax years in which the exception was used. A partial withdrawal or partial 1035 exchange taken after a series of substantially equal periodic payments has begun will result in the modification of the series of substantially equal payments and therefore will result in the imposition of the 10% additional federal tax and interest for the period as described above. Adding Purchase Payments to a Contract that is making substantially equal periodic payments will also result in a modification of the payments.Non-Qualified Annuity Medicare Tax Distributions from Non-Qualified Contracts are considered investment income for purposes of the Medicare tax on investment income. Thus, in certain circumstances, a 3.8% tax may apply to some or all of the taxable portion of distributions (e.g. earnings) to individuals whose income exceeds certain threshold amounts ($200,000 for filing single, $250,000 for married filing jointly and $125,000 for married filing separately.) This tax does not apply to distributions from Qualified Contracts. Please consult a tax adviser for more information. Payments for Financial Adviser Fees Any financial adviser fees that you choose to have us pay from this Contract to your Financial Professional or Financial Professional's firm may result in a taxable distribution. Please consult with your Financial Professional before requesting us to pay financial adviser fees from this Contract compared to other assets you may have since federal and/or state taxing authorities could determine that such fees should be treated as taxable distributions. RMDs From Qualified Contracts Distributions from a Qualified Contract must commence no later than the required beginning date. For Roth IRAs, no distributions are required during the Owner’s lifetime. For IRAs other than Roth IRAs, the required beginning date is April 1 of the calendar year following the year in which you attain age 72 (or age 70 1⁄2 if you reached this age prior to January 1, 2020). Under a qualified plan, the required beginning date is generally April 1 of the calendar year following the later of the calendar year in which you reach age 72 (or age 70 1⁄2 if you reached this age prior to January 1, 2020) or retire. Generally, RMDs must be made over a period not exceeding the life or life expectancy of the individual or the joint lives or life expectancies of the individual and his or her designated Beneficiary. If the RMDs are not made, a 50% additional federal tax is imposed as to the amount not distributed. If you are attempting to satisfy these rules through partial withdrawals, the present value of future benefits provided under the Contract may need to be included in calculating the amount required to be distributed. If you enroll in our minimum distribution program, we make RMD payments to you that are designed to meet this Contract’s RMD requirements. Diversification Code Section 817(h) and accompanying Treasury Department Regulations imposes diversification standards on the assets underlying variable annuity contracts. The Code provides that a variable annuity contract cannot be treated as an annuity contract for any period during which its investments are not adequately diversified as required by the United States Treasury Department. If the Contract no longer qualifies as an annuity contract, you would be subject to federal income tax each year with respect to Contract earnings accrued. We intend to manage all available Index Options, and we intend that all Variable Options be managed by the investment advisers so that they comply with these diversification standards. Owner Control The Treasury Department has indicated that the diversification regulations do not provide guidance regarding the circumstances in which an Owner’s control of the Separate Account’s investments may cause the Owner to be treated as the owner of the Separate Account’s assets, which would cause the Contract to lose its favorable tax treatment. In certain circumstances, variable annuity contract owners have been considered for federal income tax purposes to be the owners of the separate account’s assets, due to their ability to exercise investment control over those assets. In this case, the contract owners have been currently taxed on income and gains attributable to the variable account assets. There is little guidance in this area and some of our Contract’s features, such as the flexibility of an Owner to allocate Purchase Payments and transfer amounts among available Variable Options, have not been explicitly addressed in published rulings. While we believe that the Contracts do not give Owners investment control over Separate Account assets, we reserve the right to modify the Contracts as necessary to prevent an Owner from being treated as the owner of the Separate Account assets.
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
Taxation of Annuity Payments For Annuity Payments from Non-Qualified Contracts, the portion of each payment included in income is determined by an exclusion ratio. The exclusion ratio is a calculation that causes a portion of each Annuity Payment to be non-taxable, based upon the percentage of your Contract Value that is from Purchase Payments. We determine the exclusion ratio for Annuity Payments by dividing the investment in the Contract (adjusted for any guaranteed period or refund guarantee) by the expected return anticipated to be paid as Annuity Payments (which is determined by Treasury Regulations). We determine the amount of each Annuity Payment that is excluded from income by multiplying the Annuity Payment by the exclusion ratio. Annuity Payments received after the investment in the Contract has been recovered (for example, when the total of the amounts excluded from income equal the investment in the Contract) are fully taxable. Generally, Annuity Payments from Qualified Contracts are fully taxable unless you have separately tracked and reported any after-tax contributions that you have made. Annuity Payments that are qualified distributions from Roth IRAs are federal income tax free. Owners, Annuitants and Beneficiaries under the Contracts should seek competent financial advice about the tax consequences of any distributions. Distributions Upon the Owner’s Death (or Annuitant’s Death If the Owner Is a Non-individual) Section 72(s) of the Code requires that, to be treated as an annuity contract for federal income tax purposes, a Non-Qualified Contract must contain certain provisions regarding distributions when an Owner dies. Specifically, Section 72(s) requires that: (a) if an Annuitant dies on or after you annuitize the Contract, but before distribution of the entire Contract’s interest, the entire Contract’s interest must be distributed at least as rapidly as under the distribution method being used as of the Annuitant’s date of death; and (b) if any Owner (or the Annuitant if the Owner is a non-individual) dies before you annuitize the Contract, the Contract’s entire interest must be distributed within five years after the Owner’s date of death. These requirements are satisfied as to any part of an Owner’s interest that is payable to, or for the benefit of, a designated Beneficiary and distributed over the designated Beneficiary’s life, or over a period not extending beyond that Beneficiary’s life expectancy, provided that distributions begin within one year of the Owner’s death. The designated Beneficiary refers to an individual designated by the Owner as a Beneficiary and to whom ownership of the Contract passes by reason of death. However, if the designated Beneficiary is the deceased Owner’s surviving spouse, the surviving spouse can continue the Contract as the new Owner. If a couple is married in a jurisdiction (including a foreign country) that recognizes same-sex marriage, that marriage will be recognized for all federal tax purposes regardless of the law in the jurisdiction where they reside. However, the IRS did not recognize civil unions and registered domestic partnerships as marriages for federal tax purposes. Depending on the state in which your Contract is issued, we may offer certain spousal benefits to same-sex civil union couples, domestic partners or spouses. You should be aware, however, that, if state law does not recognize the civil union or registered domestic partnership as a marriage, we cannot permit the surviving partner/spouse to continue the Contract within the meaning of the federal tax law. Same-sex civil union couples, domestic partners and spouses should contact their financial professional and a qualified tax adviser regarding their personal tax situation, the implications of any Contract benefits based on a spousal relationship, and their partner’s/spouse’s rights and benefits under the Contract. Non-Qualified Contracts contain provisions that are intended to comply with these Code requirements. Upon death of an Owner of a Qualified Contract, the Setting Every Community Up for Retirement (SECURE) Act (contained within the Further Consolidated Appropriations Act enacted December 20, 2019) made significant changes to the payment options available to Beneficiaries of Owners who die on or after January 1, 2020. The rules discussed below reference IRA Contracts, but similar rules also apply to qualified retirement plans. With some exceptions, IRA Beneficiaries must receive their entire death benefit by December 31 following the tenth anniversary of the IRA Owner’s death. The payments options for IRA Beneficiaries differ depending on several factors, including whether a Beneficiary is an Eligible Designated Beneficiary (EDB). An EDB includes any Beneficiary of the deceased IRA Owner who at time of death is: 1) the surviving spouse, 2) not more than ten years younger than the IRA Owner, 3) a minor child of the IRA Owner, 4) chronically ill, or 5) disabled. EDB status is determined at the IRA Owner’s death.
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
If you are an EDB, then you can begin RMD payments based on your single life expectancy (“stretch payments”) in the year following the deceased Owner’s death. You must begin to receive these RMD payments by December 31 of the year following the deceased Owner’s death (but see the exception for a spouse beneficiary below). If you are an EDB that elected to receive payments over your life expectancy, once you die, then your beneficiary must receive their entire death benefit by December 31 following the tenth anniversary of your death. For a minor child Beneficiary, the payments based on life expectancy may continue only until the minor child reaches the age of majority (age 18 or the age specified in Treasury Regulations). The minor child Beneficiary must receive their entire death benefit by December 31 following the tenth anniversary of reaching the age of majority. If you were the spouse Beneficiary of the deceased Owner’s IRA Contract and your spouse had not yet reached the date at which he/she was required to begin receiving RMD payments (treating a Roth IRA as a traditional IRA for this purpose only), then you can wait to begin receiving RMD payments until the year that your spouse would have reached age 72. Alternatively, if the deceased Owner had already reached the date at which he/she was required to begin receiving RMD payments, you must begin to receive these RMD payments by December 31 of the year following the deceased Owner’s death. If you are a designated Beneficiary (generally an individual), but are not an EDB, the entire death benefit must be distributed by December 31 after the tenth anniversary of the IRA Owner’s death. If you die before the end of the ten-year period and the entire death benefit has not been distributed, your beneficiary must receive the entire death benefit by the same date you would have been required to receive the death benefit. If the Beneficiary of the IRA Contract is a trust, current Treasury Regulations provide “see-through” treatment for trusts that meet certain requirements. If such treatment applies, the beneficiaries of the trust, rather than the trust itself will be treated as having been designated as beneficiaries of the IRA Contract for purposes of determining the distribution period for RMD payments. Due to the changes made by SECURE, there is uncertainty regarding which distribution options are available when a trust is the Beneficiary of an IRA Contract. Clarification of situations involving trust Beneficiaries is expected to be provided when the Treasury Department releases applicable regulations. Individuals are encouraged to seek guidance from their own tax professional or legal counsel to determine how these new rules apply to their particular situation. If the IRA Beneficiary is not a “designated beneficiary” (e.g., beneficiary is an estate, charity, or a trust that does not meet the requirements for “see-through” treatment), then the payment options are unchanged by the SECURE Act. If the IRA Owner had not yet reached the date at which he/she was required to begin receiving RMD payments (treating a Roth IRA as a traditional IRA for this purpose only), then these IRA Beneficiaries must receive their entire death benefit by December 31 following the fifth anniversary of the IRA Owner’s death. Alternatively, if the deceased Owner had already reached the date at which he/she was required to begin receiving RMD payments, these IRA Beneficiaries can begin RMD payments based on the single life expectancy of the Owner in the year of the deceased Owner’s death, reduced by one. These Beneficiaries must begin to receive these RMD payments by December 31 of the year following the deceased Owner’s death. The SECURE Act impacts situations when the IRA Owner died before January 1, 2020 and the Beneficiary had elected stretch payments. In this situation, the stretch payments can continue to the Beneficiary, but once that Beneficiary dies, the successor beneficiary must receive any remaining death benefit by December 31 following the tenth anniversary of the original Beneficiary’s death. The SECURE Act may limit the annuitization options that a Beneficiary may elect at the IRA Owner’s death to comply with the new death benefit payment rules. Also, if an IRA Owner elected an annuitization option and then dies, action may be needed by the Beneficiary if any remaining Annuity Payments do not comply with the new death benefit payment rules for a Beneficiary. Tax-Free Section 1035 Exchanges Subject to certain restrictions, you can make a “tax-free” exchange under Section 1035 of the Code for all or a portion of one non-qualified annuity contract for another, or all of a life insurance policy for a non-qualified annuity contract. If you perform a partial 1035 exchange, please be aware that no distributions or withdrawals can occur from the old or new annuity contract within 180 days of the partial exchange, unless you qualify for an exception to this rule. IRS guidance also provides that certain partial exchanges may not qualify as tax-free exchanges. You should consult a tax adviser to discuss the potential tax effects before making a 1035 exchange.
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
Before making an exchange, you should compare both contracts carefully. Remember that if you exchange a life insurance policy or annuity contract for the Contract described in this prospectus: | • | you might have to pay a withdrawal charge on your previous contract, | | • | there is a new withdrawal charge period for this Contract, | | • | other fees and expensescharges under this Contract may be higher (or lower), | | • | the benefits may be different, and | | • | you no longer have access to any benefits from your previous contract. |
If the exchange does not qualify for Section 1035 treatment, you also may have to pay federal income tax, including a possible additional federal tax, on the exchange. You should not exchange an existing life insurance policy or another annuity contract for this Contract unless you determine the exchange is in your best interest and not just better for the person selling you the Contract who generally earns a commission on each sale. Multiple Non-Qualified Contracts Purchased In the Same Year By the Same Owner Code Section 72(e)(12) provides that multiple Non-Qualified deferred annuity contracts issued within the same calendar year to the same owner by one company or its affiliates are treated as one annuity contract for purposes of determining a distribution’s tax consequences. This treatment may result in adverse tax consequences, including more rapid taxation of distributions from combined contracts. For purposes of this rule, contracts received in a Section 1035 exchange are considered issued in the year of the exchange. You should consult a tax adviser before purchasing more than one Non-Qualified Contract in any calendar year period. Assignments, Pledges and Gratuitous Transfers Any assignment or pledge (or agreement to assign or pledge) the Contract Value is treated for federal income tax purposes as a full withdrawal. The Contract will not qualify for tax deferral while the assignment or pledge is effective. Qualified Contracts generally cannot be assigned, pledged, or transferred to another individual. For Non-Qualified Contracts, the Contract’s cost basis is increased by the amount includible as income with respect to such amount or portion, though it is not affected by any other aspect of the assignment or pledge (including its release). If an Owner transfers a Non-Qualified Contract (an ownership change) without adequate consideration to a person other than their spouse (or to a former spouse incident to divorce), the Owner is taxed on the difference between his or her Contract Value and the Contract’s cost basis at the time of transfer. In such case, the transferee’s investment in the Contract is increased to reflect the increase in the transferor’s income. An Owner should consult a tax adviser before requesting an assignment, transfer, or pledge. Income Tax Withholding Any part of a distribution that is taxable to the Owner or Beneficiary is subject to federal and/or state income tax withholding. Generally, we withhold amounts from Annuity Payments at the same rate as wages, and we withhold 10% from non-periodic payments, such as withdrawals. However, in most cases, you may elect not to have taxes withheld or to have withholding done at a different rate. Certain distributions from retirement plans qualified under Code Section 401 that are not directly rolled over to another eligible retirement plan or IRA, are subject to a mandatory 20% federal income tax withholding. The 20% withholding requirement generally does not apply to: | • | a series of substantially equal payments made at least annually for the life or life expectancy of the participant or joint and last survivor expectancy of the participant and a designated Beneficiary, or for a specified period of ten years or more; or | | • | RMDs; or | | • | any part of a distribution not included in gross income (for example, returns of after-tax contributions); or | | • | hardship withdrawals. |
Plan participants should consult a tax adviser regarding income tax withholding requirements. Federal Estate Taxes While no attempt is being made to discuss the potentialContract’s federal estate tax effects before makingimplications, an Owner should keep in mind the annuity contract’s value payable to a 1035 exchange.Beneficiary upon the Owner’s death is included in the deceased Owner’s gross estate. Depending on the annuity contract, the annuity’s value included in the gross estate may be the value of the lump sum payment payable to the designated Beneficiary, or the actuarial value of the payments to be received by the Beneficiary. Consult an estate planning adviser for more information.
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
Generation-Skipping Transfer Tax The Code may impose a “generation-skipping transfer tax” when all or part of an annuity contract is transferred to, or a death benefit is paid to, an individual two or more generations younger than the Owner. Regulations may require us to deduct this tax from your Contract, or from any applicable payment, and pay it directly to the IRS. Foreign Tax Credits We may benefit from any foreign tax credits attributable to taxes paid by certain funds to foreign jurisdictions to the extent permitted under the federal tax law. Possible Tax Law Changes Although the likelihood of legislative or regulatory changes is uncertain, there is always the possibility that the Contract’s tax treatment could change. Consult a tax adviser with respect to legislative or regulatory developments and their effect on the Contract. We have the right to modify the Contract in response to legislative or regulatory changes that could otherwise diminish the favorable tax treatment that annuity owners currently receive. We make no guarantee regarding the tax status of any Contract and do not intend the above discussion as tax advice.
11.12. Other Information
The Registered Separate Account We established Allianz Life of NY Variable Account C (the Separate Account, formerly Preferred Life Variable Account C), as a separate account under New York State insurance law on February 26, 1988. The Separate Account is registered with the SEC as a unit investment trust under the Investment Company Act of 1940. The SEC does not supervise our management of the Separate Account. The Separate Account holds the Variable Options' shares that have been purchased with Contract assets. We keep the Separate Account assets separate from the assets of our general account and other separate accounts, including the non-unitized separate accounts we established in connection with the Index Options. The Separate Account is divided into subaccounts, each of which invests exclusively in a single Variable Option.
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
We own the assets of the Separate Account. We creditIncome, gains, and losses credited to, or charge lossescharged against, the Separate Account whether orreflect the Separate Account’s own investment experience and not realized, without regard to the performanceinvestment experience of the our other investment accounts.assets. The Separate Account’s assets are insulated, so that the assets cannot be used to pay any of our liabilities, other than those arising from the investment of Contract assets in the Variable Options. If the Separate Account’s assets exceed the required reserves and other liabilities, we may transfer the excess to our general account, to the extent of seed money invested by us or earned fees and expenses. The obligations under the Contracts are obligations of Allianz Life of New York. We are obligated to pay all amounts promised to investors under the Contracts. Our General Account Our general account holds all our assets other than assets in our separate accounts. We own our general account assets, and, subject to applicable law, have sole investment discretion over them. The assets are subject to our general business operation liabilities and claims of our creditors and may lose value. We have not registered our general account as an investment company under the Investment Company Act of 1940. Our general account assets fund guarantees provided in the Contracts. Contract Value that you apply to Annuity Payments becomes part of our general account. Our Unregistered Separate Account We allocate all assets backing the Index Options to an unregistered, non-unitized, non-insulated separate account (Separate Account IANY), which we established under New York Insurance Law solely for the purpose of supporting our obligations to pay Performance Credits associated with the Index Options. Separate Account IANY has two subaccounts: Subaccount IABV (which is a book value subaccount) and Subaccount IAMV (which is a market value subaccount). Initially, a substantial majority of the aggregate assets backing the Index Options are allocated to Subaccount IABV. We hold all other assets that you allocate to the Index Options that are not invested in Subaccount IABV in Subaccount IAMV. Subsequently, there may be significant transfer of assets between Subaccount IABV and Subaccount IAMV in response to
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
Index performance during the then-current Index Year. We typically transfer assets between the subaccounts if there is a 10% incremental change in year-to-date Index performance. For the Index Performance Strategy this starts at a -10% decrease in the market; for the Index Protection NY Strategy, this starts at a -30% decrease in the market. We monitor year-to-date Index performance daily and change allocations daily if needed based on this 10% increment. We invest the assets in Subaccount IAMV in hedging instruments, including derivative investments such as put and call options, as well as cash and fixed income securities. Like our general account, the assets in Separate Account IANY are subject to our general business operation liabilities and the claims of our creditors. An Owner who allocates Contract Value to an Index Option does not have any interest in or claim on the assets in Separate Account IANY. In addition, neither the Owner nor the Index Options participate in any way in the performance of assets held in Separate Account IANY. Distribution Allianz Life Financial Services, LLC (ALFS), a wholly owned subsidiary of Allianz Life Insurance Company of North America, serves as principal underwriter for the Contracts. ALFS is a limited liability company organized in Minnesota, and is located at 5701 Golden Hills Drive, Minneapolis, MN 55416. ALFS is registered as a broker-dealer with the SEC under the Securities Exchange Act of 1934, as well as with the securities commissions in the states in which it operates, and is a member of the Financial Industry Regulatory Authority (FINRA). ALFS is not a member of Securities Investors Protection Corporation. More information about ALFS is available at www.finra.orgfinra.org or by calling 1-800-289-9999. You also can obtain an investor brochure from FINRA describing its Public Disclosure Program. We have entered into a distribution agreement with ALFS for the distribution of the Contracts. ALFS also may perform various administrative services on our behalf. We may fund ALFS operating and other expenses, including: | • | overhead, | | • | legal fees, | | • | accounting fees, | | • | Financial Professional training, | | • | compensation for the ALFS management team, and | | • | other expenses associated with the Contracts. |
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
other expenses associated with the Contracts.
Financial Professionals and their managers may also be eligible for various benefits, such as production incentive bonuses, insurance benefits, and non-cash compensation items that we may provide jointly with ALFS. Non-cash items include conferences, seminars and trips (including travel, lodging and meals in connection therewith), entertainment, awards, merchandise and other similar items. ALFS does not itself sell the Contracts on a retail basis. Rather, ALFS enters into selling agreements with other broker-dealers registered under the 1934 Act (selling firms) for the sale of the Contracts. We pay sales commissions to the selling firms and their Financial Professionals. The maximum commission payable to the selling firms for Contract sales is expected to not exceed 7% of Purchase Payments. Sometimes, we enter into an agreement with a selling firm to pay commissions as a combination of a certain amount of the commission at the time of sale and a trail commission which, when totaled, could exceed 7% of Purchase Payments. As of December 31, 2021, no Contract offered by this prospectus had been sold. Therefore, we have not included any underwriting commissions paid to ALFS. We and/or ALFS may make bonus payments to certain selling firms based on aggregate sales of our variable insurance contracts (including this Contract) or persistency standards, or as part of a special promotion. These additional payments are not offered to all selling firms, and the terms of any particular agreement governing the payments may vary among selling firms. In some instances, the amount paid may be significant. A portion of the payments made to selling firms may be passed on to their Financial Professionals. Financial Professionals may receive cash and non-cash compensation and other benefits. Ask your Financial Professional for further information about what they and their firm may receive in connection with your purchase of a Contract. Commissions paid on the Contract, including other incentives or payments, are not charged directly to the Owners or the Separate Account. We intend to recover commissions and other expenses indirectly through fees and expenses imposed under the Contract.
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
Broker-dealers and their Financial Professionals and managers involved in sales of the Contracts may receive payments from us for administrative and other services that do not directly involve the sale of the Contracts, including payments made for recordkeeping, the recruitment and training of personnel, production of promotional literature and similar services. In addition, certain firms and their Financial Professionals may receive compensation for distribution and administrative services when acting in a wholesaling capacity and working with retail firms. In certain instances, we and/or ALFS may make payments to a broker-dealer for inclusion of this Contract in its list of products that it offers for sale. We and/or ALFS may pay certain selling firms additional marketing support allowances for: | • | marketing services and increased access to their Financial Professionals; | | • | sales promotions relating to the Contracts; | | • | costs associated with sales conferences and educational seminars; | | • | the cost of client meetings and presentations; and | | • | other sales expenses incurred by them. |
We retain substantial discretion in determining whether to grant a marketing support payment to a particular broker-dealer firm and the amount of any such payment. We may also make payments for marketing and wholesaling support to broker-dealer affiliates of Variable Options that are available through the variable annuities we offer. Additional information regarding marketing support payments can be found in the Distributor section of the Statement of Additional Information. Some Financial Professionals may have a financial incentive to offer you a new contract in place of the one you already own. You should only exchange your contract if you determine, after comparing the features, fees and risks of both contracts, that it is better for you to purchase the new contract rather than continue to own your existing contract. The Variable Options may assess a Rule 12b-1 fee. These fees are paid to ALFS as consideration for providing distribution and certain other services and incurring certain expenses permitted under the Variable Option’s plan. These fees typically equal 0.25% of a Variable Option’s average daily net assets. In certain instances, an investment adviser and/or subadviser (and/or their affiliates) of a Variable Option may make payments for administrative services to ALFS or its affiliates. We offer the Contracts to the public on a continuous basis. We anticipate continuing to offer the Contracts but reserve the right to discontinue the offering.
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
Additional Credits for Certain Groups We may credit additional amounts to a Contract instead of modifying charges because of special circumstances that result in lower sales or administrative expenses or better than expected mortality or persistency experience. Administration/Allianz Service Center The Allianz Service Center performs certain administrative services regarding the Contracts and is located at 5701 Golden Hills Drive, Minneapolis, Minnesota. The Service Center mailing address and telephone number are listed at the back of this prospectus. The administrative and routine customer services performed by our Service Center include processing and mailing of account statements and other mailings to Owners, responding to Owner correspondence and inquiries. Allianz Life Insurance Company of North America (as service provider for the Contracts) also contracts with Tata Consultancy Services (Tata) located at #42(P) & 45(P), Think Campus, Electronic City, Phase II, Bangalore, Karnataka 560100, India, to perform certain administrative services including: | • | issuance and maintenance of the Contracts, | | • | maintenance of Owner records, and | | • | routine customer service including: |
–− | processing of Contract changes, | –− | processing withdrawal requests (both partial and total), and | –− | processing requests for fixed annuity payments. |
Services performed by Tata are overseen and quality control checked by our Service Center.
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
To reduce expenses, only one copy of most financial reports and prospectuses, including reports and prospectuses for the Variable Options, may be mailed to your household, even if you or other persons in your household have more than one contract issued by us or our affiliate. Call our Service Center at the toll-free telephone number listed at the back of this prospectus if you need additional copies of financial reports, prospectuses, or annual and semiannual reports, or if you would like to receive one copy for each contract in future mailings. Legal Proceedings Like other life insurance companies, we from time to time are involved in legal proceedings of various kinds, including regulatory proceedings and individual and class action lawsuits. In some legal proceedings involving insurers, substantial damages have been sought and/or material settlement payments have been made. Although the outcome of any such proceedings cannot be predicted with certainty, we believe that, at the present time, there are no pending or threatened legal proceedings to which we, the Separate Account, or ALFS is a party that are reasonably likely to materially affect the Separate Account, our ability to meet our obligations under the Contracts, or ALFS ability to perform its obligations. Status Pursuant to Securities Exchange Act of 1934 Allianz Life of New York hereby relies on the exemption provided by Rule 12h-7 under the Securities Exchange Act of 1934 from the requirement to file reports pursuant to Section 15(d) of that Act.
12.13. Information on Allianz Life of New York
Allianz Life of New York is a stock life insurance company organized under the laws of the State of New York on September 21, 1982. Our address is 1633 Broadway, 42nd Floor, New York, NY 10019-7585. Before January 1, 2003, Allianz Life of New York was known as Preferred Life Insurance Company of New York. We are a subsidiary of Allianz Life Insurance Company of North America (Allianz Life), which is also a stock life insurance company. Allianz Life is a subsidiary of Allianz of America, Inc. (AZOA), a financial holding company. AZOA is a wholly owned subsidiary of Allianz Europe, B.V., which in turn is a wholly owned subsidiary of Allianz SE, which is registered in Munich, Germany. We currently offer registered index-linked annuities and are licensed to do direct business in six states, including New York and the District of Columbia.
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
Directors, Executive Officers and Corporate Governance BOARD OF DIRECTORS The Board currently consists of nine members, including our Chair and Chief Executive Officer, our President, our Chief Financial Officer and Treasurer, our Vice President, Appointed Actuary, three independent outside board members, and two other non-independent board members. Age and positions are provided as of December 31, 2020,2021, except as otherwise noted. The Board holds regular semi-annual meetings, generally in April and November of each year, and holds special meetings or takes action by unanimous written consent as circumstances warrant. The Board has standing Executive, Audit and Evaluation, Conflict of Interest, and Finance Committees, each of which is described in further detail below. The current members of our Board are as follows. Walter R. WhiteJasmine M. Jirele
Chair, Director, and Chief Executive Officer
Walter R. White,Jasmine M. Jirele, age 64,44, joined Allianz Life in 2009,2018 and currently serves as the Chair of the Board and the Chief Executive Officer of Allianz Life Insurance Company of New York and asthe Chair of its Executive and Conflict of Interest and Executive Committees since January 1, 2012. Mr. Whitecommittees, respectively. Ms. Jirele also serves as the President and Chief Executive Officer and Board member of Allianz Life and as a memberInsurance Company of its Board of Directors and its Executive Committee since January 1, 2012. Mr. WhiteNorth America. Ms. Jirele also serves as a Director and Presidentthe Chair of the Board of AZOA Services Corporation, and as the Chair of its Shared Plans Management Committee. Mr. WhiteMs. Jirele also serves as a Governor of Allianz Individual Insurance Group, LLC, TruChoice Financial Group, LLC, and Allianz Investment Management U.S. LLC, and TruChoice Financial Group, LLC, respectively. In addition, Mr. WhiteShe also serves as a Directordirector of Questar Capital Corporation, and Questar Agency, Inc., respectively. Mr. White is responsible for leading and overseeing Allianz Australia Life Insurance Holdings Limited and Allianz Australia Life of New York and providing strategic management and direction. Mr. White previously served as the Chair, Chief Executive Officer and President of Allianz Life and Annuity Company from 2012 to 2017 and asInsurance Limited.
Previously, Ms. Jirele was a Governor of Allianz Investment Management LLC from 2017 to 2020. Mr. White brings to the Board extensive financial services and brokerage experience as well as key strategic planning and leadership skills developed as the Chief Executive Officer of Allianz Life and the former President of Woodbury Financial.
Mr. White shared his plans to retire as of December 31, 2021. Mr. White will be stepping down as Chair of the Board, Director, and Chief Executive Officer of Allianz Life of New York as well as President and Chief Executive Officer of Allianz Life on SeptemberJanuary 1, 2021 and will be replaced by Jasmine M.to February 15, 2022. Ms. Jirele was also the Senior Vice President, Chief Growth Officer of Allianz Life subjectfrom October 1, 2018 to standard regulatory filings. After his retirement, Mr. White will be nominatedSeptember 1, 2021. In that role, Ms. Jirele was responsible for the oversight of new business strategy, product innovation, marketing, and corporate communications. Prior to continuethat, Ms. Jirele was the Executive Vice President, Head of Customer
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
Excellence at Wells Fargo Consumer Bank/Consumer Auto. Prior to serve as a member of thethat, Ms. Jirele spent nine years at Allianz Life as the Senior Vice President of Enterprise Operations from 2012 to 2015, Vice President of Market Management and Product Innovation from 2009 to 2012, Director of Executive Projects from 2007 to 2009, and Director of Marketing/Communications from 2006 to 2007, respectively. Ms. Jirele brings to the Board of Directors.extensive operations, product innovation, marketing and communications, growth strategy and insurance industry experience. William E. Gaumond
Director, Chief Financial Officer, and Treasurer William E. Gaumond, age 47,48, currently serves as the Chief Financial Officer and Treasurer, and as a member of the Board of Directors of Allianz Life of New York since January 1, 2016. Mr. Gaumond also serves as Chair of its Finance Committee and as a member of its Executive Committee. Mr. Gaumond joined Allianz Life in 2004 and currently serves as the Senior Vice President, Chief Financial Officer and Treasurer, and as a member of its Board of Directors. Mr. Gaumond also serves as the Chief Financial Officer and Treasurer of Allianz Foundation for North America, and as a Governor of Allianz Individual Insurance Group, LLC, TruChoice Financial Group, LLC, Allianz Life Financial Services, LLC, and Allianz Investment Management U.S. LLC, and Allianz Strategic Investments, LLC, respectively. Mr. Gaumond also serves as a Director and President of Allianz Fund Investments, Inc., AZL PF Investments, Inc., and Dresdner Kleinwort Pfandbriefe Investments II, Inc. and PFP Holdings, Inc., respectively. Mr. Gaumond is also a Director of Questar Agency, Inc., Questar Asset Management, Inc., Questar Capital Corporation, Yorktown Financial Companies, Inc., Allianz of America, Inc., Allianz Real Estate of America LLC, and Allianz Technology of America, Inc., and PFP Holdings, Inc., respectively. Mr. Gaumond is also a Director and the Senior Vice President of AZOA Services Corporation. Mr. Gaumond also serves as a Director and the Chief Financial Officer and Treasurer of Allianz Finance Corporation. Mr. Gaumond previously served as a Director of Questar Asset Management, Inc. from January 2016 to September 2021. Mr. Gaumond is responsible for all finance and risk management functions, with oversight of the controller, financial planning, treasury, and corporate risk management areas. Prior to his current roles, Mr. Gaumond spent 12 years in a number of finance and investment-related positions at Allianz Life and its affiliates in various executive capacities. Mr. Gaumond brings to the Board extensive financial services, investment, and insurance industry experience, including serving as Chief Financial Officer and Treasurer of Allianz Life and Allianz Life of New York.
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
Eric J. Thomes
Director and President Eric J. Thomes, age 48,49, joined Allianz Life of New York on April 1, 2019, and currently serves as the President and as a member of the Board of Directors. Mr. Thomes also serves as the Senior Vice President, Chief Distribution Officer of Allianz Life. Mr. Thomes also serves as a Governor, and as the Chief Executive Officer and Chief Manager of Allianz Life Financial Services, LLC. Mr. Thomes also serves as a Governor of Allianz Individual Insurance Group, LLC, and TruChoice Financial Group, LLC, respectively. Mr. Thomes also serves as the Chair and as a Director of Yorktown Financial Companies, Inc., Questar Agency, Inc., Questar Asset Management, Inc., and Questar Capital Corporation, respectively. Mr. Thomes is responsible for the development, design and implementation of Allianz Life’s and Allianz Life of New York’s sales and distribution strategies. Prior to his current roles, Mr. Thomes served as the Field Senior Vice President, FMO Sales from 2009 to 2019. He also served as the President of Allianz Individual Insurance Group, LLC from 2005 to 2018.2018 and as a Director of Questar Asset Management, Inc. from April 2019 to September 2021, respectively. Mr. Thomes brings to the Board extensive financial services and insurance industry experience. Steven J. Thiel
Director and Vice President, Appointed Actuary Steven J. Thiel, age 50,51, joined Allianz Life of New York’s Board of Directors on November 13, 2012 and is the Vice President, Appointed Actuary and is also a member of its Finance Committee. Mr. Thiel also serves as the Vice President, Actuarial Financial Reporting and Analysis of Allianz Life. Mr. Thiel is a Director and the President and Chief Executive Officer of Allianz Life Insurance Company of Missouri. Mr. Thiel joined Allianz Life in 2008. Mr. Thiel previously served as the Appointed Actuary of Allianz Life and Annuity Company from 2012 to 2017 and as a Director and the President and Chief Executive Officer of Allianz Annuity Company of Missouri from 2012 to 2019. Mr. Thiel leads a team responsible for accurate and timely reporting of the actuarial balances for Allianz Life and Allianz Life of New York. He is accountable for analyzing aspects of the Company’s financial performance and delivering key projects that drive financial strength and stability. Mr. Thiel brings to the Board extensive experience in actuarial and financial performance matters.
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Ronald M. Clark
Director Ronald M. Clark, age 73,74, joined Allianz Life of New York’s Board of Directors on March 31, 2013, and is a member of its Audit and Evaluation Committee and its Finance Committee. Mr. Clark also serves as a Director and Audit Committee member of Allianz Reinsurance America, Inc. Mr. Clark also serves as a Director of Manitex International, Inc., a public company, as the Chair of its Compensation Committee, and as a member of its Audit Committee. Mr. Clark has over 40 years of experience in investments, having served as the President of Allianz Investment Corporation from 1980 to 1990, the Chief Operating Officer of Allianz of America, Inc. (“AZOA”) from 1990 to 2001, the Chief Investment Officer of AZOA from 2002 to 2011, and as a Director of Fireman’s Fund Insurance Company from 2014 to 2015. Mr. Clark previously served as a Director of Allianz Life and as the Chair of its Nomination, Evaluation and Compensation Committee, and as a member of its Audit and Executive Committees from 2014 to 2020. Mr. Clark brings to the Board extensive experience in the financial services and insurance industries, as well as extensive experience with investment matters. Martha Clark Goss
Director Martha Clark Goss, age 71,72, joined Allianz Life of New York’s Board of Directors on October 15, 2005, and is the Chair of its Audit and Evaluation Committee, and a member of its Conflict of Interest Committee. Ms. Goss has more than 3540 years of executive experience, primarily in finance and investments and risk management. Since 1992, she has served on a number of public and private company boards, has provided independent consulting services to various companies and serves as an instructor for executive leadership training for Deloitte LLP. Ms. Goss currently serves as a director of American Water Works Company, Inc. and Neuberger Berman Mutual Funds. Ms. Goss brings to the Board extensive experience in the financial services industry as well as expertise on corporate governance and risk management matters. The Board also benefits from her perspective as a current and former director of other companies.
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
Lorraine Lods
Director Lorraine Lods, age 52,53, joined Allianz Life of New York’s Board of Directors on October 1, 2018. Ms. Lods has over 2530 years of insurance and financial service experience. Ms. Lods currently serves as Regional Vice President of Retirement Consultant for Allianz Life Financial Services, LLC covering the New York City-Long Island Territory since 2009. Ms. Lods brings to the Board extensive experience in the insurance industry as well as extensive experience in wholesaling. Gary A. Smith
Director Gary A. Smith, age 61,62, joined Allianz Life of New York’s Board of Directors on May 10, 2005. Mr. Smith is Co-Founder and Senior Partner of Ivy Planning Group (Ivy), a 30-year-old management consulting and training company specializing in strategy, diversity, leadership and change management. Mr. Smith has over 30 years of experience in strategy, technology, management consulting and executive coaching to large private sector companies and government organizations. Mr. Smith has successfully developed and implemented strategies, led teams, and served the needs of a wide spectrum of clients, sharing best practices in management consulting in multiple venues. Mr. Smith brings to the Board extensive experience in management consulting and diversity initiatives. Kevin E. Walker
Director Kevin E. Walker, age 58,59, joined Allianz Life of New York’s Board of Directors on October 1, 2018, and is a member of its Audit and Evaluation Committee and its Executive Committee. Mr. Walker also serves on Allianz Life’s Board of Directors since May 23, 2017, and is a member of its Audit Committee and the Chair of its Nomination, Evaluation and Compensation Committee.2017. Mr. Walker serves as the Chair and Director of Allianz Reinsurance America, Inc., and is a member of its Audit Committee since January 1, 2017. Mr. Walker has over 30 years of insurance and financial services experience. Mr. Walker served at various Allianz affiliates throughout his career, most recently as the President and Chief Executive Officer of Allianz Reinsurance America, Inc. from 2015 to 2016. Mr. Walker has also served as a director and officer for several other Allianz affiliates. Mr. Walker brings to the Board extensive experience in the insurance industry, as well as extensive experience in finance and operations.
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
EXECUTIVE OFFICERS The current executive officers (other than Ms. Jirele and Messrs. White, Gaumond, Thiel and Thomes) are as follows. Age and positions are provided as of December 31, 2020,2021, except as otherwise noted. Gretchen Cepek
Chief Legal Officer and Secretary Gretchen Cepek, age 52,53, joined Allianz Life of New York on February 17, 2012 and currently serves as the Chief Legal Officer and Secretary and as a member of its Conflict of Interest Committee. In this role, Ms. Cepek is responsible for the legal, ethics and compliance departments as well as government relations and the special investigations unit. Ms. Cepek also serves as the Senior Vice President, General Counsel and Secretary of Allianz Life and as the General Counsel and Secretary of AZOA Services Corporation. Previously, Ms. Cepek served as the Secretary for Allianz Life and Annuity Company from 2012 to 2017. Ms. Cepek received her J.D. from Valparaiso University School of Law in 1993. Todd M. HedtkeJean-Roch P.F. Sibille
Chief Investment Officer
Todd M. Hedtke,Jean-Roch P.F. Sibille, age 48,39, joined Allianz Life of New York in 20122019 and currently serves as the Chief Investment Officer since August 21, 2015.May 3, 2022. He also currently serves as the Senior Vice President, Chief Investment Officer of Allianz Life. Mr. Hedtke also serves as a GovernorLife, and Chief Executive Officer of Allianz Investment Management LLC and Allianz Investment Management U.S. LLC, and as the Chief Investment Officer of Allianz Life Insurance Company of Missouri, LLC, respectively. Mr. HedtkeSibille is a Governor and the Chief Executive Officer of Allianz Investment Management U.S. LLC and a Governor of Allianz Strategic Investments, LLC, respectively. In addition, he also serves as a Director and President of Allianz Finance Corporation, and a Director, Vice President and Treasurer of Allianz Fund Investments Inc., AZL PF Investments Inc., and Dresdner Kleinwort Pfandbriefe Investments II Inc., and Allianz Fund Investments, Inc., respectively. Mr. Hedtke also serves as the Chair of the Benefit Plans Investment Committee for AZOA Services Corporation. Mr. HedtkeSibille leads the investment management, liquidity planning, hedging, and trading functions at Allianz Life. Mr. HedtkeHe is also a member of the global Allianz Investment Management Board, which serves the Allianz Group of insurance companies. Prior to his current roles,Previously, Mr. Hedtke spent 15 years in a number of investment-related positions at
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
Allianz Life and its affiliates, including as a Director and the Chief Investment Officer of Allianz Life and Annuity Company from 2015 to 2017 and as the Chief Investment Officer of Allianz Annuity Company of Missouri from 2015 to 2019, respectively.
Jasmine M. Jirele
Jasmine M. Jirele, age 43, joined Allianz Life in 2018 and currently servesSibille served as the Senior Vice President, Chief GrowthRisk Officer and Chief Credit Officer of Allianz Life since October 1, 2018. Ms. Jirele leads strategy, new markets, global business development, product innovation, marketing, digital and experience management, Allianz Ventures, strategic communication and sponsorships, and enterprise agile for Allianz Life. Previously, Ms. Jirele was an executive vice president within Wells Fargo's Consumer Bank division, and was previously a senior vice president in Wells Fargo's Wealth and Investment Management division. Prior to that, Ms. Jirele spent nine years at Allianz Life as the Senior Vice President of Enterprise Operations from 2012 to 2015, Vice President of Market Management and Product Innovation from 2009 to 2012, Director of Executive Projects from 2007 to 2009, and Director of Marketing/Communications from 2006 to 2007, respectively.
On September 1, 2021, Ms. Jirele will be Chair and member of the Board, and Chief ExecutiveRisk Officer of Allianz Life of New York from January 2019 to May 2022. Prior to his current roles, he spent four years at Allianz SE as well as a memberthe Head of Market Risk Management and Risk Reporting, and Head of the Board,Independent Validation Unit. Mr. Sibille also has broad work experience in risk management with AXA Belgium and PresidentMcKinsey and Chief Executive Officer of Allianz Life, subject to standard regulatory filings.
Catherine A. Mahone
Chief Administrative Officer
Catherine A. Mahone, age 56, joined Allianz Life of New York on April 9, 2013 and currently serves as the Chief Administrative Officer. Ms. Mahone also serves as the Senior Vice President, Chief Administrative Officer of Allianz Life, and as a Governor of Allianz Life Financial Services, LLC. Ms. Mahone is responsible for the oversight of enterprise operations, information technology, and other strategic business initiatives. Previously, Ms. Mahone served as the Senior Vice President, Enterprise Operations of Allianz Life from 2008 to 2012, and as a Director of Allianz Technology of America, Inc. from 2013 to 2015.Company.
Neil H. McKay
Chief Actuary Neil H. McKay, age 59,60, joined Allianz Life of New York in 1999 and currently serves as the Chief Actuary since April 8, 2014. Mr. McKay also currently serves as the Senior Vice President, Chief Actuary of Allianz Life. Previously, Mr. McKay served as a Director and Chief Actuary of Allianz Life and Annuity Company from 2007 to 2017. Mr. McKay is responsible for all of the actuarial functions of Allianz Life of New York and Allianz Life, including the actuarial assumptions underlying its products and the rate setting associated with existing and new products. CORPORATE GOVERNANCE Committees of the Board The Executive Committee of the Board (“Executive Committee”) is currently composed of Messrs.Ms. Jirele (Chair) (who replaced Mr. White (Chair)as Chair as of September 1, 2021), and Messrs. Gaumond and Walker. The function of the Executive Committee is to exercise the authority of the Board between meetings of the Board, with the exceptions set forth in Allianz Life of New York’s By-Laws. The Executive Committee did not meet in 2020, but did act once by written action.2021. The Audit and Evaluation Committee of the Board is currently composed of Ms. Goss (Chair) and Messrs. Clark and Walker. The Audit and Evaluation Committee is responsible for recommending the selection of independent certified public accountants, reviewing Allianz Life of New York’s financial condition and the scope and results of the independent audit and any internal audit, nominating candidates for director, evaluating the performance of principal officers deemed by the Audit and Evaluation Committee to be principal officers of Allianz Life of New York and recommending to the Board of Directors the selection and compensation of such principal officers and any plan to issue options to its officers and employees for the purchase of shares of stock. The Audit and Evaluation Committee met two times in 2020.2021. The Conflict of Interest Committee of the Board is currently composed of Mr. WhiteMs. Jirele (Chair), Ms. Cepek, and Ms. Goss (who replaced Mr. HerbertWhite as a memberChair as of April 10, 2019).September 1, 2021), and Mss. Cepek and Goss. The Conflict of Interest Committee assists Allianz Life of New York in addressing ethics and conflict of interest matters. The Conflict of Interest Committee met once in 2020.2021.
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021[MMDD, 2022]
The Finance Committee of the Board is currently composed of Messrs. Gaumond (Chair), Clark and Thiel. The Finance Committee is responsible for exercising all the powers of the Board of Directors with respect to the investments of the funds of Allianz Life of New York. The Finance Committee met two times in 2020, and acted three times by written action.2021. Independence of Certain Directors Allianz Life of New York is not subject to the independence standards of the New York Stock Exchange or any other national securities exchange, but is subject to the independence standards set out in New York Insurance laws and the Model Audit Rule. Applying the independence standards of the Model Audit Rule to the current members of Allianz Life of New York’s Board of Directors, as well as the members that served on Allianz Life of New York’s Audit and Evaluation Committee during 2020,2021, the Board of Directors has determined that (1) Ms. Goss and Messrs. Clark and Walker are “independent” under those standards. Code of Ethics All of our officers and employees, including our Chief Executive Officer, President, Chief Financial Officer and Controller, are subject to Allianz Life of New York’s Code of Ethics. Executive Compensation Compensation Discussion and Analysis In this section, we provide an overview of the goals and principal components of our executive compensation program and describe how we determine the compensation of our “Named Executive Officers” or “NEOs.” Allianz Life of New York is a subsidiary of Allianz Life. Each of our NEOs is employed by both Allianz Life of New York and Allianz Life. Our NEOs are compensated directly by Allianz Life. Allianz Life charges Allianz Life of New York an allocated percentage of each NEO’s compensation. The allocated percentage of compensation charged to Allianz Life of New York for our NEOs during the year ended December 31, 20202021 is set forth below and hereafter referred to as the “Allocation Percentages.” For 2020,2021, our NEOs were: | Name(1) | Title | Allocation Percentages | | Walter R. White | Chair and Chief Executive Officer | 5.00% | | Jasmine M. Jirele | Chair and Chief Executive Officer | 2.50% | | William E. Gaumond | Chief Financial Officer and Treasurer | 5.00% | | Neil H. McKay | Chief Actuary | 5.00% |
| (1) | Our threetwo most highly paid executive officers other than our principal executive officer and principal financial officer are not included as NEOs for 20202021 because their total compensation allocable to Allianz Life of New York did not exceed the $100,00$100,000 threshold established by SEC rules. |
The details of each NEO’s compensation may be found in the Summary Compensation Table and other compensation tables included in this Executive Compensation section. Executive Summary Our NEOs are also officers of Allianz Life, our parent company, and are not paid additional compensation for serving as executive officers of Allianz Life of New York. Instead, our NEOs are paid directly by Allianz Life with a certain portion of their Allianz Life compensation allocated to Allianz Life of New York, which allocation is reviewed and approved by our Audit and Evaluation Committee with respect to those NEOs that are also the NY Principal Officers. The “NY Principal Officers” are the Chief Executive Officer, President, Chief Legal Officer, and Secretary, Chief Administrative Officer and Chief Financial Officer and Treasurer. Therefore, our parent company, Allianz Life, establishes our NEOs’ compensation programs with our Audit and Evaluation Committee reviewing and approving the compensation allocations to Allianz Life of New York with respect to our NY Principal Officers. Allianz Life’s compensation programs are intended to align our NEOs’ interests with those of our ultimate stockholder, Allianz SE, the ultimate parent company of Allianz Life and Allianz Life of New York. Allianz Life’s compensation programs are designed to reward performance that meets or exceeds the goals established by the Compensation Committee, a management committee of Allianz Life. Allianz Life is tasked with establishing the executive compensation philosophy. In line with Allianz Life’s compensation philosophy described below, the total compensation received by our NEOs will vary based on individual and corporate performance in light of annual and long-term performance goals. Our NEOs’ total compensation is composed of a mix of annual base
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
salary, annual cash awards based on corporate objectives and executive performance factors and long-term equity incentive awards in the form of restricted stock units of the equity securities of Allianz SE.
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Compensation Philosophy and Strategy Overview The overriding goal of Allianz Life’s executive compensation programs is to attract, retain and motivate top-performing executive officers who will dedicate themselves to long-term financial and operational success. To this end, Allianz Life has structured the executive compensation programs to foster a pay-for-performance management culture by: | • | providing total compensation opportunities that are competitive with the levels of total compensation available at the large diversified financial services companies with which Allianz Life most directly competes in the marketplace; | | • | setting performance metrics and objectives for variable compensation arrangements that reward executives for attaining both annual targets and long-term business objectives, thereby providing individual executives with the opportunity to earn above-average compensation by achieving above-average results; | | • | establishing equity-based arrangements that align executives’ financial interests with those of Allianz SE by ensuring executives have a material financial stake in the equity value of Allianz SE and the business success of its affiliates; and | | • | structuring compensation packages and outcomes to foster internal pay equity. |
Compensation Components To support this pay-for-performance strategy, Allianz Life’s total compensation program provides a mix of compensation components that bases the majority of each executive’s compensation on their success and on an assessment of each executive’s overall contribution to that success. | Compensation Element | Description | Objective | | Base Salary | Fixed rate of pay that compensates employees for fulfilling their basic job responsibilities. For NEOs, increases are generally provided in the case of a significant increase in responsibilities or a significant discrepancy versus the market. | Attract and retain high-caliber leadership. | | Annual Incentive Plan | Incentive compensation that promotes and rewards the achievement of annual performance objectives through awards under the Allianz Life Annual Incentive Plan (“AIP”). | • Link compensation to annual performance results.
• Attract and motivate high-caliber leadership.
• Align the interests of NEOs and our stockholder. | | Performance-Based Equity Incentives | Incentive compensation through restricted stock unit awards made under the Allianz Equity Incentive Plan (“AEI”) that promotes and rewards the achievement of long term performance objectives. | • Retain high-caliber leadership with multi-year vesting.
• Align the interests of NEOs and our stockholder. | | Severance Arrangements | Severance payments to employees, including NEOs, under certain company-initiated termination events. | Compensate employees for situations where the employee’s employment is involuntarily terminated in a qualifying termination of employment. | | Perquisites-Benefits | Perquisites provided to our NEOs include employer matching contributions to the NEOs’ accounts in the 401(k) plan and may also include the payment of life insurance premiums, relocation reimbursements, and reimbursements for financial planning, tax preparation services, and spousal travel expenses. | Provide market competitive total compensation package. |
In addition, Allianz Life offers all employees, including our NEOs, broad-based benefits, including comprehensive medical, dental and vision insurance, group term life insurance and participation in a 401(k) plan.
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How Compensation Decisions Are Made Role of the Board of Directors and Compensation Committee The framework governing the executive compensation policies for Allianz Life, which directly compensates the executives of Allianz Life of New York, except as such policies relate to the compensation for the Chief Executive Officer, is set through the Compensation Committee of Allianz Life. Decisions affecting the compensation of the Chief Executive Officer
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
are outside the scope of the Allianz Life Compensation Committee. Any such decisions are made by Allianz SE, subject to review by the Nomination, Evaluation and Compensation Committee of the Allianz Life Board of Directors (the “NEC Committee”), and final approval by Allianz Life’s Board of Directors. With respect to the compensation of other “principal officers” selected by the Board for purposes of the duties of the NEC Committee under Minn. Stat. § 60D.20, subd. 3(d), the Compensation Committee’s decisions are similarly subject to review by the NEC Committee and final approval by Allianz Life’s Board. The “principal officers” include the Chief Executive Officer, Chief Financial Officer, and General Counsel. Allianz Life’s Board has delegated the following responsibilities to the Compensation Committee: | • | In general, establish the compensation philosophy and strategy of Allianz Life and oversee the development and implementation of compensation, benefit, and perquisite programs for corporate executives consistent with the principles of ensuring that leadership is compensated effectively in a manner consistent with the stated compensation strategy, internal equity considerations, competitive practices, shareholder interests, and the requirements of any applicable regulatory bodies in order to attract and retain high-quality leadership. This responsibility includes periodic review of Allianz Life’s compensation programs to pursue certain goals, with the expectation that changes will be made periodically to ensure these goals are attained. | | • | Review and approve the establishment of, or material modification to, any executive incentive compensation plans or programs for Allianz Life. | | • | Review and approve any special benefits or perquisites in effect for, or offered to, any prospective, current or former Allianz Life employee, regardless of the employee’s level or assignment within Allianz Life. Such benefits and perquisites are those that are unusual or different from the benefits offered to all similarly-situated employees. | | • | Review and approve any employment agreements proposed to be made with any prospective or current employee of Allianz Life. | | • | Review and approve any individual severance agreement with any Allianz Life officer. This does not include an arrangement where the employee receives severance or incentive payments under existing terms of a broad-based benefit or compensation plan. | | • | Oversee Allianz Life’s compliance with regulations with respect to compensation matters and adopt and monitor adherence to global and local process requirements and timelines, including those required under the Corporate Rules (as defined under the Allianz Life Standard for Corporate Rules) mandated by Allianz SE. |
The Compensation Committee will at all times be composed of at least three members who are appointed by the full Board of Directors of Allianz Life. The Compensation Committee currently consists of the following members: the Chair of the Board, the Chief Executive Officer, and the Chief Human Resources Officer. The Compensation Committee also utilizes internal personnel to provide advice to the Compensation Committee regarding market trends in compensation policies at competing companies and on a more macro level. Following its review and decision, the Compensation Committee produces and submits a report on executive compensation to Allianz Life’s Board of Directors at its request. With respect to the compensation of “principal officers” selected by Allianz Life’s Board for purposes of the duties of the NEC Committee under Minnesota Statutes § 60D.20, subd. 3(d), the Compensation Committee produces and submits a report on executive compensation proposed for the designated “principal officers” to the NEC Committee for its review and recommendation to Allianz Life’s Board for final approval. Role of the Chief Executive Officer Our Chief Executive Officer assists the Compensation Committee in its review of the total compensation of all the NEOs except himself. Hethemself. The Chief Executive Officer provides the Compensation Committee with histheir assessment of their performancesthe NEOs’ respective performance relative to the corporate and individual goals and other expectations set for them for the preceding year. HeThe Chief Executive Officer then provides his recommendationstheir recommendation for each NEO’s total compensation and the appropriate goals for each NEO in the year to come. However, the Compensation Committee is not bound by histhe Chief Executive Officer’s recommendations.
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
Role of Allianz Life’s Human Resources Allianz Life’s Human Resources supports the Compensation Committee on executive compensation matters by being responsible for many of the organizational and administrative tasks that underlie the compensation review and determination process and making presentations on various topics. Allianz Life’s Human Resources efforts include, among other things: | • | evaluating the compensation data from industry groups, national executive pay surveys, and other sources for the NEOs and other executive officers as appropriate; | | • | gathering and correlating performance ratings and reviews for individual executive officers, including the NEOs; |
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
| • | reviewing executive compensation recommendations against appropriate market data and for internal consistency and equity; and | | • | reporting to, and answering requests for information from, the Compensation Committee. |
Allianz Life’s Human Resources officers also coordinate and share information with their counterparts at Allianz SE. Use of Competitive Compensation Data Because Allianz Life competes most directly for executive talent with other large diversified financial services companies, Allianz Life regards it as essential to regularly review the competitiveness of the total compensation programs for executives to ensure that Allianz Life provides compensation opportunities that compare favorably with the levels of total compensation offered to similarly situated executives by other companies that participate in the compensation surveys in which Allianz Life participates. Allianz Life relies primarily on external market surveys of corporate compensation and benefits published by various national compensation consulting firms, especially salary surveys focusing on insurance companies. In addition, other factors taken into account include the average revenues and number of employees of companies that participate in such surveys. All these information sources are employed to measure and compare actual pay levels not only on an aggregate, total compensation basis, but also to break down the total compensation program component by component to review and compare specific compensation elements as well as the particular mixes of fixed versus variable, short-term versus long-term, and cash versus equity-based compensation at the surveyed companies. This information, as collected and reviewed by Allianz Life’s Human Resources, is submitted to the Compensation Committee for review and discussion. Internal Pay Equity Analysis Allianz Life’s compensation programs are designed with the goal of providing compensation to our NEOs that is fair, reasonable, and competitive. To achieve this goal, Allianz Life believes it is important to compare compensation paid to each NEO not only with compensation paid by the surveyed companies, as discussed above, but also with compensation paid to each of our other NEOs. Such an internal comparison is important to ensure that compensation is equitable among our NEOs. Components of Total Compensation For Our NEOs Allianz Life provides total compensation to our NEOs that consists of several components. These components include the three components of the total compensation program (i.e., base salary, annual incentives, and equity) as well as: (i) retirement, health, and other benefit programs; (ii) severance benefits; and (iii) perquisites. Base Salary Allianz Life’s philosophy is to make base salary a relatively small portion of the overall compensation package for our NEOs, which Allianz Life believes is common in the industry in which we operate. The amount of the base salary awarded to NEOs is based on the position held, the NEO’s tenure, the scope of the position’s responsibilities, and the NEO’s own performance, all of which are reviewed with the aid of market survey data. Using this data, Allianz Life maintains a 50th percentile pricing philosophy, comparing base salaries against the median for comparable salaries at surveyed companies, unless exceptional conditions require otherwise. With respect to the base salary of our Chief Executive Officer, the Chair of the Board considered the Chief Executive Officer’s experience, performance, and contribution to overall corporate performance when determining histheir base salary for 20202021 for recommendation to the NEC Committee. Base salaries for our other NEOs for 20202021 were also set by the Compensation Committee based upon each NEO’s individual experience and contribution to the overall performance of Allianz Life, and subject to Allianz SE Compensation Committee reviews and, with respect to the base salaries of “principal
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
“principal officers” selected by Allianz Life’s Board of Directors for purposes of the duties of the NEC Committee under Minnesota Statutes § 60D.20, subd. 3(d), subject to NEC Committee review and recommendation to Allianz Life’s Board for final approval.
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
AIP Allianz Life offers annual cash bonuses to certain executive officers under the AIP. The AIP is designed to improve performance and profitability by motivating employees to accomplish organizational objectives and financial goals. Bonus awards that may be paid pursuant to the AIP are within the sole discretion of the Compensation Committee, and with respect to our CEO, the Chair of the Board, and are intended to: | • | reward the performance of participants who have made significant contributions to the achievement of annual goals and objectives; | | • | provide an incentive that will encourage future superior individual performance; and | | • | encourage the retention of employees who have demonstrated exceptional performance and/or are anticipated to significantly contribute to the long-term success of Allianz Life. |
Following the performance year, the Compensation Committee approved a specific amount of cash awards to be made pursuant to the AIP to executive officers, including our NEOs, for the 20202021 performance year. The amount determined to be available for such awards was at the discretion of the Compensation Committee and was dependent upon many factors as outlined previously, including, but not limited to, current financial performance and contributions of our NEOs in achieving performance objectives, and with respect to the awards to the “principal officers” selected by Allianz Life’s Board for purposes of the duties of the NEC Committee under Minnesota Statutes § 60D.20, subd. 3(d), subject to NEC Committee review and recommendation to Allianz Life’s Board for final approval. AEI The AEI is (a) one part of the variable compensation component for certain individuals within designated classes of employees at Allianz Life or (b) offered by Allianz Life to select senior employees as an additional part of their variable compensation on a case by case basis. The AEI is granted in the form of restricted stock units of Allianz SE (“RSUs”). The award of RSU’s are intended to: | • | reward the performance of participants who have made significant contributions to the achievement of their company’s annual goals and objectives, | | • | provide an incentive that will encourage future superior individual performance, and | | • | encourage the retention of employees who have demonstrated exceptional performance and/or are anticipated to significantly contribute to the long-term success Allianz. |
Awards made pursuant to the AEI are based upon both the performance of Allianz Life and Allianz Life of New York and the performance of the NEO. The Compensation Committee (and, with respect to those NEOs that are “principal officers” for purposes of the NEC Committee’s duties, the NEC Committee with final approval of Allianz Life’s Board of Directors) reviewed the performance of our NEOs following the end of our 20202021 fiscal year relative to the AEI allocation amount. Benefit Perquisites Allianz Life provides our NEOs with certain limited perquisites. All of our employees, including our NEOs, may participate in the qualified 401(k) plan. Allianz Life and Allianz Life of New York generally provide our executive officers, including our NEOs, with a matching contribution up to $21,375$21,750 annually. In addition, Allianz Life and Allianz Life of New York provide excess liability insurance coverage to all of our NEOs and provide financial planning and tax preparation services, relocation reimbursements, and reimbursements of spousal travel expenses to certain of our NEOs. The incremental costs of perquisites for the NEOs during 20202021 are included in the column entitled “All Other Compensation” in the Summary Compensation Table included in this section. Severance Arrangements Allianz Life has entered into an Executive Severance Agreement with our Chair, Director,former President, and Chief Executive Officer, Walter R. White, which is described in the “Allianz Life Executive Severance Agreement” discussion later in this section. We have not entered into any other specific severance agreements with any of our NEOs. The remainder of our NEOs are eligible for severance payments under the Executive Severance Plan if they experience a qualifying termination of employment and otherwise satisfy the conditions set forth in the plan.
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
Other than the Executive Severance Plan, which is described later in this section, our NEOs (except for Walter R. White)Jasmine M. Jirele) are not eligible for severance payments. Certain of our executive officers receive offer letters which set forth the terms relating to base salary, sign-on incentives, and equity compensation. However, Allianz Life does not view these offer letters as employment agreements as each offer letter states that employment with Allianz Life is “at will.”
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
Other Compensation Policies Tax and Accounting Implications Stock-Based Compensation. Stock-based compensation, comprised of Allianz SE restricted stock units (RSUs) granted pursuant to the AEI, are accounted for in accordance with the requirements of Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 718. The fair value of the RSUs at grant is the arithmetic average of the closing prices of an Allianz SE share in the electronic cash market trading system Xetra (or any successor system) on that day and the nine immediately preceding trading days, less the present value of dividends expected to be paid on one Allianz SE share over the vesting period, and less the fair value of payout restrictions deriving from the vesting period and the payout cap. Recently Discontinued Compensation Programs The purpose of the ALTPUP was to advance the interests of Allianz Life, including Allianz Life of New York, and our indirect stockholder. The ALTPUP sought to accomplish this purpose by providing an incentive in addition to current compensation to certain individuals within designated classes of employees of Allianz Life who contribute significantly to their company’s long-term performance. Such incentive was in the form of Long-Term Performance Units ("ALTPUP Units"), which were contingent awards, subject to the terms, conditions, and restrictions described in the ALTPUP and the Award Agreement under which such awards were made, by which participants in the ALTPUP may have become entitled to receive cash on the payment date for redemption of the ALTPUP Units valued on the valuation date. The award of ALTPUP Units was discretionary. In March 2020, the Group Compensation Committee determined all Allianz entities would move forward with the Allianz SE long term incentive program or AEI. As a result, the ALTPUP program has been discontinued and provided a final grant in March 2020 for 2019 performance. The final payout under the ALTPUP program is expected to occur in 2023. OurWalter R. White, our former Chief Executive Officer, received cash awards pursuant to the terms of the Allianz SE Mid-Term Bonus Plan instead of the ALTPUP. Like the ALTPUP, the Mid-Term Bonus Plan has been discontinued, so the award with respect to 2019 performance was the final award made under the Mid-Term Bonus Plan.
Summary Compensation Table The following table sets forth the compensation paid by Allianz Life for the year ended December 31, 20202021 to our NEOs. The executive compensation information in this prospectus is shown for a one-year period, in accordance with Regulation S-K Item 402, Instruction 1 to Item 402(c).period. Name and Principal
Position
(a) | Year
(b) | Salary
(c) | Stock
Awards
(e)(1) | Non-Equity
Incentive Plan Compensation
(g) | All Other
Compensation
(i)(2) | Total
(j) | Year
(b) | NY Allocation % | Salary
(c) | Bonus
(d) | Stock
Awards
(e)(3) | Non-Equity
Incentive Plan Compensation
(g) | All Other
Compensation
(i)(4) | Total
(j) | Walter R. White
Chair and Chief Executive Officer | 2020 | $43,255 | $79,689 | $53,126 | $1,386 | $177,456 | 2021 | 5.00% | $43,255 | $15,000 | $116,789 | $77,859 | $1,133 | $254,036 | Jasmine M. Jirele(1,2)
Chair and Chief Executive Officer | | 2021 | 2.50% | $14,049 | $9,750 | $26,708 | $17,805 | $563 | $68,874 | William E. Gaumond
Chief Financial Officer and Treasurer | 2020 | $23,444 | $24,112 | $16,075 | $1,315 | $64,946 | 2021 | 5.00% | $23,795 | $15,000 | $38,548 | $25,699 | $1,122 | $104,163 | Neil H. McKay
Senior Vice President, Chief Actuary | | 2021 | 5.00% | $25,500 | $2,500 | $46,310 | $27,540 | $1,220 | $103,070 |
| (1) | Represents compensation paid during her time as Senior Vice President, Chief Growth Officer and President and Chief Executive Officer. | | (2) | A retention bonus of $800,000 will be paid over four years in increments of $200,000 with the first payment paid in March 2019 and the final payment in 2022 so long as Ms. Jirele remains employed by Allianz Life. | | (3) | Represents the grant date fair value of the RSUs issued pursuant to the AEI. The RSUs vest over a four-year period. The RSUs issued in 20212022 for the 20202021 performance year have a March 20252026 exercise date. The grant price of the RSUs was the arithmetic average of the closing prices of an Allianz SE share in the electronic cash market trading system Xetra (or any successor system) on the date of grant and the nine immediately preceding trading days, less the present value of dividends expected to be paid on one Allianz SE share over the vesting period, and less the fair |
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
| value of the payout restrictions deriving from the vesting period and the payout cap. These numbers show the amount realized for financial reporting purposes as calculated in accordance with the FASB ASC Topic 718. Under FASB ASC Topic 718, the grant date fair value is calculated using the closing market price of the common stock of Allianz SE on the date of grant, which is then recognized over the requisite service period of the award. | (2)(4) | The following table provides additional details regarding compensation found in the “All Other Compensation” column. | | | |
| Name | Year | Spousal
Travel(3) | Life Insurance
Premiums | Employer Match
to 401(k) Plan | ASAAP
Contribution(4) | Total | Year | Spousal
Travel(5) | Milestone/
Anniversary/
Recognition(6) | Life Insurance
Premiums | Employer Match
to 401(k) Plan | ASAAP
Contribution(7) | Total | | Walter R. White | 2020 | $272 | $46 | $1,069 | -- | $1,386 | 2021 | -- | -- | $46 | $1,088 | -- | $1,133 | | Jasmine M. Jirele | | 2021 | -- | $9 | $10 | $488 | $56 | $563 | | William E. Gaumond | 2020 | $213 | $33 | $975 | $94 | $1,315 | 2021 | -- | -- | $34 | $975 | $113 | $1,122 | | McKay, Neil | | 2021 | $10 | $85 | $37 | $1,088 | -- | $1,220 |
(3)(5) | Represents reimbursement or payments made to defray the costs of a spouse’s travel. | (4)(6) | Represents Milestone Anniversary Program, which pays a bonus at three and five year anniversaries, and then every five years thereafter. | | (7) | Represents company matching contribution to the Allianz Supplemental Asset Accumulation Plan for deferrals in excess of IRS compensation limit. |
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
Performance-Based Incentive Compensation Plans AIP The AIP is intended to provide an incentive that will encourage superior individual performance and encourage retention of employees who have demonstrated exceptional performance or who are anticipated to significantly contribute to long-term success. The AIP seeks to accomplish this purpose by providing a bonus opportunity to eligible employees who have made significant contributions during the plan year to the achievement of annual goals and objectives. The guidelines for target awards are meant to be illustrative of competitive market bonuses for similar job levels in the marketplace. While the target awards may be used for illustrative, budget planning, or distribution scenarios, all bonus awards are discretionary and are in no way guaranteed. The Compensation Committee or other duly authorized committee determines allocation of bonus awards to employees. With respect to “principal officers” for purposes of the NEC Committee’s duties, the NEC Committee recommends to Allianz Life’s Board of Directors awards for final approval. AEI The AEI is designed to recognize the participant’s continuous employment with Allianz Life over the relevant period and shall be an incentive to continue employment. Grants under the AEI will generally only be made if the participant is employed with Allianz Life at the date of grant. Payments will be made only if the participant remains employed with Allianz Life during the vesting period of the RSU, or leaves employment under circumstances set out in the AEI, including after retirement or early retirement eligibility, disability, or under certain other circumstances. The securities issuable under the AEI are RSUs. An RSU constitutes the right to receipt of the market value of Allianz SE common stock at the time of exercise. This amount will be paid in cash. RSUs are subject to a four-year vesting period. At the end of the four-year vesting period, the RSUs are exercised uniformly for all participants, provided they remain employed by Allianz Life, terminate after retirement or early retirement eligibility, or under certain other circumstances. Vesting and exercise may accelerate if a participant leaves employment under other “good leaver” circumstances set forth in the AEI. The grant at fair value cannot be greater than 165% of a participant’s target amount. The maximum value of an exercise is an increase of 200% over the grant value (i.e., 300% of the grant value).
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
Grants of Plan-Based Awards The following table provides additional information about plan-based compensation disclosed in the Summary Compensation Table. This table includes both equity and non-equity awards granted for the year ended December 31, 2020,2021, and charged to Allianz Life of New York based on the Allocation Percentage assigned to each NEO. Name
(a) | Grant Date
(b) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | Grant Date
(b) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2,3) | Threshold ($)
(c) | Target ($)
(d) | Maximum ($)
(e) | Threshold ($)
(f) | Target ($)
(g) | Maximum ($)
(h) | Threshold ($)
(c) | Target ($)
(d) | Maximum ($)
(e) | Threshold ($)
(f) | Target ($)
(g) | Maximum ($)
(h) | | Walter R. White | 3/5/2021 | | | 3/4/2022 | | | | RSUs (under AEI) | | $0 | $77,859 | $385,402 | | $0 | $77,859 | $350,366 | | AIP Award | | $0 | $51,906 | $85,645 | | | | $0 | $51,906 | $77,859 | | | | Jasmine M. Jirele | | 3/4/2022 | | | | RSUs (under AEI) | | | $0 | $21,073 | $94,830 | | AIP Award | | | $0 | $14,049 | $21,073 | | | | William E. Gaumond | 3/5/2021 | | | 3/4/2022 | | | | RSUs (under AEI) | | $0 | $25,320 | $125,333 | | $0 | $25,699 | $115,644 | | AIP Award | | $0 | $16,880 | $33,760 | | | | $0 | $17,132 | $25,699 | | | | Neil H. McKay | | 3/4/2022 | | | | RSUs (under AEI) | | | $0 | $27,540 | $123,930 | | AIP Award | | | $0 | $18,360 | $27,540 | | |
| (1) | The target and maximum columns show the target award and maximum award for 20202021 for each NEO under the AIP. There is no threshold amount for any participant in the AIP. The actual 20202021 awards granted to the NEOs are listed in the Non-Equity Incentive Compensation column of the Summary Compensation Table. AIP target and maximum awards are a pre-designated percentage of base salary determined at the executive’s level. | | (2) | RSUs have a vesting schedule as disclosed in the footnotes to the Summary Compensation Table. See “Outstanding Equity Awards at December 31, 2020”2021” for disclosure regarding the number of RSUs that are unvested as of December 31, 2020.2021. | | (3) | The target and maximum columns show the target award and maximum award for 20202021 for each NEO under the AEI. There is no threshold amount for any participant in the AEI. The actual 20202021 awards granted to the NEOs are listed in the Stock Awards column of the Summary Compensation Table. |
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021[MMDD, 2022]
Outstanding Equity Awards at December 31, 20202021 The following table sets forth the outstanding equity awards at the December 31, 20202021 fiscal year-end. The table shows RSUs granted pursuant to the AEI, based on the Allocation Percentage assigned to each NEO. Name
(a) | RSUs | RSUs | Number of RSUs
That Have Not
Vested
(g)(1),(2) | Market Value of
RSUs That Have
Not Vested
(h)(3) | Number of RSUs
That Have Not
Vested
(g)(1,2) | Market Value of
RSUs That Have
Not Vested
(h)(3) | | Walter R. White | | | | | | | | 351.500 | $81,896 | | | | 261.950 | $61,032 | | | | 304.850 | $71,027 | | | | 406.950 | $94,815 | | Jasmine M. Jirele | | | | | | 408.050 | $99,295 | 0.000 | $0 | | | 351.500 | $85,534 | 73.350 | $17,090 | | | 261.950 | $63,743 | 94.300 | $21,971 | | | 304.850 | $74,182 | 120.350 | $28,040 | | William E. Gaumond | | | | | | | 72.600 | $17,666 | 101.950 | $23,753 | | | 101.950 | $24,809 | 76.900 | $17,917 | | | 76.900 | $18,713 | 97.400 | $22,693 | | | 97.400 | $23,701 | 123.150 | $28,693 | | Neil H. McKay | | | | | | | 110.150 | $25,664 | | | | 86.550 | $20,165 | | | | 106.150 | $24,732 | | | | 125.150 | $29,159 |
| (1) | Represents unvested RSUs issued pursuant to the AEI. RSUs issued under the AEI during 20202021 are subject to a four-year vesting period from the grant date. At the end of the respective vesting period, the RSUs are exercised uniformly for all participants, provided they remain employed by Allianz Life or terminate after retirement or early retirement eligibility, or under certain other circumstances. Vesting and exercise may accelerate if a participant leaves employment under other “good leaver” circumstances set forth in the AEI. | | (2) | For each of the NEOs, the number of RSUs listed on the first line were exercised in 2021,2022, the RSUs listed on the second line will exercise in 2022,2023, the RSUs listed on the third line will exercise in 2023,2024, and the RSUs listed on the fourth line will exercise in 2024.2025. | | (3) | Based on an assumed stock price of $243.34$232.99 per share, which was the arithmetic average of the closing prices of an Allianz SE share in the electronic cash market trading system Xetra (or any successor system) on December 30, 20202021 and the nine immediately preceding trading days, converted from Euros into U.S. dollars. |
Allianz SE Option Exercises and Stock Grants Vested in 20202021 The following table summarizes the value received from Allianz SE stock grants vested during the year ended December 31, 2020,2021, and charged to Allianz Life of New York based on the Allocation Percentage assigned to each NEO. | Name | Stock Awards | Stock Awards | Number of
Shares
Acquired
on Vesting (#) | Value Realized
on Vesting ($)(1) | Number of
Shares
Acquired
on Vesting (#) | Value Realized
on Vesting ($)(1) | | Walter R. White | 504.850 | 112,954 | 408.050 | 100,227 | | Jasmine M. Jirele | | 0.000 | - | | William E. Gaumond | 36.050 | 8,066 | 72.600 | 17,832 | | Neil H. McKay | | 127.500 | 31,317 |
| (1) | Represents Allianz SE RSUs that were exercised during 20202021 pursuant to the AEI. Amounts realized were paid in cash. |
Allianz Life Executive Severance Agreement Allianz Life has entered into an Executive Severance Agreement with its former Chief Executive Officer, Walter R. White, with an expiration date of December 31, 2021. The severance arrangements for Mr. White as Chair and Chief Executive Officer of Allianz Life of New York arewere prescribed by the Executive Severance Agreement.
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
Pursuant to the Executive Severance Agreement, Mr. White iswas entitled to a lump sum cash payment of $86,510 upon separation based on the allocated percentage of compensation charged to Allianz Life of New York upon separation in the event he iswas terminated without “cause”, which is defined as engaging in conduct detrimental to the best interests of the Company (including, but not limited to, certain specified acts such as commission of a felony, theft, dishonesty, fraud or embezzlement) in the Executive Severance Agreement. In addition, pursuant to the Executive Severance Agreement, Mr. White iswas also bound by other restrictive covenants, including covenants relating to confidentiality and non-disparagement. Mr. White would also be entitled to continuation of medical and dental coverage at the employee premium rates for a period of 18 months following termination if Mr. White timely electselected continuation and payspaid the required premiums.
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
The remainder of our NEOs are eligible for severance payments under the Executive Severance Plan if they experience a qualifying termination of employment and otherwise satisfy the conditions set forth in the applicable plan. The terms of this plan are set forth below. Executive Severance Plan Executive officers who have the title of Senior Vice President or above and report directly to a senior executive officer at a specific level are eligible to receive severance benefits under the Executive Severance Plan if they experience a qualifying termination of employment, meaning an involuntary termination for any reason other than for “cause” with no offer of an equivalent position, and otherwise satisfy the conditions set forth in the plan. The purpose of the Executive Severance Plan is to provide severance benefits to executive officers whose employment is involuntarily terminated in a qualifying termination of employment in order to assist with job transition. Pursuant to the Executive Severance Plan, eligible executive officers who are involuntarily terminated in a qualifying termination of employment will receive a lump sum cash payment equal to one and one-half times their “annual base pay” in effect at the time of termination. Annual base pay, for purposes of this agreement, equals base salary and excludes special payments, such as bonuses, expense reimbursements, living, or other allowances. Eligible executive officers would also be entitled to continuation of medical and dental coverage at employee premium rates for a period of 18 months following termination, if the executive officer timely elects continuation coverage and pays the required premiums. The following table shows the portion of the lump sum payments that would have been allocated to Allianz Life of New York based on each NEO’s Allocation Percentage and payable to each of our NEOs had they been terminated on December 31, 20202021 and been eligible for severance payments pursuant to the Executive Severance Plan. | NEOs | Lump Sum Payment | | Walter R. White(1) | $86,510 | | Jasmine M. Jirele | $28,125 | | William E. Gaumond | $35,16635,693 | | Neil H. McKay | $38,250 |
| (1) | Mr. White is not eligible to receive payments pursuant to the Executive Severance Plan. See “Allianz Life Executive Severance Agreement” for information regarding severance payments that Mr. White is eligible to receive upon termination of service. |
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
Director Compensation The following table provides information on compensation paid to the directors of Allianz Life of New York for the year ended December 31, 2020.2021. Name
(a) | Fees Earned or
Paid in Cash
($)(1)
(b) | Total
($)
(h) | Fees Earned or
Paid in Cash
($)(1)
(b) | Total
($)
(h) | Walter R. White(2)
Chair and Chief Executive Officer | N/A | N/A | | Jasmine M. Jirele(2)
Chair and Chief Executive Officer | | N/A | N/A | William E. Gaumond(2)
Chief Financial Officer and Treasurer | N/A | N/A | N/A | N/A | Eric J. Thomes
President | N/A | N/A | | Eric J. Thomes(2)
President | | N/A | N/A | Steven J. Thiel(2)
Vice President, Appointed Actuary | N/A | N/A | N/A | N/A | Lorraine Lods(2)
Non-Independent Director | N/A | N/A | N/A | N/A | Ronald M. Clark
Independent Director | $25,000 | $25,000 | $30,000 | $30,000 | Martha Clark Goss
Independent Director | $37,500 | $37,500 | $45,000 | $45,000 | Gary A. Smith
Non-Independent Director | $25,000 | $25,000 | $30,000 | $30,000 | Kevin E. Walker
Independent Director | $25,000 | $25,000 | $30,000 | $30,000 |
| (1) | Represents cash compensation provided to our non-employee directors that is formalized in the Non-Employee Director Compensation Plan for the year ended December 31, 2020.2021. |
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
| (2) | As inside directors, Messrs. White, Gaumond,Mss. Jirele and Lods, and Messrs.Gaumond, Thomes, Thiel, and Ms. LodsThiel do not receive any compensation for their service as directors. The compensation Messrs. WhiteMs. Jirele and Mr. Gaumond received as executive officers of Allianz Life of New York is disclosed in the Summary Compensation Table as set forth herein. |
Security Ownership of Certain Beneficial Owners and Management We are an indirect wholly owned subsidiary of Allianz SE. Allianz SE’s principal executive offices are located at Königinstrasse 28, 80802 Munich, Germany. As of March 31, 2021, the directors and executive officers of Allianz Life of New York held less than 1% of Allianz SE’s ordinary shares issued and outstanding. Transactions with Related Persons, Promoters and Certain Control Persons We are a wholly owned subsidiary of Allianz Life, which is a wholly owned subsidiary of AZOA, which in turn is a wholly owned subsidiary of Allianz Europe B.V. Allianz Europe B.V. is a wholly owned subsidiary of Allianz SE, our ultimate parent, which is registered in Munich, Germany. Transactions with affiliates may not be on an arm’s-length basis and may present the potential for conflicts. Business and Operational Risks Relevant to the Contract As an insurance company, a number of risks may affect our business. However, because the Contract (and any other insurance contract that we offer) is a regulated insurance product, as opposed to an investment in our business, many of the risks that may be relevant to an investor in our business are unlikely to be relevant to you. The risks described below are only those business and operational risks that are likely to be relevant to you as a purchaser of the Contract. Risks Primarily Related to Our Financial Strength and Claims-Paying Ability We make Annuity Payments, pay death benefits, and apply Performance Credits for this Contract from our general account. We also pay benefits for other insurance contracts from our general account, and our general account is subject to claims by our creditors. Our ability to make payments from our general account is subject to our financial strength and claims-paying ability. The following risks relate to circumstances and events that may negatively affect our general account and, in turn, our financial strength and claims-paying ability.
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
Financial losses may threaten our financial strength and claims-paying ability. As an Owner of the Contract, you do not share in the profits and losses generated by our business. However, if we were to experience significant losses, we might not have sufficient assets in our general account to satisfy all of our financial obligations under the Contract. Circumstances and events that may result in financial losses include, but are not necessarily limited to, the circumstances and events listed below. We cannot predict what specific impact that any of these circumstances or events may ultimately have on our financial strength or claims-paying ability. | • | Difficult Economic Conditions. Our financial condition is materially affected by conditions in the global capital markets and the economy generally. During an economic downturn, the demand for our financial insurance products and services could be adversely affected. In addition, an economic downturn could cause the number and amount of surrendersfull and partial withdrawals under our insurance products to increase significantly, and owners of our insurance products may choose to defer making purchase payments or paying insurance premiums or stop them altogether. | | • | Unfavorable Interest Rate Environments. During periods of declining interest rates, we may experience financial losses as the spread between interest rates that we credit to customers under our insurance products and returns on our investments tighten. The ongoing low interest rate environment presents challenges for us and other life insurance companies, as it has generally reduced investment returns, raised the value of future obligations, and challenged asset-liability matching. During periods of increasing interest rates, we may experience financial losses due to increases in surrendersfull and partial withdrawals under our insurance products as our customers choose to forgo insurance protection in favor of potentially higher returns. Although we take measures to manage economic risks associated with different interest rate environments, we may not be able to fully mitigate those risks. | | • | Losses on Fixed Maturity Investments. Our fixed maturity investments are subject to interest rate risk and credit risk. Interest rate risk refers to how the values of our fixed maturity investments fluctuate in response to changes in market interest rates. Increases and decreases in prevailing interest rates generally result in decreases and increases, respectively, in the values of our fixed maturity investments. Credit risk refers to the risk that a counterparty will default on its commitments to us under a fixed maturity investment. See “Defaults by Counterparties” below. |
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
| • | Losses on Equity Investments. Our equity investments are generally valued based on quoted market prices and are subject to market risk. Market risk refers to how market prices for equity investments are subject to fluctuation. A downward fluctuation in the market price for an equity investment could result in losses upon the sale of that investment. Fluctuations in market prices may result from, among other things, actual or perceived changes in the attractiveness of specific investments or in general market conditions. | | • | Losses on Real Estate Investments. A portion of our investment portfolio consists of mortgage loans and mortgage-backed securities related to commercial, agricultural and residential real estate. The value of our real estate investments may be negatively impacted by general economic conditions in the real estate sector, including supply and demand, market volatility, and interest rate fluctuations, and geographic and extreme weather risks, as well as the creditworthiness of obligors. | | • | Losses upon the Sale of Illiquid Investments. We hold certain investments that may lack liquidity, such as privately placed fixed maturity investments, mortgage loans, collateralized debt obligations, commercial mortgage-backed securities, equity real estate and limited partnership interests. Although we seek to minimize the likelihood that we would need to sell illiquid investments, if we were required to liquidate these investments on short notice, we may have difficulty doing so and may be forced to sell them for less than their fair value. | | • | Prolonged and Elevated Inflationary Periods. During inflationary periods, the value of our fixed maturity investments may fall, see Losses on Fixed Maturity Investments above. Inflation also increases expenses, which will negatively impact our financial condition in the event that such additional costs cannot be offset. Prolonged and elevated inflation could adversely affect the financial markets and the economy generally, and dispelling it may require governments to pursue a restrictive fiscal and monetary policy, which could constrain overall economic activity and our growth. |
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
| • | Loss of Market Share to Competitors. There is strong competition among insurers, banks, brokerage firms and other financial institutions and providers seeking clients for the types of products and services that we provide. A loss of market share to our competitors could result in financial losses to our business. Our ability to successfully compete is dependent on numerous factors, some of which include the successful implementation of our business strategy, our financial strength, the attractiveness of our products and services, our relationships with distributors, and our reputation. Our ability to compete may also be hindered if our competitors obtain or seek to enforce intellectual property rights against us, or if we are otherwise precluded from offering products or services that are in demand. Our ability to compete may also be hindered if we are not able to protect or enforce our own intellectual property rights. Recently, the New York Department of Financial Services (“NYDFS”), the regulatory authority for the insurance industry in New York, introduced amendments to its Regulation 47 that would set forth new requirements for registered index-linked annuities offered and sold in New York. The introduction of these amendments is expected to significantly increase our competition in New York for sales of registered index-linked annuities. In addition, the amendments prescribe certain terms and conditions for registered index-linked annuities offered and sold in New York. Changes to our annuity sales platform to comply with the amendments could substantially increase our costs. | | • | Defaults by Counterparties. Third-parties that owe us money, securities, or other assets may not fulfill their obligations to us. These parties may include issuers of investments that we may hold, borrowers under loans that we may hold or extend, reinsurers, counterparties under swap and other derivative contracts and other third-parties (e.g., customers, trading counterparties, brokers, dealers, banks, investment funds, clearing agents, exchanges and clearing houses). In addition, with respect to secured transactions, the risk of default may be exacerbated when the collateral held by us cannot be liquidated or is liquidated at a price that is not sufficient to cover the full amount owed to us. A party may default on its obligations for a variety of reasons, including bankruptcy, lack of liquidity, downturns in the economy or real estate market and operational failure. General economic conditions and trends may also result in increased defaults. | | • | Impairments of Other Financial Institutions. We routinely execute transactions with counterparties in the financial services industry, including brokers, dealers, commercial banks, investment banks, insurers, reinsurers and other investment and financial institutions. A disruption to, or decline in the financial condition of, such financial institutions may expose us to financial losses. | | • | Payments through Guaranty Associations. When an insurance company becomes insolvent, state insurance guaranty associations have the right to assess other insurance companies doing business in their state for funds to pay obligations to policyholders of the insolvent company, up to the state-specified limit of coverage. The future failure of a large life, health or annuity insurer could trigger assessments which we would be obligated to pay. Further, amounts for historical insolvencies may be assessed over many years, and there can be significant uncertainty around the total obligation for a given insolvency. | | • | Ineffectiveness of Risk Management Policies. Our risk management policies and procedures intended to identify, monitor and manage economic risks may not be fully effective at mitigating our risk exposure in all market environments or against all types of risk. This could cause us to incur investment losses or cause our hedging and other risk management strategies to be ineffective. | | • | Impacts of Climate Change. We are exposed to economic risks related to climate change. Our financial condition could be negatively impacted by increased costs, or financial losses on investments, arising from various events related to climate change, such as changes in public policy (either contributing to the adverse effects of climate change or promoting adaption to climate change), short-term or long-term market distributions, changes in mortality/morbidity assumptions, changes in consumer behavior, business disruptions, extreme weather events, litigation, increased regulatory requirements, advancements in technology, and longer-term shifts in climate patterns. Climate change could also impact the types of assets in which we invest. For example, as the transition to a lower-carbon, more energy-efficient economy continues, regulators could require us (or we could voluntarily choose) to invest less in carbon-based industries, even though investments in carbon-based industries may have better returns in the short or long term. In addition, real estate investments may expose us to greater climate change risk, as climate change may negatively impact market prices or supply and demand, and may make extreme weather events more likely or frequent. Further, we may not be able to adequately predict and mitigate climate-change risk due to significant uncertainty and unknowns regarding the manifestations and timing of climate-change-driven events, absence of adequate historical data that captures this risk and the dependency of this risk on the extent of the actions taken in the short term by governments, corporations and communities around the world. |
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
Changes in applicable law may negatively affect our financial strength and claims-paying ability. We are subject to detailed and comprehensive regulation and supervision in New York by the New York Department of Financial Services (“NYDFS”) in jurisdictions in which we operate.NYDFS. The NYDFS has broad administrative powers with respect to all aspects of the insurance business and, in particular, monitors the manner in which an insurance company offers, sells and administers its products. Therefore, we may from time to time be subject to a variety of legal and regulatory actions relating to our current and past business operations and practices. Our operations, products and services are subject to varying other state and federal laws. In addition, our operations, products and services are regulated by various regulatory authorities and self-regulatory authorities including state insurance departments, state securities administrators,
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
state banking authorities, the Securities and Exchange Commission, the Financial Industry Regulatory Authority, the Internal Revenue Service, the Department of Labor, and the U.S. Commodity Futures Trading Commission. Changes to federal and state laws and regulations may materially affect the way in which we conduct our business. We are faced with significant challenges due to the fact that our regulatory environment is evolving rapidly. Federal and state governments, including federal and state regulatory authorities, have become increasingly active in the regulation of the businesses in which we engage. In addition, federal and state regulatory authorities are assuming active, and in some cases increasingly aggressive, roles in interpreting and enforcing laws and regulations related to our business. We cannot predict the potential effects that any new laws or regulations, changes in existing laws or regulations, or the interpretation or enforcement of laws or regulations may have on our business, but such changes may negatively affect our financial strength and claims-paying ability. The Securities and Exchange Commission has recently adopted new rules effective on June 30, 2020 (i) imposing a “best interest” standard of care on broker-dealers making recommendations to their customers and (ii) requiring broker-dealers and investment advisers to provide a written summary of the relationship between a broker-dealer or investment adviser, as applicable, and its customer. These new rules became effective on June 30, 2020. It remains unclear whether or to what extent these rules, and the evolving nature of the enforcement and interpretation of these rules by the Securities and Exchange Commission, could ultimately affect broker-dealers’ willingness to recommend our registered annuity products. These rules could increase, and to some extent have increased, our overall compliance costs and could also increase our exposure to legal claims in certain circumstances, including an increased risk of regulatory enforcement actions or potentially private claims. The New York State Department of Financial Services (“DFS”),NYDFS, the regulatory authority for the insurance industry in New York, has adopted revisions to its Insurance Regulation 187, a regulation that imposes suitability requirements on annuity and life insurance recommendations by producers and insurers subject to New York law. Under the amendments to Regulation 187, recommendations of and related to annuity contracts will be subject to a best interest standard and other additional obligations. These revisions became effective for annuity recommendations on August 1, 2019 and for life insurance recommendations on February 1, 2020. In order to comply with the revisions to Regulation 187 we may decide to change compensation for financial professionals or otherwise changeis now the sales support for annuities.subject of litigation, as the NYDFS is appealing a finding of the Appellate Division of the New York State Supreme Court, Third Department, that Regulation 187 is unconstitutionally vague. Regulation 187 will remain effective during the course of the appeal. These changes could have an adverse impact on the level and type of services provided and compliance with Regulation 187 could also increase our overall operational costs for providing some of the services currently provided. These changes may lead to greater exposure to legal claims in certain circumstances, including an increased risk of DFS-relatedNYDFS-related actions.
Our reserves could be inadequate due to differences between our actual experience and management’s estimates and assumptions. We establish and carry reserves to pay future benefits and claims of policyholders. Our reserve are calculated based on a number of estimates and assumptions, including estimates and assumptions related to future mortality, morbidity, interest rates, future equity performance, reinvestment rates, persistency, claims experience, and policyholder elections (i.e., the exercise or non-exercise of policy benefits). The assumptions and estimates used in connection with the reserve estimation process are inherently uncertain, involve the exercise of significant judgment and reflect evolving information. For example, the current rates of mortality and morbidity may continue to improve in the future due to medical and technological advancements that result in policyholders living longer than anticipated. We periodically review the adequacy of reserves and the underlying assumptions and make adjustments when appropriate. We cannot, however, determine with precision the amounts that we will pay for, or the timing of payment of, actual benefits and claims or whether the assets supporting the policy liabilities will grow to the level assumed prior to payment of benefits or claims. If actual results differ significantly from our estimates and assumptions, our claim costs could increase significantly and our
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
reserves could be inadequate. If so, we will be required to increase reserves or accelerate amortization of deferred acquisition costs. However, we cannot be certain that our reserves will ultimately be sufficient to pay future benefits and claims of policyholders. The amount of statutory capital that we must hold to meet our statutory capital requirements can vary significantly from time to time. Statutory accounting standards and capital and reserve requirements are prescribed by NYDFS and the National Association of Insurance Commissioners. The NYDFS established regulations that govern reserving requirements and provide minimum capitalization requirements based on risk-based capital (“RBC”) ratios for life insurance companies. In any particular year, statutory surplus amounts and RBC ratios may increase or decrease depending on a variety of factors, including but not limited to, the amount of statutory income or losses that we generate, changes in reserves, the amount of additional capital that we must hold to support business growth, changes in equity market levels, the value of certain
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
fixed-income and equity securities in our investment portfolio, changes in interest rates, and changes to existing RBC formulas. Additionally, state insurance regulators have significant leeway in interpreting existing regulations, which could further impact the amount of statutory capital or reserves that we must maintain. There can be no assurance that we will be able to maintain our current RBC ratio in the future or that our RBC ratio will not fall to a level that could have a material adverse effect on our business. If we are unable to maintain minimum capitalization requirements, our business may be subject to significant increases in supervision and control by the NYDFS. Litigation and regulatory proceedings may negatively affect our financial strength and claims-paying ability. We have been involved in various regulatory investigations and examinations, and we may be involved in more in the future. We may also be named as defendants in individual lawsuits in the future. These actions arise in various contexts, including in connection with our activities as an insurer, securities issuer, employer, investor, and taxpayer. Lawsuits and regulatory proceedings may involve significant amounts of damages (including punitive damages) or fines that we must pay, and certain regulatory authorities involved in regulatory proceedings have substantial power over our business operations. An adverse outcome in any lawsuit or regulatory proceeding that results in significant financial losses or operational burdens may negatively affect our financial strength and claims-paying ability. Reinsurance may not be available or affordable, or may not be adequate to protect against harm to our financial strength and claims-paying ability. As part of our overall risk management strategy, we purchase reinsurance for certain risks underwritten by our various business segments. While reinsurance agreements generally bind the reinsurer for the life of the business reinsured at generally fixed pricing, market conditions beyond our control can determine the availability and cost of the reinsurance protection for new business. If we are unable to purchase the desired amount of reinsurance protection on acceptable terms, our risk of loss may increase. As our risk of loss increases, so does the risk that we may not be able to meet our financial obligations. Our hedging programs may be inadequate to protect against harm to our financial strength and claims-paying ability. Certain types of insurance and investment products that we offer expose us to risks associated with fluctuations in financial markets. Although we use hedging techniques to manage risks associated with our insurance guarantees, increased volatility in the financial markets and unanticipated policyholder behavior may increase the cost of these hedges and/or negatively affect our ability to hedge certain risks. We may lose money on the derivatives that we hold as part of our hedging programs or otherwise. Ultimately, our hedging programs may be inadequate to protect us against the full extent of the exposure or losses we seek to mitigate, which in turn may negatively impact our financial strength and claims-paying ability. Downgrades and potential downgrades to our claims-paying and financial strength ratings may signal a higher risk that we may be unable to meet our financial obligations, and may themselves negatively affect our financial strength and claims-paying ability. Our claims-paying and financial strength ratings, which various ratings organizations publish as measures of an insurance company's ability to meet policyholder obligations, are important to maintaining public confidence in Allianz Life of New York and our products, and the ability to market our products and services. A downgrade or an announced potential downgrade by credit rating agencies in our claims-paying and financial strength ratings may reflect an increased risk that
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
we may not be able to meet our financial obligations. Any such downgrade or potential downgrade may itself harm our financial strength and claims-paying ability by causing financial losses to our business. Such losses may be the result of: | • | reductions in new sales of insurance products, annuities and other investment products; | | • | increases in our cost of capital or limitations on our access to sources of capital; | | • | harm to our relationships with distributors and sales specialists; | | • | material increases in the number or amount of surrendersfull and partial withdrawals under our insurance products; | | • | pressure on us to reduce prices or increase crediting rates for many of our insurance products; and | | • | harm to our ability to obtain reinsurance or obtain reasonable pricing for reinsurance. |
Similarly, credit rating agencies also evaluate the insurance industry as a whole and may change Allianz Life of New York’s and other insurance companies’ financial strength ratings based on the agencies’ overall view of the industry. It is possible that Allianz Life of New York’s credit rating could be similarly downgraded in the future based on credit rating agencies’ evaluation of the life insurance industry as a whole due to changes in their view of Allianz Life of New York relative to the industry or a change in their rating assessment methodologies. In addition, downgrades or announced potential downgrades in the financial strength ratings of the financial institutions with which we do business may adversely impact our business operations and may cause financial losses to our business.
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
Risks Primarily Related to Our Business Operations Breaches of security, or interference with our technology infrastructure, could harm our business. Our business relies on technology systems and networks, including systems and networks managed by third parties to process, transmit and store information, and to conduct business activities and transactions with clients, distributors, vendors, and other third parties. We are also subject to certain federal and state regulations that require us to establish and maintain policies and procedures designed to protect sensitive client information. Maintaining the integrity of our systems is critical to the success of our business operations, including the retention of clients, and to the protection of our clients’ personal information. To date, we have not identified any material breaches or interference with our systems and networks; however, we routinely encounter and address such threats, including an increasing frequency of phishing scams, introductions of malware and unauthorized payment requests. Any such breaches or interference by third parties or by our employees that may in the future occur could have a material adverse impact on our business operations and our financial condition. We have implemented and maintain security measures designed to protect against breaches of security and other interference with systems and networks resulting from attacks by third parties, including hackers, and from employee error or malfeasance. We also require third party vendors who, in the provision of services to us, are provided with or process information pertaining to our business or our clients to meet certain information security standards. Changes in our technology platforms, such as an evolution to accommodate mobile computing, may also require corresponding changes in our systems, networks and data security measures. In addition, the increasing reliance on technology systems and networks and the occurrence and potential adverse impact of attacks on such systems and networks, both generally and in the financial services industry, have enhanced government and regulatory scrutiny of the measures taken by companies to protect against cyber-security threats. As these threats, and government and regulatory oversight of associated risks, continue to evolve, we may be required to expend additional resources to enhance or expand upon the security measures we currently maintain. Despite the measures we have taken and may in the future take to address and mitigate these risks, we cannot ensure that our systems and networks will not be subject to breaches or interference. Any such event may result in operational disruptions as well as unauthorized access to or the disclosure or loss of our proprietary information or our clients’ personal information, which in turn may result in legal claims, regulatory scrutiny and liability, reputational damage, the incurrence of costs to eliminate or mitigate further exposure, the loss of clients or other damage to our business. Any such event may interfere with, impede or cause delays in our calculation of values, processing of transactions and making of payments under the Contract. In addition, the trend toward broad consumer and general public notification of such incidents could exacerbate the harm to our business operations and our financial condition. Even if we successfully protected our technology infrastructure and the confidentiality of sensitive data, we may incur significant expenses in responding to any such attacks as well as the adoption and maintenance of appropriate security measures. We could also suffer harm to our business and reputation if attempted security breaches are publicized. We cannot be certain that advances in criminal capabilities, discovery of new vulnerabilities, attempts to exploit vulnerabilities in our systems, data thefts, physical system or network break-ins or inappropriate access, or other developments will not compromise or breach the technology or other security measures protecting our networks and systems used in connection with our products and
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
services. There may be an increased risk of cyberattacks during periods of geo-political or military conflict (such as Russia’s invasion of Ukraine and the resulting response by the United States and other countries). The failure to protect our clients’ confidential information and privacy could adversely affect our business. A number of our businesses are subject to privacy regulations and confidentiality obligations, including the Gramm-Leach-Bliley Act and state privacy laws and regulations. We also have contractual obligations to protect certain confidential information we obtain from our existing vendors and clients. These obligations generally include protecting such confidential information in the same manner and to the same extent as we protect our own confidential information. The actions we take to protect confidential information vary by business segment and may include, among other things: | • | training and educating our employees regarding our obligations relating to confidential information; | | • | monitoring changes in state or federal privacy and compliance requirements; | | • | drafting appropriate contractual provisions into any contract that raises proprietary and confidentiality issues; | | • | maintaining secure storage facilities for tangible records; | | • | limiting access to electronic information; and | | • | in the event of a security breach, providing credit monitoring or other services to affected customers. |
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
In addition, we must develop, implement and maintain a comprehensive written information security program with appropriate administrative, technical and physical safeguards to protect such confidential information. If we do not properly comply with privacy regulations and protect confidential information, we could experience adverse consequences, including regulatory sanctions, such as penalties, fines and loss of license, as well as loss of reputation and possible litigation. This could have an adverse impact on our Company’s reputation and business results. Protection from system interruptions and operating errors is important to our business. If we were to experience a sustained interruption to our telecommunications or data processing systems or other failure in operational execution could harm our business operations and our business results. Operating errors and system or network interruptions could delay and disrupt our ability to develop, deliver or maintain our products and services, causing harm to our business and reputation and resulting in loss of customers or revenue. Operating errors and system or network interruptions may also interfere with, impede or cause delays in our calculation of values, processing of transactions and making of payments under the Contract. Interruptions could be caused by operational failures arising from employee error or malfeasance, interference by third parties (including hackers and other cyber-attacks), implementation of new technology, and maintenance of existing technology. Our financial, accounting, data processing or other operating systems and facilities may fail to operate or report data properly, experience connectivity disruptions or otherwise become disabled as a result of events that are wholly or partially beyond our control, adversely affecting our ability to process transactions or provide products and services to customers. The cause of these interruptions can include fires, floods, earthquakes and other natural disasters, power losses, equipment failures, attacks by third parties, failures of internal or vendor software or systems and other events beyond our control. In addition, we rely on third party service providers and vendors for certain communications, technology and business functions and face the risk of operational failure (including, without limitation, failure caused by an inaccuracy, untimeliness or other deficiency in data reporting), termination or capacity constraints of any of the clearing agents, exchanges, clearing houses or other third party service providers that we use to facilitate or are component providers to our transactions and other product manufacturing and distribution activities. These risks are heightened by the evolution in the financial markets of increasingly sophisticated products, by business-driven hedging, by compliance issues and by other risk management or investment or by financial management strategies. Any such failure, termination or constraint could adversely impact our ability to implement transactions, service our clients, manage our exposure to risk or otherwise achieve desired outcomes. The occurrence of natural or man-made disasters and catastrophes could adversely affect our business operations and our business results. The occurrence of natural or man-made disasters and catastrophes, including extreme weather events, acts of terrorism, geo-political disputes, public health crises (e.g. COVID-19), industrial accident, blackout, cyber-attack, computer virus, insider threat, insurrections and military actions, unanticipated problems with our disaster recovery systems, or a support failure from external providers, could adversely affect our business operations and our business results, particularly if those events affect our computer-based data processing, transmission, storage, and retrieval systems or destroy data. Such disasters and catastrophes may damage our facilities, preventing our employees from performing their roles or otherwise disturbing our ordinary business operations, and by impacting claims. Such disasters and catastrophes may also impact us
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
indirectly by changing the condition and behaviors of our customers, business counterparties and regulators, as well as by causing declines or volatility in the economic and financial markets. Climate change could increase our overall risk as extreme weather events may become more likely or frequent. We rely on certain third-parties to provide certain services important to our business operations. While we monitor the performance of such third-parties, including those with employees who operate remotely, successful implementation and execution of their business continuity strategies are largely outside of our control. Weaknesses or failures within a vendor’s business continuity plan in light of a natural or man-made disaster or catastrophe could materially disrupt our business operations. Inadequate or failed processes or systems, human factors or external events may adversely affect our profitability, reputation or operational effectiveness.effectiveness, as well as our financial condition. Operational risk is inherent in our business and can manifest itself in various ways, including business interruption, poor vendor performance, information systems malfunctions or failures, regulatory breaches, human errors, employee misconduct, external fraud, and external fraud.inability to recruit, motivate, and retain key employees. These events can potentially result in financial loss, harm to our reputation and/or hinder our operational effectiveness. Management attempts to control these risks and keep operational risk at low levels by maintaining a sound and well controlled environment in light of the characteristics of our business, markets and regulatory environment in which we operate. Notwithstanding these measures, operational risk is part of the business environment in which we operate, and we may experience operational disruptions and incur losses from time to time due to these types or risks.
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
Risks Related to the COVID-19 Pandemic We continue to closely monitor developments related to the COVID-19 pandemic and its impact on our business and operations. The economic conditions and uncertainties during the pandemic have at times negatively impacted our net income, surplus, and capital and liquidity positions. To date, however, we do not believe that these economic conditions and uncertainties have negatively impacted our overall financial strength and claims-paying ability in a significant manner. Nor do we believe that our administration of the Contract and our other insurance contracts has been disrupted in a significant manner, even as many of our employees and the employees of our third-party service providers continue to work remotely. The extent to which the pandemic will impact our business and operations in the future will depend on future developments, which are highly uncertain and cannot be predicted, including the general scope and duration of the pandemic andpandemic; actions taken by governmental authorities and other third parties in response to the pandemic. Thepandemic; the occurrence of new variants of the COVID virus; the severity and duration of waves in infections and hospitalizations; and the efficacy of vaccines, therapeutic treatments, and other healthcare programs. Any risk management or contingency plans or preventative measures we take may not adequately predict or address the impact of the COVID-19 pandemic on our business. As such, the pandemic could have a material adverse effect on our financial condition and operations. The pandemic-related risks that we face include (but are not necessarily limited to) the following: | • | Economic conditions and uncertainties may negatively impact the value, cash flow, and liquidity of our general account investments due to, e.g., declines in markets, market volatility, reduced liquidity, changes in interest rates, economic shutdowns or slowdowns, prolonged elevated inflation period, government regulations, higher unemployment levels, and counterparty defaults. | | • | Voluntary or government mandated hardship assistance that we provide to our customers in the form of, e.g., grace periods for failure to make timely payments, may reduce our net income and surplus. | | • | Reductions in new sales of our financial products or reductions in fees collected by us, or increases in surrenders,full withdrawals, cancellations, or defaults with respect to our customers’ existing financial products, as a result of economic conditions and uncertainties may reduce our net income and surplus. | | • | Economic conditions and uncertainties may limit our access to sources of capital and our ability to obtain reinsurance. | | • | Voluntary and government mandated pandemic mitigation efforts, such as prolonged remote working arrangements and economic shutdowns, and employees’ ability or willingness to fulfill their responsibilities during the pandemic, may disrupt our ability to administer our insurance contracts (including our ability to timely process applications, transactions, and payments and to calculate values) and may disrupt the services provided by third-parties upon which we rely to administer our insurance contracts. Extended periods of remote work arrangements could introduce additional operational risk, including but not limited to cybersecurity risks, and impair our ability to effectively manage our business. | | • | Longer-term deviations from the mortality, customer behavior, expenses, and other assumptions that we use to price our products and support our obligations. |
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022]
In addition to the risks listed above, to the extent that the pandemic impacts our business and operations, it may also have the effect of heightening the other risks described in this section of the prospectus.
13.14. Financial Statements
The statutory financial statements of Allianz Life Insurance Company of New York as of December 31, 20202021 and 20192020 and for each of the three years in the period ended December 31, 20202021 included in Appendix GF of this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. The unaudited statutory financial statements of Allianz Life Insurance Company of New York as of March 31, 2022 and audited statutory statements of admitted assets, liabilities, and capital and surplus as of December 31, 2021, as well as the related unaudited statutory statements of operations, capital and surplus and cash flow for the three month periods ended March 31, 2022 and March 31, 2021 are included in Appendix E. The financial statements of the subaccounts of Allianz Life of NY Variable Account C of Allianz Life Insurance Company of New York (“Variable Account C”) as of December 31, 2020 and 2019 and for each of the two years in the period ended December 31, 2020 included in Appendix B of the SAI, which is2021 are incorporated in this prospectusherein by reference to Post-Effective Amendment No. 14 to Variable Account C’s Form N-4N-VPFS (File No. 811-05716) filed with the SEC (File No. 333-192949), have been so includedincorporated in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021[MMDD, 2022]
14. Privacy Notice
Allianz Life Insurance Company of New York
Home Office: New York, NY
Administrative Office
5701 Golden Hills Drive
Minneapolis, MN 55416-1297
800.328.5600
Your privacy is a high priority for Allianz Life Insurance Company of New York (“we” or “our”). This Privacy Notice outlines our principles for collecting, using, and protecting information that we maintain about you. This Privacy Notice is also displayed on our website at www.allianzlife.com/new-york.
Information about you that Allianz Life of NY collects
We collect information about you so that we can process the insurance transactions you request and administer or service your policy. We also collect information to inform you of new products and services and to engage in studies or research relating to our business. We limit the information collected to what is needed for our business purposes. We may collect your information from the following sources.
• | From you, either directly or through our financial professionals. This may include information provided on your insurance application or other forms you may complete. The information we collect includes, but is not limited to, your name, Social Security number, address, telephone number, mobile phone number, and email address. | • | From others, through the process of issuing a policy or handling a claim. This may include information from consumer reporting agencies and medical or accident reports. | • | From your doctor or during a home visit by a health care professional. This may include your health records gathered with your written consent. | • | From your relationship with us. For example, this may include the number of years you have been a customer or the types of products you have purchased. | • | From data brokers that collect publicly available information about you. This includes household information, financial transactions, and social media activity. |
Information about you that Allianz Life of NY shares
We do not share information about current or former customers with anyone, except as allowed by law. “Allowed by law” means that we may share the information we collect about you as follows.
• | With people and entities when we have your consent to share your information. | • | With our affiliates and other third parties in order to process your application, or administer or service your policy. | • | With consumer reporting agencies to obtain a medical report, credit report, or motor vehicle report. These reports are used to decide eligibility for a policy or to process transactions you request. | • | With our financial professionals so that they can service your policy. They may also inform you of other Allianz Life of NY products and services that may be of interest to you. | • | With health care providers in order to process your claim. | • | As required or otherwise permitted by law. This may include sharing information with state insurance agencies, law enforcement, and other government officials. We may also share your information to respond to subpoenas, court orders, and other legal requests. | • | With research groups to conduct studies on our business to improve the products and services we offer. | • | To inform you of products and services that may be of interest to you. These communications may be made by us, our financial professionals, or through third parties. | • | With our affiliates so they can market their products and services to you. State insurance laws do not allow you to restrict this disclosure. |
Allianz Life of NY does not sell your information to anyone
We do not sell your information to anyone for their own marketing purposes. For this reason, we are not required to obtain your “opt in election,” “opt out election” or authorization.
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
Allianz Life of NY policies and practices regarding security of your information
We limit access to your information to those employees, affiliates, and service providers who need it for our business purposes. We protect your information using safeguards that comply with applicable federal and state law. This includes measures that are administrative, physical, and technical in nature. We use reasonable measures to secure our websites and protect the information that may be shared over these sites.
Your ability to access and correct your information
You have the right to access and obtain a copy of your information. This does not include the right to access and copy your information related to a claim or civil or criminal proceeding. You may also write to us and ask about disclosure(s) of your information made within the last two (2) years. If you wish to review your information, please write us at:
Allianz Life Insurance Company of New York
Attn: Privacy Office
PO Box 1344
Minneapolis, MN 55440-1344
Please provide your full name, address and policy number(s) in your written request. For your protection, please have your request notarized. We reserve the right to ask for additional verification of your identity.
Within 30 working days of our receipt of your written request, you may see and get a copy of your information in person. If you prefer, we will send you a copy of your information. If medical information is contained in your file, we may request that you name a medical professional to whom we will send your information.
If you believe any of your information is incorrect, you may write to us at the address above. Within 30 working days, we will let you know if our review has resulted in a correction of your information. If we do not agree there is an error, you may file a statement disputing our finding. We will attach the statement to your file. We will send any corrections we make, or your statement, to anyone we shared your information with over the past two years, and to anyone who may receive your information from us in the future. We do not control the information about you obtained from a consumer reporting agency or a Department of Motor Vehicles. We will provide you with the names and addresses of these agencies so you can contact them directly.
Notification of change
Your trust is one of our most important assets. If we revise our privacy practices in the future, we will notify you prior to implementing any changes.
For more information or if you have questions
If you have any questions or concerns about our privacy practices, please call the Corporate Compliance Privacy Office at 800.328.5600, write us at the address above, or contact us via the secured website.
This Privacy Notice is being provided on behalf of the following companies:
• | Allianz Life Insurance Company of New York | • | Allianz Life Financial Services, LLC |
M40018-NY (R-08/2020)
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
15. Table of Contents of the Form N-4 SAI
Allianz Life of New York as Custodian
| 3 | Legal Opinions
| 3 | Distributor
| 3 | Administrative Service Fees
| 3 | Federal Tax Status
| 4 | Annuity Contracts in General
| 4 | Taxation of Annuities in General
| 4 | Qualified Contracts
| 4 | Purchasing a Qualified Contract
| 6 | Distributions-Qualified Contracts
| 6 | Distributions-Non-Qualified Contracts
| 9 | Required Distributions
| 9 | Diversification
| 10 | Owner Control
| 10 | Contracts Owned by Non-Individuals
| 10 | Annuity Purchases by Nonresident Aliens and Foreign Corporations
| 10 |
Income Tax Withholding
| 10 | Multiple Contracts
| 11 | Partial 1035 Exchanges
| 11 | Assignments, Pledges and Gratuitous Transfers
| 11 | Death Benefits
| 11 | Spousal Continuation and the Federal Defense of Marriage Act (DOMA)
| 11 | Federal Estate Taxes
| 12 | Generation-Skipping Transfer Tax
| 12 | Foreign Tax Credits
| 12 | Possible Tax Law Changes
| 12 | Annuity Payments
| 12 | Annuity Payment Options
| 12 | Appendix A – Death of the Owner and/or Annuitant
| 14 | Appendix B – Allianz Life of NY Variable Account C Financial Statements
| 17 |
Appendix A – Available Indexes S&P 500® Index The S&P 500® Index is comprised of 500 stocks representing major U.S. industrial sectors. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC (“S&P”). This trademark has been licensed for use by S&P Dow Jones Indices LLC. S&P marks are trademarks of S&P. These trademarks have been sublicensed for certain purposes by Allianz Life Insurance Company of New York (“Allianz Life® of NY”). The S&P 500® Index (“the Index”) is a product of S&P Dow Jones Indices LLC and/or its affiliates and have been licensed for use by Allianz Life of NY. Allianz Life of NY products are not sponsored, endorsed, sold, or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, or any of their respective affiliates (collectively, “S&P Dow Jones Indices”). S&P Dow Jones Indices make no representation or warranty, express or implied, to the owners of the Allianz Life of NY products or any member of the public regarding the advisability of investments generally or in Allianz Life of NY products particularly or the ability of the Index and Average to track general market performance. S&P Dow Jones Indices’ only relationship to Allianz Life of NY with respect to the Index and Average is the licensing of the Index and Average and certain trademarks, service marks, and/or trade names of S&P Dow Jones Indices and/or its third-party licensors. The Index and Average are determined, composed, and calculated by S&P Dow Jones Indices without regard to Allianz Life of NY or the products. S&P Dow Jones Indices have no obligation to take the needs of Allianz Life of NY or the owners of the products into consideration in determining, composing, or calculating the Index and Average. S&P Dow Jones Indices are not responsible for and have not participated in the design, development, pricing, and operation of the products, including the calculation of any interest payments or any other values credited to the products. S&P Dow Jones Indices have no obligation or liability in connection with the administration, marketing, or trading of products. There is no assurance that investment products based on the Index and Average will accurately track index performance or provide positive investment returns. S&P Dow Jones Indices LLC and its subsidiaries are not investment advisors. Inclusion of a security or futures contract within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security or futures contract, nor is it considered to be investment advice. Notwithstanding the foregoing, CME Group Inc. and its affiliates may independently issue and/or sponsor financial products unrelated to products currently being issued by Allianz Life of NY, but which may be similar to and competitive with Allianz Life of NY products. In addition, CME Group Inc., an indirect minority owner of S&P Dow Jones Indices LLC, and its affiliates may trade financial products which are linked to the performance of the Index and Average. It is possible that this trading activity will affect the value of the products. S&P DOW JONES INDICES DO NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS, AND/OR THE COMPLETENESS OF THE INDEX AND AVERAGE OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY ALLIANZ LIFE OF NY, OWNERS OF THE PRODUCTS, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX AND AVERAGE OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME, OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND ALLIANZ LIFE OF NY OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES. Russell 2000® Index The Russell 2000® Index is an equity index that measures the performance of the 2,000 smallest companies in the Russell 3000® Index, which is made up of 3,000 of the biggest U.S. stocks. The Russell 2000® Index is constructed to provide a comprehensive and unbiased small-cap barometer and is completely reconstituted annually to ensure larger stocks do not affect the performance and characteristics of the true small-cap index.
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021[MMDD, 2022] Appendix A
The Russell 2000® Index (the “Index”) is a trademark of Frank Russell Company (“Russell”) and has been licensed for use by Allianz Life Insurance Company of New York (“Allianz Life® of NY”). Allianz Life of NY products are not in any way sponsored, endorsed, sold or promoted by Russell or the London Stock Exchange Group companies (“LSEG”) (together the “Licensor Parties”) and none of the Licensor Parties make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to (i) the results to be obtained from the use of the Index (upon which the Allianz Life of NY product is based), (ii) the figure at which the Index is said to stand at any particular time on any particular day or otherwise, or (iii) the suitability of the Index for the purpose to which it is being put in connection with the Allianz Life of NY product. None of the Licensor Parties have provided or will provide any financial or investment advice or recommendation in relation to the Index to Allianz Life of NY or to its clients. The Index is calculated by Russell or its agent. None of the Licensor Parties shall be (a) liable (whether in negligence or otherwise) to any person for any error in the Index or (b) under any obligation to advise any person of any error therein. Nasdaq-100® Index The NASDAQ-100 Index® includes 100 of the largest domestic and international non-financial securities listed on The NASDAQ Stock Market® based on market capitalization. The Product(s) is not sponsored, endorsed, sold or promoted by Nasdaq, Inc. or its affiliates (Nasdaq, with its affiliates, are referred to as the “Corporations”). The Corporations have not passed on the legality or suitability of, or the accuracy or adequacy of descriptions and disclosures relating to, the Product(s). The Corporations make no representation or warranty, express or implied to the owners of the Product(s) or any member of the public regarding the advisability of investing in securities generally or in the Product(s) particularly, or the ability of the Nasdaq-100 Index® to track general stock market performance. The Corporations' only relationship to Allianz Life Insurance Company of New York (“Licensee”) is in the licensing of the NASDAQ®, and Nasdaq-100 Index® registered trademarks, and certain trade names of the Corporations and the use of the Nasdaq-100 Index® which is determined, composed and calculated by NASDAQ without regard to Licensee or the Product(s). Nasdaq has no obligation to take the needs of the Licensee or the owners of the Product(s) into consideration in determining, composing or calculating the Nasdaq-100 Index®. The Corporations are not responsible for and have not participated in the determination of the timing of, prices of, or quantities of the Product(s) to be issued or in the determination or calculation of the equation by which the Product(s) is to be converted into cash. The Corporations have no liability in connection with the administration, marketing or trading of the Product(s). THE CORPORATIONS DO NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED CALCULATION OF THE NASDAQ-100 INDEX® OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE PRODUCT(S), OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE NASDAQ-100 INDEX® OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE NASDAQ-100 INDEX® OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL THE CORPORATIONS HAVE ANY LIABILITY FOR ANY LOST PROFITS OR SPECIAL, INCIDENTAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. EURO STOXX 50® The EURO STOXX 50®, Europe's leading blue-chip index for the Eurozone, provides a blue-chip representation of supersector leaders in the Eurozone. The index covers 50 stocks from 11 Eurozone countries: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. STOXX Limited, Deutsche Börse Group and their licensors, research partners or data providers have no relationship to Allianz Life Insurance Company of New York (“Allianz Life® of NY”), other than the licensing of the EURO STOXX 50® and the related trademarks for use in connection with Allianz Life of NY products. STOXX, Deutsche Börse Group and their licensors, research partners or data providers do not: | • | sponsor, endorse, sell or promote Allianz Life of NY products. | | • | recommend that any person invest in Allianz Life of NY products or any other securities. | | • | have any responsibility or liability for or make any decisions about the timing, amount or pricing of Allianz Life of NY products. |
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021[MMDD, 2022] Appendix A
| • | have any responsibility or liability for the administration, management or marketing of Allianz Life of NY products. | | • | consider the needs of Allianz Life of NY products or the owners of Allianz Life of NY products in determining, composing or calculating the EURO STOXX 50 or have any obligation to do so. |
STOXX, Deutsche Börse Group and their licensors, research partners or data providers give no warranty, and exclude any liability (whether in negligence or otherwise), in connection with the Allianz Life of NY products or their performance. STOXX does not assume any contractual relationship with the purchasers of Allianz Life of NY products or any other third parties. Specifically, | • | STOXX, Deutsche Börse Group and their licensors, research partners or data providers do not give any warranty, express or implied, and exclude any liability about: | | • | The results to be obtained by Allianz Life of NY products, the owner of Allianz Life of NY products or any other person in connection with the use of the EURO STOXX 50 and the data included in the EURO STOXX 50; | | • | The accuracy, timeliness, and completeness of the EURO STOXX 50 and its data; | | • | The merchantability and the fitness for a particular purpose or use of the EURO STOXX 50 and its data; | | • | The performance of Allianz Life of NY products generally; | | • | STOXX, Deutsche Börse Group and their licensors, research partners or data providers give no warranty and exclude any liability, for any errors, omissions or interruptions in the EURO STOXX 50 or its data; | | • | Under no circumstances will STOXX, Deutsche Börse Group or their licensors, research partners or data providers be liable (whether in negligence or otherwise) for any lost profits or indirect, punitive, special or consequential damages or losses, arising as a result of such errors, omissions or interruptions in the EURO STOXX 50 or its data or generally in relation to Allianz Life of NY products, even in circumstances where STOXX, Deutsche Börse Group or their licensors, research partners or data providers are aware that such loss or damage may occur. |
The licensing Agreement between Allianz Life of NY and STOXX is solely for their benefit and not for the benefit of the owners of Allianz Life of NY products or any other third parties.
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021[MMDD, 2022] Appendix A
Appendix B – Daily Adjustment Generally We designed the Daily Adjustment to provide an Index Option Value on Business Days other than the Index EffectiveTerm Start Date or an Index Anniversary.the Term End Date. The Daily Adjustment approximates the Index Option Value that will be available on the next Index Anniversary.Term End Date. It is the estimated present value of the future Performance Credit that we will apply on the next Index Anniversary.Term End Date. The Daily Adjustment takes into account: | (i) | any Index gains during the Index YearTerm subject to the applicable Cap and/or Participation Rate, | | (ii) | any Index losses greater than the 10%, 20%, or 30% Buffer, and | | (iii) | the number of days until the next Index Anniversary.Term End Date. |
The Daily Adjustment formula has two primary components, (i) the change in Proxy Value and (ii) accumulated proxy interest, which are added together and then multiplied by the Index Option Base. We designed the Daily Adjustment to estimate the present value of positive or negative Performance Credit that will be available on the next Index AnniversaryTerm End Date taking into account any applicable Buffer, and Cap.Cap, and/or Participation Rate. You should note that even if your selected Index(es) experience positive growth, the Daily Adjustments may be negative because of other market conditions, such as the expected volatility of Index prices and interest rates. Therefore, the Daily Adjustment could result in a loss beyond the protection of the Buffer. The Daily Adjustment for 3-year and 6-year Term Index Options may be more negatively impacted by changes in the expected volatility of Index prices than 1-year Term Index Options due the difference in Term length. Also, the risk of a negative Daily Adjustment is greater for 3-year and 6-year Term Index Options than 1-year Term Index Options because the Buffer is exposed to a longer time period. The impact of the Cap and Buffer on the Daily Adjustment for a 1-year Term Index Option is greater than it is for a 3-year or 6-year Term Index Option because we apply the Cap and Buffer for the entire Term length, and the Term length is shorter for a 1-year Term. Daily Adjustment Formula The formula for the calculation of the Daily Adjustment is as follows: Daily Adjustment = [(a) change in Proxy Value + (b) proxy interest] x Index Option Base Where: | (a) | change in Proxy Value = (current Proxy Value – beginning Proxy Value) | | (b) | proxy interest = beginning Proxy Value x (1 – time remaining during the Index Year)Term) |
Calculating Change in Proxy Value The change in Proxy Value represents the current hypothetical value of the Proxy Investment (current Proxy Value), less the cost of the Proxy Investment aton the beginning of the Index YearTerm Start Date (beginning Proxy Value). The current Proxy Value is the Proxy Value calculated on the same day as the Daily Adjustment. The beginning Proxy Value is the Proxy Value calculated on the first day of the current Index Year.Term Start Date. The Proxy Value tracks three hypothetical derivative investments (call and put options) that we designed to mimic the market value of your allocation to an Index Performance Strategy or an Index Protection NY Strategy Index Option. We calculate a Proxy Value for each of your selected Index Options. The Proxy Value involves tracking three hypothetical derivatives and is calculated using the following formula: Proxy Value = (at-the-money call) – (out-of-the-money call) – (out-of-the-money put) With respect to our Proxy Value formula, we designed the at-the-money call and out-of-the-money call to value the potential for Index gains subject to any applicable Participation Rate up to the Cap, and the out-of-the-money put to value the potential for Index losses greater than the Buffer .10%, 20% or 30% Buffer. It is important to note that the out-of-the-money put will almost always reduce the Daily Adjustment, even when the current Index price on a Business Day is higher than the Index Value on the last Index Anniversary.Term Start Date. This is because the risk that the Index Value could be lower on the next Index AnniversaryTerm End Date is present to some extent whether or not the current Index price on a Business Day is lower than the Index Value on the lastTerm Start Date. For purposes of the Proxy Value formula the value of the out-of-the-money call will be zero if an Index Anniversary.Option is uncapped.
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022] Appendix B
Calculating Proxy Interest The proxy interest is an amount of interest that is earned to provide compensation for the cost of the Proxy Investment aton the beginning of the Index Year.Term Start Date. The proxy interest is approximated by the value of amortizing the cost of the Proxy Investment over the Index YearTerm to zero. The formula for proxy interest involves the calculation of (i) the beginning Proxy Value and (ii) the time remaining during an Index Year.a Term. The time remaining during an Index Yeara Term is equal to the number of days remaining in the Index YearTerm divided by 365.the Term length. The Term length is 365 days for a 1-year Term; 1,095 days for a 3-year Term; and 2,190 days for a 6-year Term. The proxy interest may be significantly different from current interest rates available on interest bearing investments.
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
Appendix B
Additional Information You can find a more detailed explanation of the calculation of the Proxy Value, including examples, in Exhibit 99(a) of the Form S-1 Registration Statement filed with the SEC, of which this prospectus is a part. This Exhibit is incorporated by reference into this prospectus. You can obtain a copy of Exhibit 99(a) by calling (800) 624-0197, or visiting our website at www.allianzlife.com/new-york.allianzlife.com/new-york.
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021[MMDD, 2022] Appendix B
Appendix C – Historical Buffers and Initial and Renewal Caps This information regarding the Buffers and initial and renewal Caps is for historical purposes only; it is not a representation as to future Buffers or Caps. Caps may change frequently, and may vary substantially based on market conditions.
Index Protection NY Strategy
The Index Protection NY Strategy first became available to newly issued Contracts on August 24, 2015. It is not available to Contracts issued before August 24, 2015, or that have a Contract number starting with GAZ. |
Following are the highest and lowest initial and renewal Caps offered for Index Effective Date periods occurring within each calendar year during August 24, 2015 (the date the Index Protection NY Strategy was first available) through January 4, 2021. During the periods shown below, the Buffer was 30.00% for each Index.
Index Effective Dates: 8/24/2015 – 1/4/2016
| Indexes: | | S&P 500® Index | | Russell 2000® Index | | Nasdaq-100® Index | | EURO STOXX 50® | | Caps | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Initial Caps | | 4.00% | | 5.75% | | 4.75% | | 7.00% | | 3.50% | | 6.00% | | 4.75% | | 6.50% | | 1st Anniversary Renewal Caps | | 4.75% | | 5.50% | | 5.25% | | 6.25% | | 4.50% | | 5.25% | | 5.25% | | 6.25% | | 2nd Anniversary Renewal Caps | | 4.00% | | 5.00% | | 4.25% | | 5.75% | | 4.00% | | 5.00% | | 5.75% | | 7.25% | | 3rd Anniversary Renewal Caps | | 5.25% | | 5.75% | | 5.25% | | 6.00% | | 5.50% | | 6.50% | | 8.75% | | 8.75% | | 4th Anniversary Renewal Caps | | 5.25% | | 6.00% | | 5.50% | | 6.25% | | 5.25% | | 6.25% | | 8.25% | | 9.25% | | 5th Anniversary Renewal Caps | | 7.75% | | 9.25% | | 8.75% | | 10.75% | | 9.00% | | 12.25% | | 8.50% | | 10.00% |
Index Effective Dates: 1/5/2016 – 1/2/2017
| Indexes: | | S&P 500® Index | | Russell 2000® Index | | Nasdaq-100® Index | | EURO STOXX 50® | | Caps | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Initial Caps | | 4.75% | | 6.00% | | 5.25% | | 6.75% | | 4.50% | | 5.50% | | 5.25% | | 6.75% | | 1st Anniversary Renewal Caps | | 4.00% | | 5.00% | | 4.25% | | 5.75% | | 4.00% | | 5.00% | | 5.25% | | 7.25% | | 2nd Anniversary Renewal Caps | | 4.50% | | 6.00% | | 5.25% | | 6.50% | | 5.00% | | 6.50% | | 7.00% | | 9.25% | | 3rd Anniversary Renewal Caps | | 5.25% | | 6.00% | | 5.50% | | 6.25% | | 5.25% | | 6.25% | | 8.25% | | 10.00% | | 4th Anniversary Renewal Caps | | 5.50% | | 9.25% | | 5.50% | | 10.75% | | 5.50% | | 12.25% | | 8.00% | | 10.75% |
Index Effective Dates: 1/3/2017 – 1/2/2018
| Indexes: | | S&P 500® Index | | Russell 2000® Index | | Nasdaq-100® Index | | EURO STOXX 50® | | Caps | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Initial Caps | | 4.25% | | 5.75% | | 5.00% | | 6.50% | | 4.25% | | 5.50% | | 5.25% | | 7.00% | | 1st Anniversary Renewal Caps | | 4.50% | | 6.25% | | 5.25% | | 6.50% | | 5.00% | | 6.75% | | 7.00% | | 10.00% | | 2nd Anniversary Renewal Caps | | 5.25% | | 6.75% | | 5.50% | | 6.75% | | 5.50% | | 7.00% | | 8.25% | | 10.25% | | 3rd Anniversary Renewal Caps | | 5.50% | | 10.25% | | 5.50% | | 11.50% | | 5.50% | | 12.25% | | 8.00% | | 11.00% |
Index Effective Dates: 1/3/2018 – 1/1/2019
| Indexes: | | S&P 500® Index | | Russell 2000® Index | | Nasdaq-100® Index | | EURO STOXX 50® | | Caps | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Initial Caps | | 4.75% | | 7.50% | | 5.50% | | 7.75% | | 5.00% | | 8.00% | | 7.00% | | 15.75% | | 1st Anniversary Renewal Caps | | 5.25% | | 6.75% | | 5.50% | | 7.00% | | 5.50% | | 7.00% | | 8.50% | | 12.75% | | 2nd Anniversary Renewal Caps | | 5.50% | | 9.25% | | 5.50% | | 10.50% | | 5.50% | | 11.50% | | 7.25% | | 10.75% |
Index Effective Dates: 1/2/2019 – 1/6/2020
| Indexes: | | S&P 500® Index | | Russell 2000® Index | | Nasdaq-100® Index | | EURO STOXX 50® | | Caps | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Initial Caps | | 6.25% | | 8.50% | | 6.25% | | 8.25% | | 6.25% | | 9.00% | | 9.25% | | 17.75% | | 1st Anniversary Renewal Caps | | 5.50% | | 9.50% | | 5.50% | | 10.00% | | 5.50% | | 11.50% | | 7.25% | | 14.75% |
Index Effective Dates: 1/7/2020 – 1/4/2020
| Indexes: | | S&P 500® Index | | Russell 2000® Index | | Nasdaq-100® Index | | EURO STOXX 50® | | Caps | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Initial Caps | | 5.50% | | 10.25% | | 5.50% | | 12.00% | | 5.50% | | 13.50% | | 7.25% | | 11.00% |
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
Index Performance Strategy
The Index Performance Strategy with the EURO STOXX 50® first became available to newly issued Contracts on August 24, 2015. It is not available issued before August 24, 2015, or that have a Contract number starting with GAZ. |
Following are the highest and lowest initial and renewal Caps offered for Index Effective Date periods occurring within each calendar year during July 1, 2014 (the date the Contracts were first issued), through January 4, 2021. During the periods shown below, the Buffer was 10.00% for each Index.
Index Effective Dates: 7/1/2014 – 1/5/2015
| Indexes: | | S&P 500® Index | | Russell 2000® Index | | Nasdaq-100® Index | | Caps | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Initial Caps | | 12.50% | | 13.50% | | 14.75% | | 15.75% | | 11.75% | | 13.00% | | 1st Anniversary Renewal Caps | | 10.50% | | 15.50% | | 13.50% | | 17.50% | | 9.75% | | 15.25% | | 2nd Anniversary Renewal Caps | | 10.75% | | 13.25% | | 13.75% | | 16.50% | | 10.75% | | 13.00% | | 3rd Anniversary Renewal Caps | | 9.25% | | 10.25% | | 12.00% | | 14.25% | | 10.00% | | 11.00% | | 4th Anniversary Renewal Caps | | 10.50% | | 12.00% | | 11.00% | | 13.00% | | 11.75% | | 14.25% | | 5th Anniversary Renewal Caps | | 10.50% | | 13.25% | | 12.25% | | 14.75% | | 11.50% | | 14.25% | | 6th Anniversary Renewal Caps | | 17.50% | | 20.25% | | 19.00% | | 24.00% | | 18.75% | | 23.75% |
Index Effective Dates: 1/6/2015 – 1/4/2016
| Indexes: | | S&P 500® Index | | Russell 2000® Index | | Nasdaq-100® Index | | EURO STOXX 50® | | Caps | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Initial Caps1 | | 10.50% | | 15.50% | | 13.25% | | 17.50% | | 9.75% | | 15.25% | | 13.50% | | 17.50% | | 1st Anniversary Renewal Caps2 | | 10.75% | | 15.50% | | 13.75% | | 18.50% | | 10.75% | | 15.00% | | 13.75% | | 16.50% | | 2nd Anniversary Renewal Caps3 | | 9.25% | | 12.00% | | 12.00% | | 16.50% | | 9.50% | | 12.00% | | 22.00% | | 25.00% | | 3rd Anniversary Renewal Caps4 | | 9.25% | | 13.75% | | 11.00% | | 14.50% | | 10.75% | | 15.50% | | 24.00% | | 25.00% | | 4th Anniversary Renewal Caps5 | | 10.50% | | 13.25% | | 12.00% | | 14.75% | | 11.50% | | 15.00% | | 25.00% | | 26.50% | | 5th Anniversary Renewal Caps6 | | 11.75% | | 20.25% | | 12.25% | | 24.00% | | 11.75% | | 23.75% | | 25.50% | | 29.25% |
1 | The initial Caps for the EURO STOXX 50® are for a partial period of August 24, 2015 through January 4, 2016. | 2 | The 1st Anniversary Renewal Caps for the EURO STOXX 50® are for a partial period of August 24, 2016 through January 4, 2017. | 3 | The 2nd Anniversary Renewal Caps for the EURO STOXX 50® are for a partial period of August 24, 2017 through January 4, 2018. | 4 | The 3rd Anniversary Renewal Caps for the EURO STOXX 50® are for a partial period of August 24, 2018 through January 4, 2019. | 5 | The 4th Anniversary Renewal Caps for the EURO STOXX 50® are for a partial period of August 24, 2019 through January 4, 2020. | 6 | The 5th Anniversary Renewal Caps for the EURO STOXX 50® are for a partial period of August 24, 2020 through January 4, 2021. |
Index Effective Dates: 1/5/2016 – 1/2/2017
| Indexes: | | S&P 500® Index | | Russell 2000® Index | | Nasdaq-100® Index | | EURO STOXX 50® | | Caps | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Initial Caps | | 10.75% | | 15.50% | | 13.75% | | 18.50% | | 10.75% | | 15.00% | | 13.75% | | 18.50% | | 1st Anniversary Renewal Caps | | 9.25% | | 12.00% | | 12.00% | | 16.50% | | 9.50% | | 12.00% | | 13.50% | | 25.00% | | 2nd Anniversary Renewal Caps | | 9.25% | | 13.75% | | 11.00% | | 14.50% | | 10.75% | | 15.50% | | 24.00% | | 28.00% | | 3rd Anniversary Renewal Caps | | 10.50% | | 13.25% | | 12.00% | | 14.75% | | 11.50% | | 15.00% | | 25.00% | | 28.00% | | 4th Anniversary Renewal Caps | | 11.75% | | 20.25% | | 12.25% | | 24.00% | | 11.75% | | 23.75% | | 23.50% | | 29.25% |
Index Effective Dates: 1/3/2017 – 1/2/2018
| Indexes: | | S&P 500® Index | | Russell 2000® Index | | Nasdaq-100® Index | | EURO STOXX 50® | | Caps | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Initial Caps | | 9.75% | | 14.50% | | 13.50% | | 18.50% | | 10.00% | | 14.00% | | 13.50% | | 25.50% | | 1st Anniversary Renewal Caps | | 9.25% | | 17.00% | | 12.00% | | 17.25% | | 10.75% | | 17.75% | | 24.00% | | 31.00% | | 2nd Anniversary Renewal Caps | | 10.75% | | 17.75% | | 12.00% | | 18.00% | | 11.50% | | 17.75% | | 25.50% | | 31.00% | | 3rd Anniversary Renewal Caps | | 11.75% | | 25.50% | | 12.25% | | 27.50% | | 11.75% | | 26.50% | | 23.50% | | 31.50% |
Index Effective Dates: 1/3/2018 – 1/1/2019
| Indexes: | | S&P 500® Index | | Russell 2000® Index | | Nasdaq-100® Index | | EURO STOXX 50® | | Caps | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Initial Caps | | 11.50% | | 16.25% | | 14.25% | | 16.75% | | 12.00% | | 17.00% | | 24.00% | | 28.00% | | 1st Anniversary Renewal Caps | | 12.50% | | 16.00% | | 13.50% | | 17.75% | | 12.25% | | 16.50% | | 26.25% | | 28.00% | | 2nd Anniversary Renewal Caps | | 12.75% | | 22.50% | | 13.25% | | 25.75% | | 12.50% | | 26.25% | | 24.00% | | 29.50% |
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
Index Effective Dates: 1/2/2019 – 1/6/2020
| Indexes: | | S&P 500® Index | | Russell 2000® Index | | Nasdaq-100® Index | | EURO STOXX 50® | | Caps | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Initial Caps | | 14.25% | | 17.25% | | 15.00% | | 17.75% | | 14.25% | | 18.50% | | 26.50% | | 29.00% | | 1st Anniversary Renewal Caps | | 13.75% | | 22.25% | | 14.00% | | 25.75% | | 13.50% | | 26.25% | | 25.00% | | 29.50% |
Index Effective Dates: 1/7/2020 – 1/4/2021
| Indexes: | | S&P 500® Index | | Russell 2000® Index | | Nasdaq-100® Index | | EURO STOXX 50® | | Caps | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Lowest | | Highest | | Initial Caps | | 13.75% | | 22.25% | | 14.00% | | 25.75% | | 13.50% | | 26.25% | | 25.00% | | 29.50% |
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
Appendix D – Historical Index Option Performance Information
The following historical information, based on historical Buffers and Caps, show how actual movements in the external Index Returns impacted actual Performance Credits. They show the lowest and highest actual annual Index Returns for each time period, and the corresponding Performance Credits received for these Index Returns. No single Crediting Method or Index Option consistently delivers the most return under all market conditions. Past performance does not guaranteed future results. This historical information shows the returns for Contracts with Index Effective Date periods occurring within the first year that each Crediting Method was available using the S& P 500® Index. You can obtain more historical information for other time periods and other Index Options by contacting your Financial Professional.
INDEX PROTECTION NY STRATEGY WITH THE S&P 500® INDEX
The Index Protection NY Strategy was not available before August 24, 2015. The Buffer was 30% for all time periods. It is not available to Contracts issued before August 24, 2015 or that have a Contract number starting with GAZ. |
| Index Effective Date | | 8/24/2015-
8/28/2015 | | 9/1/2015-
10/5/2015 | | 10/6/2015-
11/2/2015 | | 11/3/2015-
11/30/2015 | | 12/1/2015-
1/4/2016 | | 1/5/2016-
2/1/2016 | | 2/2/2016-
2/29/2016 | | Initial Cap | | 4.25% | | 4.00% | | 5.50% | | 5.75% | | 5.50% | | 5.00% | | 5.25% | | 1st Index Year Index Return | | 9.63% to
16.32% | | 7.21% to
15.39% | | -0.29% to
9.13% | | -1.00% to
6.98% | | 4.21% to
12.82% | | 12.51% to
22.44% | | 19.69% to
27.29% | | 1st Index Anniversary Credit | | 4.25% | | 4.00% | | 0% to
5.50% | | 0% to
5.75% | | 4.21% to
5.50% | | 5.00% | | 5.25% | | 1st Anniversary Renewal Cap | | 5.50% | | 4.75% | | 4.75% | | 4.75% | | 4.75% | | 4.50% | | 4.50% | | 2nd Index Year Index Return | | 12.10% to
12.69% | | 12.76% to
18.17% | | 17.61% to
22.97% | | 17.47% to
24.26% | | 17.65% to
20.59% | | 20.67% to
25.11% | | 12.48% to
21.10% | | 2nd Index Anniversary Credit | | 5.50% | | 4.75% | | 4.75% | | 4.75% | | 4.75% | | 4.50% | | 4.50% | | 2nd Anniversary Renewal Cap | | 4.75% | | 4.50% | | 4.75% | | 4.00% | | 5.00% | | 4.75% | | 4.50% | | 3rd Index Year Index Return | | 17.86% to
18.57% | | 13.07% to
17.16% | | 2.33% to
13.35% | | 1.37% to
7.60% | | -12.38% to
5.72% | | -7.97% to
-4.09% | | -1.35% to
4.92% | | 3rd Index Anniversary Credit | | 4.75% | | 4.50% | | 2.33% to
4.75% | | 1.37% to
4.00% | | 0% to
5.00% | | 0% | | 0% to
4.50% | | 3rd Anniversary Renewal Cap | | 5.25% | | 5.25% | | 5.25% | | 5.50% | | 5.75% | | 5.75% | | 5.50% | | 4th Index Year Index Return | | -0.95% to
0.13% | | -1.23% to
4.05% | | 0.30% to
15.08% | | 11.00% to
19.03% | | 10.85% to
37.13% | | 20.04% to
27.32% | | 11.54% to
23.91% | | 4th Index Anniversary Credit | | 0% to
0.13% | | 0% to
4.05% | | 0.30% to
5.25% | | 5.50% | | 5.75% | | 5.75% | | 5.50% | | 4th Anniversary Renewal Cap | | 5.25% | | 5.75% | | 6.00% | | 6.00% | | 5.75% | | 5.75% | | | | 5th Index Year Index Return | | 19.21% to
21.47% | | 8.19% to
22.36% | | 7.54% to
19.15% | | 9.45% to
16.17% | | 14.00% to
18.84% | | 13.47% to
18.86% | | | | 5th Index Anniversary Credit | | 5.25% | | 5.75% | | 6.00% | | 6.00% | | 5.75% | | 5.75% | | |
| Index Effective Date | | 3/1/2016-
4/4/2016 | | 4/5/2016-
5/2/2016 | | 5/3/2016-
6/6/2016 | | 6/7/2016-
7/4/2016 | | 7/5/2016-
8/1/2016 | | 8/2/2016-
9/5/2016 | | Initial Cap | | 6.00% | | 6.00% | | 5.50% | | 5.00% | | 5.50% | | 5.50% | | 1st Index Year Index Return | | 13.80% to
21.11% | | 11.30% to
15.36% | | 15.09% to
17.38% | | 14.85% to
20.94% | | 13.49% to
16.47% | | 10.91% to
14.86% | | 1st Index Anniversary Credit | | 6.00% | | 6.00% | | 5.50% | | 5.00% | | 5.50% | | 5.50% | | 1st Anniversary Renewal Cap | | 4.25% | | 4.25% | | 4.75% | | 4.75% | | 4.75% | | 4.75% | | 2nd Index Year Index Return | | 9.46% to
17.83% | | 10.23% to
15.65% | | 10.12% to
15.40% | | 11.29% to
14.51% | | 12.50% to
14.89% | | 14.11% to
18.57% | | 2nd Index Anniversary Credit | | 4.25% | | 4.25% | | 4.75% | | 4.75% | | 4.75% | | 4.75% | | 2nd Anniversary Renewal Cap | | 5.50% | | 5.50% | | 6.00% | | 5.50% | | 5.25% | | 5.25% | | 3rd Index Year Index Return | | -0.12% to
11.05% | | 7.25% to
11.18% | | -0.09% to
12.01% | | 3.72% to
10.42% | | 4.98% to
9.27% | | -0.63% to
3.71% | | 3rd Index Anniversary Credit | | 0% to
5.50% | | 5.50% | | 0% to
6.00% | | 3.72% to
5.50% | | 4.98% to
5.25% | | 0% to
3.71% | | 3rd Anniversary Renewal Cap | | 5.50% | | 5.50% | | 5.25% | | 5.50% | | 5.75% | | 5.25% | | 4th Index Year Index Return | | -21.63% to
12.08% | | -8.16% to
-1.63% | | -3.49% to
13.79% | | 3.56% to
12.50% | | 4.68% to
11.55% | | 12.37% to
22.36% | | 4th Index Anniversary Credit | | 0% to
5.50% | | 0% | | 0% to
5.25% | | 3.56% to
5.50% | | 4.68% to
5.75% | | 5.25% |
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
Appendix D
Index Performance Strategy with the S&P 500® Index
The Buffer was 10% for all time periods. |
| Index Effective Date | | 7/1/2014-
8/4/2014 | | 8/5/2014-
9/1/2014 | | 9/2/2014-
10/6/2014 | | 10/7/2014-
11/3/2014 | | 11/4/2014-
12/1/2014 | | 12/2/2014-
1/5/2015 | | 1/6/2015-
2/2/2015 | | Initial Cap | | 13.00% | | 12.75% | | 12.75% | | 12.50% | | 13.50% | | 12.75% | | 11.75% | | 1st Index Year Index Return | | 3.98% to
8.98% | | -6.52% to
9.35% | | -5.10% to
0.97% | | 2.26% to
9.15% | | -0.80% to
4.48% | | -2.70% to
5.09% | | -8.52% to
-0.62% | | 1st Index Anniversary Credit | | 3.98% to
8.98% | | 0% to
9.35% | | 0% to
0.97% | | 2.26% to
9.15% | | 0% to
4.48% | | 0% to
5.09% | | 0% | | 1st Anniversary Renewal Cap | | 10.50% | | 10.75% | | 10.50% | | 13.50% | | 15.50% | | 13.50% | | 12.50% | | 2nd Index Year Index Return | | 0.80% to
4.88% | | 3.65% to
16.32% | | 7.21% to
14.05% | | -1.00% to
7.91% | | -0.81% to
6.98% | | 5.40% to
12.81% | | 14.41% to
22.16% | | 2nd Index Anniversary Credit | | 0.80% to
4.88% | | 3.65% to
10.75% | | 7.21% to
10.50% | | 0% to
7.91% | | 0% to
6.98% | | 5.40% to
12.81% | | 12.50% | | 2nd Anniversary Renewal Cap | | 13.25% | | 13.00% | | 11.25% | | 10.75% | | 11.00% | | 11.25% | | 10.75% | | 3rd Index Year Index Return | | 13.49% to
15.60% | | 10.91% to
14.08% | | 12.75% to
17.98% | | 17.61% to
23.90% | | 17.47% to
24.26% | | 17.72% to
20.90% | | 20.67% to
25.34% | | 3rd Index Anniversary Credit | | 13.25% | | 10.91% to
13.00% | | 11.25% | | 10.75% | | 11.00% | | 11.25% | | 10.75% | | 3rd Anniversary Renewal Cap | | 10.25% | | 10.00% | | 9.25% | | 9.75% | | 9.50% | | 9.50% | | 9.75% | | 4th Index Year Index Return | | 11.70% to
15.09% | | 14.35% to
18.57% | | 13.14% to
17.53% | | 2.33% to
13.35% | | 1.96% to
8.62% | | -12.38% to
5.72% | | -7.97% to
-1.35% | | 4th Index Anniversary Credit | | 10.25% | | 10.00% | | 9.25% | | 2.33% to
9.75% | | 1.96% to
8.62% | | -2.38% to
5.72% | | 0% | | 4th Anniversary Renewal Cap | | 10.75% | | 10.75% | | 10.50% | | 10.75% | | 10.50% | | 12.00% | | 12.50% | | 5th Index Year Index Return | | -0.20% to
10.42% | | -0.95% to
3.70% | | -1.23% to
4.18% | | 0.30% to
15.08% | | 9.64% to
17.66% | | 10.85% to
37.13% | | 19.23% to
27.32% | | 5th Index Anniversary Credit | | 0% to
10.42% | | 0% to
3.70% | | 0% to
4.18% | | 0.30% to
10.75% | | 9.64% to
10.50% | | 10.85% to
12.00% | | 12.50% | | 5th Anniversary Renewal Cap | | 12.00% | | 10.50% | | 12.00% | | 12.50% | | 12.75% | | 13.25% | | 12.75% | | 6th Index Year Index Return | | 4.48% to
16.23% | | 14.38% to
21.47% | | 8.19% to
22.36% | | 7.62% to
20.29% | | 11.86% to
17.62% | | 13.59% to
18.84% | | 13.61% to
18.68% | | 6th Index Anniversary Credit | | 4.48% to
12.00% | | 10.50% | | 8.19% to
12.00% | | 7.62% to
12.50% | | 11.86% to
12.75% | | 13.25% | | 12.75% |
| Index Effective Date | | 2/3/2015-
3/2/2015 | | 3/3/2015-
4/6/2015 | | 4/7/2015-
5/4/2015 | | 5/5/2015-
6/1/2015 | | 6/2/2015-
7/6/2015 | | Initial Cap | | 12.00% | | 11.75% | | 11.00% | | 11.00% | | 10.75% | | 1st Index Year Index Return | | -11.58% to
-6.17% | | -5.43% to
0.64% | | -3.00% to
0.63% | | -4.13% to
-0.59% | | -4.84% to
1.92% | | 1st Index Anniversary Credit | | -1.58% to
0.00% | | 0% to
0.64% | | 0% to
0.63% | | 0% | | 0% to
1.92% | | 1st Anniversary Renewal Cap | | 13.25% | | 15.50% | | 15.50% | | 13.75% | | 12.50% | | 2nd Index Year Index Return | | 19.69% to
27.29% | | 13.80% to
19.55% | | 11.82% to
16.50% | | 15.09% to
17.38% | | 14.76% to
21.92% | | 2nd Index Anniversary Credit | | 13.25% | | 13.80% to
15.50% | | 11.82% to
15.50% | | 13.75% | | 12.50% | | 2nd Anniversary Renewal Cap | | 10.25% | | 12.00% | | 12.00% | | 10.50% | | 10.25% | | 3rd Index Year Index Return | | 12.99% to
17.56% | | 9.46% to
17.83% | | 10.86% to
15.21% | | 11.36% to
14.75% | | 11.40% to
14.71% | | 3rd Index Anniversary Credit | | 10.25% | | 9.46% to
12.00% | | 10.86% to
12.00% | | 10.50% | | 10.25% | | 3rd Anniversary Renewal Cap | | 9.25% | | 12.00% | | 11.50% | | 13.75% | | 11.75% | | 4th Index Year Index Return | | 0.51% to
3.77% | | -0.12% to
11.18% | | 7.17% to
11.14% | | 0.36% to
9.72% | | -0.09% to
10.42% | | 4th Index Anniversary Credit | | 0.51% to
3.77% | | 0% to
11.18% | | 7.17% to
11.14% | | 0.36% to
9.72% | | 0% to
10.42% | | 4th Anniversary Renewal Cap | | 13.25% | | 11.75% | | 10.75% | | 10.75% | | 11.00% | | 5th Index Year Index Return | | 6.67% to
23.91% | | -20.05% to
12.08% | | -8.16% to
-0.89% | | -2.87% to
11.34% | | 3.27% to
13.79% | | 5th Index Anniversary Credit | | 6.67% to
13.25% | | -10.05% to
11.75% | | 0% | | 0% to
10.75% | | 3.27% to
11.00% |
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021
Appendix D
Appendix E – Annual Contract Fees Calculation Examples
Please note that these examples may differ from your actual results due to rounding. On the Quarterly Contract Anniversary your annual product fee is 1.25% and your Contract Value and Charge Base are $100,000. This Contract Value includes any Variable Option gains or losses and any Daily Adjustments or Performance Credits on the Index Options. During the quarter you make no additional Purchase Payments and take no withdrawals. We calculate the daily product fee amount for this quarter as follows: (the Charge Base) x (annual product fee ÷ 365) = daily product fee amount, or: $100,000 x (1.25% ÷ 365) = $3.42 If there are 89 days in the current quarter (which includes the next Quarterly Contract Anniversary), then the total quarterly product fee is: (number of days in the current quarter) x (daily product fee amount), or: 89 x $3.42 = $304.79 On the next Quarterly Contract Anniversary we would deduct $304.79 from the Contract Value. We first account for any gains/losses on the Variable Options and add any Daily Adjustments or Performance Credits to the Index Option Values, then process any additional Purchase Payments, withdrawals you take, and withdrawals, including deduction ofdeductions we make for the total quarterly product fee. We then set the Charge Base equal to this new Contract Value. If the Contract Value at the end of the day on the Quarterly Contract Anniversary after all processing is $101,250 we would begin computing the daily product fee for the next quarter on the next day as: (the Charge Base) x (annual product fee ÷ 365) = daily product fee amount, or: $101,250 x (1.25% ÷ 365) = $3.47 If you make an additional Purchase Payment of $15,000 on the 43rd day of the next quarter, your Charge Base would increase by the dollar amount of the payment to $116,250 ($101,250 + $15,000). We would then use this new Charge Base to begin computing the daily product fee for the remainder of the quarter on the next day as: (the Charge Base) x (annual product fee ÷ 365) = daily product fee amount, or: $116,250 x (1.25% ÷ 365) = $3.98 If there are 92 days in the current quarter (which includes the next Quarterly Contract Anniversary), then the total quarterly product fee is: (number of days in the current quarter) x (daily product fee amount), or: (43 x $3.47) + (49 x $3.98) = $149.10 + $195.08 = $344.18 On the next Quarterly Contract Anniversary we would deduct $344.18 from the Contract Value after we account for any gains/losses on the Variable Option and add any Daily Adjustments or Performance Credits to the Index Option Values. We would then process any additional Purchase Payments, withdrawals you take, and any other withdrawalsdeductions we make for the total quarterly product fee and set the Charge Base equal to this new Contract Value and begin computing the daily product fee for the next quarter on the next day.
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021[MMDD, 2022] Appendix EC
Appendix FD – MaterialVariable Options Available Under the Contract Variations by Issue Date All material Issue Date variationsThe following includes information about the Variable Options. More information about the Variable Options is available in the Variable Options' prospectuses, which may be amended from time to time and can be found online at allianzlife.com/new-york/variableoptions. You can also request this information at no cost by calling (800) 624-0197, or by sending an email request to contact.us@allianzlife.com.
The current expenses and performance information below reflects fees and expenses of the Variable Options, but do not reflect the other fees and expenses that your Contract are disclosed in this Appendix. If youmay charge. Expenses would like more information regarding Issue Date specific Contract provisions, you should contact your Financial Professional or contact our Service Center at the toll-free telephone number listed at the backbe higher and performance would be lower if these other charges were included. The Variable Options' past performance is not necessarily an indication of this prospectus.future performance. Crediting Method and/or Index Availability Restrictions| Investment Objectives | Variable Option and
Adviser/Subadviser | Current
Expenses | Average Annual Total Returns
(as of December 31, 2021) | | 1 Year | 5 Years | 10 Years | | Current income consistent with stability of principal | AZL® Government Money Market Fund(1)
Adviser: Allianz Investment Management LLC
Subadviser: BlackRock Advisors, LLC | 0.64% | 0.00% | 0.53% | 0.27% | | Long-term capital appreciation with preservation of capital as an important consideration | AZL® MVP Balanced Index Strategy Fund(2)
Adviser: Allianz Investment Management LLC | 0.71% | 10.02% | 7.73% | 7.20% | | Long-term capital appreciation | AZL® MVP Growth Index Strategy Fund(2)
Adviser: Allianz Investment Management LLC | 0.68% | 16.40% | 9.77% | 9.23% |
Crediting Method / Indexes(1) | | Availability Restrictions:The AZL® Government Money Market Fund’s annual expenses reflect a temporary fee reduction. Please see the AZL® Government Money Market Fund’s prospectus for information regarding the expense reimbursement or fee waiver arrangement. | Index Protection NY Strategy(2) | | This Variable Option is managed in a way that is intended to minimize volatility of returns (referred to as a “managed volatility strategy”). Please see “Principal Risks – For Contracts with a number starting with AV this first became available to newly issued Contracts on August 24, 2015.
– Not available to Contracts issued before August 24, 2015, or ifManaged Volatility Fund Risk” in the Contract has a number starting with GAZ. | EURO STOXX 50® | | – For Contracts with a number starting with AV this first became available to newly issued Contracts on August 24, 2015.
– Not available to Contracts issued before August 24, 2015, or ifprospectus and the Contract has a number starting with GAZ.Investment Option’s prospectus for more information. |
If a Crediting Method or Index is not available, you cannot allocate to it unless we make it available to you on a future Index Anniversary. Certain Crediting Methods and/or Indexes also may not be available from all selling firms or from all Financial Professionals. Please consult with your Financial Professional for more information.
Automatic Performance Lock Availability Restrictions
Automatic Performance Locks are not available to Contracts issued before August 24, 2015, or that have a Contract number starting with GAZ.
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021[MMDD, 2022] Appendix FD
Appendix G –E –Unaudited Selected Financial Data and Statutory Financial Statements Management’s Discussion and Analysis of Financial Condition and Results of Operations (For the 123 month period ended Decemberending march 31, 2020)2022) The following discussion of our financial condition and results of operations should be read in conjunction with our statutory financial statements and notes to those statements included in this Appendix. The discussion and analysis in this Appendix includes certain forward-looking statements that are subject to risks, uncertainties and other factors, as described in “Risk Factors” and elsewhere in this prospectus, that could cause our actual growth, results of operations, performance, financial position and business prospects and opportunities in 2022 and beyond to differ materially from those expressed in, or implied by, those forward-looking statements. See “Forward-Looking Statements.” unaudited Statutory Financial Statements The following unaudited statutory financial statements of Allianz Life Insurance Company of North America as of March 31, 2022 and unaudited statutory statements of admitted assets, liabilities, and capital and surplus as of December 31, 2021, as well as the related unaudited statutory statements of operations, capital and surplus and cash flow for the three month periods ended March 31, 2022 and March 31, 2021 are included in this Appendix.
Allianz Index Advantage® New York Variable Annuity Prospectus – [MMDD, 2022] Appendix E
Appendix F – Audited Selected Financial Data and Statutory Financial Statements Management’s Discussion and Analysis of Financial Condition and Results of Operations (For the 12 month period ending December 31, 2021) The following discussion of our financial condition and results of operations should be read in conjunction with our statutory financial statements and notes to those statements included in this Appendix. The discussion and analysis in this Appendix includes certain forward-looking statements that are subject to risks, uncertainties and other factors, as described in “Risk Factors” and elsewhere in this prospectus, that could cause our actual growth, results of operations, performance, financial position and business prospects and opportunities in 2022 and beyond to differ materially from those expressed in, or implied by, those forward-looking statements. See “Forward-Looking Statements.” Statutory Financial Statements The statutory financial statements of Allianz Life Insurance Company of New York as of December 31, 20202021 and 20192020 and for each of the three years in the period ended December 31, 20202021 included in this Appendix GF have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. The principal business address of PricewaterhouseCoopers LLP is 45 South Seventh Street, Suite 3400, Minneapolis, MN.
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021[MMDD, 2022] Appendix GF
Item 11(f).
Selected Financial Data
(dollars in thousands, unless otherwise stated)
The following table sets forth the Company’s selected historical financial data. The selected financial data has been derived from the Statutory Financial Statements included elsewhere in this prospectus, and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Company’s audited Statutory Financial Statements.
These historical results are not necessarily indicative of results to be expected for any future period.
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| Year ended December 31, | | Selected income data |
| 2020 |
| 2019 |
| 2018 |
| 2017 |
| 2016 | | Premium and annuity considerations* |
| $ | 431,944 |
|
| 376,919 |
|
| 306,832 |
|
| 275,425 |
|
| 250,086 |
| | Net investment income |
| 18,028 |
|
| 19,866 |
|
| 23,273 |
|
| 34,421 |
|
| 42,598 |
| | Ceded reinsurance reserve and expense adjustments |
| 291 |
|
| 181 |
|
| 201 |
|
| 211 |
|
| 225 |
| | Fees from separate accounts |
| 66,045 |
|
| 68,960 |
|
| 72,602 |
|
| 74,868 |
|
| 73,612 |
| | Other income |
| — |
|
| — |
|
| — |
|
| 24 |
|
| — |
| | Total income |
| 516,308 |
|
| 465,926 |
|
| 402,908 |
|
| 384,949 |
|
| 366,521 |
| | Policyholder benefits and surrenders |
| 244,532 |
|
| 255,885 |
|
| 246,712 |
|
| 240,015 |
|
| 173,282 |
| | Change in aggregate reserves |
| 1,842 |
|
| 2,503 |
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| (35,379) |
|
| 4,740 |
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| (9,455) |
| | General and administrative and commission |
| 56,875 |
|
| 52,630 |
|
| 43,506 |
|
| 41,569 |
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| 40,116 |
| | Net transfers to separate accounts |
| 186,015 |
|
| 134,980 |
|
| 107,721 |
|
| 60,857 |
|
| 104,150 |
| | Total benefits and other expenses |
| 489,264 |
|
| 445,998 |
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| 362,560 |
|
| 347,181 |
|
| 308,093 |
| | Income tax expense (benefit) |
| 1,280 |
|
| (7,343) |
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| (292) |
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| 3,333 |
|
| 104 |
| | Net realized capital (loss) gain |
| (41,220) |
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| (70,095) |
|
| 7,217 |
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| (39,732) |
|
| (48,008) |
| | Net (loss) income |
| $ | (15,456) |
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| (42,824) |
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| 47,857 |
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| (5,297) |
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| 10,316 |
| | Capital and Surplus: |
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| | Change in unrealized capital (loss) gain |
| $ | (1,845) |
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| (8,937) |
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| 18,410 |
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| (21,209) |
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| (5,276) |
| | Other change in capital & surplus |
| $ | 1,934 |
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| (649) |
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| (15,579) |
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| (2,565) |
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| (1,669) |
| | Net change in capital & surplus |
| (15,367) |
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| (52,410) |
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| 50,688 |
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| (29,071) |
|
| 3,371 |
| | *Includes premiums and annuity and supplementary contract considerations. |
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| As of December 31, | | Selected balance sheet data |
| 2020 |
| 2019 |
| 2018 |
| 2017 |
| 2016 | | Total cash and invested assets |
| $ | 590,406 |
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| 596,501 |
|
| 652,934 |
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| 630,219 |
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| 641.417 |
| | Investment income due and accrued |
| 4,744 |
|
| 4,921 |
|
| 5,270 |
|
| 7,101 |
|
| 13.772 |
| | Other admitted assets |
| 8,604 |
|
| 12,922 |
|
| 4,246 |
|
| 7,048 |
|
| 5.272 |
| | Separate account assets |
| 3,773,866 |
|
| 3,232,062 |
|
| 2,677,964 |
|
| 2,752,080 |
|
| 2,463.583 |
| | Total admitted assets |
| 4,377,620 |
|
| 3,846,406 |
|
| 3,340,414 |
|
| 3,396,448 |
|
| 3,124.044 |
| | Total policyholder liabilities |
| 490,011 |
|
| 487,107 |
|
| 484,136 |
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| 524,125 |
|
| 517,924 |
| | Other liabilities |
| (42,226) |
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| (44,099) |
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| (45,390) |
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| (52,815) |
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| (59,593) |
| | Separate account liabilities |
| 3,773,866 |
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| 3,232,062 |
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| 2,677,964 |
|
| 2,752,080 |
|
| 2,463,583 |
| | Total liabilities |
| 4,221,651 |
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| 3,675,070 |
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| 3,116,710 |
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| 3,223,390 |
|
| 2,921,914 |
| | Total capital and surplus |
| 155,969 |
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| 171,336 |
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| 223,746 |
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| 173,058 |
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| 202,130 |
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Selected Financial Data and Management's Discussion and Analysis
Page 1 of 15
Item 11(h).
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provides an assessment by management of the Company’s financial condition as of December 31, 2020, compared with December 31, 2019, and its results of operations for each of the three years ended December 31, 2020, 2019, 2018, respectively. The information contained herein should be read in conjunction with the financial statements, notes, exhibits and schedules in the 2020 and 2019 Annual Statement and audited Statutory Financial Statements of the Company. Amounts are presented on a non-consolidated basis in accordance with Statutory Accounting Principles (SAP).
Forward-looking Statements
This report reviews the Company’s financial condition and results of operations. Where appropriate, factors that may affect future financial performance are also identified and discussed. Certain statements made in this report include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward- looking statements include any statement that may predict, forecast, indicate or imply future results, performance or achievements instead of historical facts, and may contain words like “believe”, “expect”, “estimate”, “project”, “budget”, “forecast”, “anticipate”, “plan”, “will”, “shall”, “may”, and other words, phrases or expressions with similar meaning. Forward-looking statements are subject to risks and uncertainties. Readers are cautioned not to place undue reliance on forward-looking statements as a prediction of actual results. The Company undertakes no obligation to update publicly or revise any forward-looking statements.
Company Overview
The Company is a life insurance company domiciled in New York and is licensed to sell insurance products in six U.S. states and the District of Columbia. The Company primarily offers a portfolio of individual variable-indexed and variable annuities which are sold through licensed registered representatives contracted with a broker/dealer. The Company also maintains a legacy portfolio of individual fixed annuities, individual and group life policies, and individual and group accident and health policies, but does not actively issue new policies related to these products.
Allianz Life of New York is a wholly owned subsidiary of Allianz Life Insurance Company of North America (Allianz Life). Allianz Life is a wholly owned subsidiary of Allianz of America, Inc. (AZOA), which is a subsidiary of Allianz Europe, B.V.. Allianz Europe, B.V. is a wholly owned subsidiary of Allianz SE, the Company’s ultimate parent, which is incorporated in Munich, Germany.
The Company has organized its principal operations into the following segments: Individual Annuities and Other.
Individual Annuities
The Individual Annuities segment provides tax-deferred investment growth and lifetime income opportunities for our customers through fixed, fixed-indexed, variable-indexed, and variable annuities. The “fixed” and “variable” classifications describe whether we or the contractholders bear the investment risk of the assets supporting the contract. Variable annuities allow the contractholder to make deposits into various investment options and also have unique product features that allow for guaranteed minimum income benefits, guaranteed minimum accumulation benefits, guaranteed minimum death benefits, and guaranteed minimum withdrawal benefits. The variable annuity products with guaranteed minimum benefits which provide a minimum return based on their initial deposit may be increased by additional deposits, bonus amounts, or other account crediting features. The income and accumulation benefits shift a portion of the investment risk from the contractholder back to the Company. The Company's variable annuity sales strategy has shifted to variable-indexed annuity products, which combines a separate account option with a general account option that is similar to a fixed-indexed annuity. Sales of the variable-indexed annuity have increased in recent years due to an industry shift from traditional variable products to hybrid annuities as well as the Allianz Index Advantage® New York Variable Annuity product being very competitive. Our Individual Annuity products are sold through independent distribution channels made up of registered representatives contracted with a broker dealer. As previously noted, we discontinued selling fixed annuity products and the block of business is in run-off, however, in-force volumes are material and thus reported within the Individual Annuities segment.
Other
The Other segment consists of individual term life, which is not material enough to break out in a separate segment, as well as closed blocks of life, long-term care (LTC), and Special Markets products. The Special Markets products include individual and group annuity and life products, including whole and term life insurance. Although Other products are part of the combined results, the Company does not allocate additional resources to these areas other than to maintain the operational support to its current customers.
Selected Financial Data and Management's Discussion and Analysis
Page 2 of 15
Income and expense allocation
We maintain segregated investment portfolios at the subsidiary level but do not maintain segregated portfolios for each segment. All net investment income and other Corporate income and expense activity is allocated to the segments. Assets are only monitored at the total Company level, and as such, asset disclosures by segment are not included herein.
Income and expense related to assets backing policyholder reserves are allocated to the segments based on policyholder statutory reserve levels. The results of our segments also reflect allocation of income and expense related to assets backing surplus. Income and expense related to assets backing surplus are allocated to the segments based on required capital levels for each segment.
Basis of Presentation
The Statutory Financial Statements have been prepared in accordance with accounting practices prescribed or permitted by the New York State Department of Financial Services (the Department). The Department recognizes statutory accounting practices prescribed or permitted by the state of New York for determining and reporting the financial condition and results of operations of an insurance company and its solvency under New York insurance law. The state of New York has adopted the National Association of Insurance Commissioners (NAIC) Accounting Practices and Procedures Manual as its prescribed basis of statutory accounting principles (SAP). The state of New York has also adopted certain prescribed accounting practices that differ from those found in NAIC SAP. The Company has no material statutory accounting practices that differ from those of the Department or NAIC SAP. These practices differ in some respects from accounting principles generally accepted in the United States of America (U.S. GAAP). The effects of these differences, while not quantified, are presumed to be material to the Statutory Financial Statements.
The preparation of Statutory Financial Statements in conformity with NAIC SAP requires management to make certain estimates and assumptions that affect reported amounts of admitted assets and liabilities, including reporting or disclosure of contingent assets and liabilities as of December 31, 2020, and 2019 and the reported amounts of revenues and expenses during the reporting period. Future events, including changes in mortality, morbidity, interest rates, capital markets, and asset valuations could cause actual results to differ from the estimates used within the Statutory Financial Statements. Such changes in estimates are recorded in the period they are determined.
Adoption of New Financial Accounting Standards
See Note 3 – “Accounting Changes and Correction of Errors” of the Company’s audited Statutory Financial Statements in this prospectus for information related to recent accounting pronouncements.
Application of Critical Accounting Policies
Our accounting policies require management to make interpretative and valuation judgments and to make estimates based upon assumptions that affect the amounts of assets, liabilities, revenues, and expenses reported in our Statutory Financial Statements. Because the use of assumptions and estimates inherently entails uncertainty, the effects of accounting policies under different conditions could produce results that are significantly different. A discussion of the presentation of the business factors that affect critical accounting policies can be found in Note 2 of the accompanying Statutory Financial Statements and are summarized below.
Accounting for Investments
Investment valuation and presentation are determined to be in accordance with methods prescribed by the NAIC. See Note 5 and 6 of the audited Statutory Financial Statements for additional information regarding the portfolio and fair value of investments.
Aggregate Reserves for Life Policies and Annuity Contracts
See Notes 10 through 12 of the audited Statutory Financial Statements for additional information regarding our annuity and life actuarial reserves, deposit liabilities, and separate accounts.
Derivatives
See Note 2 and 5 of the audited Statutory Financial Statements for additional information regarding our derivatives and hedging instruments.
Reinsurance
See Note 9 of the audited Statutory Financial Statements for additional information regarding reinsurance agreements we have entered into to manage insurance risk as well as businesses we have exited.
Selected Financial Data and Management's Discussion and Analysis
Page 3 of 15
Income Taxes
See Note 7 of the audited Statutory Financial Statements for additional information regarding income tax estimates and assumptions.
Individual Annuities and Other
Based upon the significance of the Individual Annuities segment and its overall impact on the total results of operations, we only provided variance commentary at the total company level for the year ended December 31, 2020 compared to 2019 and year ended December 31, 2019, compared to 2018.
Total Results of Operations
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| Year ended December 31, |
| Increase (decrease) and % change |
| Increase (decrease) and % change |
| 2020 |
| 2019 |
| 2018 |
| 2020 - 2019 |
| 2019 - 2018 | | Income: |
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| | Premium and annuity considerations* | $ | 431,944 |
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| 376,919 |
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| 306,832 |
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| $ | 55,025 |
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| 14.6 | % |
| $ | 70,087 |
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| 22.8 | % | | Net investment income | 18,028 |
|
| 19,866 |
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| 23,273 |
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| (1,838) |
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| (9.3) |
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| (3,407) |
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| (14.6) |
| | Ceded reinsurance reserve and expense adjustments | 291 |
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| 181 |
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| 201 |
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| 110 |
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| 60.8 |
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| (20) |
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| (10.0) |
| | Fees from separate accounts | 66,045 |
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| 68,960 |
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| 72,602 |
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| (2,915) |
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| (4.2) |
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| (3,642) |
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| (5.0) |
| | Other income | — |
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| — |
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| — |
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| — |
|
| — |
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| — |
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| — |
| | Total income | 516,308 |
|
| 465,926 |
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| 402,908 |
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| 50,382 |
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| 10.8 |
|
| 63,018 |
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| 15.6 |
| | Benefits and other expenses: |
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| | Policyholder benefits and surrenders | 244,532 |
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| 255,885 |
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| 246,712 |
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| (11,353) |
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| (4.4) |
|
| 9,173 |
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| 3.7 |
| | Change in aggregate reserves | 1,842 |
|
| 2,503 |
|
| (35,379) |
|
| (661) |
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| (26.4) |
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| 37,882 |
|
| 107.1 |
| | General and administrative and commission | 56,875 |
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| 52,630 |
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| 43,506 |
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| 4,245 |
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| 8.1 |
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| 9,124 |
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| 21.0 |
| | Net transfers to separate accounts | 186,015 |
|
| 134,980 |
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| 107,721 |
|
| 51,035 |
|
| 37.8 |
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| 27,259 |
|
| 25.3 |
| | Total benefits and other expenses | 489,264 |
|
| 445,998 |
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| 362,560 |
|
| 43,266 |
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| 9.7 |
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| 83,438 |
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| 23.0 |
| | Pretax income (loss) | 27,044 |
|
| 19,928 |
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| 40,348 |
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| 7,116 |
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| 35.7 |
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| (20,420) |
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| (50.6) |
| | Income tax expense (benefit) | 1,280 |
|
| (7,343) |
|
| (292) |
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| 8,623 |
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| 117.4 |
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| (7,051) |
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| NM● | | Net realized capital (loss) gain | (41,220) |
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| (70,095) |
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| 7,217 |
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| 28,875 |
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| 41.2 |
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| (77,312) |
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| NM● | | Net income (loss) | $ | (15,456) |
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| (42,824) |
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| 47,857 |
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| $ | 27,368 |
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| 63.9 | % |
| $ | (90,681) |
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| (189.5) | % | | Capital and Surplus: |
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| | Change in unrealized capital (loss) gain | $ | (1,845) |
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| (8,937) |
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| 18,410 |
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| $ | 7,092 |
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| 79.4 | % |
| $ | (27,347) |
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| (148.5) | % | | Other change in capital & surplus | 1,934 |
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| (649) |
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| (15,579) |
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| 2,583 |
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| 398.0 |
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| 14,930 |
|
| 95.8 |
| | Net change in capital & surplus | $ | (15,367) |
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| (52,410) |
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| 50,688 |
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| $ | 37,043 |
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| 70.7 | % |
| $ | (103,098) |
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| (203.4) | % | | *Includes premiums and annuity and supplementary contract considerations. | ●Not meaningful. |
Selected Financial Data and Management's Discussion and Analysis
Page 4 of 15
Selected Operating Performance Measures
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| Year ended December 31, |
| Increase (decrease) and % change |
| Increase (decrease) and % change |
| 2020 |
| 2019 |
| 2018 |
| 2020 - 2019 |
| 2019 - 2018 | | Deposits and gross premiums written: |
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| | Individual Annuities | $ | 425,561 |
|
| 371,966 |
|
| 298,637 |
|
| $ | 53,595 |
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| 14.4 | % |
| $ | 73,329 |
|
| 24.6 | % | | Other | 4,108 |
|
| 4,149 |
|
| 4,289 |
|
| (41) |
|
| (1.0) |
|
| (140) |
|
| (3.3) |
| | Total | $ | 429,669 |
|
| 376,115 |
|
| 302,926 |
|
| $ | 53,554 |
|
| 14.2 | % |
| $ | 73,189 |
|
| 24.2 | % | | In-force: |
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| | Individual Annuities | $ | 3,990,425 |
|
| 3,613,848 |
|
| 3,101,165 |
|
| $ | 376,577 |
|
| 10.4 | % |
| $ | 512,683 |
|
| 16.5 | % | | Other | 328,472 |
|
| 49,947 |
|
| 53,361 |
|
| 278,525 |
|
| 557.6 |
|
| (3,414) |
|
| (6.4) |
| | Total | $ | 4,318,897 |
|
| 3,663,795 |
|
| 3,154,526 |
|
| $ | 655,102 |
|
| 17.9 | % |
| $ | 509,269 |
|
| 16.1 | % |
Deposits and in-force amounts in the table above are for direct business. Deposits reflect amounts collected on both new and renewal business. Individual Annuities in-force represents account values for our annuity contracts. Other products in-force represent gross life insurance within the life and Special Markets products. The deposits increased within Individual Annuities year over year as a result of the continued growth of variable-indexed annuity sales due to competitive product features partially offset by lower traditional variable annuity sales the continued run-off of fixed annuities. The increase of in-force in the Individual Annuities segment is primarily driven by growth of the variable-indexed annuity sales and equity market increases resulting in higher contractholder account values. In-force within Other products increased due to the new term life policies which were initially marketed in 2020.
Change in Key Market Factors
Our Individual Annuities segment is impacted by various market impacts and movements which are summarized below:
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| Year ended December 31, |
| % change |
| 2020 |
| 2019 |
| 2018 |
| 2020 - 2019 |
| 2019 - 2018 | | Stock Index |
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| | S&P 500 | 16.26% |
| 28.88% |
| (6.24)% |
| (12.62)% |
| 35.12% | | NASDAQ 100 | 47.58% |
| 37.96% |
| (1.04)% |
| 9.62% |
| 39.00% |
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| Year ended December 31, |
| Basis point (bps) change |
| 2020 |
| 2019 |
| 2018 |
| 2020 - 2019 |
| 2019 - 2018 | | Interest Rates |
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| | LIBOR 10 year | 0.93% |
| 1.90% |
| 2.71% |
| (97) bps |
| (81) bps | | LIBOR 20 year | 1.32% |
| 2.07% |
| 2.83% |
| (75) bps |
| (76) bps |
Year Ended December 31, 2020Compared toYear Ended December 31, 2019
Overview
The change in capital and surplus was unfavorable in 2020, but lower than 2019 due to hedging impacts as a result of equity market increases. Capital and surplus was also unfavorably impacted in 2020 by increases in asset adequacy reserves in the Individual Annuities segment and by a Premium Deficiency Reserves (PDR) related to LTC in the Other segment. Also impacting capital in surplus was a higher income tax expense compared to the prior year.
Income
•Premium and annuity considerations: Premium and annuity considerations increased primarily due to the continued growth of the variable-indexed annuity product which was impacted by competitive product features and a stronger sales focus compared to traditional variable annuity products in the Individual Annuities segment.
•Net investment income:Net investment income decreased primarily due to a decrease in average invested assets backing general account policyholder liabilities as a result of the continued run-off of the Company's fixed annuity block of business. Assets supporting the general account decreased despite increased premiums because the significant products are in separate account.
Selected Financial Data and Management's Discussion and Analysis
Page 5 of 15
•Ceded reinsurance reserve and expense adjustments: Ceded reinsurance reserve and expense adjustments increased primarily due to the ceded expense allowance on the term life product.
•Fees from separate accounts: Fees from separate accounts decreased primarily due to lower M&E and benefit rider income from the effects of negative equity markets in early 2020, which resulted in lower average traditional variable annuity separate account assets in 2020. The decrease was partially offset by lower variable annuity surrenders.
Benefits and Other Expenses
•Policyholder benefits and surrenders: Policyholder benefits and surrenders decreased primarily due to a decrease in variable and fixed surrender benefits driven by policyholder activity.
•Change in aggregate reserves:Change in aggregate reserves was driven by higher variable-indexed premium and annuity considerations and additional asset adequacy reserves that were established for both the variable and fixed annuity lines of business as a result of annual cash flow testing. This is partially offset by fixed annuity reserve decreases due to the continued run-off of the closed block of business.
•General and administrative and commission:General and administrative and commission increased primarily due to higher variable indexed-annuity commissions as a result of an increase in production.
•Net transfers to separate accounts: Net transfers to separate accounts increase is driven by new premium and policyholder withdrawals, and increased due to higher separate account premium.
•Income tax expense (benefit): The pre-tax income expense in 2020 as compared to the pre-tax benefit in 2019 was driven by pre-tax income and hedging impacts.
•Net realized capital (loss) gain: Net realized capital losses are driven by fewer losses on derivatives hedging guarantees in our Individual Annuities segment due to less positive equity markets.
Capital and Surplus
•Change in unrealized capital (loss) gain: Unrealized capital losses are primarily due to losses on derivatives hedging guarantees in our Individual Annuities segment due to positive equity markets.
•Other change in capital and surplus: Other change in capital and surplus increase was driven by an increase in net deferred income taxes as a result of losses on derivatives hedging guarantees due to favorable equity market impacts.
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
Overview
The decrease in capital and surplus was primarily driven by realized losses due to hedging impacts, an increase in change in aggregate reserves driven by higher variable-indexed premium and annuity considerations, impacts due to favorable equity market performance, and the change in Premium Deficiency Reserves (PDR) related to LTC in the Other segment. This was partially offset by favorable variable-indexed annuity premiums which is partially offset by an increase in net transfers to separate accounts both due to an increase in new premiums.
Income
•Premium and annuity considerations: Premium and annuity considerations increased primarily due to the continued growth of the variable-indexed annuity product which was impacted by a sales promotion in 2019 and higher traditional variable annuity sales driven by market conditions in the Individual Annuities segment.
•Net investment income: Net investment income decreased primarily due to the sale of the Company's Interest Rate Swap (IRS) portfolio in March of 2018, which caused a decline in derivative instrument income as well as negative IMR amortization. In addition, there was a decrease in average invested assets backing policyholder liabilities as a result of the continued run-off of the Company's fixed annuity block of business.
•Fees from separate accounts: Fees from separate accounts decreased primarily due to lower M&E and benefit rider income from the effects of negative equity markets in late 2018, which resulted in lower average traditional variable annuity Separate Account assets in 2019. The decrease was also impacted by higher variable annuity surrenders.
Benefits and Other Expenses
•Policyholder benefits and surrenders: Policyholder benefits and surrenders increased primarily due to an increase in variable surrender benefits driven by policyholder activity. This was partially offset by lower fixed surrenders.
Selected Financial Data and Management's Discussion and Analysis
Page 6 of 15
•Change in aggregate reserves: Change in aggregate reserves was driven by higher variable-indexed premium and annuity considerations and an increase in premium deficiency reserves related to the LTC line of business which is supported by the gross premium valuation which is conducted annually. This is partially offset by fixed annuity reserve decreases due to the continued run-off of the closed block of business.
•General and administrative and commission: General and administrative and commission increased primarily due to higher variable indexed-annuity commissions as a result of an increase in production.
•Net transfers to separate accounts: Net transfers to separate accounts increase is driven by new premium and policyholder withdrawals, and increased due to higher separate account premium.
•Income tax expense (benefit): The higher income tax benefit in 2019 as compared to 2018 was driven by the timing of the increase in hedging losses.
•Net realized capital gain (loss): Net realized capital losses are driven by negative hedging results in our Individual Annuities segment due to increasing equity markets.
Capital and Surplus
•Change in unrealized capital gain (loss): Unrealized capital losses are primarily due to negative hedging results in our Individual Annuities segment due to increasing equity markets.
•Other change in capital and surplus: Other change in capital and surplus increased to due change in nonadmitted assets driven by negative IMR and a change in accounting principle in 2018. This was partially offset by an increase in net deferred income taxes as a result of hedging losses due to favorable equity market impacts.
Selected Financial Data and Management's Discussion and Analysis
Page 7 of 15
The following tables provide the results of operations for the Individual Annuities and Other segments:
Individual Annuities
Segment Results of Operations
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| Year ended December 31, |
| Increase (decrease) and % change |
| Increase (decrease) and % change |
| 2020 |
| 2019 |
| 2018 |
| 2020 - 2019 |
| 2019 - 2018 | | Income: |
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|
|
|
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|
|
|
|
|
| | Premium and annuity considerations* | $ | 429,006 |
|
| 373,869 |
|
| 303,753 |
|
| $ | 55,137 |
|
| 14.7 | % |
| $ | 70,116 |
|
| 23.1 | % | | Net investment income | 14,100 |
|
| 16,813 |
|
| 20,651 |
|
| (2,713) |
|
| (16.1) |
|
| (3,838) |
|
| (18.6) |
| | | | | | | | | | | | | | | | Fees from separate accounts | 66,045 |
|
| 68,960 |
|
| 72,602 |
|
| (2,915) |
|
| (4.2) |
|
| (3,642) |
|
| (5.0) |
| | Other income | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| | Total income | 509,151 |
|
| 459,642 |
|
| 397,006 |
|
| 49,509 |
|
| 10.8 |
|
| 62,636 |
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| 15.8 |
| | Benefits and other expenses: |
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|
|
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|
|
|
|
|
|
|
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| | Policyholder benefits and surrenders | 241,717 |
|
| 254,424 |
|
| 245,151 |
|
| (12,707) |
|
| (5.0) |
|
| 9,273 |
|
| 3.8 |
| | Change in aggregate reserves | (5,248) |
|
| (16,098) |
|
| (41,622) |
|
| 10,850 |
|
| 67.4 |
|
| 25,524 |
|
| 61.3 |
| | General and administrative and commission | 55,706 |
|
| 51,799 |
|
| 42,982 |
|
| 3,907 |
|
| 7.5 |
|
| 8,817 |
|
| 20.5 |
| | Net transfers to separate accounts | 186,015 |
|
| 134,980 |
|
| 107,721 |
|
| 51,035 |
|
| 37.8 |
|
| 27,259 |
|
| 25.3 |
| | Total benefits and other expenses | 478,190 |
|
| 425,105 |
|
| 354,232 |
|
| 53,085 |
|
| 12.5 |
|
| 70,873 |
|
| 20.0 |
| | Pretax income (loss) | 30,961 |
|
| 34,537 |
|
| 42,774 |
|
| (3,576) |
|
| (10.4) |
|
| (8,237) |
|
| (19.3) |
| | Income tax expense (benefit) | 1,465 |
|
| (12,727) |
|
| (309) |
|
| 14,192 |
|
| 111.5 | % |
| (12,418) |
|
| NM● | | Net realized capital (loss) gain | (41,117) |
|
| (70,099) |
|
| 1,593 |
|
| 28,982 |
|
| 41.3 |
|
| (71,692) |
|
| NM● | | Net income (loss) | $ | (11,621) |
|
| (22,835) |
|
| 44,676 |
|
| $ | 11,214 |
|
| 49.1 | % |
| $ | (67,511) |
|
| (151.1) | % | | Capital and Surplus: |
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|
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|
|
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|
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| | Change in unrealized capital (loss) gain | $ | (1,873) |
|
| (9,089) |
|
| 19,051 |
|
| $ | 7,216 |
|
| 79.4 | % |
| $ | (28,140) |
|
| (147.7) | % | | Other change in capital & surplus | 1,697 |
|
| (629) |
|
| (13,134) |
|
| 2,326 |
|
| 369.8 |
|
| 12,505 |
|
| 95.2 |
| | Net change in capital & surplus | $ | (11,797) |
|
| $ | (32,553) |
|
| $ | 50,593 |
|
| $ | 20,756 |
|
| 63.8 | % |
| $ | (83,146) |
|
| (164.3) | % | | *Includes premiums and annuity and supplementary contract considerations. | ●Not meaningful |
Selected Financial Data and Management's Discussion and Analysis
Page 8 of 15
Other
Segment Results of Operations
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| Year ended December 31, |
| Increase (decrease) and % change |
| Increase (decrease) and % change |
| 2020 |
| 2019 |
| 2018 |
| 2020 - 2019 |
| 2019 - 2018 | | Income: |
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| | Premium and annuity considerations | $ | 2,938 |
|
| 3,050 |
|
| 3,079 |
|
| $ | (112) |
|
| (3.7) | % |
| $ | (29) |
|
| (0.9) | % | | Net investment income | 3,927 |
|
| 3,053 |
|
| 2,622 |
|
| 874 |
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| 28.6 |
|
| 431 |
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| 16.4 |
| | Ceded reinsurance reserve and expense adjustments | 291 |
|
| 181 |
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| 201 |
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| 110 |
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| 60.8 |
|
| (20) |
|
| (10.0) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total income | 7,156 |
|
| 6,284 |
|
| 5,902 |
|
| 872 |
|
| 13.9 |
|
| 382 |
|
| 6.5 |
| | Benefits and other expenses: |
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| | Policyholder benefits and surrenders | 2,815 |
|
| 1,462 |
|
| 1,561 |
|
| 1,353 |
|
| 92.5 |
|
| (99) |
|
| (6.3) |
| | Change in aggregate reserves | 7,090 |
|
| 18,601 |
|
| 6,243 |
|
| (11,511) |
|
| (61.9) |
|
| 12,358 |
|
| 197.9 |
| | General and administrative and commission | 1,168 |
|
| 830 |
|
| 524 |
|
| 338 |
|
| 40.7 |
|
| 306 |
|
| 58.4 |
| | | | | | | | | | | | | | | | Total benefits and other expenses | 11,073 |
|
| 20,893 |
|
| 8,328 |
|
| (9,820) |
|
| (47.0) |
|
| 12,565 |
|
| 150.9 |
| | Pretax (loss) income | (3,917) |
|
| (14,609) |
|
| (2,426) |
|
| 9,820 |
|
| 67.2 |
|
| (12,183) |
|
| (502.2) |
| | Income tax expense (benefit) | (185) |
|
| 5,384 |
|
| 17 |
|
| (5,569) |
|
| (103.4) |
|
| 5,367 |
|
| NM● | | Net realized capital gain (loss) | (103) |
|
| 4 |
|
| 5,624 |
|
| (107) |
|
| NM● |
| (5,620) |
|
| (99.9) |
| | Net income (loss) | $ | (3,835) |
|
| (19,989) |
|
| 3,181 |
|
| $ | 16,154 |
|
| 80.8 | % |
| $ | (23,170) |
|
| (728.4) | % | | Capital and Surplus: |
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|
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| | Change in unrealized capital gain (loss) | $ | 28 |
|
| 152 |
|
| (641) |
|
| $ | (124) |
|
| (81.6) | % |
| $ | 793 |
|
| 123.7 | % | | Other change in capital & surplus | 237 |
|
| (20) |
|
| (2,445) |
|
| 257 |
|
| NM● |
| 2,425 |
|
| 99.2 |
| | Net change in capital & surplus | $ | (3,570) |
|
| (19,857) |
|
| 95 |
|
| $ | 16,287 |
|
| 82.0 |
|
| $ | (19,952) |
|
| NM● | ●Not meaningful
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Financial Condition
Investment Strategy
Our investment strategy focuses on diversification by asset class. We seek to achieve economic diversification, while reducing overall credit and liquidity risks. We attempt to mitigate these credit and liquidity risks by adhering to investment policies that provide portfolio diversification on an asset class, creditor, and industry basis, and by complying with investment limitations governed by state insurance laws and regulations, as applicable. We also consider all relevant objective information available in estimating the cash flows related to structured securities. We actively monitor and manage exposures, and determine whether any securities are impaired. The aggregate credit risk taken in the investment portfolio is influenced by our risk/return preferences, the economic and credit environment, and the ability to manage this risk through liability portfolio management. We also have an asset-liability management strategy to align cash flows and duration of the investment portfolio with contractholder liability cash flows and duration.
Selected Financial Data and Management's Discussion and Analysis
Page 9 of 15
The following table presents the investment portfolio at December 31:
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| 2020 |
| 2019 |
| Carrying Value |
| % of total |
| Carrying Value |
| % of total | | Bonds | $ | 572,795 |
|
| 97.0 | % |
| $ | 554,866 |
|
| 93.0 | % | | Cash and cash equivalents | 16,637 |
|
| 2.8 |
|
| 41,013 |
|
| 6.9 |
| | Policy loans | 143 |
|
| — |
|
| 329 |
|
| 0.1 |
| | Derivative assets | 341 |
|
| 0.1 |
|
| 283 |
|
| — |
| | Receivables for securities | 490 |
|
| 0.1 |
|
| 10 |
|
| 0.0 |
| | Total cash and invested assets | $ | 590,406 |
|
| 100.0 | % |
| $ | 596,501 |
|
| 100.0 | % |
Bonds
Refer to Note 5 of the audited Statutory Financial Statements for information regarding the nature of our portfolio of bonds. The tables below set forth the NAIC Securities Valuation Office ("SVO") quality ratings for the Companies bond portfolio at December 31, 2020 and 2019.
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| 2020 | | NAIC Classes | Fair Value |
| % of Total |
| Amortized Cost |
| % of Total | | 1 | $ | 401,626 |
|
| 63.4 | % |
| $ | 370,754 |
|
| 64.7 | % | | 2 | 216,459 |
|
| 34.2 |
|
| 188,559 |
|
| 32.9 |
| | Investment grade | 618,085 |
|
| 97.6 |
|
| 559,313 |
|
| 97.6 |
| | 3 | 14,442 |
|
| 2.3 |
|
| 12,955 |
|
| 2.3 |
| | 4 | 580 |
|
| 0.1 |
|
| 527 |
|
| 0.1 |
| | 5 | — |
|
| — |
|
| — |
|
| — |
| | 6 | — |
|
| — |
|
| — |
|
| — |
| | Below investment grade | 15,022 |
|
| 2.4 |
|
| 13,482 |
|
| 2.4 |
| | Total | $ | 633,107 |
|
| 100.0 | % |
| $ | 572,795 |
|
| 100.0 | % |
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| 2019 | | NAIC Classes | Fair Value |
| % of Total |
| Amortized Cost |
| % of Total | | 1 | $ | 377,821 |
|
| 63.8 | % |
| $ | 357,536 |
|
| 64.4 | % | | 2 | 211,076 |
|
| 35.6 |
|
| 194,083 |
|
| 35.0 |
| | Investment grade | 588,897 |
|
| 99.4 |
|
| 551,619 |
|
| 99.4 |
| | 3 | 2,748 |
|
| 0.5 |
|
| 2,717 |
|
| 0.5 |
| | 4 | 551 |
|
| 0.1 |
|
| 530 |
|
| 0.1 |
| | 5 | — |
|
| — |
|
| — |
|
| — |
| | 6 | — |
|
| — |
|
| — |
|
| — |
| | Below investment grade | 3,299 |
|
| 0.6 |
|
| 3,247 |
|
| 0.6 |
| | Total | $ | 592,196 |
|
| 100.0 | % |
| $ | 554,866 |
|
| 100.0 | % |
Selected Financial Data and Management's Discussion and Analysis
Page 10 of 15
Commercial Mortgage-backedand Asset-backed Securities
Commercial mortgage-backed securities (CMBS) represent pools of commercial mortgages that are broadly diversified across property types and geographical areas. The following table summarizes our exposure to CMBS holdings by NAIC classes and vintage year as of December 31:
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| 2020 | | NAIC Classes | % of total CMBS |
|
| Vintage | | 1 | $ | 90,119 |
|
| 100.0 | % |
| 2020 | $ | 2,472 |
|
| 2.7 | % | | 2 | — |
|
| — |
|
| 2019 | 3,782 |
|
| 4.2 |
| | 3 | — |
|
| — |
| 1 |
| 2018 | 8,107 |
|
| 9.0 |
| | 4 | — |
|
| — |
|
| 2017 | 11,611 |
|
| 12.9 |
| | 5 | — |
|
| — |
|
| 2016 and prior | 64,147 |
|
| 71.2 |
| | 6 | — |
|
| — |
|
|
| $ | 90,119 |
|
| 100.0 | % |
| $ | 90,119 |
|
| 100.0 | % |
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| 2019 | | NAIC Classes | % of total CMBS |
|
| Vintage | | 1 | $ | 90,511 |
|
| 100.0 | % |
| 2019 | $ | 1,542 |
|
| 1.7 | % | | 2 | — |
|
| — |
|
| 2018 | 8,121 |
|
| 9.0 |
| | 3 | — |
|
| — |
|
| 2017 | 11,629 |
|
| 12.8 |
| | 4 | — |
|
| — |
|
| 2016 | 19,100 |
|
| 21.1 |
| | 5 | — |
|
| — |
|
| 2015 and prior | 50,119 |
|
| 55.4 |
| | 6 | — |
|
| — |
|
|
| $ | 90,511 |
|
| 100.0 | % |
| $ | 90,511 |
|
| 100.0 | % |
|
|
|
|
|
Asset backed security (ABS) holdings consist primarily of aircraft leases, credit card receivables and other asset-backed securities that meet specific criteria, such as credit quality, insurance requirements, or limits on these types of investments.
The following table summarizes our exposure to other ABS holdings by NAIC classes and vintage year as of December 31:
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| 2020 | | NAIC Classes | % of total other ABS |
|
| Vintage | | 1 | $ | 142 |
|
| 100.0 | % |
| 2020 | $ | — |
|
| — | % | | 2 | — |
|
| — |
|
| 2019 | — |
|
| — |
| | 3 | — |
|
| — |
|
| 2018 | — |
|
| — |
| | 4 | — |
|
| — |
|
| 2017 | — |
|
| — |
| | 5 | — |
|
| — |
|
| 2016 and prior | $ | 142 |
|
| 100.0 | % | | 6 | — |
|
| — |
|
|
| $ | 142 |
|
| 100.0 | % |
| $ | 142 |
|
| 100.0 | % |
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|
| 2019 | | NAIC Classes | % of total other ABS |
|
| Vintage | | 1 | $ | 667 |
|
| 100.0 | % |
| 2019 | $ | — |
|
| — | % | | 2 | — |
|
| — |
|
| 2018 | — |
|
| — |
| | 3 | — |
|
| — |
|
| 2017 | — |
|
| — |
| | 4 | — |
|
| — |
|
| 2016 | — |
|
| — |
| | 5 | — |
|
| — |
|
| 2015 and prior | 667 |
|
| 100.0 |
| | 6 | — |
|
| — |
|
|
| $ | 667 |
|
| 100.0 | % |
| $ | 667 |
|
| 100.0 | % |
|
|
|
|
|
Selected Financial Data and Management's Discussion and Analysis
Page 11 of 15
Unrealized investment losses of bonds, for investment grade (NAIC classes 1-2) and below investment grade (NAIC classes 3-6) securities by duration are as follows at December 31:
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| 2020 |
| Investment Grade |
| % of Total |
| Below Investment Grade |
| % of Total | | Twelve months or less below fair value | $ | 352 |
|
| 100.0 | % |
| $ | — |
|
| — | % | | More than twelve months below fair value | — |
|
| — |
|
| — |
|
| — |
| | Total | $ | 352 |
|
| 100.0 | % |
| $ | — |
|
| — | % |
|
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| 2019 |
| Investment Grade |
| % of Total |
| Below Investment Grade |
| % of Total | | Twelve months or less below fair value | $ | 80 |
|
| 90.9 | % |
| $ | — |
|
| — | % | | More than twelve months below fair value | — |
|
| — |
|
| 8 |
|
| 9.1 |
| | Total | $ | 80 |
|
| 90.9 | % |
| $ | 8 |
|
| 9.1 | % |
See Note 5 of the audited Statutory Financial Statements for additional disclosures in regards to unrealized investment losses of bonds, December 31.
Other-than-temporary impairments, by market sector, for impairments included in the Statements of Operations, were as follows at December 31:
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| 2020 |
| 2019 |
| Impairment |
| No. of Securities |
| Impairment |
| No. of Securities | | Corporate securities | $ | 1,484 |
|
| 4 |
|
| $ | 48 |
|
| 1 |
|
Refer to Note 6 of the audited Statutory Financial Statements for information regarding the fair value and fair value hierarchy level of our financial instruments.
Liquidity and Capital Resources
Overview
The Company’s liquidity requirements are generally met through funds provided by investment income, receipt of insurance premiums, M&E fees and benefit rider income, and maturities and sales of investments.
The Company does not utilize the capital markets as a source of capital. Should the need for capital arise, the Company may utilize its parent, Allianz Life, as an alternative source of funding. The Company has a line of credit agreement with its parent, Allianz Life, to provide liquidity to the Company, as needed. The Company’s borrowing capacity under the agreement is limited to 5% of the Company’s general account admitted assets as of the preceding year end. As of December 31, 2020 and 2019, there are no amounts outstanding under the line of credit agreement. In addition, if capital infusions are deemed necessary, the Company obtains prior approval by the Department, as appropriate.
The primary uses of funds are policy benefits, commissions, other product-related acquisition costs, investment purchases, and operating expenses. The Company routinely reviews its sources and uses of funds in order to meet its ongoing obligations.
Financial Ratings and Strength
We received the following financial strength ratings as of December 31, 2020:
•AM Best A+ (Superior)
•S&P AA (Very Strong)
The financial strength ratings are influenced by many factors including the operating and financial performance, asset quality, liquidity, asset/liability management, overall portfolio mix, financial leverage, and exposure to risks.
Selected Financial Data and Management's Discussion and Analysis
Page 12 of 15
Cash Flows
The cash flows of the Company for the years ended December 31, 2020, 2019, and 2018 are summarized in the condensed table below:
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| Year ended December 31, |
|
| 2020 |
| 2019 |
| 2018 | | Net cash provided by operating activities |
| $ | 38,478 |
|
| 28,664 |
|
| 38,823 |
| | Net cash used in investing activities |
| (61,112) |
|
| (32,994) |
|
| (12,245) |
| | Net cash (used in) provided by financing and miscellaneous activities |
| (1,742) |
|
| (2,296) |
|
| 2,316 |
| | Net (decrease) increase in cash and cash equivalents |
| $ | (24,376) |
|
| (6,626) |
|
| 28,894 |
|
We have the funds necessary to meet capital requirements in the state of New York and to support our operations.
The increase in net cash provided by operating activities in 2020 compared to 2019 is primarily due to an increase in premiums and a decrease in income taxes paid. This was partially offset by an increase in surrenders and annuity benefits, an increase in commissions and lower net investment income. The decrease in net cash provided by operating activities in 2019 compared to 2018 is primarily due to higher commissions, an increase in surrenders and annuity benefits, and lower net investment income. This was partially offset by a decrease in income taxes paid and an increase in premiums.
The increase in cash flow used in investing activities in 2020 compared to 2019 was primarily driven by a net increase in bond purchases partially offset by derivative cash impacts. The increase in cash flow used in investing activities in 2019 compared to 2018 was primarily driven by derivative cash impacts and partially offset by the net increase in bond purchases.
The decrease in cash provided by financing activities in 2020 compared to 2019 is primarily due to the change in payable from parent mostly offset by other miscellaneous activities. The decrease in cash provided by financing activities in 2019 compared to 2018 is primarily due to the change in payable from parent.
Risk-Based Capital
See Note 15 of the audited Statutory Financial Statements for information regarding the Risk-Based Capital (RBC). The Company's RBC ratio significantly exceeds required minimum thresholds as of December 31, 2020 and 2019.
Statutory Surplus and Dividends
Statutory accounting practices prescribed or permitted by the Company’s state of domicile are directed toward insurer solvency and protection of policyholders. Additionally, account balances and future policy benefit reserves calculated for statutory reporting do not include provisions for withdrawals.The Company is required to meet minimum statutory capital and surplus requirements. The Company’s statutory capital and surplus as of December 31, 2020 and 2019 were in compliance with these requirements. The maximum amount of dividends that can be paid by New York insurance companies to stockholders without prior approval of the Department is subject to restrictions relating to statutory earned surplus, also known as unassigned funds. Unassigned funds are determined in accordance with the accounting procedures and practices governing preparation of the statutory annual statement. In accordance with New York statutes, the Company may declare and pay from its Unassigned surplus cash dividends of not more than the greater of 10% of its beginning-of-the year statutory surplus, or its net gain from operations of the insurer, not including realized gains, for the 12-month period ending the 31st day of the preceding year. Based on these restrictions, ordinary dividends of $15,597 can be paid in 2021 without the approval of the Department. The Company paid no dividends and received no capital contributions in 2020, 2019 or 2018.
Commitments
The following table summarizes certain contractual obligations and the Company’s expected commitments based on policyholder behavior assumptions by period as of December 31, 2020:
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| In 1 year |
| After 1 year |
| After 3 years |
| After |
| Total |
| or less |
| up to 3 years |
| up to 5 years |
| 5 Years | | Payments due |
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|
|
|
|
|
| | Policyholder liabilities | $ | 711,326 |
|
| 67,220 |
|
| 93,708 |
|
| 75,454 |
|
| 474,944 |
| | Operating leases | 282 |
|
| 75 |
|
| 150 |
|
| 56 |
|
| — |
| | Total payments due | $ | 711,608 |
|
| 67,295 |
|
| 93,858 |
|
| 75,510 |
|
| 474,944 |
|
Selected Financial Data and Management's Discussion and Analysis
Page 13 of 15
Policyholder liabilities include estimated claim and benefit, policy surrender and commission obligations offset by expected future deposits and premiums on in-force insurance policies and investment contracts in the Individual Annuities and Other segments. We have excluded the separate account liabilities as these obligations are legally insulated from general account obligations and will be fully funded by cash flows from separate account assets. The obligations have not been discounted to present value. Estimated claim and benefit obligations are based upon mortality, morbidity and lapse assumptions comparable to historical experience. The results are based on assuming market growth and interest crediting consistent with other valuation assumptions. In contrast to this table, the majority of our obligations are recorded on the Balance Sheets at current account values or other prescribed measurements that are not directly related to liability cash flows. These obligations do not incorporate an expectation on future market growth, interest crediting, or future deposits. Therefore, due to the significance of the assumptions used, the amounts presented could materially differ from actual results. Operating leases include non-cancelable obligations on certain office space and equipment.
Contingencies
The Company is or may become subject to claims and lawsuits that arise in the ordinary course of business. In the opinion of management, the ultimate resolution of any such known litigation will not have a material adverse effect on the Company’s financial position.
The Company is contingently liable for possible future assessments under regulatory requirements pertaining to insolvencies and impairments of unaffiliated insurance companies. Provision has been made for assessments currently received and assessments anticipated for known insolvencies.
The financial services industry, variable and fixed annuities, life insurance, distribution companies, and broker-dealers, is subject to close scrutiny by regulators, legislators, and the media.
Federal and state regulators, such as state insurance departments, state securities departments, the SEC, the Financial Industry Regulatory Authority, the Internal Revenue Service, and other regulatory bodies regularly make inquiries and conduct examinations or investigations concerning various selling practices, including suitability reviews, product exchanges, sales to seniors, and compliance with, among other things, insurance and securities law. The Company is subject to ongoing market conduct examinations and investigations by regulators, which may have a material adverse effect on the Company.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet transactions, arrangements or other relationships that management believes would be reasonably likely to have a material effect on the Company’s liquidity or the requirements for capital resources.
The Company utilizes exchange-traded futures to economically hedge certain product liabilities. Under this kind of transaction, the Company agrees to purchase a specified number of contracts and settles the variation margin with the counterparty on a daily basis in an amount equal to the change in the market value of the underlying contracts from the close of the previous trading day. The parties with whom the Company enters into the exchange-traded futures contracts are regulated futures commission’s merchants who are members of a trading exchange.
The Company is exposed to credit-related losses in the event of non-performance by counterparties under the terms of the futures contracts. The Company minimizes counterparty credit risk by establishing relationships only with counterparties rated BBB+ and higher. Given the credit ratings of the counterparties with which the Company transacts, the Company does not expect any counterparties to fail to meet their obligations. The Company has also executed Credit Support Annex (CSA) agreements with all active counterparties and requires a CSA from all new counterparties added to the Company’s counterparty pool. The CSA agreements further limit the Company’s counterparty credit risk by requiring the counterparty to post collateral to a segregated custodial account based on the net exposure to the Company.
As the Company’s futures transactions are executed through a regulated exchange, positions are marked-to-market and settled on a daily basis, and collateral is posted prior to execution of a transaction. The Company has minimal exposure to credit-related losses in the event of non-performance. The Company is required to post collateral for any futures, options and swap contracts that are executed. The amount of collateral required is determined by the exchange on which the contract is traded. For 2020 and 2019, the Company posted U.S. Treasuries to satisfy this collateral requirement.
Selected Financial Data and Management's Discussion and Analysis
Page 14 of 15
Item 11(j).
Quantitative and Qualitative Disclosures about Market Risk
Market risk is the risk of the loss of fair value resulting from adverse changes in market rates and prices, such as interest rates and equity prices. Market risk is directly influenced by the volatility and liquidity in the markets in which the related underlying financial instruments are traded. Reference Note 4 of the audited Statutory Financial Statements for additional details on how we mitigate our market exposure risk and our overall risk management practices.
Sensitivity Analysis
To assess the impact of changes in interest rate and equity markets, we perform sensitivity tests. Sensitivity tests measure the instantaneous impact of a single hypothetical interest rate or equity price change on our post-tax income, or fair value of an asset or liability, while holding all other rates or prices constant. To assess interest rate risk, we perform a sensitivity test which instantaneously shocks interest rates across all maturities by a hypothetical 50 basis points (bps). To assess equity risk, we perform a sensitivity test which instantaneously shocks all equity prices by a hypothetical 15%.
Interest Rate Risk
One means of assessing exposure to interest rate changes is to measure the potential change in the statutory value of an asset due to a hypothetical change in interest rates of 50 bps across all maturities. We noted that under this model, with all other factors remaining constant, a 50 bps increase in interest rates would cause our post-tax income to increase by $10,059 as of December 31, 2020.
We also examined the impact on after tax income due to a hypothetical decrease in interest rates of 50 bps across all maturities. Under this model, with all other factors being constant, we estimated that such a decline would cause our post-tax income to decrease by $13,632 as of December 31, 2020. Note that the impacts referenced reflect the net of economic hedge impact and does not include economic impact related to our fixed-income investment portfolio or economic changes in reserve calculations.
Equity Market Risk
One means of assessing exposure to changes in equity market prices is to estimate the potential changes in post-tax income from a hypothetical change in equity market prices of 15%. Under this model, with all other factors constant, we estimated that a decrease in equity market prices would cause our post-tax income to increase by $5,982, while an increase in equity market prices would cause our post-tax income to decrease by $5,601 based on our equity exposure as of December 31, 2020. Note that the impacts referenced reflect the net of economic hedge impact and does not include economic impact related to our fixed-income investment portfolio or economic changes in reserve calculations.
Selected Financial Data and Management's Discussion and Analysis
Page 15 of 15
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Statutory Financial Statements
December 31, 2020 and 2019
(With Report of Independent Auditors Thereon)
Report of Independent Auditors
To the Board of Directors of Allianz Life Insurance Company of New York:
We have audited the accompanying statutory financial statements of Allianz Life Insurance Company of New York, which comprise the statutory statements of admitted assets, liabilities, and capital and surplus as of December 31, 2020 and 2019, and the related statutory statements of operations, capital and surplus, and of cash flow for the years then ended.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with the accounting practices prescribed or permitted by the New York State Department of Financial Services. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles
As described in Note 2 to the financial statements, the financial statements are prepared by the Company on the basis of the accounting practices prescribed or permitted by the New York State Department of Financial Services, which is a basis of accounting other than accounting principles generally accepted in the United States of America.
The effects on the financial statements of the variances between the statutory basis of accounting described in Note 2 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material.
Adverse Opinion on U.S. Generally Accepted Accounting Principles
In our opinion, because of the significance of the matter discussed in the “Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles” paragraph, the financial statements referred to above do not present fairly, in accordance
with accounting principles generally accepted in the United States of America, the financial position of the Company as of December 31, 2020 and 2019, or the results of its operations or its cash flows for the years then ended.
Opinion on Statutory Basis of Accounting
In our opinion, the financial statements referred to above present fairly, in all material respects, the admitted assets, liabilities and surplus of the Company as of December 31, 2020 and 2019, 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 New York State Department of Financial Servicesdescribed in Note 2.
/s/ PricewaterhouseCoopers LLP
Minneapolis, MN
April 2, 2021
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus
December 31, 2020 and 2019
(Dollars in thousands, except share data)
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| | Admitted Assets |
| 2020 |
| 2019 | | Cash and invested assets: |
|
|
|
| | Bonds |
| $ | 572,795 |
|
| 554,866 |
| | Cash and cash equivalents |
| 16,637 |
|
| 41,013 |
| | Policy loans |
| 143 |
|
| 329 |
| | Derivative assets |
| 341 |
|
| 283 |
| | Receivables for securities |
| 490 |
|
| 10 |
| | Total cash and invested assets |
| 590,406 |
|
| 596,501 |
| | Investment income due and accrued |
| 4,744 |
|
| 4,921 |
| | | | | | | | | | | | | | | | | | | | | | Deferred tax asset, net |
| 6,487 |
|
| 4,307 |
| | Current federal and foreign income tax recoverable |
| — |
|
| 7,390 |
| | Other assets |
| 2,117 |
|
| 1,225 |
| | Admitted assets, exclusive of separate account assets |
| 603,754 |
|
| 614,344 |
| | Separate account assets |
| 3,773,866 |
|
| 3,232,062 |
| | Total admitted assets |
| $ | 4,377,620 |
|
| 3,846,406 |
|
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus
December 31, 2020 and 2019
(Dollars in thousands, except share data)
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|
|
| | Liabilities and Capital and Surplus | 2020 |
| 2019 | | Policyholder liabilities: |
|
|
|
| | Life policies and annuity contracts |
| $ | 413,759 |
|
| 419,693 |
| | Accident and health policies |
| 70,999 |
|
| 63,589 |
| | Deposit-type contracts |
| 4,956 |
|
| 3,604 |
| | Life policy and contract claims |
| 23 |
|
| 27 |
| | Accident and health policy and contract claims |
| 274 |
|
| 194 |
| | Total policyholder liabilities |
| 490,011 |
|
| 487,107 |
| | General expenses due and accrued |
| 761 |
|
| 485 |
| | Due from separate accounts |
| (60,293) |
|
| (56,933) |
| | Payable to parent and affiliates |
| 3,902 |
|
| 3,384 |
| | Current income taxes |
| 1,978 |
|
| — |
| | Asset valuation reserve |
| 7,496 |
|
| 5,601 |
| | Derivative liabilities |
| — |
|
| — |
| | Other liabilities |
| 3,930 |
|
| 3,364 |
| | Liabilities, exclusive of separate account liabilities |
| 447,785 |
|
| 443,008 |
| | Separate account liabilities |
| 3,773,866 |
|
| 3,232,062 |
| | Total liabilities |
| 4,221,651 |
|
| 3,675,070 |
| | Capital and surplus: |
|
|
|
| | Common stock, $10 par value. Authorized, issued, and outstanding 200,000 shares at December 31, 2020 and 2019 |
| 2,000 |
|
| 2,000 |
| | Additional paid-in capital |
| 72,500 |
|
| 72,500 |
| | Unassigned surplus |
| 81,469 |
|
| 96,836 |
| | Total capital and surplus |
| 155,969 |
|
| 171,336 |
| | Total liabilities and capital and surplus |
| $ | 4,377,620 |
|
| 3,846,406 |
|
|
|
|
|
| | See accompanying notes to statutory financial statements. |
|
|
|
|
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Statutory Statements of Operations
Years ended December 31, 2020, 2019, and 2018
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| 2019 |
| 2018 | | Income: |
|
|
|
|
|
| | Premiums and annuity considerations |
| $ | 428,499 |
|
| 375,015 |
|
| 301,715 |
| | Consideration for supplementary contracts |
| 3,445 |
|
| 1,904 |
|
| 5,117 |
| | Net investment income |
| 18,028 |
|
| 19,866 |
|
| 23,273 |
| | Commissions and expense allowances on reinsurance ceded |
| 291 |
|
| 181 |
|
| 201 |
| | Fees from separate accounts |
| 66,045 |
|
| 68,960 |
|
| 72,602 |
| | | | | | | | | Total income |
| 516,308 |
|
| 465,926 |
|
| 402,908 |
| | Benefits and other expenses: |
|
|
|
|
|
| | Policyholder benefits |
| 34,640 |
|
| 33,083 |
|
| 26,024 |
| | Surrenders |
| 209,892 |
|
| 222,802 |
|
| 220,688 |
| | Change in aggregate reserves and deposit funds |
| 1,842 |
|
| 2,503 |
|
| (35,379) |
| | Commissions and other agent compensation |
| 31,709 |
|
| 28,312 |
|
| 24,543 |
| | General and administrative expenses |
| 25,166 |
|
| 24,318 |
|
| 18,963 |
| | Net transfers to separate accounts |
| 186,015 |
|
| 134,980 |
|
| 107,721 |
| | Total benefits and other expenses |
| 489,264 |
|
| 445,998 |
|
| 362,560 |
| | Income from operations before income taxes and net realized capital (loss) gain |
| 27,044 |
|
| 19,928 |
|
| 40,348 |
| | Income tax expense (benefit) |
| 1,280 |
|
| (7,343) |
|
| (292) |
| Net income from operations before net realized capital (loss) gain |
| 25,764 |
|
| 27,271 |
|
| 40,640 |
| | Net realized capital (loss) gain, net of taxes and interest maintenance reserve |
| (41,220) |
|
| (70,095) |
|
| 7,217 |
| | Net (loss) income |
| $ | (15,456) |
|
| (42,824) |
|
| 47,857 |
|
|
|
|
|
|
|
| | See accompanying notes to statutory financial statements. |
|
|
|
|
|
|
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Statutory Statements of Capital and Surplus
Years ended December 31, 2020, 2019, and 2018
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| 2019 |
| 2018 | | Capital and surplus at beginning of year |
| $ | 171,336 |
|
| 223,746 |
|
| 173,058 |
| | Change in accounting principle, net of tax (Note 3) |
| — |
|
| — |
|
| 3,191 |
| | | | | | | | | Adjusted balance at beginning of year |
| 171,336 |
|
| 223,746 |
|
| 176,249 |
| | Net (loss) income |
| (15,456) |
|
| (42,824) |
|
| 47,857 |
| | Change in unrealized capital (loss) gain |
| (1,845) |
|
| (8,937) |
|
| 18,410 |
| | Change in net deferred income tax |
| 5,397 |
|
| 3,356 |
|
| 332 |
| | Change in nonadmitted assets |
| (1,698) |
|
| (2,712) |
|
| (18,198) |
| | Other changes in capital and surplus |
| (1,765) |
|
| (1,293) |
|
| (904) |
| | Capital and surplus at end of year |
| $ | 155,969 |
|
| 171,336 |
|
| 223,746 |
|
|
|
|
|
|
|
| | See accompanying notes to statutory financial statements. |
|
|
|
|
|
|
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Statutory Statements of Cash Flow
Years ended December 31, 2020, 2019, and 2018
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| 2019 |
| 2018 | | Cash flows from operating activities: |
|
|
|
|
|
| | Revenues: |
|
|
|
|
|
| | Premiums and annuity considerations, net |
| $ | 432,042 |
|
| 376,831 |
|
| 306,827 |
| | Net investment income |
| 21,039 |
|
| 22,640 |
|
| 26,144 |
| | Other income |
| 66,336 |
|
| 69,139 |
|
| 72,805 |
| | Total cash provided by operating activities |
| 519,417 |
|
| 468,610 |
|
| 405,776 |
| | Benefits and expenses paid: |
|
|
|
|
|
| | Benefit and loss-related payments |
| 242,416 |
|
| 254,810 |
|
| 245,902 |
| | Commissions, expenses paid, and aggregate write-ins for deductions |
| 56,583 |
|
| 52,455 |
|
| 42,993 |
| | Net transfers to separate accounts |
| 189,376 |
|
| 131,928 |
|
| 72,777 |
| | Income tax (benefit received) paid , net |
| (7,436) |
|
| 753 |
|
| 5,281 |
| | Total cash used in operating activities |
| 480,939 |
|
| 439,946 |
|
| 366,953 |
| | Net cash provided by operating activities |
| 38,478 |
|
| 28,664 |
|
| 38,823 |
| | Cash flows from investing activities: |
|
|
|
|
|
| | Proceeds from investments sold, matured, or repaid: |
|
|
|
|
|
| | Bonds |
| 152,052 |
|
| 149,505 |
|
| 119,948 |
| | | | | | | | | Miscellaneous proceeds |
| 374 |
|
| 1,006 |
|
| 758 |
| | Total cash provided by investing activities |
| 152,426 |
|
| 150,511 |
|
| 120,706 |
| | Cost of investments acquired: |
|
|
|
|
|
| | Bonds |
| 171,141 |
|
| 100,701 |
|
| 123,799 |
| | | | | | | | | Derivatives |
| 42,397 |
|
| 82,804 |
|
| 9,152 |
| | | | | | | | | Total cash used in investing activities |
| 213,538 |
|
| 183,505 |
|
| 132,951 |
| | Net cash used in investing activities |
| (61,112) |
|
| (32,994) |
|
| (12,245) |
| | Cash flows from financing and miscellaneous activities: |
|
|
|
|
|
| | Change in payable to parent and affiliates |
| 518 |
|
| (1,308) |
|
| 1,895 |
| | Other |
| (2,260) |
|
| (988) |
|
| 421 |
| | Net cash (used in) provided by financing and miscellaneous activities |
| (1,742) |
|
| (2,296) |
|
| 2,316 |
| | Net (decrease) increase in cash and cash equivalents |
| (24,376) |
|
| (6,626) |
|
| 28,894 |
| | Cash and cash equivalents: |
|
|
|
|
|
| | Beginning of year |
| 41,013 |
|
| 47,639 |
|
| 18,745 |
| | End of year |
| $ | 16,637 |
|
| 41,013 |
|
| 47,639 |
|
|
|
|
|
|
|
| | See accompanying notes to statutory financial statements. |
|
|
|
|
|
|
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
(1)Organization and Nature of Operations
Allianz Life Insurance Company of New York (the Company) is a wholly-owned subsidiary of Allianz Life Insurance Company of North America (Allianz Life), which is a wholly-owned subsidiary of Allianz of America, Inc. (AZOA). AZOA is a wholly-owned subsidiary of Allianz Europe, B.V., which is a wholly-owned subsidiary of Allianz SE. Allianz SE is a European company registered in Munich, Germany, and is the Company's ultimate parent.
The Company is a life insurance company licensed to sell annuity, group and individual life, individual long-term care (LTC), and group accident and health policies in six states and the District of Columbia. Based on statutory net premium written, the Company's business is predominately annuity. The annuity business consists of variable-indexed and variable annuities. The life business includes individual life and consists entirely of term life policies. Accident and health business consists principally of LTC insurance. The Company has discontinued selling fixed annuity and LTC products. The Company's primary distribution channel is through broker-dealers.
After evaluating the Company’s ability to continue as a going concern, management is not aware of any conditions or events which raise substantial doubts concerning the Company’s ability to continue as a going concern as of the date of filing these Statutory Financial Statements.
(2) Summary of Significant Accounting Policies
(a)Basis of Presentation
The Statutory Financial Statements have been prepared in accordance with accounting practices prescribed or permitted by the New York State Department of Financial Services (the Department). The Department recognizes statutory accounting practices prescribed or permitted by the state of New York for determining and reporting the financial condition and results of operations of an insurance company and its solvency under New York insurance law. The state of New York has adopted the National Association of Insurance Commissioners (NAIC) Accounting Practices and Procedures Manual as its prescribed basis of statutory accounting principles (SAP). The state of New York has also adopted certain prescribed accounting practices that differ from those found in NAIC SAP. The Company has no material statutory accounting practices that differ from those of the Department or NAIC SAP. These practices differ in some respects from accounting principles generally accepted in the United States of America (U.S. GAAP). The effects of these differences, while not quantified, are presumed to be material to the Statutory Financial Statements. The more significant of these differences are as follows:
(1) Acquisition costs, such as commissions and other costs incurred in connection with acquiring new and renewal business, are charged to current operations as incurred. Under U.S. GAAP, acquisition costs that are directly related to the successful acquisition of insurance contracts are capitalized and charged to operations as the corresponding revenues or future profits are recognized.
(2) Aggregate reserves for life policies and annuity contracts, excluding variable annuities, are based on statutory mortality and interest assumptions without consideration for lapses or withdrawals. Under U.S. GAAP, aggregate reserves consider lapses and withdrawals.
(3) Ceded reinsurance recoverable are netted against their related reserves within Policyholder liabilities, Life policies and annuity contracts and Life policy and contract claims, on the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus. Under U.S. GAAP, these ceded reserves are presented on a gross basis as an asset.
(4) Bonds are carried at values prescribed by the NAIC, generally amortized cost, except for those with an NAIC rating of 6, which are reported at the lower of amortized cost or fair value. Under U.S. GAAP, bonds classified as “available-for-sale” are carried at fair value, with unrealized gains and losses recorded in stockholder’s equity.
(5) Changes in deferred income taxes are recorded directly to Unassigned surplus. Under U.S. GAAP, these items are recorded as an item of income tax benefit or expense in operations. Moreover, under NAIC SAP, a valuation allowance may be recorded against the deferred tax asset (DTA) and admittance
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
testing may result in an additional charge to capital and surplus for nonadmitted portions of DTAs. Under U.S. GAAP, a valuation allowance may be recorded against the DTA and reflected as an expense.
(6) The Company is required to establish an asset valuation reserve (AVR) liability and an interest maintenance reserve (IMR) liability. The AVR provides for a standardized statutory investment valuation reserve for certain invested assets. Changes in this reserve are recorded as direct charges or credits to Unassigned surplus. The IMR is designed to defer net realized capital gains and losses resulting from changes in the level of prevailing market interest rates and amortize them into income within the Statutory Statements of Operations over the remaining life of the investment sold. The IMR represents the unamortized portion of applicable investment gains and losses as of the balance sheet date. There is no such concept under U.S. GAAP.
(7) Certain assets designated as “nonadmitted assets” are not recognized and are charged directly to Unassigned surplus within the Statutory Statements of Capital and Surplus. These include, but are not limited to, furniture and fixtures, prepaid expenses, receivables outstanding greater than 90 days, negative IMR, and portions of DTAs. There is no such concept under U.S. GAAP.
(8) A provision is made for amounts ceded to unauthorized reinsurers in excess of collateral in the form of a trust or letter of credit through a direct charge to Unassigned surplus within the Statutory Statements of Capital and Surplus. There is no such requirement under U.S. GAAP.
(9) Revenues for universal life policies and annuity contracts, excluding deposit-type contracts, are recognized as revenue when received within the Statutory Statements of Operations. Under U.S. GAAP, policy and contract fees charged for the cost of insurance, policy administrative charges, amortization of policy initiation fees, and surrender contract charges are recorded as revenues when earned.
(10) Benefits for universal life policies and annuity contracts within the Statutory Statements of Operations, excluding deposit-type contracts, consist of payments made to policyholders. Under U.S. GAAP, benefits represent interest credited, and claims and benefits incurred in excess of the policyholder’s contract balance.
(11) Changes in the fair value of derivatives are recorded as direct adjustments to Unassigned surplus as a component of Change in unrealized capital gains (losses) within the Statutory Statements of Capital and Surplus. Under U.S. GAAP, changes in the fair value of derivatives are recorded in derivative income (loss) as part of operating income.
(12) Commissions allowed by reinsurers on business ceded are reported as income when received within the Statutory Statements of Operations. Under U.S. GAAP, such commissions are deferred and amortized as a component of deferred acquisition costs to the extent recoverable.
(13) The Statutory Financial Statements do not include a statement of comprehensive income as required under U.S. GAAP.
(14) The Statutory Statements of Cash Flow do not classify cash flows consistent with U.S. GAAP and a reconciliation of net income to net cash provided from operating activities is not provided.
(15) The calculation of reserves and transfers in the separate account statement requires the use of a Commissioners Annuity Reserve Valuation Method (CARVM) allowance on annuities for NAIC SAP. There is no such requirement under U.S. GAAP.
(16) Sales inducements and premium bonuses are included in Life policies and annuity contracts in the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus, and are charged to current operations as incurred. Under U.S. GAAP, deferred sales inducements and premium bonuses are similarly reserved; however, the costs are capitalized as assets and charged to operations as future profits are recognized in a manner similar to acquisition costs.
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
(17) Negative cash balances are presented as a negative asset within the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus. These balances are presented as a liability under U.S. GAAP.
(18) Embedded derivatives are not separated from the host contract and accounted for separately as a derivative instrument. Under U.S. GAAP, entities must separate the embedded derivative from the host contracts and separately account for those embedded derivatives at fair value.
(19) For variable-indexed annuities, the Department requires the Company to maintain a separate asset portfolio to back related reserves. These assets and liabilities are required to be included as part of the Separate account assets and Separate account liabilities presented on the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus. Under U.S. GAAP, there is no such requirement.
(b) Permitted and Prescribed Statutory Accounting Practices
The Company is required to file annual statements with insurance regulatory authorities, which are prepared on an accounting basis permitted or prescribed by such authorities. Prescribed statutory accounting practices include state laws, regulations, and general administrative rules, as well as a variety of publications of the NAIC. Permitted statutory accounting practices encompass all accounting practices that are not prescribed; such practices differ from state to state, may differ from company to company within a state, and may change in the future. The Company has no permitted or prescribed practices that differ from NAIC SAP that had an impact on net income or surplus as of December 31, 2020, 2019, and 2018.
(c) Use of Estimates
The preparation of Statutory Financial Statements in conformity with NAIC SAP requires management to make certain estimates and assumptions that affect reported amounts of admitted assets and liabilities, including reporting or disclosure of contingent assets and liabilities as of December 31, 2020 and 2019, and the reported amounts of revenues and expenses during the reporting period. Future events, including changes in mortality, morbidity, interest rates, capital markets, and asset valuations could cause actual results to differ from the estimates used within the Statutory Financial Statements. Such changes in estimates are recorded in the period they are determined.
(d) Premiums and Annuity Considerations
Life premiums are recognized as income over the premium paying period of the related policies. Nondeposit-type annuity considerations are recognized as revenue when received. Accident and health premiums are earned ratably over the terms of the related insurance and reinsurance contracts or policies.
(e) Aggregate Reserves for Life Policies and Annuity Contracts
Reserves are principally calculated as the minimum reserves permitted by the state where the contract is issued for the year in which the contract is issued.
For the Company’s fixed annuity product lines, reserves are calculated using CARVM. The Company uses both issue year for fixed-indexed and change in fund basis for deferred fixed-interest annuities for the calculation method, on a continuous basis, using the maximum allowable interest rate. Deferred fixed-indexed and fixed-interest annuities only have a single-tier structure, which may include bonuses.
For the Company’s variable and variable-indexed annuity product lines, reserves are calculated using NY Regulations 213, for guaranteed benefits with adequacy confirmed using stochastic scenario testing. Variable deferred annuities include a wide range of guaranteed minimum death benefits and living benefits (income, accumulation, and withdrawal).
Aggregate reserves for life insurance policies are principally calculated using the Commissioners Reserve Valuation Method (CRVM). Additional reserves are held for supplemental benefits and for contracts with secondary guarantees, consistent with prescribed regulations and actuarial guidelines.
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
The Company performs an annual asset adequacy analysis as required by regulation covering substantially all of its reserves. These tests are not only performed under the required interest rate scenarios, but also under additional stochastically generated interest and equity growth scenarios. Sensitivity tests, including policy lapse, annuitization, maintenance expenses, and investment return, are performed to evaluate potential insufficiencies in reserve adequacy. The results of these tests and analysis resulted in additional adequacy reserves recorded of $13,000 and $0 at December 31, 2020 and 2019, respectively. For the universal life business, the Department’s Regulation 147 – Valuation of Life Insurance Reserves stand-alone asset adequacy analysis was performed, which resulted in establishing additional reserves of $100 as of December 31, 2020 and 2019, respectively.
(f) Aggregate Reserves for Accident and Health Policies
For accident and health business, reserves consist of active life reserves (mainly reserves for unearned premiums and reserves for contingent benefits on individual LTC business) and claim reserves (the present value of amounts not yet due). Claim reserves represent incurred but unpaid claims under group policies. For the LTC business, the Department’s Regulation 56 – Minimum Reserves for Individual Accident and Health Insurance Policies stand‑alone asset adequacy analysis was performed through a gross premium valuation. The testing under the “sound value” requirements resulted in establishing additional reserves of $26,573 and $26,948 as of December 31, 2020 and 2019, respectively.
(g) Deposit-type Contracts
Deposit-type contracts represent liabilities to policyholders in a payout status, who have chosen a fixed payout option without life contingencies. The premiums and claims related to deposit-type contracts are not reflected in the Statutory Statements of Operations as they do not have insurance risk. The Company accounts for the contract as a deposit-type contract in the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus.
(h)Policy and Contract Claims
Policy and contract claims include the liability for claims reported but not yet paid, claims incurred but not yet reported (IBNR), and claim settlement expenses on the Company’s accident and health business. Actuarial reserve development methods are generally used in the determination of IBNR liabilities. In cases of limited experience or lack of credible claims data, loss ratios are used to determine an appropriate IBNR liability. Claim and IBNR liabilities of a short-term nature are not discounted, but those claim liabilities resulting from disability income or LTC benefits include interest and mortality discounting.
(i) Reinsurance
The Company cedes business to other insurers. Reinsurance premium and benefits paid or provided are accounted for in a manner consistent with the basis used in accounting for original policies issued and the terms of the reinsurance contracts. Amounts recoverable from reinsurers represent account balances and unpaid claims covered under reinsurance contracts. Amounts paid or deemed to have been paid for claims covered by reinsurance contracts are recorded as a reinsurance recoverable and are included in Other assets on the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus.
(j) Investments
Investment values are determined in accordance with methods prescribed by the NAIC.
Bonds
The Securities Valuation Office (SVO) of the NAIC evaluates the credit quality of the Company’s bond investments. Bonds rated at “1” (highest quality), “2” (high quality), “3” (medium quality), “4” (low quality), or “5” (lower quality) are reported at cost adjusted for the amortization of premiums, accretion of discounts, and any impairment. Bonds rated at “6” (lowest quality) are carried at the lower of amortized cost or fair value with any adjustments to fair value recorded to Unassigned surplus within the Statutory Statements of Capital and Surplus.
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
In accordance with its investment policy, the Company invests primarily in high-grade marketable securities. Dividends are accrued on the date declared and interest is accrued as earned. Premiums or discounts on bonds are amortized using the constant-yield method.
Loan-backed securities and structured securities are amortized using anticipated prepayments, in addition to other less significant factors. Prepayment assumptions for loan-backed and structured securities are obtained from various external sources or internal estimates. The Company believes these assumptions are consistent with those a market participant would use. The Company recognizes income using the modified scientific method based on prepayment assumptions and the estimated economic life of the securities. For structured securities, except impaired bonds, when actual prepayments differ significantly from anticipated prepayments, the effective yield is recalculated to reflect actual payments to date and anticipated future payments retrospectively. Any resulting adjustment is included in Net investment income on the Statutory Statements of Operations. For impaired bonds, when adjustments are made for anticipated prepayments and other expected changes in future cash flows, the effective yield is recalculated using the prospective method as required by Statement of Statutory Accounting Principles (SSAP) No. 43R – Loan Backed and Structured Securities (SSAP No. 43R).
Hybrid securities are investments structured to have characteristics of both stocks and bonds. The Company records these securities within Bonds on the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus.
Gross realized gains and losses are computed based on the average amortized cost of all lots held for a particular CUSIP.
The fair value of bonds is obtained from third-party pricing sources whenever possible. Management completes its own independent price verification (IPV) process, which ensures security pricing is obtained from a third-party source other than the sources used by the Company's internal and external investment managers. The IPV process supports the reasonableness of price overrides and challenges by the internal and external investment managers and reviews pricing for appropriateness. Results of the IPV process are reviewed by the Company’s Pricing Committee.
Allianz Life reviews its entire combined investment portfolio, including the investment portfolios of the Company and all other subsidiaries, in aggregate each quarter to determine if declines in fair value are other than temporary.
For bonds for which the fair value is less than amortized cost, the Company evaluates whether a credit loss exists by considering primarily the following factors: (a) the length of time and extent to which the fair value has been less than the amortized cost of the security; (b) changes in the financial condition, credit rating, and near-term prospects of the issuer; (c) whether the issuer is current on contractually obligated interest and principal payments; (d) changes in the financial condition of the security’s underlying collateral, if any; and (e) the payment structure of the security. For loan-backed securities, the Company must allocate other-than-temporary impairments (OTTI) between interest and noninterest-related declines in fair value. Interest-related impairments are considered other than temporary when the Company has the intent to sell the investment prior to recovery of the cost of the investment. The Company maintains a prohibited disposal list that restricts the ability of the investment managers to sell securities in a significant unrealized loss position and requires formal attestations from investment managers regarding their lack of intent to sell certain securities.
Impairments considered to be other-than-temporary are recorded as a reduction of the cost of the security, and a corresponding realized loss is recognized on the Statutory Statements of Operations in the period in which the impairment is determined. Recognition of the realized loss is subject to potential offset by AVR and IMR.
Cash and Cash Equivalents
Cash and cash equivalents may include cash on hand, demand deposits, money market funds, and highly liquid debt instruments purchased with an original maturity of three months or less. Due to the short-term nature of these investments, the carrying value is deemed to approximate fair value.
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
Policy Loans
Policy loans are supported by the underlying cash value of the policies. Policy loans are carried at unpaid principal balances plus accrued interest income on the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus. The unpaid principal balances are not in excess of the cash surrender values of the related policies.
Receivables for Securities
Receivables and payables for securities are carried at fair value on the trade date and represent a timing difference on securities that are traded at the balance sheet date but not settled until subsequent to the balance sheet date. Receivables and payables for securities are included in Receivables for securities and Other liabilities, respectively, on the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus.
(k) Derivatives
The Company utilizes derivatives within certain actively managed investment portfolios for hedging purposes.
Futures and Options Contracts
The Company provides benefits through certain annuity products which are linked to the fluctuation of various market indices, and certain variable annuity contracts that provide minimum guaranteed benefits. The Company has analyzed the characteristics of these benefits and has entered into over-the-counter (OTC) option contracts and exchange-traded futures contracts tied to an underlying index with similar characteristics with the objective to economically hedge these benefits. Management monitors in-force amounts as well as option and futures contract values to ensure satisfactory matching and to identify unsatisfactory mismatches. If actual persistency deviated, management would purchase or sell option and futures contracts as deemed appropriate or take other actions.
The OTC option contracts are reported at fair value in Derivative assets and Derivative liabilities on the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus. The fair value of the OTC options is derived internally and deemed by management to be reasonable via performing an IPV process. The process of deriving internal derivative prices requires the Company to calibrate Monte Carlo scenarios to actual market information. The calibrated scenarios are applied to derivative cash flow models to calculate fair value prices for the derivatives. Incremental gains and losses from expiring options are included in Net realized capital gain (loss) on the Statutory Statements of Operations. The liability for the related policyholder benefits is reported in Life policies and annuity contracts on the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus. The unrealized gain or loss on open OTC option contracts is recognized as a direct adjustment to Unassigned surplus within the Statutory Statements of Capital and Surplus. Any unrealized gains or losses on open OTC option contracts are recognized as realized when the contracts mature (see Note 5 for further discussion).
Futures contracts do not require an initial cash outlay, and the Company has agreed to daily net settlement based on movements of the representative index. Therefore, no asset or liability is recorded as of the end of the reporting period. A derivative asset or liability and an offsetting variation margin payable or receivable is recorded in Derivative assets or Derivative liabilities in the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus for the outstanding unpaid variation margin representing market movements on the last trading day of the year.
Gains and losses are not considered realized until the termination or expiration of the futures contract. Unrealized gains and losses on futures contracts are reflected in the Statutory Statements of Capital and Surplus in Unassigned surplus, within Change in unrealized capital gains (loss). Realized gains and losses on futures contracts are included in the Statutory Statements of Operations, Net realized capital gain (loss), net of taxes and interest maintenance reserve.
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
In 2018, NAIC SAP issued an update to SSAP No. 86 – Derivatives (SSAP No. 86) clarifying treatment of futures gains and losses, see Note 3 for further discussion.
Interest Rate Swaps and Total Return Swaps
The Company utilizes interest rate swaps (IRS) and total return swaps (TRS) also to economically hedge market risks embedded in certain annuities. IRS and TRS contracts are reported at fair value in Derivative assets or Derivative liabilities on the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus. The fair value of the IRS are derived using a third-party vendor software program and deemed by management to be reasonable. Centrally cleared IRS fair values are obtained from the exchange on which they are traded. The fair value of the TRS is based on counterparty pricing and deemed by management to be reasonable. Changes in unrealized gains and losses on the swaps are recorded as a direct adjustment to Unassigned surplus within the Statutory Statements of Capital and Surplus. Gains and losses on exchange cleared IRS are recorded as unrealized until the contracts mature or are disposed at which time they are recorded as realized, subject to offset by IMR.
In March 2018, the Company changed its hedging strategy for certain variable annuities, which resulted in the sale of its IRS portfolio. See Note 5(f) for further details on the sale. As such, the Company does not have any IRS accounted for under SSAP No. 108, Derivatives Hedging Variable Annuity Guarantees.
(l) Income Taxes
The Company files a consolidated federal income tax return with AZOA. The consolidated tax allocation agreement stipulates that each company participating in the return will bear its share of the tax liability pursuant to certain tax allocation elections under the Internal Revenue Code (IRC) and its related regulations and reimbursement will be in accordance with an intercompany tax reimbursement arrangement. The Company generally will be paid for the tax benefit of any of their tax attributes used by any member of the consolidated group.
The Company provides for federal income taxes based on amounts the Company believes it ultimately will owe. Inherent in the provision for federal income taxes are estimates regarding the deductibility of certain items and the realization of certain tax credits. In the event the ultimate deductibility of certain items or the realization of certain tax credits differs from estimates, the Company may be required to significantly change the provision for federal income taxes recorded in the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus. Any such change could significantly affect the amounts reported in the Statutory Statements of Operations. Management uses best estimates to establish reserves based on current facts and circumstances regarding tax exposure items where the ultimate deductibility is open to interpretation. Quarterly, management evaluates the appropriateness of such reserves based on any new developments specific to their fact patterns. Information considered includes results of completed tax examinations, Technical Advice Memorandums, and other rulings issued by the Internal Revenue Service or the tax courts.
The Company utilizes the asset and liability method of accounting for income taxes. DTAs and deferred tax liabilities (DTLs), net of the nonadmitted portion are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Gross DTAs and DTLs are measured using enacted tax rates and are considered for admitted tax asset status according to the admissibility test as set forth by the state of New York. Changes in DTAs and DTLs, including changes attributable to changes in tax rates, are recognized as a component of Unassigned surplus on the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus.
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
(m) Separate Accounts
Separate account assets and liabilities are primarily funds held for the exclusive benefit of variable and variable-indexed annuity contract holders for which investment income and investment gains and losses accrue directly to and the investment risk is borne by contract holders. Separate account assets are reported at fair value in accordance with SSAP No. 56 – Separate Accounts (SSAP No. 56), with the exception of certain bonds, cash, cash equivalents, and investment income due and accrued. Certain assets that are allocated to the index options for the Allianz Index Advantage New York Variable Annuity (VIA) are invested in bonds and cash equivalents and carried at amortized cost in accordance with the product filing requirements in the state of New York.
Amounts due from separate accounts primarily represent the difference between the surrender value of the contracts and the Separate account liability as disclosed on the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus. This receivable represents the surrender fee that would be paid to the Company upon the surrender of the policy or contract by the policyholder or contract holder as of December 31. Amounts charged to the contract holders for mortality and contract maintenance, and other administrative services fees are included in income within Fees from separate accounts on the Statutory Statements of Operations. These fees have been earned and assessed against contract holders on a daily or monthly basis throughout the contract period and are recognized as revenue when assessed and earned. Transfers to (from) separate accounts within the Statutory Statements of Operations primarily includes transfers for new premium and annuity considerations, benefit payments, surrender charge wear-off, realized and unrealized investment gains/losses, investment income, and other contractholder behavior.
(n)Receivables
Receivable balances approximate estimated fair values. This is based on pertinent information available to management as of year-end, including the financial condition and creditworthiness of the parties underlying the receivables. Any balances outstanding more than 90 days are nonadmitted on the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus.
(o) Reclassifications
Prior year balances have not been reclassified to conform to the current year presentation.
(3)Accounting Changes and Corrections of Errors
Accounting Changes
Variable-Indexed Annuity Basic Adjusted Reserve Calculation
In 2018, the Company changed its methodology used to calculate the Basic Adjusted Reserve for variable-indexed annuities to utilize the guaranteed cap instead of the projected index option. The prior period impacts of the methodology change were recorded in 2018 and resulted in a pre-tax decrease of $4,040 to Policyholder liabilities for Life policies and annuity contracts within the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus. The corresponding increase to surplus of $3,191 is recorded in Change in accounting principle, net of tax within the Statutory Statements of Capital and Surplus.
Recently Issued Accounting Standards – Adopted in 2020
In 2016, the NAIC adopted revisions to SSAP No. 51R, Life Contracts and SSAP No. 54, Individual and Group Accident and Health Contracts, Issue Paper No. 154, Implementation of Principles-Based Reserving. These revisions relate to the adoption of the Valuation Manual and provides for principles based reserving for Life and Heath contracts. The Valuation Manual is part of the Department Regulation 213. Final adoption of the First Amendment to Regulation 213 was published February 2020 and provides the following revisions: 1) VM-20, Requirements for Principle-Based Reserves for Life Products, is effective January 1, 2020. However, an insurer may request a one-year delay in adopting this standard. The Company has an agreement with the Department that it will adopt Regulation 213 for life products in 2021. 2) VM-21, Requirements for Principle-Based Reserves for Variable Annuities, applies to business issued on or after January 1, 2017. Under VM-21, during 2017, 2018, and 2019, the Company elected to
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
combine contracts subject to Actuarial Guideline 43 and VM-21 for purposes of calculating reserves. In 2019, the NAIC adopted revisions to both Actuarial Guideline 43 and VM-21, effective January 1, 2020. The implementation of the Regulation 213 revisions as of January 1, 2020 resulted in no change in reserves. The portion of the Standard reserve that was impacted with the implementation of Regulation 213 did not exceed the offsetting hedge component within the calculation after the changes, resulting in no impact to the reported reserve. The 2019 amendments to VM-21 allow an optional phase-in of the increase which the Company did not elect. 3) VM-22, Statutory Maximum Valuation Interest Rates for Income Annuities, VM-25, Health Insurance Reserves Minimum Requirements, and VM-26, Credit Life and Disability Reserve Requirements, are not applicable as the Company does not issue these contracts.
In August 2019, the NAIC adopted SSAP No. 22R, Leases. This revised standard is a substantive revision, reorganization, and clarification of SSAP 22. It adopts much of the language of US GAAP Accounting Standards Update (ASU) 2016-02, Leases, but retains operating lease accounting for Statutory accounting. It was effective January 1, 2020, with early adoption permitted. The Company adopted these revisions effective January 1, 2020. There was no impact on net income or surplus during the year ended December 31, 2020, as a result of adopting the revisions.
In March 2020, the NAIC adopted INT 20-01, Reference Rate Reform. The interpretation adopted the optional guidance outlined in ASU 2020-04, Reference Rate Reform, for a limited period of time to ease the potential burden on accounting for reference rate reform. The practical expedients outlined in the interpretation are for modifications solely related to reference rate reform and optionally suspends assessments for re-measuring a contract and de-designating a hedge relationship. This interpretation is effective on the date of adoption and expires on December 31, 2022. The Company adopted the optional guidance in this interpretation effective March 12, 2020. As of December 31, 2020, the Company has not made any modifications to financial assets or liabilities as a result of reference rate reform.
In April, May, June, and August 2020, the NAIC adopted and extended, the following interpretations (INT) in response to the COVID-19 pandemic:
•INT 2020-02, Extension of 90-Day Rule for the Impact of COVID-19. This INT extends a one-time optional extension of the nonadmission assessment guidance for premiums and similar receivables due from policyholders or agents. For receivables that were current prior to the beginning of the declaration of a state of emergency by the U.S. federal government on March 13, 2020 or originated on or after March 13, 2020, insurers may continue to admit assets greater than 90 days past due. This INT is applicable for the March 31, 2020, June 30, 2020, and September 30, 2020 financial statements and expired on December 30, 2020. This INT did not have a material impact to the Company.
•INT 2020-03, Troubled Debt Restructuring Due to COVID-19. This INT follows the interagency COVID-19 guidance issued by federal and state prudential banking regulators (and concurred by the FASB) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Specifically, a modification of a mortgage loan or bank loan terms do not result in troubled debt restructurings as long as the modification is in response to COVID-19, the borrower was current at the time of the modification, and the modification is short-term. In addition, insurers are not required to designate mortgage loans or bank loans with deferrals granted due to COVID-19 as past due or report them as nonaccrual loans. This INT was effective for the period beginning March 1, 2020 and originally expired on December 31, 2020. In January 2021, the provisions in this INT were extended updating the effective period to be the earlier of January 1, 2022 or the date that is 60 days after the date on which the national emergency declared by the President terminates. This INT did not have a material impact to the Company.
•INT 2020-04, Mortgage Loan Impairment Assessment Due to COVID-19. This INT defers the impairment assessment for bank loans, mortgage loans, and investments which predominantly hold underlying mortgage loans and are impacted by forbearance or modifications in response to COVID-19. This INT is applicable for the March 31, 2020, June 30, 2020, and September 30, 2020 financial statements and expired on December 30, 2020. This INT did not have a material impact to the Company.
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
•INT 2020-05, Investment Income Due and Accrued. This INT provides temporary relief guidance for assessing the collectability of interest income, admissibility relief of accrued investment income 90 days past due, and clarifies how interest income should be recognized during a payment holiday. This INT is applicable for the June 30, 2020, and September 30, 2020 financial statements and expired on December 30, 2020. This INT did not have did not have a material impact to the Company.
•INT 2020-06, Participation in the 2020 TALF Program. This INT provides guidance for reporting Term Asset-Backed Securities Lending Facility (TALF) loans for the duration of the 2020 TALF program. This INT did not impact the Company as the Company did not participate in this program.
•INT 2020-07, Troubled Debt Restructuring of Certain Debt Investments Due to COVID-19. This INT provides temporary guidance by allowing practical expedients when assessing whether modifications made to debt securities (under SSAP No. 26R and SSAP No. 43R) due to COVID-19 are insignificant. Specifically, the guidance proposes restructurings in response to COVID-19 are considered to be insignificant if the restructuring results in a 10% or less shortfall amount in the contractual amount due and does not extend the maturity of the investment by more than 3 years. This INT was effective for the period beginning March 1, 2020 and originally expired on December 31, 2020. In January 2021, the provisions in this INT were extended updating the effective period to be the earlier of January 1, 2022 or the date that is 60 days after the date on which the national emergency declared by the President terminates. This INT did not have a material impact to the Company.
•INT 2020-08, COVID-19 Premium Refunds, Rate Reductions and Policyholder Dividends. This INT provides guidance for returns or benefits to policyholders. This INT did not impact the Company.
These INTs have an immaterial effect on the financial statements as of December 31, 2020. The Company will continue to monitor these INTs and assess impacts until they are nullified.
In May 2020, the NAIC adopted revisions to SSAP No. 26R, Bonds, which provides clarifying guidance when assessing other than temporary impairments (OTTI) for debt instruments that have been previously modified pursuant to SSAP No. 36, Troubled Debt Restructuring, or SSAP No. 103R, Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. The revisions to SSAP No. 26R state subsequent OTTI assessments for debt instruments modified under SSAP No. 36 or SSAP No 103 will be based on the modified contractual terms and not revert back to the original acquisition terms. These revisions were effective May 20, 2020 and were subsequently adopted by the Company. There was no impact on net income or surplus during the year ended December 31, 2020, as a result of adopting the revisions.
In November 2020, the NAIC adopted revisions to SSAP No. 43R, Loan-Backed and Structured Securities. The revisions reflect the updated NAIC designation category for residential and commercial mortgage-backed securities that utilize the financial modeling guidance. The revisions were effective November 12, 2020 and was subsequently adopted by the Company. There was no impact on net income or surplus during the year ended December 31, 2020, as a result of adopting the revisions.
Recently Issued Accounting Standards – Adopted in 2019
Not applicable.
Recently Issued Accounting Standards – Adopted in 2018
In 2017, the NAIC adopted revisions to SSAP No. 86. These revisions clarify that variation margin changes should not be recognized as "settlement" until the derivative contract has terminated and instead should be recognized as an adjustment to the carrying value of the derivative contract as a separate asset or liability. The revisions are effective January 1, 2018 with prospective application. Upon adoption, the Company reflected a prospective change in variation margin for all futures contracts as unrealized until sale, maturity, or expiration, resulting in a pre-tax decrease of $7,969 to net income and no impact to surplus for the year ended December 31, 2018.
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
Corrections of Errors
The Company records correction of errors in accordance with SSAP No. 3 – Accounting Changes and Correction of Errors (SSAP No. 3). SSAP No. 3 prescribes that the correction of errors in previously issued Statutory Financial Statements will be reported as an adjustment to capital and surplus in the period the error is detected. These errors are shown within Correction of errors, net of tax, on the Statutory Statements of Capital and Surplus.
(4) Risk Disclosures
The following is a description of the significant risks facing the Company and how it attempts to mitigate those risks:
(a) Credit Risk
Credit risk is the risk that issuers of fixed-income securities, or other parties with whom the Company has transactions, such as reinsurers and derivative counterparties, default on their contractual obligations, resulting in unexpected credit losses.
The Company mitigates this risk by adhering to investment policies and limits that provide portfolio diversification on an asset class, asset quality, creditor, and geographical basis, and by complying with investment limitations from applicable state insurance laws and regulations. The Company considers all relevant objective information available in estimating the cash flows related to structured securities. The Company actively monitors and manages exposures, and determines whether any securities are impaired. The aggregate credit risk is influenced by management’s risk/return preferences, the economic and credit environment, and the ability to manage this risk through liability portfolio management.
For derivative counterparties, the Company mitigates credit risk by tracking and limiting exposure to each counterparty through limits that are reported regularly and, once breached, restricts further trades; establishing relationships with counterparties rated BBB+ and higher; and monitoring the credit default swaps (CDS) of each counterparty as an early warning signal to cease trading when credit default swap spreads imply severe impairment in credit quality.
The Company executes Credit Support Annexes (CSA) with all active and new counterparties which further limits credit risk by requiring counterparties to post collateral to a segregated account to cover any counterparty exposure. Additionally most transactions are cleared through a clearinghouse thereby transferring counterparty risk from the bank to the clearinghouse that tends to have stronger credit. This often leads to increased collateralization and lower counterparty risk for the Company.
(b) Credit Concentration Risk
Credit concentration risk is the risk of increased exposure to significant asset defaults (of a single security issuer); economic conditions (if business is concentrated in a certain industry sector or geographic area); or adverse regulatory or court decisions (if concentrated in a single jurisdiction) affecting credit.
The Company’s Finance Committee, responsible for asset/liability management (ALM) issues, recommends an investment policy to the Company’s Board of Directors (BOD) and approves the strategic asset allocation and accompanying investment mandates for an asset manager with respect to asset class. The investment policy and accompanying investment mandates specify asset allocation among major asset classes and the degree of asset manager flexibility for each asset class. The investment policy complies, at a minimum, with state statutes. Compliance with the policy is monitored by the Finance Committee who is responsible for implementing internal controls and procedures. Deviations from the policy are monitored and addressed. The Finance Committee and, subsequently, the BOD review the investment policy at least annually.
To further mitigate this risk, internal concentration limits based on credit rating and sector are established and are monitored regularly by Allianz Life on a consolidated basis. Any ultimate obligor group exceeding these limits is placed on a restricted list to prevent further purchases, and the excess exposure may be actively sold down to comply with concentration limit guidelines. Any exceptions require Chief Risk Officer approval and monitoring by the Risk Committee. Further, the Company performs a quarterly concentration risk calculation to ensure compliance with the State of New York basket clause.
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
(c) Liquidity Risk
Liquidity risk is the risk that unexpected timing or amounts of cash needed will require liquidation of assets in a market that will result in a realized loss or an inability to sell certain classes of assets such that an insurer will be unable to meet its obligations and contractual guarantees. Liquidity risk also includes the risk that in the event of a company liquidity crisis, refinancing is only possible at higher interest rates. Liquidity risk can be affected by the maturity of liabilities, the presence of withdrawal penalties, the breadth of funding sources, and terms of funding sources. It can also be affected by counterparty collateral triggers as well as whether anticipated liquidity sources, such as credit agreements, are cancelable.
The Company manages liquidity within four specific domains: (1) monitoring product development, product management, business operations, and the investment portfolio; (2) setting ALM strategies; (3) managing the cash requirements stemming from the Company’s derivative dynamic economic hedging activities; and (4) establishing a liquidity facility with Allianz Life to provide additional liquidity. The Company has established liquidity risk limits, which are approved by the Company’s Risk Committee, and the Company monitors its liquidity risk regularly.
(d) Interest Rate Risk
Interest rate risk is the risk that movements in interest rates or interest rate volatility will cause a decrease in the value of an insurer’s assets relative to the value of its liabilities and/or an unfavorable change in prepayment activity resulting in compressed interest margins.
The Company has an ALM strategy to align cash flows and duration of the investment portfolio with policyholder liability cash flows and duration. Allianz Life monitors the economic and accounting impacts of interest rate sensitivities on assets and liabilities on a consolidated basis regularly and on the Company's specific basis periodically.
(e) Equity Market Risk
Equity market risk is the risk that movements in equity prices or equity volatility will cause a decrease in the value of an insurer’s assets relative to the value of its liabilities.
Variable annuity products guarantee minimum payments regardless of market movements. The Company has adopted an economic hedging program to manage the equity risk of these products.
Allianz Life monitors the impacts of equity sensitivities on assets and liabilities on a consolidated basis regularly and on the Company’s specific basis periodically.
Basis risk is the risk that variable annuity hedge asset values change unexpectedly relative to the value of the underlying separate account funds of the variable annuity contracts. Basis risk may arise from the Company’s inability to directly hedge the underlying investment options of the variable annuity contracts. The Company regularly reviews and synchronizes fund mappings, product design features, hedge design, and manages funds line-up.
(f) Operational Risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes and systems, from human misbehavior or error, or from external events. Operational risk is comprised of the following seven risk categories: (1) external fraud; (2) internal fraud; (3) employment practices and workplace safety; (4) clients/third-party, products and business practices; (5) damage to physical assets; (6) business disruption and system failure; and (7) execution, delivery, and process management. Operational risk is comprehensively managed through a combination of core qualitative and quantitative activities.
The Operational Risk Management framework includes the following key activities: (1) an Operational Risk Capital Model covering all material types of operational risks, under which the Company quantifies and regularly monitors operational risk; (2) loss data capture to create transparency and gather information about losses that meet a designated threshold. Business owners are required to identify and resolve the root cause of
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
operational loss events; and (3) an integrated risk and control system, a bottom-up risk assessment process for significant operational risk scenarios, to proactively manage significant operational risk scenarios throughout the organization.
(g) Regulatory Change Risk
Regulatory change risk is the risk that regulatory changes and imposed regulation may materially impact the Company's business model, sales levels, company financials and ability to effectively comply with regulations.
The Company actively monitors all regulatory changes and participates in national and international discussions relating to legal, regulatory, and accounting changes. The Company maintains active membership with various professional and industry trade organizations. A formal process exists to review, analyze, and implement new legislation as it is enacted.
(h) Rating Agency Risk
Rating agency risk is the risk that rating agencies change their outlook or rating of the Company. The rating agencies generally utilize proprietary capital adequacy models in the process of establishing ratings for the Company. The Company is at risk of changes in these models and the impact that changes in the underlying business that it is engaged in can have on such models. To mitigate this risk, the Company maintains regular communications with the rating agencies and evaluates the impact of significant transactions on such capital adequacy models and considers the same in the design of transactions to minimize the adverse impact of this risk. Rating agency risk is also addressed in the TRA process and on an ad hoc basis as necessary.
(i) Mortality/Longevity Risk
Mortality/longevity risk is the risk that mortality experience is different than the life expectancy assumptions used by the Company to price its products.
The Company mitigates mortality risk primarily through reinsurance, whereby the Company cedes a significant portion of its mortality risk to third parties. The Company also manages mortality risk through the underwriting process. Both mortality and longevity risks are managed through the review of life expectancy assumptions and experience in conjunction with active product management.
(j) Lapse Risk
Lapse risk is the risk that actual lapse experience evolves differently than the assumptions used for pricing and valuation exercises leading to a significant loss in Company value and/or income.
The Company mitigates this risk by performing sensitivity analysis at the time of pricing to affect product design, adding Market Value Adjustments and surrender charges when appropriate, regular ALM analysis, and exercising management levers at issue, as well as post-issue as experience evolves. Policyholder experience is monitored regularly.
(k) Cyber Security Risk
Cyber security risk is the risk of losses due to external and/or internal attacks impacting the confidentiality, integrity, and/or availability of key systems, data, and processes reliant on digital technology. The Company has implemented preventative, detective, response, and recovery measures including firewalls, intrusion detection and prevention, advanced malware detection, spyware and anti-virus software, email protection, network and laptop encryption, web content filtering, web application firewalls, and regular scanning of all servers and network devices to identify vulnerabilities. Controls are implemented to prevent and review unauthorized access.
(l) Reinsurance Risk
Reinsurance risk is the risk that reinsurance companies default on their obligation where the Company has ceded a portion of its insurance risk. The Company uses reinsurance to limit its risk exposure to certain business lines and to enable better capital management.
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
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.
The Company mitigates this risk by requiring certain counterparties to meet thresholds related to the counterparty’s credit rating, exposure, or other factors. If the thresholds are not met by those counterparties, they are required to establish a trust or letter of credit backed by assets meeting certain quality criteria. All arrangements are regularly monitored to determine whether trusts or letters of credit are sufficient to support the ceded liabilities and that their terms are being met. Also, the Company reviews the financial standings and ratings of its reinsurance counterparties and monitors concentrations of credit risk to minimize its exposure to significant losses from reinsurer insolvencies regularly.
(5) Investments
(a) Bonds and Other Assets Receiving Bond Treatment
At December 31, the amortized cost, gross unrealized gains, gross unrealized losses, and fair values of investments are shown below:
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| 2020 |
|
| Amortized cost |
| Gross unrealized gains |
| Gross unrealized losses |
| Fair value | | Bonds: |
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|
|
|
| | U.S. government |
| $ | 100,155 |
|
| 2,304 |
|
| 352 |
|
| 102,107 |
| | States and political subdivisions |
| 7,010 |
|
| 1,299 |
|
| — |
|
| 8,309 |
| | | | | | | | | | | Corporate securities |
| 323,878 |
|
| 47,863 |
|
| — |
|
| 371,741 |
| | Mortgage-backed securities |
| 141,752 |
|
| 9,198 |
|
| — |
|
| 150,950 |
| | Total |
| $ | 572,795 |
|
| 60,664 |
|
| 352 |
|
| 633,107 |
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| 2019 |
|
| Amortized cost |
| Gross unrealized gains |
| Gross unrealized losses |
| Fair value | | Bonds: |
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|
|
|
|
| | U.S. government |
| $ | 70,170 |
|
| 432 |
|
| 77 |
|
| 70,525 |
| | States and political subdivisions |
| 7,092 |
|
| 686 |
|
| — |
|
| 7,778 |
| | | | | | | | | | | Corporate securities |
| 338,916 |
|
| 31,107 |
|
| 10 |
|
| 370,013 |
| | Mortgage-backed securities |
| 138,688 |
|
| 5,194 |
|
| 2 |
|
| 143,880 |
| | Total |
| $ | 554,866 |
|
| 37,419 |
|
| 89 |
|
| 592,196 |
|
At December 31, 2020 and 2019, the Company did not have NAIC-6 rated bonds.
At December 31, 2020 and 2019, the Company did not have any hybrid securities.
As of December 31, 2020 and 2019, investments with a statement value of $1,662 and $1,667, respectively were held on deposit as required by statutory regulations.
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
The amortized cost and fair value of bonds and other assets receiving bond treatment reported in the statutory Annual Statement Schedule D Part 1A at December 31, 2020, by contractual maturity, are shown below:
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| Amortized cost |
| Fair value | | Due in 1 year or less |
| $ | 37,018 |
|
| 37,348 |
| | Due after 1 year through 5 years |
| 172,214 |
|
| 182,074 |
| | Due after 5 years through 10 years |
| 104,596 |
|
| 114,851 |
| | Due after 10 years through 20 years |
| 83,318 |
|
| 105,447 |
| | Due after 20 years |
| 33,897 |
|
| 42,436 |
| | Loan-backed and other structured securities |
| 141,752 |
|
| 150,951 |
| | Total bonds and other assets receiving bond treatment |
| $ | 572,795 |
|
| 633,107 |
|
Expected maturities will differ from contractual maturities, because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Proceeds from sales of bonds includes sales, maturities, paydowns, and other redemptions of bonds and other assets receiving bond treatment. Proceeds from sales of bonds for the years ended December 31 are shown below:
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| 2020 |
| 2019 |
| 2018 | | Proceeds from sales |
| $ | 152,052 |
|
| 149,505 |
|
| 119,948 |
| | Gross gains |
| 1,883 |
|
| 1,314 |
|
| 299 |
| | Gross losses |
| 297 |
|
| 481 |
|
| 2,061 |
|
For the years ended December 31, 2020 and 2019, there were 15 and 7 CUSIPs sold, disposed, or otherwise redeemed as a result of a callable feature, respectively. The aggregate amount of investment income generated as a result of these transactions was $735 and $212 for 2020 and 2019, respectively.
The Company’s bond portfolio includes mortgage-backed securities. Due to the high quality of these investments and the lack of subprime loans within the securities, the Company does not have a material exposure to subprime mortgages.
(b) Unrealized Investment Losses
To determine whether or not declines in fair value are other than temporary, Allianz Life performs a quarterly review of its entire combined investment portfolio, including the Company as their subsidiary, using quoted market prices by third-party sources. For further discussion, see Notes 2 and 6.
Unrealized losses and the related fair value of investments held by the Company for the years ended December 31 are shown below:
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| 2020 |
| 12 months or less |
| Greater than 12 months |
| Total |
| Fair value |
| Unrealized losses |
| Fair value |
| Unrealized losses |
| Fair value |
| Unrealized losses | | Bonds: |
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| | U.S. government | $ | 19,941 |
|
| 352 |
|
| — |
|
| — |
|
| 19,941 |
|
| 352 |
| | | | | | | | | | | | | | Corporate securities | 4,000 |
|
| — |
|
| — |
|
| — |
|
| 4,000 |
|
| — |
| | | | | | | | | | | | | | Total temporarily impaired securities | $ | 23,941 |
|
| 352 |
|
| — |
|
| — |
|
| 23,941 |
|
| 352 |
|
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
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| 2019 |
| 12 months or less |
| Greater than 12 months |
| Total |
| Fair value |
| Unrealized losses |
| Fair value |
| Unrealized losses |
| Fair value |
| Unrealized losses | | Bonds: |
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| | U.S. government | $ | 12,753 |
|
| 77 |
|
| — |
|
| — |
|
| 12,753 |
|
| 77 |
| | | | | | | | | | | | | | Corporate securities | 495 |
|
| 2 |
|
| 273 |
|
| 8 |
|
| 768 |
|
| 10 |
| | Mortgage-backed securities | 2,011 |
|
| 2 |
|
| — |
|
| — |
|
| 2,011 |
|
| 2 |
| | Total temporarily impaired securities | $ | 15,259 |
|
| 81 |
|
| 273 |
|
| 8 |
|
| 15,532 |
|
| 89 |
|
As of December 31, 2020 and 2019, the number of bonds that were in an unrealized loss position was 4 and 6, respectively.
As of December 31, 2020 and 2019, of the total amount of unrealized losses, $352, or 100.0%, and $80, or 90.4%, respectively, are related to unrealized losses on investment grade securities. Investment grade is defined as a security having an NAIC SVO credit rating of 1 or 2. Unrealized losses on securities are principally related to changes in interest rates or changes in sector spreads from the date of purchase. As contractual payments continue to be met, management continues to expect all contractual cash flows to be received and does not consider these investments to be other-than-temporarily impaired.
(c) Realized Investment Gains (Losses)
Net realized capital gains (losses) for the years ended December 31 are shown below:
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| 2020 |
| 2019 |
| 2018 | | Bonds |
| $ | 101 |
|
| 784 |
|
| (2,125) |
| | Derivatives |
| (40,495) |
|
| (70,151) |
|
| (37,022) |
| | Other |
| 45 |
|
| 4 |
|
| 27 |
| | Total realized capital losses |
| (40,349) |
|
| (69,363) |
|
| (39,120) |
| | Income tax (expense) benefit on net realized losses |
| (651) |
|
| (118) |
|
| 335 |
| | Total realized capital losses, net of taxes |
| (41,000) |
|
| (69,481) |
|
| (38,785) |
| | Net gains (losses) transferred to IMR, net of taxes |
| 220 |
|
| 614 |
|
| (46,002) |
| | Net realized (losses) gains, net of taxes and IMR |
| $ | (41,220) |
|
| (70,095) |
|
| 7,217 |
|
(d) Net Investment Income
Major categories of net investment income for the years ended December 31 are shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| 2019 |
| 2018 | | Interest: |
|
|
|
|
|
| | Bonds |
| $ | 20,529 |
|
| 21,636 |
|
| 22,183 |
| | Policy loans |
| 9 |
|
| 13 |
|
| (12) |
| | Cash, cash equivalents, and short-term investments |
| 245 |
|
| 686 |
|
| 779 |
| | Derivatives |
| (11) |
|
| — |
|
| 990 |
| | Other |
| 59 |
|
| 52 |
|
| 30 |
| | Gross investment income |
| 20,831 |
|
| 22,387 |
|
| 23,970 |
| | Investment expenses |
| (1,239) |
|
| (974) |
|
| (691) |
| | Net investment income before amortization of IMR |
| 19,592 |
|
| 21,413 |
|
| 23,279 |
| | Amortization of IMR |
| (1,564) |
|
| (1,547) |
|
| (6) |
| | Net investment income |
| $ | 18,028 |
|
| 19,866 |
|
| 23,273 |
|
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
(e) Loan-Backed Securities
SSAP No. 43R requires the bifurcation of impairment losses on loan-backed or structured securities into interest and noninterest-related portions. The noninterest portion is the difference between the present value of cash flows expected to be collected from the security and the amortized cost basis of the security. The interest portion is the difference between the present value of cash flows expected to be collected from the security and its fair value at the balance sheet date.
The Company had no loan-backed securities with a recognized OTTI for the years ended December 31, 2020 and 2019.
(f) Derivatives and Hedging Instruments
The Company does not have derivative contracts with financing premium. Derivatives held by the Company do not qualify for hedge accounting treatment.
In March 2018, the Company changed its hedging strategy for certain variable annuities, which resulted in the sale of its IRS portfolio. As a result of the sale, the Company recorded a realized loss of $56,161 that was offset by IMR of $44,367 and a tax benefit of $11,794. The sale resulted in a negative IMR balance that was reclassified to an asset and fully nonadmitted.
Futures and Options Contracts
OTC options are cleared through the Options Clearing Corporation, which operates under the jurisdiction of both the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission. The fair values of the collateral posted for futures and OTC options are discussed in the derivative collateral management section below.
Total Return Swaps
The Company engages in the use of OTC TRS, which allow the parties to exchange cash flows based on a variable reference rate such as the three-month LIBOR and the return of an underlying index. The fair value of the collateral posted for OTC TRS is discussed in the derivative collateral management section below.
The following table presents a summary of the aggregate notional amounts and fair values of the Company’s derivative instruments reported on the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus as of December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| 2019 |
|
|
|
| Gross Fair Value |
|
|
| Gross Fair Value |
|
| Notional (1) |
| Assets |
| Liabilities |
| Notional (1) |
| Assets |
| Liabilities | | OTC options |
| $ | 1,667 |
|
| 341 |
|
| — |
|
| 194,850 |
|
| 283 |
|
| — |
| | | | | | | | | | | | | | | Futures |
| 231,731 |
|
| — |
|
| — |
|
| 238,907 |
|
| — |
|
| — |
| | TRS |
| 5,000 |
|
| — |
|
| — |
|
| 8,000 |
|
| — |
|
| — |
| | Total derivative instruments |
|
|
| $ | 341 |
|
| — |
|
|
|
| 283 |
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) Notional amounts are presented on an absolute basis. |
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
Derivative Collateral Management
The Company manages derivative collateral for the general account and separate account combined and separate collateral for exchange-traded and OTC derivatives. The total collateral posted for exchange-traded derivatives at December 31, 2020 and 2019, had a fair value of $49,781 and $24,773, respectively, and is included in Bonds on the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus and recorded at amortized cost. The Company retains ownership of the exchange-traded collateral, but the collateral resides in an account designated by the exchange. The collateral is subject to specific exchange rules regarding rehypothecation. The Company had no collateral posted for OTC derivatives as of December 31, 2020 and 2019. The Company posts collateral to OTC counterparties based upon exposure amounts. The Company retains ownership of the OTC collateral.
(g)Offsetting Assets and Liabilities
The Company elects to disclose derivative assets and liabilities eligible for offset under SSAP No. 64 – Offsetting and Netting of Assets and Liabilities on a gross basis on the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus in accordance with the provisions set forth in SSAP No. 86. This treatment is consistent with the Company’s historical reporting presentation.
(h)Restricted Assets
As of December 31, 2020, the Company had the following restricted assets, including assets pledged to others as collateral:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross Restricted |
|
|
|
|
| Percentage |
|
| Total general account |
| Total from prior year |
| Increase (decrease) |
| Total current year admitted restricted |
| Gross restricted to total assets |
| Admitted restricted to total admitted assets | | On deposit with states |
| $ | 1,662 |
|
| 1,667 |
|
| (5) |
|
| 1,662 |
|
| — | % |
| — | % | | Derivative collateral |
| 48,071 |
|
| 24,310 |
|
| 23,761 |
|
| 48,071 |
|
| 1.1 |
|
| 1.1 |
| | Total restricted assets |
| $ | 49,733 |
|
| 25,977 |
|
| 23,756 |
|
| 49,733 |
|
| 1.1 | % |
| 1.1 | % |
(6) Fair Value Measurements
SSAP No. 100R – Fair Value establishes a fair value hierarchy that prioritizes the inputs used in the valuation techniques to measure fair value.
Level 1 – Unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date.
Level 2 – Valuations derived from techniques that utilize observable inputs, other than quoted prices included in Level 1, which are observable for the asset or liability either directly or indirectly, such as:
(a) Quoted prices for similar assets or liabilities in active markets.
(b) Quoted prices for identical or similar assets or liabilities in markets that are not active.
(c) Inputs other than quoted prices that are observable.
(d) Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 – Valuations derived from techniques in which the significant inputs are unobservable. Level 3 fair values reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk).
The Company has analyzed the valuation techniques and related inputs, evaluated its assets and liabilities reported at fair value, and determined an appropriate fair value hierarchy level based upon trading activity and the observability of market inputs. Based on the results of this evaluation and investment class analysis, each financial asset and liability was classified into Level 1, 2, or 3.
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
The following presents the assets and liabilities measured at fair value on a recurring basis and their corresponding level in the fair value hierarchy at December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
|
| Level 1 |
| Level 2 (a) |
| Level 3 |
| Total | | Assets at fair value |
|
|
|
|
|
|
|
| | Derivative assets |
| $ | — |
|
| 341 |
|
| — |
|
| 341 |
| | Separate account assets |
| 2,273,066 |
|
| 319,099 |
|
| — |
|
| 2,592,165 |
| | Total assets reported at fair value |
| 2,273,066 |
|
| 319,440 |
|
| — |
|
| 2,592,506 |
| | Liabilities at fair value |
|
|
|
|
|
|
|
| | | | | | | | | | | Separate account derivative liabilities |
| — |
|
| 194,296 |
|
| — |
|
| 194,296 |
| | Total liabilities reported at fair value |
| $ | — |
|
| 194,296 |
|
| — |
|
| 194,296 |
|
|
|
|
|
|
|
|
|
| (a) The Company does not have any assets or liabilities measured at net asset value (NAV) that are included in Level 2 within this table. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| Level 1 |
| Level 2 (a) |
| Level 3 |
| Total | | Assets at fair value |
|
|
|
|
|
|
|
| | Derivative assets |
| $ | — |
|
| 283 |
|
| — |
|
| 283 |
| | Separate account assets |
| 2,295,709 |
|
| 125,436 |
|
| — |
|
| 2,421,145 |
| | Total assets reported at fair value |
| 2,295,709 |
|
| 125,719 |
|
| — |
|
| 2,421,428 |
| | Liabilities at fair value |
|
|
|
|
|
|
|
| | Separate account derivative liabilities |
| — |
| 36,644 |
| 51,037 |
|
| — |
|
| 51,037 |
| | Total liabilities reported at fair value |
| $ | — |
|
| 51,037 |
|
| — |
|
| 51,037 |
|
|
|
|
|
|
|
|
|
| (a) The Company does not have any assets or liabilities measured at NAV that are included in Level 2 within this table. |
The following is a discussion of the methodologies used to determine fair values for the assets and liabilities listed in the above table. These fair values represent an exit price (i.e., what a buyer in the marketplace would pay for an asset in a current sale or charge to transfer a liability). The Company has not made changes to valuation techniques in 2020.
(a) Valuation of Derivatives
Active markets for OTC options do not exist. The fair value of OTC options is derived internally, by calculating their expected discounted cash flows, using a set of calibrated, risk-neutral stochastic scenarios, including a market data monitor, a market data model generator, a stochastic scenario calibrator, and the actual asset pricing calculator. The valuation results are reviewed by Management via the Pricing Committee. OTC options that are internally priced and IRS are included in Level 2, because they use market observable inputs. TRS are included in Level 3 because they use valuation techniques in which significant inputs are unobservable. The fair value of futures is based on quoted market prices and are generally included in Level 1.
Certain derivatives are priced using external third-party vendors. The Company has controls in place to monitor the valuations of these derivatives. Using market observable inputs, IRS prices are derived from a third-party source and are independently recalculated internally and reviewed for reasonableness at the position level on a monthly basis. TRS prices are obtained from the respective counterparties. These prices are also
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
internally recalculated and reviewed for reasonableness at the position level on a monthly basis. The Company does not have insight into the specific inputs used by third-party vendors; however, the key unobservable input would generally include the spread.
(b) Valuation of Separate Account Assets and Separate Account Derivative Liabilities
Separate account assets and Separate account derivative liabilities, with the exception of certain bonds, cash, cash equivalents and investment income due and accrued, are carried at fair value, which is based on the fair value of the underlying assets which are described throughout this note. Funds in the separate accounts are primarily invested in variable investment option funds with the following investment types: bond, domestic equity, international equity, or specialty. Variable investment option funds are included in Level 1 because their fair value is based on quoted prices in active, observable markets. The remaining investments are categorized similar to the investments held by the Company in the general account (e.g., if the separate account invested in bonds, short-term investments and derivatives, that portion could be classified within Level 2 or Level 3). Certain bonds, cash and cash equivalents, along with related accrued investment income and receivables, carried at amortized cost within the separate account have an amortized cost of $1,181,701 and $810,917 as of December 31, 2020 and 2019, respectively, and a fair value of $1,267,749 and $843,261 as of December 31, 2020 and 2019, respectively. Separate account assets carried at amortized cost are included in the table in section 6(g) below.
(c) Level 3 Rollforward
The following table provides a reconciliation of the beginning and ending balances for the Company’s Level 3 assets and liabilities measured at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| January 1, 2020 | Transfers into
Level 3 | Transfers out
of Level 3 | Total gains
and (losses)
included in
Net Income | Total gains
and (losses)
included in
Surplus | Purchases, issuances, sales and settlements | December 31, 2020 |
|
|
|
|
|
|
|
| | TRS asset | $ | — |
| — |
| — |
| 9,020 |
| — |
| (9,020) |
| — |
| | Total Level 3 assets | — |
| — |
| — |
| 9,020 |
| — |
| (9,020) |
| — |
|
|
|
|
|
|
|
|
| | TRS liability | — |
|
|
| (8,366) |
| — |
| 8,366 |
| — |
| | Total Level 3 liabilities | $ | — |
| — |
| — |
| (8,366) |
| — |
| 8,366 |
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| January 1, 2019 | Transfers into
Level 3 | Transfers out
of Level 3 | Total gains
and (losses)
included in
Net Income | Total gains
and (losses)
included in
Surplus | Purchases, issuances, sales and settlements | December 31, 2019 |
|
|
|
|
|
|
|
| | TRS asset | $ | — |
| — |
| — |
| 1,182 |
| — |
| (1,182) |
| — |
| | Total Level 3 assets | — |
| — |
| — |
| 1,182 |
| — |
| (1,182) |
| — |
|
|
|
|
|
|
|
|
| | TRS liability | — |
|
|
| (1,827) |
| — |
| 1,827 |
| — |
| | Total Level 3 liabilities | $ | — |
| — |
| — |
| (1,827) |
| — |
| 1,827 |
| — |
|
(d) Transfers
The Company reviews its fair value hierarchy classifications annually. Transfers between levels occur when there are changes in the observability of inputs and market activity.
For the years ended December 31, 2020 and 2019, the Company did not have any transfers into or out of Level 3.
(e) Sensitivity of Fair Value Measurements to Changes in Unobservable Inputs
Derivative assets and liabilities: The TRS are priced by a third-party vendor and the Company internally reviews the valuation for reasonableness. The Company does not have insight into the specific inputs used; however, the key unobservable input would generally include the spread. For a long position, a significant
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
increase (decrease) in the spread used in the fair value of the TRS in isolation could result in higher (lower) fair value. For a short position, a significant increase (decrease) in the spread used in the fair value of the TRS in isolation could result in lower (higher) fair value.
(f) Estimates
The Company has been able to estimate the fair value of all financial assets and liabilities.
(g) Aggregate Fair Value of Financial Instruments
The following tables present the carrying amounts and fair values of all financial instruments at December 31 (b):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
|
|
|
|
|
| Fair Value |
|
| Aggregate Fair Value |
| Admitted Assets/
Carrying Value |
| Level 1 |
| Level 2 |
| Level 3 | | Financial Assets |
|
|
|
|
|
|
|
|
|
| | Bonds |
| $ | 633,107 |
|
| 572,795 |
|
| 102,107 |
|
| 531,000 |
|
| — |
| | | | | | | | | | | | | Cash equivalents |
| 12,279 |
|
| 12,279 |
|
| 12,279 |
|
| — |
|
| — |
| | | | | | | | | | | | | Derivative assets |
| 341 |
|
| 341 |
|
| — |
|
| 341 |
|
| — |
| | Separate account assets |
| 3,859,915 |
|
| 3,773,866 |
|
| 2,334,838 |
|
| 1,525,077 |
|
| — |
| | Financial Liabilities |
|
|
|
|
|
|
|
|
|
| | Deposit-type contracts |
| $ | 6,056 |
|
| 4,956 |
|
| — |
|
| — |
|
| 6,056 |
| | Other investment contracts |
| 539,498 |
|
| 389,832 |
|
| — |
|
| — |
|
| 539,498 |
| | | | | | | | | | | | | Separate account liabilities |
| 3,859,915 |
|
| 3,773,866 |
|
| 2,334,838 |
|
| 1,525,077 |
|
| — |
|
|
|
|
|
|
|
|
|
|
|
| (b) The Company does not have any assets or liabilities measured at NAV that are included in Level 2 in this table. In addition, the Company has no assets or liabilities for which it is not practicable to measure at fair value. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
|
|
|
|
| Fair Value |
|
| Aggregate Fair Value |
| Admitted Assets/
Carrying Value |
| Level 1 |
| Level 2 |
| Level 3 | | Financial Assets |
|
|
|
|
|
|
|
|
|
| | Bonds |
| $ | 592,196 |
|
| 554,866 |
| 70,525 |
| 521,671 |
| — |
| | Cash equivalents |
| 43,050 |
|
| 43,050 |
|
| 43,050 |
|
| — |
|
| — |
| | Derivative assets |
| 283 |
|
| 283 |
|
| — |
|
| 283 |
|
| — |
| | Separate account assets |
| 3,264,406 |
|
| 3,232,062 |
| 2,320,888 |
| 943,518 |
| — |
| | Financial Liabilities |
|
|
|
|
|
|
|
|
|
| | Deposit-type contracts |
| $ | 4,176 |
|
| 3,604 |
| — |
|
| — |
|
| 4,176 |
| | Other investment contracts |
| 519,727 |
|
| 397,644 |
| — |
|
| — |
|
| 519,727 |
| | Separate account liabilities |
| 3,264,406 |
|
| 3,232,062 |
| 2,320,888 |
|
| 943,518 |
|
| — |
|
|
|
|
|
|
|
|
|
|
|
| (b) The Company does not have any assets or liabilities measured at NAV that are included in Level 2 in this table. In addition, the Company has no assets or liabilities for which it is not practicable to measure at fair value. |
A description of the Company’s valuation techniques for financial instruments not reported at fair value and categorized within the fair value hierarchy is shown below:
Valuation of Bonds
The fair value of bonds is based on quoted market prices in active markets when available. Based on the market data, the securities are categorized into asset class, and based on the asset class of the security, appropriate pricing applications, models and related methodology, and standard inputs are utilized to determine what a buyer in the marketplace would pay for the security in a current sale. When quoted prices are not readily available or in an inactive market, standard inputs used in the valuation models, listed in approximate order of priority, include, but are not limited to, benchmark yields, reported trades, Municipal Securities
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
Rulemaking Board reported trades, Nationally Recognized Municipal Securities Information Repository material event notices, broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data, and industry and economic events. In some cases, including private placement securities and certain difficult-to-price securities, internal pricing models may be used that are based on market proxies. Internal pricing models based on market spread and U.S. Treasury rates are used to value private placement holdings. The primarily unobservable input used in the discounted cash flow models for states and political subdivisions, foreign government, and corporate bonds is a corporate index option adjusted spread (OAS). CDOand certain mortgage-backed securities are priced by a third-party vendor and the Company internally reviews the valuation for reasonableness. The Company does not have insight into the specific inputs; however, the key unobservable inputs would generally include default rates.
Generally, U.S. Treasury securities and exchange-traded stocks are included in Level 1. Most bonds for which prices are provided by third-party pricing sources are included in Level 2, because the inputs used are market observable. Bonds for which prices were obtained from broker quotes, certain bonds without active trading markets and private placement securities that are internally priced are included in Level 3.
Valuation of Cash Equivalents
Cash equivalents are comprised of money market mutual funds. The fair value of money market mutual funds are based on quoted market prices in active markets and included in Level 1.
Valuation of Deposit-Type Contracts
Fair values of deposit-type contracts are based on discounted cash flows using internal inputs, including the discount rate and consideration of the Company’s own credit standing and a risk margin for actuarial inputs.
Valuation of Other Investment Contracts
Other investment contracts are included within Life policies and annuity contracts within the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus. Other investment contracts include certain reserves related to deferred annuities and other payout annuities that may include life contingencies, but do not have significant mortality risk due to substantial periods certain. Fair values are based on discounted cash flows using internal inputs, including the discount rate and consideration of the Company’s own credit standing and a risk margin for market inputs.
Valuation of Separate Account Liabilities
The fair value of separate account liabilities approximates the fair value of separate account assets.
(7) Income Taxes
(a)Deferred Tax Assets and Liabilities
The components of the net DTA or net DTL are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2020 |
| Ordinary |
| Capital |
| Total | | Total gross deferred tax assets | $ | 16,394 |
|
| 676 |
|
| 17,070 |
| | Statutory valuation allowance adjustments | — |
|
| — |
|
| — |
| | Adjusted gross deferred tax assets | 16,394 |
|
| 676 |
|
| 17,070 |
| | Deferred tax assets nonadmitted | (8,771) |
|
| — |
|
| (8,771) |
| | Subtotal net admitted deferred tax assets | 7,623 |
|
| 676 |
|
| 8,299 |
| | Deferred tax liabilities | (1,812) |
|
| — |
|
| (1,812) |
| | Net admitted deferred tax assets | $ | 5,811 |
|
| 676 |
|
| 6,487 |
|
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
| Ordinary |
| Capital |
| Total | | Total gross deferred tax assets | $ | 11,500 |
|
| 10 |
|
| 11,510 |
| | Statutory valuation allowance adjustments | — |
|
| — |
|
| — |
| | Adjusted gross deferred tax assets | 11,500 |
|
| 10 |
|
| 11,510 |
| | Deferred tax assets nonadmitted | (5,083) |
|
| — |
|
| (5,083) |
| | Subtotal net admitted deferred tax assets | 6,417 |
|
| 10 |
|
| 6,427 |
| | Deferred tax liabilities | (2,120) |
|
| — |
|
| (2,120) |
| | Net admitted deferred tax assets | $ | 4,297 |
|
| 10 |
|
| 4,307 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Change |
| Ordinary |
| Capital |
| Total | | Total gross deferred tax assets | $ | 4,894 |
|
| 666 |
|
| 5,560 |
| | Statutory valuation allowance adjustments | — |
|
| — |
|
| — |
| | Adjusted gross deferred tax assets | 4,894 |
|
| 666 |
|
| 5,560 |
| | Deferred tax assets nonadmitted | (3,688) |
|
| — |
|
| (3,688) |
| | Subtotal net admitted deferred tax assets | 1,206 |
|
| 666 |
|
| 1,872 |
| | Deferred tax liabilities | 308 |
|
| — |
|
| 308 |
| | Net admitted deferred tax assets | $ | 1,514 |
|
| 666 |
|
| 2,180 |
|
The amount of admitted adjusted gross DTAs allowed under each component of SSAP No. 101 – Income Taxes (SSAP No. 101) as of December 31 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2020 |
| Ordinary |
| Capital |
| Total | | Federal income taxes paid in prior years recoverable through loss carrybacks (11.a) | $ | — |
|
| 676 |
|
| 676 |
| | Adjusted gross DTAs expected to be realized after application of the threshold limitations |
|
|
|
|
| | Lesser of 11.b.i or 11.b.ii: |
|
|
|
|
| | Adjusted gross DTAs expected to be realized following the balance sheet date (11.b.i.) | 5,811 |
|
| — |
|
| 5,811 |
| | Adjusted gross DTAs allowed per limitation threshold (11.b.ii) | N/A |
| N/A |
| 22,422 |
| | Lesser of 11.b.i or 11.b.ii | 5,811 |
|
| — |
|
| 5,811 |
| | Adjusted gross DTAs offset by gross DTLs (11.c) | 1,812 |
|
| — |
|
| 1,812 |
| | Deferred tax assets admitted | $ | 7,623 |
|
| 676 |
|
| 8,299 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
| Ordinary |
| Capital |
| Total | | Federal income taxes paid in prior years recoverable through loss carrybacks (11.a) | $ | — |
|
| 10 |
|
| 10 |
| | Adjusted gross DTAs expected to be realized after application of the threshold limitations |
|
|
|
|
| | Lesser of 11.b.i or 11.b.ii: |
|
|
|
|
| | Adjusted gross DTAs expected to be realized following the balance sheet date (11.b.i.) | 4,297 |
|
| — |
|
| 4,297 |
| | Adjusted gross DTAs allowed per limitation threshold (11.b.ii) | N/A |
| N/A |
| 25,054 |
| | Lesser of 11.b.i or 11.b.ii | 4,297 |
|
| — |
|
| 4,297 |
| | Adjusted gross DTAs offset by gross DTLs (11.c) | 2,120 |
|
| — |
|
| 2,120 |
| | Deferred tax assets admitted | $ | 6,417 |
|
| 10 |
|
| 6,427 |
|
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Change |
| Ordinary |
| Capital |
| Total | | Federal income taxes paid in prior years recoverable through loss carrybacks (11.a) | $ | — |
|
| 666 |
|
| 666 |
| | Adjusted gross DTAs expected to be realized after application of the threshold limitations |
|
|
|
|
| | Lesser of 11.b.i or 11.b.ii: |
|
|
|
|
| | Adjusted gross DTAs expected to be realized following the balance sheet date (11.b.i.) | 1,513 |
|
| — |
|
| 1,513 |
| | Adjusted gross DTAs allowed per limitation threshold (11.b.ii) | N/A |
| N/A |
| (2,632) |
| | Lesser of 11.b.i or 11.b.ii | 1,513 |
|
| — |
|
| 1,513 |
| | Adjusted gross DTAs offset by gross DTLs (11.c) | (308) |
|
| — |
|
| (308) |
| | Deferred tax assets admitted | $ | 1,205 |
|
| 666 |
|
| 1,871 |
|
Ratios used for threshold limitation as of December 31 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31 |
|
|
| 2020 |
| 2019 |
| Change | | Ratio percentage used to determine recovery period and threshold limitation amount | 1,028 | % |
| 1,467 | % |
| (439) | % | | Amount of adjusted capital and surplus used to determine recovery period threshold limitation | $ | 149,483 |
|
| 167,029 |
|
| (17,546) |
|
Impact of tax planning strategies on the determination of net admitted adjusted gross DTAs is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2020 |
| Ordinary |
| Capital |
| Total | Net admitted adjusted gross DTAs - (percentage of total net admitted adjusted gross DTAs) | — | % |
| — | % |
| — | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
| Ordinary |
| Capital |
| Total | Net admitted adjusted gross DTAs - (percentage of total net admitted adjusted gross DTAs) | — | % |
| — | % |
| — | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Change |
| Ordinary |
| Capital |
| Total | Net admitted adjusted gross DTAs - (percentage of total net admitted adjusted gross DTAs) | — | % |
| — | % |
| — | % |
The Company’s tax planning strategies do not include the use of reinsurance.
(b)Unrecognized Deferred Tax Liabilities
There are no temporary differences for which DTLs are not recognized.
(c)Current and Deferred Income Taxes
The significant components of income taxes incurred (i.e. Current income tax expense) include:
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31 |
|
|
|
|
| 2020 |
| 2019 |
| 2018 |
| 2020-2019 Change |
| 2019-2018 Change | | Current year federal tax expense (benefit) - ordinary income | $ | 1,280 |
|
| (7,343) |
|
| (292) |
|
| 8,623 |
|
| (7,051) |
| | Current year foreign tax expense (benefit) - ordinary income | — |
|
| — |
|
| — |
|
| — |
|
| — |
| | Subtotal | 1,280 |
|
| (7,343) |
|
| (292) |
|
| 8,623 |
|
| (7,051) |
| | Current year tax expense (benefit) - net realized capital gains (losses) | 652 |
|
| 118 |
|
| (335) |
|
| 534 |
|
| 453 |
| | Federal and foreign income taxes incurred | $ | 1,932 |
|
| (7,225) |
|
| (627) |
|
| 9,157 |
|
| (6,598) |
|
DTAs and DTLs consist of the following major components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31 |
|
| | Deferred tax assets |
| 2020 |
| 2019 |
| Change | | Ordinary: |
|
|
|
|
|
| | Deferred acquisition costs |
| $ | 2,879 |
|
| 2,539 |
|
| 340 |
| | Policyholder reserves |
| 12,294 |
|
| 8,168 |
|
| 4,126 |
| | Expense accruals |
| 1 |
|
| 1 |
|
| — |
| | Investments |
| 1,216 |
|
| 745 |
|
| 471 |
| | Nonadmitted assets |
| 4 |
|
| 47 |
|
| (43) |
| | Subtotal |
| 16,394 |
|
| 11,500 |
|
| 4,894 |
| | | | | | | | | Nonadmitted ordinary deferred tax assets |
| (8,771) |
|
| (5,083) |
|
| (3,688) |
| | Admitted ordinary tax assets |
| 7,623 |
|
| 6,417 |
|
| 1,206 |
|
|
|
|
|
|
| — |
| | Capital: |
|
|
|
|
| — |
| | Impaired assets |
| 676 |
|
| 10 |
|
| 666 |
| | Subtotal |
| 676 |
|
| 10 |
|
| 666 |
| | | | | | | | | | | | | | | | Admitted capital deferred tax assets |
| 676 |
|
| 10 |
|
| 666 |
| | Admitted deferred tax assets |
| $ | 8,299 |
|
| 6,427 |
|
| 1,872 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31 |
|
| | Deferred tax liabilities |
| 2020 |
| 2019 |
| Change | | Ordinary: |
|
|
|
|
|
| | Investments |
| $ | (255) |
|
| (231) |
|
| (24) |
| | | | | | | | | Policyholder reserves |
| (1,551) |
|
| (1,862) |
|
| 311 |
| | Deferred and uncollected premiums |
| (6) |
|
| (27) |
|
| 21 |
| | Subtotal |
| (1,812) |
|
| (2,120) |
|
| 308 |
|
|
|
|
|
|
|
| | Capital: |
|
|
|
|
|
| | Other |
| — |
|
| — |
|
| — |
| | Subtotal |
| — |
|
| — |
|
| — |
| | Deferred tax liabilities |
| (1,812) |
|
| (2,120) |
|
| 308 |
| | Net deferred tax asset |
| $ | 6,487 |
|
| 4,307 |
|
| 2,180 |
|
The realization of the DTAs is dependent upon the Company’s ability to generate sufficient taxable income in future periods. Based on historical results and the prospects for future current operations, management anticipates that it is more likely than not that future taxable income will be sufficient for the realization of the remaining DTAs.
The Coronavirus Aid, Relief, and Economic Security Act, (CARES Act of 2020) was enacted on March 27, 2020, thereby allowing net operating losses (NOLs) arising in tax years beginning after December 31, 2017, and before January 1, 2021 (e.g., NOLs incurred in 2018, 2019, or 2020 by a calendar-year taxpayer) to be carried back to each of the five tax years preceding the tax year of such loss.
In computing taxable income, life insurance companies are allowed a deduction attributable to their life insurance and accident and health reserves. The Tax Act of 2017 significantly changed the methodology by which these reserves are computed for tax purposes. The changes are effective for tax years beginning after
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
2017 and are subject to a transition rule that spreads the additional income tax liability over the subsequent eight years beginning in 2018. Due to complexities in the new methodology and limited guidance from the Internal Revenue Service and U.S. Treasury, the Company has recorded provisional amounts for the deferred tax revaluation associated with the changes in the computation of life insurance tax reserves based on information available at December 31, 2017. Pursuant to Interpretation of the SAP Working Group 18-01: Updated Tax Estimates under the Tax Cuts and Jobs Act, provisional tax computations related to these amounts were reasonably estimated as of December 31, 2017 and have been adjusted based on guidance received from Internal Revenue Service and U.S. Treasury. Adjusted amounts are reflected in the Company's results of operations for the years ended December 31, 2020, 2019, and 2018.
The Change in net deferred income tax is comprised of the following (this analysis is exclusive of the nonadmitted DTAs as the Change in nonadmitted assets is reported separately from the Change in net deferred income tax in the Unassigned surplus section of the Statutory Statements of Capital and Surplus):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31 |
|
|
| 2020 |
| 2019 |
| Change | | Net deferred tax assets | $ | 15,257 |
|
| 9,390 |
|
| 5,867 |
| | Statutory valuation allowance adjustment | — |
|
| — |
|
| — |
| | Net deferred tax assets after statutory valuation allowance | 15,257 |
|
| 9,390 |
|
| 5,867 |
| | Tax effect of unrealized gains/(losses) | (1,216) |
|
| (745) |
|
| (471) |
| | | | | | | | Change in net deferred income tax |
|
|
|
| $ | 5,397 |
|
(d)Reconciliation of Federal Income Tax Rate to Actual Effective Rate
The provision for federal income taxes incurred is different from that which would be obtained by applying the statutory federal income tax rate to income before income taxes. The significant items causing this difference are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2020 |
| December 31, 2019 |
| December 31, 2018 | | Federal income tax rate | 21.0 | % |
| 21.0 | % |
| 21.0 | % | | Amortization of IMR | 1.2 |
|
| 1.6 |
|
| — |
| | Dividends received deduction | (3.7) |
|
| (4.3) |
|
| (1.9) |
| | Tax hedges | — |
|
| 0.7 |
|
| (0.2) |
| | Tax hedge reclassification | (31.5) |
|
| (73.9) |
|
| (19.3) |
| | Non-deductible expenses | — |
|
| 0.1 |
|
| 0.1 |
| | Change in deferred tax on non-admitted assets | 0.2 |
|
| (0.2) |
|
| — |
| | Prior period adjustments | — |
|
| 0.9 |
|
| (1.0) |
| | Change in deferred tax impairments | (2.5) |
|
| 0.5 |
|
| (0.3) |
| | | | | | | | | | | | | | | | | | | | Realized Capital Gains Tax | 2.4 |
|
| — |
|
| — |
| | Effective tax rate | (12.9) | % |
| (53.6) | % |
| (1.6) | % |
|
|
|
|
|
| Federal and foreign income taxes incurred (1) | 4.7% |
| (36.8) | % |
| (0.7) | % | | Realized Capital Gains Tax | 2.4 |
|
| — |
|
| — |
| | Change in net deferred income taxes | (20.0) |
|
| (16.8) |
|
| (0.9) |
| | Effective tax rate | (12.9) | % |
| (53.6) | % |
| (1.6) | % | (1) Prior to 2020, tax on capital gains (losses) was excluded from federal and foreign income taxes incurred and detailed in Note 5(c). |
(e)Carryforwards, Recoverable Taxes, and IRC Section 6603 Deposits
As of December 31, 2020, there are no operating losses or tax credit carryforwards available for tax purposes.
There are no Federal income taxes available for recoupment in the event of future net losses.
There are no aggregate deposits admitted under Section 6603 of the IRC.
The Company had no tax contingencies computed in accordance with SSAP No. 101 as of December 31, 2020 and 2019.
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
The Company recognizes interest and penalties accrued related to unrecognized tax benefits in federal income tax expense. During the years ended December 31, 2020 and 2019, the Company recognized no such expenses.
(f)Consolidated Federal Income Tax Return
The Company is included in the consolidated group for which AZOA files a federal income tax return on behalf of all group members. As a member of the AZOA consolidated group, the Company is no longer subject to US Federal and non-US income tax examinations for years prior to 2016, though examinations of combined returns filed by AZOA, which include the Company by certain US state and local tax authorities, may still be conducted for 2008 and subsequent years. The last Internal Revenue Service (IRS) examination of AZOA involved the federal income tax returns filed by AZOA for the 2015 tax year, which included carrybacks to the 2012 tax year. This examination concluded in October 2018 with the IRS only making one immaterial adjustment that increased the Company's tax liability for 2012 by approximately $530. The IRS has also initiated an examination of AZOA's 2017 and 2018 income tax returns, which is expected to close by the end of 2021.
As of December 31, 2020, the companies included in the consolidated group for which AZOA files a federal income tax return is included below:
|
|
|
|
|
| Members of Consolidated Tax Group | Allianz Life Insurance Company of New York | Allianz Life Insurance Company of Missouri | Allianz Life Insurance Company of North America | Allianz Underwriters Insurance Company | AZOA Services Corporation | AGCS Marine Insurance Company | Allianz Global Risks US Insurance Company | William H. McGee & Co., Inc. | Allianz Reinsurance of America, Inc. | Fireman’s Fund Insurance Company | Allianz Technology of America, Inc. | Fireman’s Fund Indemnity Corporation | Allianz Renewable Energy Partners of America LLC | National Surety Corporation | Allianz Renewable Energy Partners of America 2 LLC | Chicago Insurance Company | PFP Holdings, Inc. | Interstate Fire & Casualty Company | AZL PF Investments, Inc. | Associated Indemnity Corporation | Dresdner Kleinwort Pfandbriefe Investments II, Inc. | American Automobile Insurance Company | Allianz Fund Investments, Inc. | The American Insurance Company | Yorktown Financial Companies, Inc. | Allianz Risk Transfer, Inc. | Questar Capital Corporation | Allianz Risk Transfer (Bermuda), Ltd. | Questar Asset Management, Inc. |
| Questar Agency, Inc. |
|
(8) Accident and Health Claim Reserves
Accident and health claim reserves are based on estimates that are subject to uncertainty. Uncertainty regarding reserves of a given accident year is gradually reduced as new information emerges each succeeding year, thereby allowing more reliable reevaluations of such reserves. While management believes that reserves as of December 31, 2020, are appropriate, uncertainties in the reserving process could cause reserves to develop favorably or unfavorably in the near term as new or additional information emerges. Any adjustments to reserves are reflected in the operating results of the periods in which they are made. Movements in reserves could significantly impact the Company’s future reported earnings.
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
Activity in the accident and health claim reserves is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| 2019 |
| 2018 | | Balance at January 1, net of reinsurance recoverables of $1,214, $529, and $622, respectively |
| $ | 7,302 |
|
| 3,938 |
|
| 4,867 |
| | Incurred related to: |
|
|
|
|
|
| | Current year |
| 3,428 |
|
| 3,991 |
|
| 916 |
| | Prior years |
| (1,093) |
|
| 749 |
|
| (374) |
| | Total incurred |
| 2,335 |
|
| 4,740 |
|
| 542 |
| | Paid related to: |
|
|
|
|
|
| | Current year |
| 153 |
|
| 211 |
|
| 81 |
| | Prior years |
| 1,650 |
|
| 1,165 |
|
| 1,390 |
| | Total paid |
| 1,803 |
|
| 1,376 |
|
| 1,471 |
| | Balance at December 31, net of reinsurance recoverables of $1,079, $1,214, and $529, respectively |
| $ | 7,834 |
|
| 7,302 |
|
| 3,938 |
|
Prior year incurred claim reserves for 2020 were favorable as a result of re-estimation of unpaid claims and claim adjustment expenses, principally on the individual LTC line of business. Prior year incurred claim reserves for 2019 reflect unfavorable claim development primarily within the individual LTC line of business. Prior year incurred claims reserves for 2018 reflect unfavorable claim development as a result of re-estimation of unpaid claims and claim adjustment expenses, principally on individual LTC and group health lines of business.
(9) Reinsurance
The Company primarily enters into reinsurance agreements to manage risk resulting from its life, annuity, and accident and health businesses, as well as businesses the Company has chosen to exit. In the normal course of business, the Company seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding risks under excess coverage and coinsurance contracts.
The Company monitors the financial exposure and financial strength of the reinsurers on an ongoing basis. The Company attempts to mitigate risk by securing recoverable balances with various forms of collateral, including arranging trust accounts and letters of credit with certain reinsurers.
The effect of reinsurance on reserves and claims, for amounts recoverable from other insurers, was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the years ended December 31, | | Reduction in: |
| 2020 |
| 2019 | | Aggregate reserves |
| $ | 6,184 |
|
| 5,537 |
| | Policy and contract claims |
| 183 |
|
| 197 |
|
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
The Company assumed no business from other companies for the years ended December 31, 2020, 2019, and 2018. Life insurance, annuities, and accident and health business ceded to other companies are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | Year ended |
| Direct amount |
| Ceded to other companies |
| Net amount | | December 31, 2020 |
|
|
|
|
|
| | Life insurance in force |
| $ | 328,472 |
|
| 293,458 |
|
| 35,014 |
| | Premiums: |
|
|
|
|
|
| | Life |
| 884 |
|
| 734 |
|
| 150 |
| | Annuities |
| 425,561 |
|
| — |
|
| 425,561 |
| | Accident and health |
| 3,224 |
|
| 436 |
|
| 2,788 |
| | Total premiums |
| $ | 429,669 |
|
| 1,170 |
|
| 428,499 |
|
|
|
|
|
|
|
| | December 31, 2019 |
|
|
|
|
|
| | Life insurance in force |
| $ | 49,947 |
|
| 42,359 |
|
| 7,588 |
| | Premiums: |
|
|
|
|
|
| | Life |
| 807 |
|
| 655 |
|
| 152 |
| | Annuities |
| 371,966 |
|
| — |
|
| 371,966 |
| | Accident and health |
| 3,341 |
|
| 444 |
|
| 2,897 |
| | Total premiums |
| $ | 376,114 |
|
| 1,099 |
|
| 375,015 |
|
|
|
|
|
|
|
| | December 31, 2018 |
|
|
|
|
|
| | Life insurance in force |
| $ | 53,361 |
|
| 48,195 |
|
| 5,166 |
| | Premiums: |
|
|
|
|
|
| | Life |
| 922 |
|
| 744 |
|
| 178 |
| | Annuities |
| 298,637 |
|
| — |
|
| 298,637 |
| | Accident and health |
| 3,367 |
|
| 467 |
|
| 2,900 |
| | Total premiums |
| $ | 302,926 |
|
| 1,211 |
|
| 301,715 |
|
There are no nonaffiliated reinsurers owned in excess of 10% or controlled, either directly or indirectly, by the Company or by a representative, officer, trustee, or director of the Company.
There are no policies issued by the Company that have been reinsured with a company chartered in a country other than the United States that is owned in excess of 10% or controlled directly or indirectly by an insured, a beneficiary, a creditor, or any other person not primarily engaged in the insurance business.
The Company does not have any reinsurance agreements in effect under which the reinsurer may unilaterally cancel any reinsurance for reasons other than for nonpayment of premium or other similar credits.
The Company does not have reinsurance agreements in effect such that the amount of losses paid or accrued through the statement date may result in a payment to the reinsurer of amounts that, in aggregate and allowing for offset of mutual credits from other reinsurance agreements with the same reinsurer, exceed the total direct premium collected under the reinsured policies.
The Company did not write off any uncollectible recoverables during 2020, 2019, and 2018.
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
(10)Annuity Actuarial Reserves and Deposit Liabilities by Withdrawal Characteristics
Information regarding the Company’s annuity actuarial reserves and deposit liabilities by withdrawal characteristics at December 31 is as follows:
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|
| 2020 |
| Percentage of total |
| 2019 |
| Percentage of total | | Subject to discretionary withdrawal: |
|
|
|
|
|
|
|
| | With market value adjustment |
| $ | 94,060 |
|
| 2 | % |
| $ | 60,359 |
|
| 2 | % | | At book value less current surrender charges of 5% or more |
| 1,172,480 |
|
| 30 |
|
| 738,120 |
|
| 21 |
| | At market value |
| 2,087,722 |
|
| 53 |
|
| 2,297,154 |
|
| 65 |
| | Total with adjustment or at market value |
| 3,354,262 |
|
| 85 |
|
| 3,095,633 |
|
| 88 |
| | At book value without adjustment (minimal or no charge or adjustment) |
| 489,561 |
|
| 12 |
|
| 381,487 |
|
| 11 |
| | Not subject to discretionary withdrawal |
| 78,609 |
|
| 3 |
|
| 65,387 |
|
| 1 |
| | Total gross |
| 3,922,432 |
|
| 100 | % |
| 3,542,507 |
|
| 100 | % | | Reinsurance ceded |
| — |
|
|
|
| — |
|
|
| | Total net |
| $ | 3,922,432 |
|
|
|
| $ | 3,542,507 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | Reconciliation of total annuity actuarial reserves and deposit fund liabilities: |
| 2020 |
| 2019 | | Life, Accident and Health Annual Statement: |
|
|
|
| | Annuities, net (excluding supplementary contracts with life contingencies) |
| $ | 376,832 |
|
| 397,644 |
| | Supplemental contracts with life contingencies, net |
| 20,886 |
|
| 18,688 |
| | Deposit-type contracts |
| 4,956 |
|
| 3,604 |
| | Subtotal |
| 402,674 |
|
| 419,936 |
| | Separate Accounts Annual Statement: |
|
|
|
| | Annuities, net (excluding supplementary contracts with life contingencies) |
| 3,519,106 |
|
| 3,121,880 |
| | Supplemental contracts with life contingencies, net |
| 652 |
|
| 691 |
| | Subtotal |
| 3,519,758 |
|
| 3,122,571 |
| | Total annuity actuarial reserves and deposit fund liabilities |
| $ | 3,922,432 |
|
| 3,542,507 |
|
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
(11) Life Actuarial Reserves by Withdrawal Characteristics
Information regarding the Company’s life actuarial reserves by withdrawal characteristics at December 31 is as follows:
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| 2020 | | General Account | Account value | Cash value | Reserve | | Subject to discretionary withdrawal, surrender values, or policy loans: |
|
|
| | | | | | Universal life | $ | 37 |
| 28 |
| 969 |
| | | | | | | | | | | | | | Indexed life | 1,644 |
| 1,511 |
| 1,580 |
| | Other permanent cash value life insurance | 354 |
| 354 |
| 354 |
| | | | | | | | | | | | | | Not subject to discretionary withdrawal or no cash values: |
|
|
| | Term policies without cash value | XXX | XXX | 271 |
| | | | | | | | | | | | | | Miscellaneous reserves | XXX | XXX | 13,223 |
| | Total gross | 2,035 |
| 1,893 |
| 16,397 |
| | Reinsurance ceded | — |
| — |
| 357 |
| Total net (1) | $ | 2,035 |
| 1,893 |
| 16,040 |
| (1) Balances reflected within this disclosure reside in the Company's general account; the Company's separate accounts do not contain Life business. |
|
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|
|
| 2019 | | General Account | Account value | Cash value | Reserve | | Subject to discretionary withdrawal, surrender values, or policy loans: |
|
|
| | | | | | Universal life | $ | 51 |
| 198 |
| 726 |
| | | | | | | | | | | | | | Indexed life | 1,623 |
| 1,471 |
| 1,571 |
| | Other permanent cash value life insurance | 538 |
| 538 |
| 538 |
| | | | | | | | | | | | | | Not subject to discretionary withdrawal or no cash values: |
|
|
| | Term policies without cash value | XXX | XXX | 264 |
| | | | | | | | | | | | | | Miscellaneous reserves | XXX | XXX | 272 |
| | Total gross | 2,212 |
| 2,207 |
| 3,371 |
| | Reinsurance ceded | — |
| — |
| 11 |
| Total net (1) | $ | 2,212 |
| 2,207 |
| 3,361 |
| (1) Balances reflected within this disclosure reside in the Company's general account; the Company's separate accounts do not contain Life business. |
The Company does not have any Life policies with either guarantees or nonguarantees in the separate account.
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|
| | Reconciliation of total life actuarial reserves: | 2020 | 2019 | | Life, Accident, and Health Annual Statement: |
|
| | Life insurance, net | $ | 2,781 |
| $ | 3,088 |
| | | | | | | | | | | Miscellaneous reserves, net | 13,259 |
| 272 |
| | | | | | | | | | | | | | Total life actuarial reserves | $ | 16,040 |
| $ | 3,361 |
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|
|
|
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
(12)Separate Accounts
The Company’s separate accounts represent funds held for the benefit of contract holders entitled to payments under variable annuity contracts issued through the Company’s separate accounts and underwritten by the Company.
As of December 31, 2020 and 2019, the Company's separate accounts are classified as nonguaranteed. Information regarding the Company’s separate accounts for the years ended December 31 is as follows:
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|
| 2020 |
| 2019 | | Premiums, considerations, or deposits | $ | 401,472 |
|
| 352,992 |
|
|
|
|
| | Reserves for account, with assets at fair value | 2,338,554 |
|
| 2,297,845 |
| | Reserves for account, with assets at amortized cost | 1,181,205 |
|
| 824,726 |
| | Total reserves | 3,519,759 |
|
| 3,122,571 |
| | By withdrawal characteristics: |
|
|
| | At fair value | 2,337,902 |
|
| 2,297,154 |
| | At book value without MV adjustment and with current surrender charge of 5% or more | 921,552 |
|
| 737,371 |
| | At book value without MV adjustment and with current surrender charge of less than 5% | 259,653 |
|
| 87,355 |
| | Subtotal | 3,519,107 |
|
| 3,121,880 |
| | Not subject to discretionary withdrawal | 652 |
|
| 691 |
| | Total | $ | 3,519,759 |
|
| 3,122,571 |
|
As of December 31, 2020 and 2019, the Company’s separate accounts included legally insulated assets and non-insulated assets attributed to the following products/transactions:
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|
| 2020 |
| 2019 | | Product/transaction |
| Legally insulated |
| Not legally insulated |
| Legally insulated |
| Not legally insulated | | Variable Annuities |
| $ | 2,130,361 |
|
| — |
|
| 2,194,429 |
|
| — |
| | Variable Annuities (Non-Unitized Non-Insulated) |
| — |
|
| 1,643,505 |
|
| — |
|
| 1,037,633 |
| | Total |
| $ | 2,130,361 |
|
| 1,643,505 |
|
| 2,194,429 |
|
| 1,037,633 |
|
The Company’s separate account liabilities contain guaranteed benefits. The liabilities for guaranteed benefits are supported by the Company’s general account assets. To compensate the general account for the risk taken, the separate account paid risk charges of $26,544, $37,538, $36,073, $33,270, and $30,266 during the past five years, respectively. The general account of the Company paid $929, $1,019, $465, $13, and $2,140 towards separate account guarantees during the past five years, respectively.
A reconciliation of net transfers to separate accounts for the years ended December 31 is included in the following table:
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|
| 2020 |
| 2019 |
| 2018 | | Transfers as reported in the Summary of Operations of the Separate Accounts Annual Statement: |
|
|
|
|
|
| | Transfers to separate accounts |
| $ | 401,472 |
|
| 352,992 |
|
| 298,627 |
| | Transfers from separate accounts |
| (215,753) |
|
| (217,517) |
|
| (191,108) |
| | Net transfers to separate accounts |
| 185,719 |
|
| 135,475 |
|
| 107,519 |
| | Reconciling adjustments: |
|
|
|
|
|
| | Other adjustments |
| 296 |
|
| (495) |
|
| 202 |
| | | | | | | | | Transfers as reported in the Statutory Statements of Operations |
| $ | 186,015 |
|
| 134,980 |
|
| 107,721 |
|
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
(13) Related-Party Transactions
(a) Real Estate
The Company subleases office space from an affiliate. In connection with this agreement, the Company incurred rent expense of $76, $56, and $25 in 2020, 2019, and 2018, respectively, which is included in General and administrative expenses on the Statutory Statements of Operations.
(b) Service Fees
The Company incurred fees for administrative services provided by Allianz Life of $10,372, $10,113 and $9,500 in 2020, 2019, and 2018, respectively. The Company’s liability for these expenses was $1,272 and $791 as of December 31, 2020 and 2019, respectively, and is included in Payable to parent and affiliates on the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus. In the normal course of business, the outstanding amount is settled in cash.
The Company incurred fees for investment advisory services provided by affiliated companies of $1,128, $870, and $668 in 2020, 2019, and 2018, respectively. The Company’s liability for these charges was $108 and $78 as of December 31, 2020 and 2019, respectively, and is included in Payable to parent and affiliates on the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus. In the normal course of business, the outstanding amount is settled in cash.
The Company has an agreement with Allianz Investment Management, LLC which has subsequent agreements with its affiliates Pacific Investment Management Company (PIMCO), Oppenheimer Capital LLC (OpCap), and with certain other related parties whereby (1) specific investment options managed by PIMCO and OpCap are made available through the Company's separate accounts to holders of the Company's variable annuity products, and (2) the Company receives compensation for providing administrative and recordkeeping services relating to the investment options managed by PIMCO and OpCap. Income recognized by the Company from these affiliates for distribution and in-force related costs as a result of providing investment options to the contractholders was $787, $885, and $965 during 2020, 2019, and 2018, respectively, which is included in Fees from separate accounts on the Statutory Statements of Operations. The related receivable for the fees was $66 and $74 at December 31, 2020 and 2019, respectively, which is included in Other assets on the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus.
The Company has incurred commission expense related to the distribution of variable annuity products from Allianz Life Financial Services, LLC, (ALFS), an affiliated company, in the amount of $31,064, $27,988, and $24,155 for the years ended December 31, 2020, 2019, and 2018, respectively.
The Company has an agreement with ALFS, whereby 12b-1 fee receivables are assigned to the Company and Allianz Life. The Company has also agreed with Allianz Life to share in reimbursing ALFS for direct and indirect expenses incurred in performing services for the Company and Allianz Life. In the event that assigned receivables exceed expenses, ALFS records a loss on the transaction with the Company and a dividend-in-kind to Allianz Life. The Company recorded revenue from this agreement of $3,936, $4,163, and $4,236 for the years ended December 31, 2020, 2019, and 2018, respectively. The Company recorded expenses related to this agreement of $6,027, $7,135, and $4,973 for the years ended December 31, 2020, 2019, and 2018, respectively.
(c) Reinsurance
The Company cedes certain term life and universal life insurance policies to Allianz Life. At December 31, 2020 and 2019, the Company had no reinsurance recoverables and receivables from Allianz Life included in Other assets on the Statutory Statements of Admitted Assets, Liabilities, and Capital and Surplus.
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
(d) Line of Credit Agreement
The Company has a line of credit agreement with its parent, Allianz Life Insurance Company of North America (Allianz Life) to provide liquidity as needed. The Company’s borrowing capacity under the agreement is limited to 5% of the general account admitted assets of the Company as of the preceding year end. The interest rate for borrowing under the agreement is based on the 1 month USD LIBOR rate. Borrowed amounts can be prepaid at any time with no prepayment penalty. Allianz Life provided $25,000 to the Company under the terms of this agreement on March 17, 2020 and the loan was paid in full on April 15, 2020. There was no interest accrued as of December 31, 2020 and 2019. There was no outstanding balance under the line of credit agreement as of December 31, 2020, and 2019.
(14) Employee Benefit Plans
The Company participates in the Allianz Asset Accumulation Plan (AAAP), a defined contribution plan sponsored by Allianz of America Corporation. Eligible employees are immediately enrolled in the AAAP on their first day of employment. The AAAP will accept participants’ pretax, Roth 401(k), and/or after-tax contributions up to 80% of the participants’ eligible compensation, although contributions remain subject to annual limitations set by the Internal Revenue Service. The Company matches up to a maximum of 7.5% of the employees’ eligible compensation. Participants are 100% vested in the Company’s matching contribution after three years of service.
The AAAP administration expenses and the trust fund, including trustee fees, investment manager fees, and audit fees, are payable from the trust fund but may, at the Company’s discretion, be paid by the Company. All legal fees are paid by the Company. It is the Company’s policy to fund the AAAP costs as incurred. The Company has expensed $323, $295, and $252 in 2020, 2019, and 2018, respectively, toward the AAAP matching contributions and administration expenses.
(15)Statutory Capital and Surplus
Statutory accounting practices prescribed or permitted by the Company’s state of domicile are directed toward insurer solvency and protection of policyholders. As such, the Company is required to meet minimum statutory capital and surplus requirements. The Company’s statutory capital and surplus as of December 31, 2020 and 2019 were in compliance with these requirements. The maximum amount of dividends that can be paid by New York insurance companies to stockholders without prior approval of the Department is subject to restrictions relating to statutory earned surplus, also known as unassigned funds. Unassigned funds are determined in accordance with the accounting procedures and practices governing preparation of the statutory annual statement. In accordance with New York statutes, the Company may declare and pay from its Unassigned surplus cash dividends of not more than the lesser of 10% of its beginning-of-the year statutory surplus, or its net gain from operations of the insurer, not including realized gains, for the 12-month period ending the 31st day of the preceding year. Based on these restrictions, ordinary dividends of $15,597 can be paid in 2021 without prior approval of the Department. The Company paid no dividends in 2020, 2019, and 2018.
Regulatory Risk-Based Capital
An insurance enterprise’s state of domicile imposes minimum risk-based capital requirements that were developed by the NAIC. The formulas for determining the amount of risk-based capital specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio of an enterprise’s regulatory total adjusted capital to its authorized control level risk-based capital, as defined by the NAIC. Companies below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. This ratio for the Company significantly exceeds required minimum thresholds as of December 31, 2020 and 2019.
(16) Direct Premiums Written by Third-Party Administrators
The Company has direct premiums written by third-party administrators (TPAs). The types of business written by the TPAs include life, accidental death and dismemberment, medical, disability, excess risk, and LTC. The authority granted to the TPAs includes claims payment, claims adjustment, underwriting, binding authority, and premium collection. Total premiums written by TPAs were $883, $803, and $935 for 2020, 2019, and 2018, respectively. For
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
Notes to the Statutory Financial Statements
(Dollars in thousands, except share data and security holdings quantities)
the years ended December 31, 2020, 2019, and 2018, there were no individual TPAs that wrote premiums that equaled at least 5% of the capital and surplus of the Company.
(17)Reconciliation to the Annual Statement
The Company is required to file an Annual Statement with the Department. As of December 31, 2020 and 2019, there is no difference in admitted assets or liabilities between this report and the Annual Statement. As of December 31, 2020, 2019, and 2018, there is no difference in capital and surplus or net income between this report and the Annual Statement.
(18) Commitments and Contingencies
The Company is or may become subject to claims and lawsuits that arise in the ordinary course of business. In the opinion of management, the ultimate resolution of any such known litigation will not have a material adverse effect on the Company's financial position.
The Company is contingently liable for possible future assessments under regulatory requirements pertaining to insolvencies and impairments of unaffiliated insurance companies. Provision has been made for assessments currently received and assessments anticipated for known insolvencies.
The financial services industry, variable and fixed annuities, life insurance, distribution companies, and broker-dealers, is subject to close scrutiny by regulators, legislators, and the media.
Federal and state regulators, such as state insurance departments, state securities departments, the SEC, the Financial Industry Regulatory Authority, the Internal Revenue Service, and other regulatory bodies regularly make inquiries and conduct examinations or investigations concerning various selling practices, including suitability reviews, product exchanges, sales to seniors, and compliance with, among other things, insurance and securities law. The Company is, and may become, subject to ongoing market conduct examinations and investigations by regulators, which may have a material adverse effect on the Company.
It can be expected that annuity and life product designs, management, and sales practices will be an ongoing source of regulatory scrutiny and enforcement actions, litigation, and rulemaking.
These matters could result in legal precedents and new industry-wide legislation, rules, and regulations that could significantly affect the financial services industry, including life insurance and annuity companies. It is unclear at this time whether any such litigation or regulatory actions will have a material adverse effect on the Company in the future.
(19) Subsequent Events
The Company has evaluated subsequent events through April 2, 2021, which is the date the Statutory Financial Statements were available to be issued. No material subsequent events have occurred since December 31, 2020 that require adjustment to the Statutory Financial Statements.
For Service or More Information The Statement of Additional Information (SAI) contains additional information about the Contract, Allianz Life, and the Separate Account. The SAI is dated the same date as this prospectus, and the SAI is incorporated by reference into this prospectus. This prospectus and the SAI can be found online at allianzlife.com/new-york/prospectuses. You can also request this information at no cost by calling (800) 624-0197, or by sending an email request to contact.us@allianzlife.com. The SEC maintains a website (www.sec.gov)sec.gov. The prospectus, the Form N-4 SAI and other information about the Contract are available on the EDGAR database on the SEC’s website. Copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following email address: publicinfo@sec.gov. Our Service Center If you need customer service (for Contract changes, information on Contract Values, requesting a withdrawal or transfer, changing your allocation instructions, etc.) please contact our Service Center at (800) 624-0197. To send an application, a check for an additional Purchase Payment, or for general customer service, please mail to the appropriate address as follows: SendTo send an application, ora check for an additional Purchase Payment,
with a check: | | Send an application or for general customer service,
without a check: please mail to the appropriate address as follows: | REGULAR MAIL | | REGULAR MAIL | Allianz Life Insurance Company of New York
NW5990
P.O. Box 145059060
Minneapolis, MN 55485-5990 | | Allianz Life Insurance Company of New York
P. O. Box 561
Minneapolis, MN 55440-056155459-0060 | | | | OVERNIGHT, CERTIFIED, OR REGISTERED MAIL | | OVERNIGHT, CERTIFIED, OR REGISTERED MAIL | Allianz Life Insurance Company of New York
NW5990
1801 Parkview Drive
Shoreview, MN 55126 | | Allianz Life Insurance Company of New York
5701 Golden Hills Drive
Golden Valley, MN 55416-1297 |
Checks sent to the wrong address for applications or additional Purchase Payments are forwarded to the 1801 Parkview5701 Golden Hills Drive address listed above, which may delay processing. |
For general customer service by email, please use this address: Contact.Us@allianzlife.com.contact.us@allianzlife.com. To send information by email, please use this address: variableannuity@send.allianzlife.com. To send information over the web, please upload to your account on our website at: www.allianzlife.com/new-york.allianzlife.com/new-york. If you have questions about whether you can submit certain information by email or over the web, please contact our Service Center. Until May 1, 2022,2023, all dealers that effect transactions in these securities may be required to deliver a prospectus. EDGAR Contract ID [ ]
Allianz Index Advantage® New York Variable Annuity Prospectus – April 30, 2021[MMDD, 2022]
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Securities and Exchange Commission Registration Fee$ 25,760
-------------- Estimated Printing and Filing Costs:$ 30,000
--------------
Estimated Accounting Fees:$ 60,000
---------------
Estimated Legal Fees:$ 175,000
---------------
Estimated Miscellaneous Fees:$ N/A
---------------
Securities and Exchange Commission Registration Fee | $ 25,760 | | -------------- | Estimated Printing and Filing Costs: | $ 30,000 | | -------------- | Estimated Accounting Fees: | $ 60,000 | | --------------- | Estimated Legal Fees: | $175,000 | | --------------- | Estimated Miscellaneous Fees: | N/A | | --------------- |
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Bylaws of the Insurance Company provide:
ARTICLE X INDEMNIFICATION OF OFFICERS, DIRECTORS AND EMPLOYEES
To the fullest extent allowed under New York law, the Company shall indemnify officers, directors and employees of the Company. No director shall be personally liable to the Company or any of its shareholders for damages for any breach of duty as a director; provided, however, that the foregoing provision shall not eliminate or limit (i) the liability of a director if a judgment or other final adjudication adverse to him or her establishes that his or her acts or omissions were in bad faith or involved intentional misconduct or were acts or omissions (a) which he or she knew or reasonably should have known violated the New York Insurance Law or (b) which violated a specific standard of care imposed on directors directly, and not by reference, by a provision of the New York Insurance Law (or any regulations promulgated thereunder) or (c) which constituted a knowing violation of any other law, or establishes that he or she personally gained in fact a financial profit or other advantage to which he or she was not legally entitled; or (ii) the liability of a director for any act or omission prior to adoption of these Restated Bylaws by the shareholders of the Company.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Insurance Company pursuant to the foregoing provisions, or otherwise, the Insurance Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and, is therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Insurance Company of expenses incurred or paid by a director, officer or controlling person of the Insurance Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Insurance Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
NOT APPLICABLE.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
| 1. | (a) Principal Underwriter Agreement by and between Preferred Life Insurance Company of New York on behalf of Preferred Life Variable Account C and NALAC Financial Plans, Inc. incorporated by reference as exhibit EX-99.B3.a. from Registrant’s Pre-Effective Amendment No. 1 to Form N-4 (File Nos. 333-19699 and 811-05716) electronically filed on May 12, 1997. Preferred Life Insurance Company of New York is the predecessor to Allianz Life Insurance Company of New York. Preferred Life Variable Account C is the predecessor to Allianz Life of NY Variable Account C. NALAC Financial Plans, Inc., is the predecessor to USAllianz Investor Services, LLC, which is the predecessor to Allianz Life Financial Services, LLC. |
| (b) | Broker-Dealer Agreement (amended and restated) between Allianz Life Insurance Company of New York and Allianz Life Financial Services, LLC, dated June 1, 2010 incorporated by reference as exhibit EX- 99.B3.b. from Registrant’s Post-Effective Amendment No. 21 to Form N-4 (File Nos. 333-143195 and 811-05716) electronically filed on October 21, 2010. |
| (c) | The current specimen of the selling agreement between Allianz Life Financial Services, LLC, the principal underwriter for the Contracts, and retail brokers which offer and sell the Contracts to the public is incorporated by reference as exhibit EX-99.B3.b from the Initial Registration Statement to Allianz Life Variable Account B’s Form N-4 (File Nos.333-134267 and 811-05618) electronically filed on May 19, 2006. The underwriter has executed versions of the agreement with approximately 2,100 retail brokers. |
(b) Bylaws, as amended and restated March 9, 2011, of Allianz Life Insurance Company of New York, filed on December 19, 2013 as Exhibit 3(b) to Registrant's initial registration on Form S-1 (File No. 333-192948), is incorporated by reference. 4.(a) Deferred Annuity Contract, L40538-NY, as revised 5/16/14, filed on December 8, 2014, as Exhibit 4(a) to Registrant's Post-Effective Amendment No. 1 on Form S-1 (File No. 333-192948), is incorporated by reference. | (b) | Contract Schedule Pages, S40877-NY, filed on May 2, 2014 as Exhibit 4(b) to Registrant's Pre-Effective Amendment No. 1 on Form S-1 (File No. 333-192948), is incorporated by reference. Schedule pages S40875-NY, S40876-NY, as revised 5/9/14, filed on December 8, 2014, as Exhibit 4(b) to Registrant's Post-Effective Amendment No. 1 on Form S-1 (File No. 333-192948), is incorporated by reference. |
| (c) | Application for Individual Annuity Contract, F40538-NY, as revised 5/2014, filed on December 8, 2014, as Exhibit 4(c) to Registrant's Post-Effective Amendment No. 1 on Form S-1, is incorporated by reference. Application for Ind. Var. Annuity Contract – F40538-02-NY (5/2015), filed on April 20, 2015, as Exhibit 4(c) to Registrant's Post-Effective Amendment No. 2 on Form S-1 (File No. 333-192948), is incorporated by reference. |
5. Opinion re Legality - not applicable
| 8. | Opinion re Tax Matters - not applicable |
| 10. | Material Contracts - not applicable |
21. Not applicable. 24. (a) Board Resolution, effective December 11, 2012, of the Board of Directors of Allianz Life Insurance Company of North America, filed on December 19, 2013 as Exhibit 24(b) to Registrant's initial registration on Form S-1 (File No. 333-192948), is incorporated by reference. (b) Board Resolution, effective March 6, 2014, of the Board of Directors of Allianz Life Insurance Company of New York, filed on May 2, 2014 as Exhibit 24(d) to Registrant's Pre-Effective Amendment No. 1 on Form S-1 (File No. 333-192948), is incorporated by reference. (c) * Powers of Attorney, filed herewith.on April 18, 2022, as Exhibit 24(c) to Registrant's Initial Registration Statement on Form S-1 (File No. 333-264350), is incorporated by reference.25. Not applicable 26. Not applicable (b) Transition Representation Letter - Independent Registered Public Accounting Firm, pursuant to S-K, item 304, filed on April 17, 2018, as Exhibit 99(b) to Registrant's initial registration on Form S-1 (File No. 333-224317), is incorporated by reference.
* Filed herewith ** To be filed by amendment
(b) Financial Statement Schedules All required financial statement schedules of Allianz Life Insurance Company of New York are included in Part I of this registration statement.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes pursuant to Item 512 of Regulation S-K:
| (1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
| (i) | To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; |
| (ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. |
| (iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
| (2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| (3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
| (4) | That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. |
| (5) | That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
| (i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
| (ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
| (iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
| (iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
| (6) | Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Insurance Company pursuant to the foregoing provisions, or otherwise, the Insurance Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and, is therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Insurance Company of expenses incurred or paid by a director, officer or controlling person of the Insurance Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Insurance Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. |
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minneapolis, State of Minnesota, on this 16th8th day of April, 2021.June, 2022. ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK By: /S/ Walter R. White*s/ Jasmine M. Jirele* Walter R. White Jasmine M. Jirele
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on April 16, 2021.June 8, 2022.
Signature | Title | Walter R. WhiteJasmine M. Jirele(1)*
| Chairman of theDirector, Board Chair and Chief Executive Officer
| Eric Thomes(1)* | Director and President | Gary A. Smith(1)* | Director | Martha Clark Goss(1)* | Director | Steven J. Thiel(1)
| Director, Vice President and Appointed Actuary
| Ronald M. Clark(1)* | Director | William E. Gaumond(1)* | Director, Chief Financial Officer and Treasurer | | | (principal accounting officer) | Lorraine Lods (1)* | Director | Kevin E. Walker(1)* | Director |
| (1)* | By Power of Attorney, filed as Exhibit 24(c) to this Registration Statement. |
BY: /s/ Erik T. Nelson
Stewart D. Gregg,Erik T. Nelson Associate General Counsel, Senior Counsel
PRE-EFFECTIVE NO. 1 FORM S-1 ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK INDEX TO EXHIBITS
| Exhibit | Description of Exhibit | 23(a)
107
| Consent of Independent Registered Public Accounting Firms
| 23(b)
| Consent of Counsel
| 24(c)
| Powers of Attorney
| | | | | | Filing Fee Exhibit Table
|
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