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TEACHERS INSURANCE AND ANNUITY ASSOCIATION A++OF AMERICA

TIAA-CREF LIFE INSURANCE COMPANY A++

New York, New York

A++

Ultimate Parent: Teachers Insurance & Ann Assn of America

TEACHERS INSURANCE AND ANNUITY ASSOCIATIONOF AMERICA730 Third Avenue

New York, NY 10017-3206Web: www.tiaa-cref.org

Tel.: 212-490-9000 Fax: 800-842-5916AMB#: 007112 NAIC#: 69345Ultimate Parent#: 007112 FEIN#: 13-1624203

BEST’S CREDIT RATING

Best’s Financial Strength Rating: A++ Outlook: StableBest’s Financial Size Category: XV

RATING RATIONALE

The following text is derived from A.M. Best’s Credit Report on TIAAGroup (AMB# 070362).

Rating Rationale: The ratings of Teachers Insurance and AnnuityAssociation of America (TIAA) and its wholly owned insurance subsidiary,TIAA-CREF Life Insurance Company (TIAA-CREF Life), collectivelyreferred to as the TIAA Group, reflect its market-leading position in the highereducation and not-for-profit pension market, solid net operating performance,stable liability profile and low-cost structure, strong risk-adjustedcapitalization, and significant financial flexibility. Partially offsetting thesestrengths are the challenges to sustain and improve its overall net operatingperformance, manage its material investment exposure to the real estatemarkets relative to total capital, and to maintain its dominant position in theU.S. higher education pension market niche.

TIAA and TIAA-CREF Life, together with their companion organization,the College Retirement Equities Fund (CREF), form one of the largestretirement systems in the U.S., with combined total assets underadministration of $897 billion as of year-end 2014. TIAA has a uniqueinsurance liability structure as approximately seventy-five percent of itsgeneral account reserves are not cashable and can only be received as a deathbenefit or in the form of a periodic annuity payout, typically in the form of aten-year annuity payout. Contract holders may also transfer funds from TIAAto CREF or to another employer-approved funding vehicle. This long liabilitystructure coupled with its low liquidity needs allows TIAA to take advantageof typically higher-yielding investments that are less liquid and of a longerduration. A.M. Best notes that TIAA does not provide living benefitguarantees on its insurance and pension businesses and has only a modestexposure to guaranteed minimum death benefits. The group’s low expensestructure, effective distribution networks, competitive product crediting ratesand excellent customer service provide it with favorable competitiveadvantages. TIAA has also leveraged its investment expertise, its economies

of scale, and unique business profile to expand into various activities that arecomplementary to its core pension businesses, such as asset management,mutual funds, trust services, state-sponsored tuition financing programs andplanned giving services. The group continues to maintain strong risk-adjustedcapitalization as measured by Best’s Capital Adequacy Ratio (BCAR).Risk-adjusted capitalization has been enhanced by its profitable operatingperformance that has more than offset modest investment losses in recentyears, the issuance of surplus notes, several capital initiatives and regulatorycapital relief. Furthermore, it continues to maintain considerable latitude inmanaging its capital base, particularly given its ability to adjust crediting rateson its interest-sensitive business and its conservative approach to valuing itsstatutory reserves. TIAA’s current financial leverage is prudent, with adequateinterest coverage and modest use of operating leverage. A.M. Best also notesthat TIAA recently acquired Nuveen Investments Inc. (Nuveen), a diversifiedinvestment management company. Nuveen operates within TIAA AssetManagement, a subsidiary of TIAA, retaining its current multi-boutiquebusiness model and continuing to support its investment affiliates throughscaled distribution, marketing and administrative services. A.M. Best believesthis acquisition adds scale to TIAA’s existing asset management business,expands the products and services available to its customers, and addsdiversification to its current investment and distribution platforms.

Despite TIAA’s favorable net operating performance trends, A.M. Bestnotes that the majority of net earnings have been derived through active spreadmanagement of its core pension businesses. However, with the majority of itspension businesses having 3% minimum interest rate guarantees, A.M. Bestbelieves the group may be challenged to sustain and improve upon itshistorical net operating performance as it navigates through this persistent lowinterest rate environment. To mitigate its exposure to these high minimuminterest rate guarantees over the long term, TIAA now utilizes an indexedminimum interest guarantee for new institutional and individual retirementaccounts. While A.M. Best considers TIAA’s investment managementcapabilities to be extremely strong, it notes that the overall investmentportfolio has generated moderate levels of investment losses over the past fiveyears. These losses have been triggered primarily by the effects of thefinancial crisis and its lingering impact on the U.S. residential and commercialreal estate markets. Although A.M. Best believes any near-term assetimpairments for TIAA will be more than offset by net operating gains, itremains concerned regarding the group’s sizable exposure to realestate-related assets. A.M. Best believes the potential for material credit lossesfrom its real estate holdings remains, should the global economic recoverystall or deteriorate. These concerns are somewhat mitigated as TIAA’s directcommercial mortgage loan portfolio is well diversified by asset class andgeographic region and thus far has performed reasonably well. The overallexposure to real estate assets is also down since the period prior to theeconomic downturn. Additionally, TIAA’s CMBS portfolio is concentratedalmost entirely in the highest-rated tranches, a majority in earlier vintages,well diversified both by asset class and geographic location and maintains ahigh degree of subordination. Finally, A.M. Best acknowledges that TIAA’sunique liability structure allows it to hold these investments to recovery ormaturity. TIAA continues to hold a dominant position in the U.S. highereducation and not-for-profit pension markets. However, its dominance hasbeen challenged in recent years by strong brand name, low-cost mutual fund


firms offering a wide array of non-guaranteed investment options thatcompete with TIAA’s dividend rates. While A.M. Best does not believeTIAA’s existing customer relationships would be affected significantly, it doesbelieve it could be challenged to attract new customers in this highlycompetitive market. In response, TIAA has implemented marketing strategiesaimed at strengthening its brand awareness and customer reach.

Key factors that could result in a negative rating action include a significantand sustained decline in risk-adjusted capitalization as measured by BCAR, amaterial increase in investment losses, net operating performance that doesnot meet A.M. Best’s expectations, or a regulatory change that adverselyimpacts TIAA’s core pension business.

FIVE YEAR RATING HISTORY

DateBest’sFSR Date

Best’sFSR

06/05/15 A++ 04/11/12 A++05/21/14 A++ 02/15/11 A++05/08/13 A++

KEY FINANCIAL INDICATORS ($000)Total Capital

Year Assets

CapitalSurplusFunds

AssetValuation

Reserve

NetPremiumsWritten

NetInvest

IncomeNet

Income2010 214,544,169 25,155,764 2,023,259 11,067,608 10,458,511 1,380,9772011 225,931,548 27,130,896 2,825,322 11,084,625 10,770,487 2,358,8932012 237,037,712 29,308,980 3,423,855 10,431,717 10,924,963 2,041,8272013 250,494,215 30,779,125 4,633,285 12,580,187 11,128,974 1,751,4662014 262,634,190 33,919,944 5,020,051 11,185,673 11,070,478 984,254

(*) Within several financial tables of this report, this company is compared against theIndividual Annuity Composite.

(*) Data reflected within all tables of this report has been compiled from the company-filedstatutory statement.

CORPORATE OVERVIEW

Teachers Insurance and Annuity Association of America (TIAA) wasestablished in 1918 as a legal reserve life insurance company under theinsurance laws of the State of New York by the Carnegie Foundation for theadvancement of teaching. Under its charter, TIAA’s purpose is to aid andstrengthen non-profit educational and research organizations, governmentalentities and other non-profit institutions by providing retirement andinsurance benefits for their employees and their families and by counselingsuch organizations and their employees on benefit plans and other measures ofeconomic security, all without profit to the corporation or its stockholders. Netearnings - after expenses and taxes - in excess of the amounts needed toprovide for contractual benefits and to establish necessary asset valuation andcontingency reserves are available for distribution to TIAA policyholders inthe form of additional amounts, or remain available for purposes that theTIAA Board of Trustees determines can uphold TIAA’s mission. Also,according to its charter, all of the outstanding common stock of TIAA is heldby TIAA Board of Overseers. TIAA Board of Overseers is a Type B New York

not-for-profit corporation incorporated in the state of New York, created forthe purpose of holding the stock of TIAA. TIAA Board of Overseers elects themembers of the TIAA Board of Trustees. TIAA Board of Trustees overseesthe management of TIAA and, among other things, approves changes toTIAA’s organizational documents. All policies and contracts issued by TIAAare non-participating.

TIAA operates in conjunction with its companion organization, the CollegeRetirement Equities Fund (CREF), a separate entity formed in 1952 as anot-for-profit membership corporation under the laws of the state of New Yorkto provide variable annuity contracts as alternatives to TIAA’s fixed annuitycontracts. CREF is registered as an open-end diversified managementinvestment company. TIAA and CREF policyholders traditionally have beenable to allocate their retirement annuity contributions between the TIAA fixedaccount and CREF’s variable annuity accounts. With total assets underadministration of $897 billion as of year-end 2014, TIAA-CREF is a majorfinancial services organization. Together, TIAA and CREF represent one ofthe largest retirement systems in the U.S.

An important provision of the TIAA system is that it provides full funding,immediate vesting and portability of pension funds, which enableseducational or research professionals to change employer without forfeitingaccrued pension rights. Today, TIAA and CREF serve approximately 5.0million people across more than 16,000 colleges, universities, and relatededucation and research institutions in the United States.

TIAA-CREF Life Insurance Company (TIAA-CREF Life) wasincorporated and commenced business in 1996, as a stock company under thelaws of the state of New York. It is a direct wholly-owned subsidiary of TIAA.TIAA-CREF Life sells life insurance and annuity products to the generalpublic with a large focus on marketing its products to individuals who ownretirement annuities or insurance policies issued by TIAA. TIAA-CREF Lifealso sells funding agreements and separate account guaranteed interestcontracts (SAGIC). These funding agreements are issued directly to states insupport of state sponsored 529 college savings and scholarship plans. SAGICsare unallocated, non-participating, deposit type contracts in the separateaccount and are designed as an investment vehicle offered to trustees and/orplan sponsors of stable value funds. The majority of the services required forits business operations are provided by TIAA and certain of its direct andindirect wholly-owned subsidiaries pursuant to various service, investmentmanagement, administrative, selling and distribution agreements.

CORPORATE STRUCTUREAMB# COMPANY NAME DOMICILE % OWN007112 Teachers Ins & Annuity Assoc NY 100.00060222 TIAA-CREF Life Ins Co NY 100.00

BUSINESS PROFILEThe following text is derived from A.M. Best’s Credit Report on TIAA

Group (AMB# 070362).

TIAA Group, directly and through its subsidiaries and affiliates, offers awide array of financial services and products, including: fixed and variableannuities (directly and through separate accounts); mutual funds; wealthmanagement advice; non-commissioned investment advice; education


savings programs; life insurance; trust and banking services; planned givingand endowment services; brokerage services; and institutional third-partyasset management. Several years ago, TIAA Group exited the group life anddisability as well as the long-term care businesses, since they no longer fit itslong-term objective and core strength. At year-end 2014, approximately 97%of the group’s general account policy and contract reserves were attributable topension and retirement annuities.

TIAA-CREF maintains the mission to aid and strengthen academic,medical, cultural, and research institutions by seeking to provide financialsecurity suited to the needs of institutions, and their employees and theirfamilies. TIAA Group does not have a commissioned sales force to distributeits products (other than the TIAA-CREF Life operations) and premiums forpension annuity and mutual fund products are remitted directly byparticipating institutions. TIAA Group recognizes that its customers arelooking for financial solutions that meet their needs at every life stage. TIAAGroup’s primary business is providing individually-owned retirementannuities to fund defined contribution pension plans at participatinginstitutions. In 2014, TIAA Group provided retirement annuities andinsurance coverage to approximately 5.0 million individuals at over 16,000colleges, universities, primary and secondary schools (K-12), independentschools, government entities, hospitals, and other non-profit organizationsacross the U.S. All aspects of the institutional relationship, including productdevelopment and management, service, distribution and sales are offered.TIAA-CREF policyholders are able to allocate their retirement annuitycontributions between proprietary options, which include the group’s generalaccount and real estate separate account and various CREF accounts that covera range of investment objectives and styles, including stock, money market,social choice, bond, and inflation-linked bond funds. Policyholders can alsoallocate these contributions to various proprietary mutual funds and lifecyclefunds. Non-proprietary funds are also made available. TIAA and TIAA-CREFBrokerage Services, a wholly owned subsidiary, have enhanced their platformto a more flexible recordkeeping platform providing a way to offer moreproprietary products and a broader array of services. This platform offersclients both proprietary and non-proprietary mutual funds, and in conjunctionwith the platform, TIAA Group offers investment advice with respect to assetallocation and fund selections to retirement plan participants. Furthermore,the group believes that the recordkeeping platform enables it to compete moreeffectively as the 403(b) market continues to move from a multiple full serviceprovider model to a single recordkeeping model with multiple investmentmanagers. The pension and retirement part of TIAA Group does not employsoliciting agents and does not incur commission costs. From the individualclient perspective, TIAA Group looks to offer advice, products and servicesrelated to fulfilling the client’s long-term financial goals, while from theinstitutional perspective, TIAA Group offers efficient and cost-effectivedelivery of products and administration.

Scope of Operations: TIAA offers Retirement Annuities (RAs), GroupRetirement Annuities (GRAs) and Retirement Choice Contracts (RCs) as partof an employee base retirement plan. TIAA also offers SupplementalRetirement Annuities (SRAs), Group Supplemental Retirement Annuities(GSRAs), Retirement Choice Plus contracts (RCPs) and individual retirementaccounts (IRAs). SRAs, GSRAs, and RCPs enable participants to supplementtheir basic retirement savings by voluntarily setting aside a portion of their

salaries to accumulate on a pre-tax basis. SRAs, GSRAs, and RCPs providefor lump-sum cash withdrawals. In 2012, TIAA ceased issuing new KeoghPlans but continues to service its existing Keogh Plan accounts. In 2013,TIAAreplaced the Keogh Plan offerings with IRA products.

Because of the purpose of TIAA’s annuities, TIAA participants typicallycan only withdraw their funds in the form of lifetime annuity income or as anannuity payable in ten annual installments. As of year-end 2014, 75% ofTIAA’s general account policy and contract reserves were not subject todiscretionary withdrawal at the option of the policyholder. Annuitantsreceiving income under TIAA lifetime annuity contracts are given the optionto transfer the actuarial present value of their remaining TIAA annuity incomepayments to CREF equity accounts over five years for the purchase of avariable annuity, payable under the same income option to the same first andsecond annuitant as the original TIAA annuity. As a result of thisexceptionally stable liability structure; TIAA Group is able to maintain along-term view toward its investment strategies, without exposing it toexcessive volatility resulting from short-term market fluctuations.Additionally, the group has established several ancillary businesses tocomplement its focused pension, annuity, and insurance operations. Theseventures dovetail with its target markets and strategic focus by capturing andretaining existing client’s wealth as well as attracting new clients.

TIAA Group markets individual life insurance and annuity productsthrough TIAA-CREF Life, a direct wholly-owned subsidiary of TIAA.TIAA-CREF Life sells its products to individuals who own retirementannuities or insurance policies issued by TIAA and to the general public. Thelife insurance portfolio includes term life insurance in the form of level termand annual renewable term, and permanent life insurance in the form ofuniversal life insurance and variable universal life for both single andsurvivorship sales. The representatives that market variable insuranceproducts are also registered representatives of TIAA Group’s affiliatedbroker-dealer. TIAA-CREF Life’s primary marketing efforts for term lifeinsurance products involve direct mail and an internet website which isdesigned to direct potential policyholders to a call center staffed by licensedrepresentatives. Universal life and variable universal life products are also soldthrough non-commissioned representatives. Assets associated with variableuniversal life insurance policies are held in various investment sub-accounts ofTIAA-CREF Life’s separate accounts, based on policyholder’s investmentallocations. TIAA-CREF Life also offers non-qualified individual annuitiesand insurance products to the general public.

In October 2012, TIAA-CREF Life and M Financial Group (M Financial)entered into an exclusive agreement to offer TIAA-CREF Life’s life insuranceproducts to M Financial’s member firms and their clients. TIAA-CREF Lifehas access to M Financial’s ultra-high net worth client base, significantlyexpanding its distribution network. As a result of this agreement, TIAA-CREFLife developed proprietary life insurance products to be distributedexclusively through M Financial and its affiliated licensed producers. Inaddition, TIAA-CREF Life provides a variety of dedicated resources tosupport M Financial’s member firms, including sales and marketing support,underwriting, and policyholder service. Since entering the exclusiveagreement, TIAA-CREF Life and M Financial have expanded their lifeportfolio to include two variable universal life products, a fixed universal lifeproduct designed for high net worth clients, both fixed and variablesurvivorship universal life products, and a term product.


TIAA Group conducts its investment management and investment advisorybusiness through TIAA Asset Management LLC (TAM), which holdscontrolling interests in TIAA-CREF Asset Management (TCAM) andTIAA-CREF Asset Management Finance Company (TAMF). NuveenInvestments, which was acquired in 2014 operates as a separate subsidiaryunder TAMF. Nuveen offers investment management capabilities across adiversified set of asset classes to provide investment solutions for a wide rangeof investor needs.

TIAA-CREF Life’s funding agreement segment focuses on providingnon-participating flexible premium funding agreements issued from thegeneral account to support education-related investment and/or savingsprograms sponsored by various states. Several states sponsor a 529 collegesavings plan and each plan is a tax-advantaged investment and savingsprogram designed to encourage account owners to save for the future highereducation expenses of a designated beneficiary. Some states offer aguaranteed option to those investing in the state’s college savings plan.TIAA-CREF Life provides funding agreements to certain states to supporttheir guaranteed option, which guarantees a return of account owners’principal, with interest. TIAA-CREF Life also makes available a fundingagreement to any state that provides a state scholarship program for thoseseeking higher education.

TIAA-CREF also issues separate account guaranteed interest contracts(SAGIC). These contracts are generally issued to the trustees of stable valuefunds (commingled and custom single client funds) and represent one of thefunding vehicles of such fund. These contracts may also be issued as a fundingvehicle for the stable value option offered to the plan’s participants.

Within the TIAA Group, TIAA-CREF Asset Management has leveraged itsscale and low-cost structure by developing an broad offering of 82 proprietarymutual fund and annuity products. TIAA sponsors a family of 62 no-loadmutual funds (32 individual strategy mutual funds, 12 Lifecycle funds, 12Lifecycle Index funds, 5 Lifestyle funds, and 1 Managed Allocation fund withfour classes of shares) under the TIAA-CREF Funds that are distributed to awide array of customers including, retirement plans, financial intermediaryplatforms, retail customers, institutional investors and college savingprograms. Participation in the sponsored mutual funds is generally available tomembers of the public, outside of TIAA’s core eligible participant base. Inaddition, TIAA sponsors a family of 11 mutual funds under the TIAA-CREFLife Funds that are used as underlying investment options for certain of thevariable annuity and variable insurance products issued by TIAA-CREF Life,and 9 single-tiered annuity products (CREF Accounts and TIAA SeparateAccount VA-1).

Demand for wealth transfer and other financial services among itstraditional participants prompted TIAA Group to enter the trust services andbanking markets through the TIAA-CREF Trust Company, FSB (TIAA-FSB). TIAA-FSB includes its institutional and individual trustbusinesses as well as its bank business. The focus of institutional trust servicesis on small endowment and foundation management, serving as trustee orinvestment manager for certain employee benefit plans and providing trustservices to TIAA-CREF affiliates. The individual trust services allow clientsto invest in professionally managed, customized portfolios. Personalconsultants allow customized advice to the individual client, strong existingrelationships with its clients, investment expertise of advisors and dedicated

portfolio managers. TIAA-FSB offers trust and investment managementservices to TIAA-CREF participants and their families, education andresearch institutions and others. TIAA has a regulatory commitment to keepTIAA-FSB “well capitalized” as defined by the regulations of the Office ofThrift Supervision (OTS) and its successor, the Office of the Comptroller ofthe Currency (OCC). Several years ago, the OTS approved TIAA-FSB ‘s plansto further expand its banking services. The TIAA-FSB began offeringlending and deposit products to the public. Lending products include fixed andadjustable rate products for both the purchasing and refinancing of a home aswell as home equity lines of credit. Deposit products include checking,savings, and money market accounts as well as certificates of deposit.

Consistent with TIAA’s higher education charter, the group established theTIAA-CREF Tuition Financing, Inc. (TFI), which is a direct wholly-ownedsubsidiary of TIAA. TFI provides certain plan management services for statesthat offer a state qualified tuition program (aka 529 plans). TFI’s planmanagement services include investment recommendations, recordkeepingfor state 529 plan account owners and beneficiaries, calculating unit values,tax reporting, certain administrative services, and marketing. Each state 529plan to which TFI provides services is offered by the state directly toindividuals and includes a variety of investment options. As of year-endDecember 31, 2014, TFI provided services to eleven state 529 plans.

In 2006, TIAA acquired Kaspick & Company, LLC (Kaspick) a leadingprovider of planned giving services for colleges, university and othernot-for-profit organizations. Kaspick operates as an indirect wholly-ownedsubsidiary of TIAA. Kaspick primarily serves the large ($20 million andabove) segment of the planned giving market as well as provides offerings tothe mid-sized planned giving programs that TIAA-CREF historically served.Planned giving provides important financial support for non-profitinstitutions, in which donors establish charitable trusts and purchasecharitable gift annuities to benefit their chosen charitable institutions. Kaspickis dedicated to helping charities materially enhance the value of their plannedgiving programs by providing sophisticated asset management, high qualitygift administration, expert program consulting, and constructive reporting. In2010, TIAA expanded its endowment management business with the launchof its wholly-owned subsidiary, Covariance Capital Management, Inc.(Covariance). Covariance provides comprehensive endowment managementservices to non-profit institutions with endowment assets of $25 million orgreater and provides clients access to third-party investment managers intraditional as well as alternative assets cases (private equity, real estate,commodities, and hedge funds). Covariance’s endowment-investing styleapproach provides customized investment solutions designed to address theliquidity and risk/return profiles of nonprofit institutions.


TOTAL PREMIUM COMPOSITION & GROWTH ANALYSISReinsurance

Period ————DPW———— ——Prem Assumed——Ending ($000) (% Chg) ($000) (% Chg)2010 11,071,878 13.2 11,790 -45.02011 11,302,718 2.1 -204,095 -99.92012 10,445,848 -7.6 … 100.02013 12,594,756 20.6 … …2014 11,200,150 -11.1 … …

5-Yr CAGR … 2.8 … -99.9

ReinsurancePeriod ———Prem Ceded——— —NPW & Deposits—Ending ($000) (% Chg) ($000) (% Chg)2010 16,059 -24.9 11,354,318 12.92011 13,998 -12.8 11,369,331 0.12012 14,131 1.0 10,765,503 -5.32013 14,569 3.1 12,997,004 20.72014 14,477 -0.6 11,656,586 -10.3

5-Yr CAGR … -7.5 … 3.0

Territory: The company is licensed in the District of Columbia, Puerto Rico,U.S. Virgin Islands and all states.

Business Trends: Net cash flows into its non-insurance activities haveincreased steadily over the past several years. A.M. Best believes that theseinitiatives will allow the organization to maintain its overall scale of operationwhile better serving the needs of its customer base. The acquisition of Nuveenmeaningfully expanded the organization’s assets under management andexpanded the customer base. Nevertheless, the pension and retirementsegment continues to comprise a sizable majority of the organization’s assetsunder management.

2014 BY-LINE BUSINESS ($000)

——DPW——Reinsurance

—Prem Assumed—Product Line ($000) (%) ($000) (%)Ordinary life 311,011 2.8 … …Individual annuities 5,651,577 50.5 … …Group annuities 5,223,356 46.6 … …Individual A&H 13,909 0.1 … …Group A&H 297 0.0 … …

Total 11,200,150 100.0 … …Reinsurance

——Prem Ceded—— ——NPW——Product Line ($000) (%) ($000) (%)Ordinary life 272 1.9 310,739 2.8Individual annuities … … 5,651,577 50.5Group annuities … … 5,223,356 46.7Individual A&H 13,908 96.1 1 0.0Group A&H 297 2.0 … …

Total 14,477 100.0 11,185,673 100.0

BY-LINE RESERVES ($000)Product Line 2014 2013 2012 2011 2010Ordinary life 540,149 537,217 533,300 527,277 536,414Supplementary contr 3,752,345 3,468,906 3,191,665 2,890,135 2,603,826Individual annuities 152,387,830 150,741,061 147,725,575 145,541,706 142,609,540Group annuities 31,769,743 29,775,596 27,316,226 25,203,312 22,951,072Deposit type contracts 949,280 852,977 764,940 693,636 646,338Individual A&H 16 16 20 21 35

Total 189,399,363 185,375,773 179,531,725 174,856,087 169,347,225

LIFE POLICIES STATISTICS-Ordinary Policies- -Group Policies- -Group Certificates-

Year Issued In Force Issued In Force Issued In Force2010 574 365,835 … … … 1,4842011 584 112,554 … … … 1,3222012 666 104,229 … … … 1,1922013 601 94,994 … … … 1,0552014 453 86,762 … … … 948

LIFE INSURANCE IN FORCE ($000)

Year

Whole LifeEndow. &

Adds Term Credit Group Industrial

TotalInsuranceIn Force

2010 1,617,678 25,186,550 … 81,220 … 26,885,4482011 889,585 23,005,812 … 71,714 … 23,967,1112012 916,284 21,272,294 … 65,092 … 22,253,6702013 933,412 19,220,820 … 57,727 … 20,211,9592014 939,398 17,425,540 … 51,528 … 18,416,466

NEW LIFE BUSINESS ISSUED ($000)

YearWhole Life& Endow. Term Credit Group

Indus-trial

TotalInsurance

Issued

Non-Par(%)

Par(%)

2010 50,659 -1,377 … … … 49,282 100.0 …2011 49,846 … … … … 49,846 100.0 …2012 57,592 … … … … 57,592 100.0 …2013 49,321 … … … … 49,321 100.0 …2014 38,728 … … … … 38,728 100.0 …

ORDINARY LIFE STATISTICSOrd. Renew Average 1st Yr 1st Yr Gen.

Lapse Premium Ord. Policy Avg Prem / Comm / Exp. /Ratio Persist (in dollars) Prem Total 1st Yr Policies

Year % % Issued In Force ($/M) Prem Prem In Force2010 7.5 97.1 85,857 73,269 13.55 0.5 … 56.172011 6.5 97.5 85,353 212,302 5.89 0.5 … 187.722012 6.8 97.3 86,474 212,883 15.21 0.6 … 185.742013 8.7 94.9 82,065 212,163 16.00 0.7 … 252.572014 8.4 95.8 85,492 211,670 16.94 0.7 … 315.67


First Year Gen’l Exp/ Return onNumber of Policies Premium Reserves Reserves

Year Issued In Force (000) (%) (%)2010 574 365,835 1,833 3.83 7.372011 584 112,554 1,886 4.01 11.962012 666 104,229 2,183 3.63 6.832013 601 94,994 2,392 4.47 1.932014 453 86,762 2,187 5.07 7.43

Note: Expenses are not affected by Federal Income taxes. The unusual proportion of terminsurance causes a very low average premium.

INDIVIDUAL ANNUITY STATISTICS

YearNPW(000)

Res(000)

Exp toRes(%)

Comm &Exp toNPW(%)

Benefits &Wdrwls toNPW (%)

Benefits &Wdrwls to

Res (%)2010 6,923,917 145,213,366 0.4 8.7 134.0 6.42011 6,606,962 148,431,841 0.4 9.9 143.1 6.42012 5,654,588 150,917,240 0.5 12.4 170.7 6.42013 6,883,794 154,209,966 0.5 11.5 152.3 6.82014 5,651,577 156,140,175 0.7 19.3 194.3 7.0

GROUP ANNUITY STATISTICS

YearNPW(000)

Res(000)

Exp toRes (%)

Comm &Exp toNPW(%)


Benefits &Wdrwls to

Res (%)2010 3,780,709 22,951,072 0.5 3.0 41.7 6.92011 4,337,322 25,203,312 0.5 2.7 42.1 7.22012 4,439,983 27,316,226 0.5 2.8 45.3 7.42013 5,374,186 29,775,596 0.5 2.8 43.4 7.82014 5,223,356 31,769,743 0.1 0.6 51.5 8.5

TOTAL ANNUITY ACTUARIAL RESERVESBY WITHDRAWAL CHARACTERISTICS

YearTotal Annuity

Res (000)

Min or NoSurrender

Charge (%)

WithSurrenderCharge 5%or more (%)

WithMVA (%)

NoSurrender

Allowed (%)2010 168,164,438 27.6 … … 72.42011 173,635,153 29.4 … … 70.62012 178,233,466 30.9 … … 69.12013 183,985,563 33.0 … … 67.02014 187,909,918 34.5 … … 65.5

SEPARATE ACCOUNT DATA

2014 2013 2012 2011 2010Sep Acct Assets 26,530,814 22,348,323 18,420,084 16,018,867 12,908,817% Growth 18.7 21.3 15.0 24.1 38.2S/A Assets/Adm Assets 10.1 8.9 7.8 7.1 6.0

Sep Acct Reserves 26,357,612 22,195,690 17,884,534 14,678,375 11,724,596% Individual Annuities 66.8 67.9 69.6 71.0 72.0% Group Annuities 33.2 32.1 30.4 29.0 28.0Deposit Type Liabilities 8,705 7,085 5,362 4,333 2,904Other Liabilities 155,444 139,854 176,892 141,661 122,344Sep Acct Surplus 8,902 5,532 353,112 1,194,427 1,058,960

S/A Prems & Deposits 3,688,929 3,534,029 2,636,305 2,725,290 2,650,513% Individual Annuities 56.9 59.2 59.9 66.7 70.5% Group Annuities 43.1 40.8 40.1 33.3 29.5

Sep Acct Fees & Charges 186,628 162,924 149,217 131,329 103,580% Individual Annuities 70.0 70.7 71.6 72.2 75.5% Group Annuities 30.0 29.3 28.4 27.8 24.5Fees & Chgs to Assets% 0.8 0.8 0.9 0.9 0.9

Sep Acct Ben & Wdrwls 2,267,543 1,973,213 1,417,757 1,462,546 1,078,642% Individual Annuities 63.9 67.8 66.3 72.7 73.9% Group Annuities 36.1 32.2 33.7 27.3 26.1Ben & Wdrwl to Assets% 9.3 9.7 8.2 10.1 9.7

GEOGRAPHIC BREAKDOWN BYDIRECT PREMIUM WRITINGS ($000)

2014 2013 2012 2011 2010New York 2,187,421 2,337,899 1,930,338 2,020,661 1,903,780Pennsylvania 802,837 894,892 743,079 808,237 777,410California 711,939 816,426 669,292 687,514 666,151New Jersey 646,415 668,355 453,657 503,496 498,737Massachusetts 587,741 701,864 577,742 627,793 691,051Michigan 495,020 572,420 450,679 532,821 511,276Illinois 415,024 454,879 409,308 437,010 389,628Ohio 403,707 433,022 359,805 334,394 293,875Texas 335,398 383,486 345,846 370,791 360,717Maryland 332,174 379,996 322,643 339,899 352,426All Other 4,496,797 5,131,908 4,324,053 4,749,724 4,707,962

Total 11,414,471 12,775,147 10,586,442 11,412,339 11,153,014

RISK MANAGEMENTThe following text is derived from A.M. Best’s Credit Report on TIAA


The mission of TIAA’s Enterprise Risk Management (ERM) division is toprotect TIAA-CREF’s mission, financial strength and reputation, and to be acompetitive advantage for the organization. To achieve this mission, ERMpromotes the proactive identification, measurement, assessment, andmanagement of risks within the firm’s risk appetite to drive risk-basedbusiness decisions. ERM is an independent function reporting directly toTIAA’s President and Chief Executive Officer. Board oversight is through a


Risk and Compliance Committee. ERM operates a risk committee structurethat includes integrated risk committees. The division is designed to alignwith the lines of business to better support business and strategic objectives inaddition to providing complementary ERM functions The ERM teamsinclude: TIAA-CREF Asset Management Risk, Retirement & IndividualRisk, Risk Transformation, Business Management, ERM Governance &Operational Risk, Financial Risk, and Valuation Services.

OPERATING PERFORMANCEThe following text is derived from A.M. Best’s Credit Report on TIAA


Operating Results: Overall, TIAA Group has demonstrated a generallyconsistent track record of strong net operating profitability, reflecting itsextremely stable liability structure, lean expense structure, and favorableinvestment income trends that have continued to increase despite thechallenges of the current low interest rate environment. TIAA Group’soperating and administrative expenses are exceptionally low and comparefavorably with those of mutual fund companies which typically havesignificantly lower cost infrastructures than most insurance companies.Distribution of traditional annuity products is conducted directly with itsinstitutional clients. Pension and retirement products (other than products soldby TIAA-CREF Life) are offered to employees on a payroll deduction basisand, therefore, incur no commission costs. However, full administrativeservice and support is provided both to the institution and individual planparticipants through the organization’s staff. In addition to this low-costdistribution structure, the group’s overall unit costs are further minimized bythe scale of its operations and its effective administrative links with itsinstitutional clients for payroll deduction, premium payment and servicing.TIAA Group has been strategically increasing infrastructure costs over thepast several years to add to its technology platform and advertising expense inorder to raise brand awareness.

The growth of the TIAA Group’s general account share of premium incomehas been relatively modest, since premium deposits have been concentrated inthe CREF variable annuities and mutual funds. Furthermore, the trends inrevenues have been affected by fluctuations in internal transfers - resultingfrom the state of economic cycles and capital market conditions - andpremium allocations between TIAA, CREF and mutual funds. The companyenjoys a significant competitive advantage due to its extremely stable liabilitystructure, which ensures long-term persistency of its policies in force andprovides for considerable flexibility in its investment strategies. TIAA Groupgenerates predictable and significant positive cash flow, and withapproximately 75% of its general account reserves not cashable, the companycan invest in opportunities - such as real estate or alternative investments -with long-term payback, a luxury not available to most of its competitors.

Some of the group’s newer non-core businesses remain challenged toachieve meaningful profitability on a fully stand-alone basis due to the lack ofcritical mass and the impact of start-up costs. The group will continue to makemodest investments in these activities over the next several years to build theirinfrastructure and position them to absorb projected growth. Over time,management will continue to evaluate these ventures and their ability tobecome profitable on a stand-alone basis, generate an acceptable return oninvestment and demonstrate synergies with TIAA Group’s core pensionoperations.

TIAA Group has generated generally consistent net operating gains the pastseveral years despite the challenges of the persistent low interest rate andvolatile equity market environment. The majority of pension business has 3%guaranteed interest rates. In response, TIAA now utilizes an indexedminimum interest guarantee basis for new institutional and individualretirement accounts. As part of this strategy, new institutional clients areoffered only an indexed guaranteed contract. Overall earnings declinedsomewhat in 2014, primarily due to an increase in operating expenses andhigher dividend payouts to policyholders.

Net operating earnings have been driven primarily by solid earnings fromits core individual and group annuity segments enhanced by an active spreadmanagement process. The group’s capital allocated to the non-insurancesegments has also contributed meaningful earnings. The ordinary lifesegment’s net operating performance has fluctuated in recent years dampenedsomewhat by expense strains associated with increased sales.

PROFITABILITY ANALYSIS ($000)————————Company————————

Pre-tax NetPeriod Net Oper Operating Net TotalEnding Income Gain Income Return2010 2,782,589 2,810,808 1,380,977 2,778,8262011 2,663,601 2,802,465 2,358,893 2,839,9302012 2,446,158 2,457,531 2,041,827 2,543,0852013 2,140,263 2,168,458 1,751,466 2,989,9152014 1,323,830 1,360,824 984,254 1,469,221

5-Yr Total 11,356,441 11,600,086 8,517,417 12,620,977

———Company——— —Industry Composite—Period Operating Operating Operating OperatingEnding ROR (%) ROE (%) ROR (%) ROE (%)2010 11.4 11.7 6.5 15.32011 11.2 10.7 1.7 4.22012 10.0 8.7 7.8 17.42013 7.9 7.2 8.4 19.12014 5.2 4.2 5.5 14.4

5-Yr Avg 9.1 8.2 5.9 14.1


PROFITABILITY TESTSComm & Pre-tax

Ben Paid Exp to NOG Operating Investto NPW NPW to Tot NOG to Return on Net Total

Year & Dep & Dep Assets Tot Rev Equity Yield Return2010 96.4 7.1 1.4 11.4 11.7 5.57 5.732011 99.9 7.5 1.3 11.2 10.7 5.50 5.622012 109.2 8.6 1.1 10.0 8.7 5.33 5.512013 99.4 8.0 0.9 7.9 7.2 5.20 5.782014 118.0 12.7 0.5 5.2 4.2 4.97 4.89

5-Year Avg 104.5 8.8 1.0 9.1 8.2 5.30 5.49

(*) Pre-Tax Invest Total Return quarterly calculation based on more limited quarterly data - seeCalculation Specifications.

NET OPERATING GAIN ($000)Product Line 2014 2013 2012 2011 2010Ordinary life 40,125 10,357 36,447 63,048 39,522Group life … 0 -12 -32 -36Supplementary contr -144,222 -126,331 -109,136 -100,954 -87,783Individual annuities 994,937 386,976 761,655 992,433 1,219,803Group annuities 605,207 217,159 279,669 357,403 318,587Individual A&H 17 1,378 1,473 1,316 1,992Group A&H 0 7 -13 -315 -300Other -135,240 1,678,912 1,487,448 1,489,566 1,319,024

Total 1,360,824 2,168,458 2,457,531 2,802,465 2,810,808

ACCIDENT & HEALTH STATISTICS ($000)Net Premiums Net Premiums Loss Exp. Underwriting

Year Written Earned Ratio Ratio Results2010 4 6 -99.9 999.9 -2842011 5 4 -99.9 999.9 -2912012 4 4 118.2 999.9 -502013 3 5 256.1 361.5 -182014 2 1 999.9 -99.9 15Current Year Experience:Group … … … … 0Guarant renew … … … … 26Other 2 1 999.9 … -10

INVESTMENT GAINS ($000)—————————Company—————————Net Realized UnrealizedInv Capital Capital

Year Income Gains Gains2010 10,458,511 -1,429,832 1,397,8502011 10,770,487 -443,572 481,0382012 10,924,963 -415,704 501,2582013 11,128,974 -416,992 1,238,4492014 11,070,478 -376,569 484,967

5-Year Total 54,353,413 -3,082,669 4,103,560

——————Company—————— -Industry Composite-Pre-taxInvest

Inv Inc Inv Return on Total Inv Inc InvGrowth Yield Inv Assets Return Growth Yield

Year (%) (%) (%) (%) (%) (%)2010 1.8 5.6 5.1 5.7 7.6 5.52011 3.0 5.5 5.5 5.6 3.6 5.42012 1.4 5.3 5.4 5.5 0.9 5.22013 1.9 5.2 5.4 5.8 4.8 5.32014 -0.5 5.0 4.8 4.9 2.3 5.2

5-Yr Avg 1.5 5.3 5.2 5.5 3.8 5.3


BALANCE SHEET STRENGTHThe following text is derived from A.M. Best’s Credit Report on TIAA


Capitalization: TIAA Group’s consolidated risk-adjusted capitalization asmeasured by Best’s Capital Adequacy Ratio (BCAR) model is strong for itscurrent business and investment risks. The company’s unique organizationalstructure and considerable latitude in managing its capital base - given itsstable liabilities and its ability to adjust crediting and dividend rates - haveprovided the group with significant financial flexibility.

TIAA Group’s capital has increased over the past several years as strong netoperating gains, coupled with large unrealized investment gains primarilyderived from its alternative asset portfolio, have more than offset realizedinvestment losses generated primarily from its long-term bond portfolio. In2014, the increase in capital was enhanced by the issuance of $2 billion insurplus notes to help fund the acquisition of Nuveen.Current BCAR: 247

CAPITAL GENERATION ANALYSIS ($000)——————Source of Surplus Growth——————

Pre-Tax Net Realized UnrealizedAdjusted Capital Income Capital

Year Gain Gains Taxes Gains2010 2,782,589 -1,429,832 -28,219 1,397,8502011 2,663,601 -443,572 -138,865 481,0382012 2,446,158 -415,704 -11,373 501,2582013 2,140,263 -416,992 -28,195 1,238,4492014 1,323,830 -376,569 -36,993 484,967

5-Yr Total 11,356,441 -3,082,669 -243,645 4,103,560


—————Source of Surplus Growth—————Change Change % Chg

in Other in inYear AVR Changes C&S C&S2010 -1,417,641 950,627 2,311,813 10.12011 -802,063 -62,735 1,975,132 7.92012 -598,532 233,531 2,178,083 8.02013 -1,209,431 -310,338 1,470,146 5.02014 -386,765 2,058,363 3,140,819 10.2

5-Yr Total -4,414,432 2,869,448 11,075,993 8.2

QUALITY OF SURPLUS ($000)Surplus Other Contributed Unassigned

Year Notes Debt Capital Surplus2010 2,000,000 … 3,050 23,152,7142011 2,000,000 … 3,050 25,127,8462012 2,000,000 … 3,050 27,305,9302013 2,000,000 … 3,050 28,776,0752014 4,000,000 … 3,050 29,916,894

Year-End Asset Valuation AdjustedYear C&S Reserve C&S2010 25,155,764 2,023,259 27,179,0232011 27,130,896 2,825,322 29,956,2192012 29,308,980 3,423,855 32,732,8352013 30,779,125 4,633,285 35,412,4112014 33,919,944 5,020,051 38,939,995

LEVERAGE ANALYSIS————————Company———————— -Industry Composite-C&S NPW Change C&S

to Surplus & Dep in NPW to SurplusYear Liab(%) Relief(%) to Capital & Dep(%) Liab(%) Relief(%)2010 15.5 … 0.4 12.9 11.8 …2011 16.5 … 0.4 0.1 11.8 …2012 17.6 … 0.3 -5.3 11.9 …2013 18.4 … 0.4 20.7 11.9 …2014 19.7 … 0.3 -10.3 12.3 …

CEDED REINSURANCE ANALYSIS—————————Company————————— -Industry Composite-

Face Affil Unaffil Total TotalAmount Reins Reins Reins Surplus Reins Reins Reins

Year Reins Ceded Rec/C&S Rec/C&S Rec/C&S Relief Leverage Rec/C&S Leverage2010 153,633 … 0.0 0.0 … 2.0 3.9 161.22011 144,303 … 0.0 0.0 … 1.7 4.0 173.22012 130,634 … 0.0 0.0 … 1.5 4.0 191.82013 116,094 … 0.0 0.0 … 1.4 4.0 192.92014 101,868 … 0.0 0.0 … 1.2 3.7 182.5


Liquidity: The Group enjoys very strong liquidity, with its high-quality,unleveraged balance sheet, solid earnings capacity, predictable cash flows andfavorable liability structure. TIAA Group’s long-term liability structurecontains minimal disintermediation risk and enables the Group to manage itsinvestment portfolio with a view toward long term performance, and to obtainthe highest possible long term rates of return within reasonable riskparameters. Short term liquidity is not a major concern due to the long termliability structure, although any liquidity requirements are monitoredcarefully. TIAA maintains adequate levels of liquid investment holdingsincluding cash, cash equivalents, short-term investments, and U.S. treasurysecurities to manage short term liquidity needs. TIAA expects total cashinflow to be adequate to meet withdrawal and benefit obligations for theforeseeable future.

TIAA has extended several guarantees in support of its subsidiaries andaffiliates. TIAA has a financial support agreement with TIAA-CREF Life.Under the agreement, TIAA will provide support so that TIAA-CREF Lifewill have the greater of (a) capital and surplus of $250 million, (b) the amountof capital and surplus needed to maintain TIAA-CREF Life’s capital andsurplus at a level not less than 150% of the NAIC Risk Based Capital model or(c) such other amounts as necessary to maintain TIAA-CREF Life’s financialstrength rating at least at the same or better than TIAA’s rating at all times. Thisagreement was not utilized during 2014 or 2013.

TIAA provides a $100 million unsecured revolving line of credit toTIAA-CREF Life. As of year-end 2014, $30 million was maintained on acommitted basis for which TIAA received a commitment fee on the undrawncommitted amount. All draw-downs were repaid by year-end.

TIAA provides a $1.0 billion uncommitted and unsecured line of credit tocertain accounts of CREF and certain TIAA-CREF Funds. Loans under therevolving credit facility are for a maximum of 60 days and are made solely atthe discretion of TIAA to fund shareholder redemption requests or othertemporary or emergency needs of CREF and the TIAA-CREF Funds. It is theintent of TIAA, CREF and the TIAA-CREF Funds to use this facility as asupplement liquidity facility, which would be used only after the availability ofthe current $1.5 billion committed credit facility that is maintained by a groupof banks for the benefit of the TIAA-CREF Fund Complex (which includesCREF and the TIAA-CREF Funds) has been exhausted.

TIAA provides mortality, expense and liquidity guarantees to REA and iscompensated for these guarantees. TIAA provides REA with a liquidityguarantee to ensure it has funds available to meet participant transfer or cashwithdrawal requests. If REA cannot fund participant requests, TIAA’s generalaccount will fund them by purchasing accumulation units from REA. Pursuantto the liquidity guarantee obligation, TIAA’s general account did not own anyaccumulation units at year-end 2014.

TIAA conducted leveraged investing through its wholly-owned subsidiary,TGM, through December 16, 2013, at which time TGM was dissolved. As aresult, TIAA no longer guarantees up to $5 bil. of TGM’s debt or provides a$1.0 bil. uncommitted and unsecured 364-day revolving line of credit.


LIQUIDITY ANALYSIS———————————Company———————————

Operating Non-Inv Delnq &Cash Quick Current Grade Bonds Foreclsd

Year Flow ($000) Liquidity Liquidity to Capital Mtg to Capital2010 7,644,828 49.9 92.8 47.1 …2011 8,378,974 51.7 92.3 46.0 …2012 8,091,861 52.1 93.0 40.1 …2013 7,923,581 52.0 93.1 34.3 …2014 5,166,180 49.9 90.5 31.4 …

————Company———— ——Industry Composite——Mtg & Cred Affil

Ten Lns Invest Quick CurrentYear & RE to Cap to Capital Liquidity Liquidity2010 67.4 33.6 51.9 91.12011 49.2 40.4 50.8 89.52012 44.5 42.9 49.5 89.32013 45.3 44.1 48.2 88.32014 45.1 57.4 47.4 88.2


Investments: TIAA Group benefits from an unusually stable andlong-maturity liability structure, as the majority of its insurance reserves arecomprised of annuities that are not subject to discretionary withdrawal at theoption of the policyholder. This unique structure provides the group with asignificant degree of flexibility in its investment strategy. TIAA Group hasused a well-balanced mix of long-maturity corporate bonds - including publicand private, direct commercial mortgages, structured securities, treasuries andother alternative investment classes that include private equity and real estateto support its liabilities. The group also uses derivative instruments foreconomic hedging, income generation, and asset replication purposes. As aresult of its stable liability structure, the company has historically been able totake a higher degree of credit risk and, to some extent, liquidity and interestrate risk, in its investment portfolio when compared to other insurers.Nonetheless, policyholders have benefited from TIAA Group’s ability totranslate this incremental risk into above-average investment performance thathas contributed to enhanced policyholder dividends compared to its peers.Policyholders also benefit from the significant economies of scale inTIAA-CREF’s operations, resulting in lower investment expenses and highernet investment yields.

TIAA Group’s total admitted assets are allocated approximately 88% to itsgeneral account with the remainder allocated to its separate accounts. Themajority of the group’s general account invested assets is in long-term bondsthat currently represent about 78% of total general account invested assets.The remainder of TIAA Group’s general account invested assets consist ofalternative assets (Schedule BA), direct mortgage loans, preferred andcommon stocks, real estate assets, contract loans, cash balances, short-termsecurities, and derivative instruments. A.M. Best notes TIAA does not engagein derivative financial instrument transactions for speculative purposes.

TIAA Group currently maintains three non-guaranteed separate accountsthat have been established to fund variable annuities in its non-pension andpension lines of business. A fourth separate account was established to fund aflexible fixed annuity contract offered to employer sponsored defined pensionplans principally in the 403(b) market. The separate account assets increasedduring 2014 driven by improving economic conditions, and improvedperformance of the commercial mortgage and equity markets.

INVESTMENT YIELDSCash & Invest.

Net Short- —Real Estate— Exp.Year Yield Bonds Stocks Mortgages Term Gross Net Ratio2010 5.57 5.95 2.75 6.36 0.86 16.68 4.02 5.132011 5.50 5.74 0.73 6.05 0.36 15.93 4.05 4.872012 5.33 5.49 2.29 6.10 0.23 15.17 3.95 4.992013 5.20 5.19 1.96 5.67 0.47 11.84 3.15 4.652014 4.97 5.01 1.20 5.27 0.12 11.59 3.40 4.79

Investments - Bond Portfolio: TIAA Group’s fixed income investmentexpertise is reflected in the historical performance of its general accountportfolio. The long-term bond portfolio is primarily investment gradesecurities with the majority in NAIC class 1 securities. Private placementinstruments comprise about 24% of the total long-term bond portfolio and area combination of 144A issues and “true” private placements and are generallyof lower credit quality than the public portfolio, but with greater covenantprotection in order to generate incremental investment yield. A.M. Best notesthat the group’s exposure to below investment grade bonds relative to capitaldeclined again slightly in 2014 and remains well below industry averages. Thetotal long-term bond portfolio is currently in a net unrealized gain position.The long-term bond portfolio is well-diversified being invested in publiclytraded corporate obligations, structured securities, and U.S. and foreigngovernment debt. A.M. Best notes that the Group’s European financialexposure is modest and concentrated primarily in senior debt holdings of theUnited Kingdom, Netherlands and France. Total structured securities that arerepresented primarily by residential mortgage-backed, commercialmortgage-backed and asset-backed securities account for about 39% of thetotal long-term bond portfolio and have structures that are well suited to TIAAGroup’s liability profile. The majority of TIAA Group’s residentialmortgage-backed structured securities (RMBS) is investment grade andconsist principally of government agency-backed and non-agency primeRMBSs that have specific prepayment and maturity profiles. The majority ofTIAA Group’s commercial mortgage-backed structured (CMBS) securities isinvestment grade. The CMBSs are typically originated by single or multipleissuers, which are collateralized by mortgage loans secured by incomeproducing commercial properties such as office buildings, multi-familydwellings, industrial, retail, hotels and other property types. The asset-backedsecurities have some modest exposure to the subprime residential mortgagemarket and collateralized debt obligations.


INVESTMENTS - SECURITIESCurrent Year Distribution of Bonds By Maturity

————Years———— Yrs-Avg0-1 1-5 5-10 10-20 20+ Maturity

Government 0.4 0.9 2.7 4.7 15.8 20Gov’t Agencies & Muni 0.1 0.2 0.7 4.8 5.2 19Industrial & Misc 3.9 14.0 24.5 9.1 11.5 10Hybrid Securities 0.0 0.0 … 0.1 0.4 21Affiliated 0.2 0.4 0.5 … … 5

Total 4.5 15.5 28.4 18.7 32.9 14

2014 2013 2012 2011 2010Bonds (000) 180,086,454 181,120,885 173,954,031 167,931,236 161,873,236US Government 21.8 22.7 23.8 24.8 12.3Foreign Government 2.4 2.2 2.1 1.9 1.8Foreign - All Other 11.7 11.5 11.3 10.5 10.1State/Special Revenue - US 10.9 11.0 12.1 12.5 24.6Industrial & Misc - US 51.6 51.0 48.7 48.2 46.9Hybrid Securities 0.5 0.6 0.8 1.2 1.4Credit Tenant Lns - US … … … … 2.0Affiliated 1.1 1.0 1.2 1.0 0.9

Private Issues 24.3 23.3 22.5 21.3 21.2Public Issues 75.7 76.7 77.5 78.7 78.8

Bond Quality (%) 2014 2013 2012 2011 2010Class 1 70.7 70.0 69.7 70.6 72.0Class 2 22.5 23.3 22.8 21.2 20.1Class 3 4.1 4.1 4.8 5.2 4.8Class 4 2.1 1.8 2.0 2.2 2.0Class 5 0.5 0.6 0.7 0.6 0.9Class 6 0.2 0.2 0.1 0.2 0.2

Investments - Equity Portfolio: The preferred stock portfolio is comprised ofpublic, non-public, and REIT securities with the majority of the returnscoming from dividends.

TIAA Group’s total common stock portfolio rose in 2014. The portfolio iscomprised of unaffiliated securities, mutual fund investments, andinvestments in affiliated wholly-owned subsidiaries including real estateproperties, life insurance and annuity operations, investment advisory andbanking and trust services.

INVESTMENTS - EQUITIES2014 2013 2012 2011 2010

Stocks (000) 3,003,852 2,723,715 3,532,979 3,664,649 3,688,073Unaffiliated Common 44.8 45.1 33.3 31.2 29.3Affiliated Common 51.9 53.1 65.6 66.5 68.6Unaffiliated Preferred 3.3 1.8 1.1 2.2 2.1

Investments - Mortgage Loans and Real Estate: The group originatesmortgage loans that are primarily collateralized by first mortgage liens oncompleted, income-producing commercial properties with the majority inshopping centers, office and industrial buildings, and apartments. The

mortgage loan portfolio is well-diversified geographically. The majority of themortgage loan portfolio is fixed rate loans. TIAA Group does not underwriteor hold any direct subprime mortgages in its commercial mortgage portfolioand has only minimal indirect subprime exposure. No portion of the mortgageportfolio was delinquent for more than 180 days or in the process offoreclosure at year-end 2014. The mortgage portfolio increased in 2013 and2014 driven by acquisitions and refinancings that more than offset pay-downs,maturities and prepayments.

TIAA Group invests in commercial real estate directly, through itswholly-owned subsidiaries and through real estate limited partnerships. Atyear-end 2014, the majority of the group’s directly owned real estate was inproperties held for production of income primarily in office and industrialbuildings.

INVESTMENTS - MORTGAGE LOANS & REAL ESTATE2014 2013 2012 2011 2010

Mortgages (000) 15,612,848 14,246,132 12,956,051 13,132,931 13,666,167Commercial 97.8 98.1 100.0 100.0 100.0Residential 0.6 0.0 0.0 0.0 0.0Farm 1.7 1.9 … … …

2014 2013 2012 2011 2010Real Estate (000) 1,966,221 1,811,569 1,623,255 1,595,164 1,340,628Property Occupied by Co 10.1 11.1 12.7 13.5 16.5Property Held for Inc 89.9 88.9 85.4 86.5 83.5Property Held for Sale … … 1.9 … …

Investments - Other Invested Assets: A large portion of TIAA Group’salternative assets (Schedules BA) consist of unaffiliated private equity fundsand real estate related holdings. A majority of the other invested assets isrepresented by a diversified portfolio of affiliated entities that invest inagricultural products for the production of income, timber harvesting,financial instruments that include fixed income securities, and mortgageloans, investments in real estate related holdings, operating subsidiaries,investment advisory subsidiaries and fund investments. During 2014, thisportfolio increased through increases in affiliated investments, including ameaningful investment in TIAA Asset Management, LLC to fund theacquisition of Nuveen. While these investments enhance the company’s spreadmanagement strategy, they could adversely affect operating performance andfinancial strength should the worldwide economic recovery stall ordeteriorate.

INVESTMENTS - OTHER INVESTED ASSETS2014 2013 2012 2011 2010

Other Inv Assets (000) 29,946,930 22,946,406 21,108,581 18,296,011 15,658,176Cash 4.9 4.7 5.4 2.7 8.0Short-Term 0.2 1.2 2.6 0.6 0.7Schedule BA Assets 86.8 87.0 84.8 88.4 82.2All Other 8.1 7.0 7.3 8.3 9.1

HISTORYDate Incorporated: 03/04/1918 Date Commenced: 05/17/1918

Domicile: NY


MANAGEMENT

Officers: President and Chief Executive Officer, Roger W. Ferguson, Jr.;Executive Vice President and Chief Operating Officer, Ronald R. Pressman;Executive Vice President and Chief Financial Officer, Virginia M. Wilson;Executive Vice President and Chief Risk Officer, Stephen B. Gruppo;Executive Vice President and Chief Marketing Officer, Constance Weaver;Executive Vice President and Chief Technology Officer, Scott Blandford;Executive Vice President and Chief Legal Officer, Brandon C. Becker;Executive Vice President and Chief Human Resource Officer, Otha T.Spriggs; Executive Vice Presidents, Kathie Andrade (Head of IndividualAdvisory Services), Brian Bohaty (Head of Client ServicesGroup andEnterprise Integration), Douglas Chittenden (Head of Individual Business),Carol Deckbar (CEO, TCAMAsset Management), Teresa Hassara (Head ofInstitutional Business), Jeffery Hickling (Office of Business Effectiveness),Robert G. Leary (President of Asset Management), Edward D. Van Dolsen(President of Retirement & Individual Financial Services), Paul Van Heest(Retirement and Individual Services Product Management); Senior VicePresident and Chief Actuary, Sue A. Collins; Senior Vice President andController, Phillip Goff; Secretary and Managing Director, Phillip T. Rollock.

Directors: Jeffrey R. Brown, James R. Chambers, Robert C. Clark, Roger W.Ferguson, Jr., Lisa W. Hess, Edward M. Hundert, Lawrence H. Linden,Maureen O’Hara, Donald K. Peterson, Sidney A. Ribeau, Dorothy K.Robinson, David L. Shedlarz, Ronald L. Thompson (Chair), Marta Tienda.

REGULATORYAn examination of the financial condition is being made as of December

31, 2013, by the insurance department of New York. The 2014 annualindependent audit of the company was conducted byPricewaterhouseCoopers, LLP. The annual statement of actuarial opinion isprovided by John Esch, Vice President and Senior Actuary.

Reserve basis: (Current ordinary business): 2001 CSO 3.5%; CRVMvaluation. (Current 2015 qualified annuity business): a-2000 (9,9), (10,10)3%-2.5% and A-2000 + SETBACK dynamic interest (5 year CMT less 125BP) (deferred), A-2000 (4,4) 2.50% (immediate).

FINANCIAL INFORMATIONBALANCE SHEET ($000) - December 31, 2014

Assets LiabilitiesTotal bonds 180,086,454 +Net policy reserves 188,450,083Total preferred stocks 100,445 Policy claims 557,031Total common stocks 2,903,407 Deposit type contracts 949,280Mortgage loans 15,612,848 Interest maint reserve 2,105,713Real estate 1,966,221 Comm taxes expenses 1,185,650Contract loans 1,555,357 Asset val reserve 5,020,051Cash & short-term inv 1,541,827 Other liabilities 3,924,526Other invested assets 25,988,689Prems and consids due 67,113 Tot liab w/o sep accts 202,192,334Accrued invest income 1,755,918 Separate account bus 26,521,912Other assets 4,525,097

Total liabilities 228,714,246Tot assets w/o sep accts 236,103,376 Common stock 2,500

Separate account bus 26,530,814 Surplus notes 4,000,000Paid in & contrib surpl 550Contingency reserve 29,916,894

Assets 262,634,190 Total 262,634,190

+Analysis of reserves; Life $444,552; annuities $184,157,039; supplementary contracts withlife contingencies $3,752,345; disability active lives $6,388; disability disabled lives $61,487;miscellaneous reserves $28,256; accident & health $16.

SUMMARY OF OPERATIONS ($000)Premiums: Death benefits 72,069Ordinary life 310,739 Matured endowments 78Individual annuities 5,651,577 Annuity benefits 7,321,813Group annuities 5,223,356 Disability benefits 7,287Acc & health other 1 Surrender benefits 6,185,297Total premiums 11,185,673 Acc & health benefits 12

Supplementary contracts 720,479 Int on policy funds 28,414Net investment income 11,070,478 Supplementary contracts 139,452Amort interest maint res 182,135 Incr life reserves 3,927,287Net gain from sep acct 3,370 Incr a & h reserves 0Other income 3,034,726 Insur taxes lic & fees 60,642

General ins expenses 1,419,111Net transf to sep acct 1,676,116Misc operating expense 446,066

Total 26,196,861 Total 21,283,644

Gain from operations before FIT & div to policyholders....................................... 4,913,217

Dividends to policyholders: life......................................................................... 3,589,386

Gains from operations after dividends to policyholders........................................ 1,323,830

Federal income taxes incurred........................................................................... -36,993

Net gain from operations after FIT and dividends................................................ 1,360,824


CASH FLOW ANALYSIS ($000)

Funds Provided Funds AppliedGross cash from oper 23,905,333 Benefits paid 13,735,679Long-term bond proceeds 24,289,491 Comm, taxes, expenses 1,561,158Other invest proceeds 5,504,557 Long-term bonds acquired 23,043,397Other cash provided 2,178,768 Other invest acquired 13,768,029

Other cash applied 3,589,573Incr cash & short-term 180,313

Total 55,878,149 Total 55,878,149

—— ♦ ——

Ultimate Parent: Teachers Insurance & Ann Assn of America

TIAA-CREF LIFE INSURANCE COMPANY730 Third Avenue

New York, NY 10017-3206Web: www.tiaa-cref.org

Tel.: 800-223-1200 Fax: 800-842-5916AMB#: 060222 NAIC#: 60142Ultimate Parent#: 007112 FEIN#: 13-3917848

BEST’S CREDIT RATING

Best’s Financial Strength Rating: A++ Outlook: StableBest’s Financial Size Category: XV

RATING RATIONALE

Rating Rationale: The ratings of Teachers Insurance and AnnuityAssociation of America (TIAA) have been extended to TIAA-CREF Life as itremains a strategic part of TIAA’s current and future business strategies.TIAA-CREF Life maintains solid stand-alone risk-adjusted capitalizationfurther enhanced by a financial support agreement with its parent, TIAA.TIAA-CREF Life’s positive operating performance also provides a measure ofearnings diversification. TIAA-CREF Life is fully integrated with TIAAthrough its investment management, back-office operations and corporateoversight. TIAA-CREF Life markets individual annuities, life insurance,funding agreements and separate account guaranteed interest contracts. Its lifeinsurance and individual annuity products are available to the general public aswell as individuals who own retirement annuities or insurance policies issuedby TIAA.


The ratings of Teachers Insurance and Annuity Association of America(TIAA) and its wholly owned insurance subsidiary, TIAA-CREF LifeInsurance Company (TIAA-CREF Life), collectively referred to as the TIAAGroup, reflect its market-leading position in the higher education andnot-for-profit pension market, solid net operating performance, stable liabilityprofile and low-cost structure, strong risk-adjusted capitalization, andsignificant financial flexibility. Partially offsetting these strengths are thechallenges to sustain and improve its overall net operating performance,manage its material investment exposure to the real estate markets relative tototal capital, and to maintain its dominant position in the U.S. higher educationpension market niche.

TIAA and TIAA-CREF Life, together with their companion organization,the College Retirement Equities Fund (CREF), form one of the largestretirement systems in the U.S., with combined total assets underadministration of $897 billion as of year-end 2014. TIAA has a uniqueinsurance liability structure as approximately seventy-five percent of itsgeneral account reserves are not cashable and can only be received as a deathbenefit or in the form of a periodic annuity payout, typically in the form of aten-year annuity payout. Contract holders may also transfer funds from TIAAto CREF or to another employer-approved funding vehicle. This long liabilitystructure coupled with its low liquidity needs allows TIAA to take advantageof typically higher-yielding investments that are less liquid and of a longerduration. A.M. Best notes that TIAA does not provide living benefitguarantees on its insurance and pension businesses and has only a modestexposure to guaranteed minimum death benefits. The group’s low expensestructure, effective distribution networks, competitive product crediting ratesand excellent customer service provide it with favorable competitiveadvantages. TIAA has also leveraged its investment expertise, its economiesof scale, and unique business profile to expand into various activities that arecomplementary to its core pension businesses, such as asset management,mutual funds, trust services, state-sponsored tuition financing programs andplanned giving services. The group continues to maintain strong risk-adjustedcapitalization as measured by Best’s Capital Adequacy Ratio (BCAR).Risk-adjusted capitalization has been enhanced by its profitable operatingperformance that has more than offset modest investment losses in recentyears, the issuance of surplus notes, several capital initiatives and regulatorycapital relief. Furthermore, it continues to maintain considerable latitude inmanaging its capital base, particularly given its ability to adjust crediting rateson its interest-sensitive business and its conservative approach to valuing itsstatutory reserves. TIAA’s current financial leverage is prudent, with adequateinterest coverage and modest use of operating leverage. A.M. Best also notesthat TIAA recently acquired Nuveen Investments Inc. (Nuveen), a diversifiedinvestment management company. Nuveen operates within TIAA AssetManagement, a subsidiary of TIAA, retaining its current multi-boutiquebusiness model and continuing to support its investment affiliates throughscaled distribution, marketing and administrative services. A.M. Best believesthis acquisition adds scale to TIAA’s existing asset management business,expands the products and services available to its customers, and addsdiversification to its current investment and distribution platforms.

Despite TIAA’s favorable net operating performance trends, A.M. Bestnotes that the majority of net earnings have been derived through active spreadmanagement of its core pension businesses. However, with the majority of its


pension businesses having 3% minimum interest rate guarantees, A.M. Bestbelieves the group may be challenged to sustain and improve upon itshistorical net operating performance as it navigates through this persistent lowinterest rate environment. To mitigate its exposure to these high minimuminterest rate guarantees over the long term, TIAA now utilizes an indexedminimum interest guarantee for new institutional and individual retirementaccounts. While A.M. Best considers TIAA’s investment managementcapabilities to be extremely strong, it notes that the overall investmentportfolio has generated moderate levels of investment losses over the past fiveyears. These losses have been triggered primarily by the effects of thefinancial crisis and its lingering impact on the U.S. residential and commercialreal estate markets. Although A.M. Best believes any near-term assetimpairments for TIAA will be more than offset by net operating gains, itremains concerned regarding the group’s sizable exposure to realestate-related assets. A.M. Best believes the potential for material credit lossesfrom its real estate holdings remains, should the global economic recoverystall or deteriorate. These concerns are somewhat mitigated as TIAA’s directcommercial mortgage loan portfolio is well diversified by asset class andgeographic region and thus far has performed reasonably well. The overallexposure to real estate assets is also down since the period prior to theeconomic downturn. Additionally, TIAA’s CMBS portfolio is concentratedalmost entirely in the highest-rated tranches, a majority in earlier vintages,well diversified both by asset class and geographic location and maintains ahigh degree of subordination. Finally, A.M. Best acknowledges that TIAA’sunique liability structure allows it to hold these investments to recovery ormaturity. TIAA continues to hold a dominant position in the U.S. highereducation and not-for-profit pension markets. However, its dominance hasbeen challenged in recent years by strong brand name, low-cost mutual fundfirms offering a wide array of non-guaranteed investment options thatcompete with TIAA’s dividend rates. While A.M. Best does not believeTIAA’s existing customer relationships would be affected significantly, it doesbelieve it could be challenged to attract new customers in this highlycompetitive market. In response, TIAA has implemented marketing strategiesaimed at strengthening its brand awareness and customer reach.

Key factors that could result in a negative rating action include a significantand sustained decline in risk-adjusted capitalization as measured by BCAR, amaterial increase in investment losses, net operating performance that doesnot meet A.M. Best’s expectations, or a regulatory change that adverselyimpacts TIAA’s core pension business.

FIVE YEAR RATING HISTORY

DateBest’sFSR Date

Best’sFSR

06/05/15 A++ 04/11/12 A++05/21/14 A++ 02/15/11 A++05/08/13 A++

KEY FINANCIAL INDICATORS ($000)Total Capital

Year Assets

CapitalSurplusFunds

AssetValuation

Reserve

NetPremiumsWritten

NetInvest

IncomeNet

Income2010 3,570,995 370,581 7,805 218,881 128,693 24,9442011 4,250,093 398,385 10,594 223,785 131,639 29,5052012 5,656,327 412,931 14,164 282,508 145,499 18,1432013 7,988,639 373,833 17,937 480,855 148,804 -29,3282014 9,803,159 354,575 27,305 675,516 161,035 -17,526

(*) Within several financial tables of this report, this company is compared against theIndividual Annuity Composite.

(*) Data reflected within all tables of this report has been compiled from the company-filedstatutory statement.

BUSINESS PROFILEThe following text is derived from A.M. Best’s Credit Report on TIAA


TIAA Group, directly and through its subsidiaries and affiliates, offers awide array of financial services and products, including: fixed and variableannuities (directly and through separate accounts); mutual funds; wealthmanagement advice; non-commissioned investment advice; educationsavings programs; life insurance; trust and banking services; planned givingand endowment services; brokerage services; and institutional third-partyasset management. Several years ago, TIAA Group exited the group life anddisability as well as the long-term care businesses, since they no longer fit itslong-term objective and core strength. At year-end 2014, approximately 97%of the group’s general account policy and contract reserves were attributable topension and retirement annuities.

TIAA-CREF maintains the mission to aid and strengthen academic,medical, cultural, and research institutions by seeking to provide financialsecurity suited to the needs of institutions, and their employees and theirfamilies. TIAA Group does not have a commissioned sales force to distributeits products (other than the TIAA-CREF Life operations) and premiums forpension annuity and mutual fund products are remitted directly byparticipating institutions. TIAA Group recognizes that its customers arelooking for financial solutions that meet their needs at every life stage. TIAAGroup’s primary business is providing individually-owned retirementannuities to fund defined contribution pension plans at participatinginstitutions. In 2014, TIAA Group provided retirement annuities andinsurance coverage to approximately 5.0 million individuals at over 16,000colleges, universities, primary and secondary schools (K-12), independentschools, government entities, hospitals, and other non-profit organizationsacross the U.S. All aspects of the institutional relationship, including productdevelopment and management, service, distribution and sales are offered.TIAA-CREF policyholders are able to allocate their retirement annuitycontributions between proprietary options, which include the group’s generalaccount and real estate separate account and various CREF accounts that covera range of investment objectives and styles, including stock, money market,social choice, bond, and inflation-linked bond funds. Policyholders can alsoallocate these contributions to various proprietary mutual funds and lifecycle


funds. Non-proprietary funds are also made available. TIAA and TIAA-CREFBrokerage Services, a wholly owned subsidiary, have enhanced their platformto a more flexible recordkeeping platform providing a way to offer moreproprietary products and a broader array of services. This platform offersclients both proprietary and non-proprietary mutual funds, and in conjunctionwith the platform, TIAA Group offers investment advice with respect to assetallocation and fund selections to retirement plan participants. Furthermore,the group believes that the recordkeeping platform enables it to compete moreeffectively as the 403(b) market continues to move from a multiple full serviceprovider model to a single recordkeeping model with multiple investmentmanagers. The pension and retirement part of TIAA Group does not employsoliciting agents and does not incur commission costs. From the individualclient perspective, TIAA Group looks to offer advice, products and servicesrelated to fulfilling the client’s long-term financial goals, while from theinstitutional perspective, TIAA Group offers efficient and cost-effectivedelivery of products and administration.

Scope of Operations: TIAA offers Retirement Annuities (RAs), GroupRetirement Annuities (GRAs) and Retirement Choice Contracts (RCs) as partof an employee base retirement plan. TIAA also offers SupplementalRetirement Annuities (SRAs), Group Supplemental Retirement Annuities(GSRAs), Retirement Choice Plus contracts (RCPs) and individual retirementaccounts (IRAs). SRAs, GSRAs, and RCPs enable participants to supplementtheir basic retirement savings by voluntarily setting aside a portion of theirsalaries to accumulate on a pre-tax basis. SRAs, GSRAs, and RCPs providefor lump-sum cash withdrawals. In 2012, TIAA ceased issuing new KeoghPlans but continues to service its existing Keogh Plan accounts. In 2013,TIAAreplaced the Keogh Plan offerings with IRA products.

Because of the purpose of TIAA’s annuities, TIAA participants typicallycan only withdraw their funds in the form of lifetime annuity income or as anannuity payable in ten annual installments. As of year-end 2014, 75% ofTIAA’s general account policy and contract reserves were not subject todiscretionary withdrawal at the option of the policyholder. Annuitantsreceiving income under TIAA lifetime annuity contracts are given the optionto transfer the actuarial present value of their remaining TIAA annuity incomepayments to CREF equity accounts over five years for the purchase of avariable annuity, payable under the same income option to the same first andsecond annuitant as the original TIAA annuity. As a result of thisexceptionally stable liability structure; TIAA Group is able to maintain along-term view toward its investment strategies, without exposing it toexcessive volatility resulting from short-term market fluctuations.Additionally, the group has established several ancillary businesses tocomplement its focused pension, annuity, and insurance operations. Theseventures dovetail with its target markets and strategic focus by capturing andretaining existing client’s wealth as well as attracting new clients.

TIAA Group markets individual life insurance and annuity productsthrough TIAA-CREF Life, a direct wholly-owned subsidiary of TIAA.TIAA-CREF Life sells its products to individuals who own retirementannuities or insurance policies issued by TIAA and to the general public. Thelife insurance portfolio includes term life insurance in the form of level termand annual renewable term, and permanent life insurance in the form ofuniversal life insurance and variable universal life for both single andsurvivorship sales. The representatives that market variable insurance

products are also registered representatives of TIAA Group’s affiliatedbroker-dealer. TIAA-CREF Life’s primary marketing efforts for term lifeinsurance products involve direct mail and an internet website which isdesigned to direct potential policyholders to a call center staffed by licensedrepresentatives. Universal life and variable universal life products are also soldthrough non-commissioned representatives. Assets associated with variableuniversal life insurance policies are held in various investment sub-accounts ofTIAA-CREF Life’s separate accounts, based on policyholder’s investmentallocations. TIAA-CREF Life also offers non-qualified individual annuitiesand insurance products to the general public.

In October 2012, TIAA-CREF Life and M Financial Group (M Financial)entered into an exclusive agreement to offer TIAA-CREF Life’s life insuranceproducts to M Financial’s member firms and their clients. TIAA-CREF Lifehas access to M Financial’s ultra-high net worth client base, significantlyexpanding its distribution network. As a result of this agreement, TIAA-CREFLife developed proprietary life insurance products to be distributedexclusively through M Financial and its affiliated licensed producers. Inaddition, TIAA-CREF Life provides a variety of dedicated resources tosupport M Financial’s member firms, including sales and marketing support,underwriting, and policyholder service. Since entering the exclusiveagreement, TIAA-CREF Life and M Financial have expanded their lifeportfolio to include two variable universal life products, a fixed universal lifeproduct designed for high net worth clients, both fixed and variablesurvivorship universal life products, and a term product.

TIAA Group conducts its investment management and investment advisorybusiness through TIAA Asset Management LLC (TAM), which holdscontrolling interests in TIAA-CREF Asset Management (TCAM) andTIAA-CREF Asset Management Finance Company (TAMF). NuveenInvestments, which was acquired in 2014 operates as a separate subsidiaryunder TAMF. Nuveen offers investment management capabilities across adiversified set of asset classes to provide investment solutions for a wide rangeof investor needs.

TIAA-CREF Life’s funding agreement segment focuses on providingnon-participating flexible premium funding agreements issued from thegeneral account to support education-related investment and/or savingsprograms sponsored by various states. Several states sponsor a 529 collegesavings plan and each plan is a tax-advantaged investment and savingsprogram designed to encourage account owners to save for the future highereducation expenses of a designated beneficiary. Some states offer aguaranteed option to those investing in the state’s college savings plan.TIAA-CREF Life provides funding agreements to certain states to supporttheir guaranteed option, which guarantees a return of account owners’principal, with interest. TIAA-CREF Life also makes available a fundingagreement to any state that provides a state scholarship program for thoseseeking higher education.

TIAA-CREF also issues separate account guaranteed interest contracts(SAGIC). These contracts are generally issued to the trustees of stable valuefunds (commingled and custom single client funds) and represent one of thefunding vehicles of such fund. These contracts may also be issued as a fundingvehicle for the stable value option offered to the plan’s participants.

Within the TIAA Group, TIAA-CREF Asset Management has leveraged itsscale and low-cost structure by developing an broad offering of 82 proprietary


mutual fund and annuity products. TIAA sponsors a family of 62 no-loadmutual funds (32 individual strategy mutual funds, 12 Lifecycle funds, 12Lifecycle Index funds, 5 Lifestyle funds, and 1 Managed Allocation fund withfour classes of shares) under the TIAA-CREF Funds that are distributed to awide array of customers including, retirement plans, financial intermediaryplatforms, retail customers, institutional investors and college savingprograms. Participation in the sponsored mutual funds is generally available tomembers of the public, outside of TIAA’s core eligible participant base. Inaddition, TIAA sponsors a family of 11 mutual funds under the TIAA-CREFLife Funds that are used as underlying investment options for certain of thevariable annuity and variable insurance products issued by TIAA-CREF Life,and 9 single-tiered annuity products (CREF Accounts and TIAA SeparateAccount VA-1).

Demand for wealth transfer and other financial services among itstraditional participants prompted TIAA Group to enter the trust services andbanking markets through the TIAA-CREF Trust Company, FSB (TIAA-FSB). TIAA-FSB includes its institutional and individual trustbusinesses as well as its bank business. The focus of institutional trust servicesis on small endowment and foundation management, serving as trustee orinvestment manager for certain employee benefit plans and providing trustservices to TIAA-CREF affiliates. The individual trust services allow clientsto invest in professionally managed, customized portfolios. Personalconsultants allow customized advice to the individual client, strong existingrelationships with its clients, investment expertise of advisors and dedicatedportfolio managers. TIAA-FSB offers trust and investment managementservices to TIAA-CREF participants and their families, education andresearch institutions and others. TIAA has a regulatory commitment to keepTIAA-FSB “well capitalized” as defined by the regulations of the Office ofThrift Supervision (OTS) and its successor, the Office of the Comptroller ofthe Currency (OCC). Several years ago, the OTS approved TIAA-FSB ‘s plansto further expand its banking services. The TIAA-FSB began offeringlending and deposit products to the public. Lending products include fixed andadjustable rate products for both the purchasing and refinancing of a home aswell as home equity lines of credit. Deposit products include checking,savings, and money market accounts as well as certificates of deposit.

Consistent with TIAA’s higher education charter, the group established theTIAA-CREF Tuition Financing, Inc. (TFI), which is a direct wholly-ownedsubsidiary of TIAA. TFI provides certain plan management services for statesthat offer a state qualified tuition program (aka 529 plans). TFI’s planmanagement services include investment recommendations, recordkeepingfor state 529 plan account owners and beneficiaries, calculating unit values,tax reporting, certain administrative services, and marketing. Each state 529plan to which TFI provides services is offered by the state directly toindividuals and includes a variety of investment options. As of year-endDecember 31, 2014, TFI provided services to eleven state 529 plans.

In 2006, TIAA acquired Kaspick & Company, LLC (Kaspick) a leadingprovider of planned giving services for colleges, university and othernot-for-profit organizations. Kaspick operates as an indirect wholly-ownedsubsidiary of TIAA. Kaspick primarily serves the large ($20 million andabove) segment of the planned giving market as well as provides offerings tothe mid-sized planned giving programs that TIAA-CREF historically served.Planned giving provides important financial support for non-profit

institutions, in which donors establish charitable trusts and purchasecharitable gift annuities to benefit their chosen charitable institutions. Kaspickis dedicated to helping charities materially enhance the value of their plannedgiving programs by providing sophisticated asset management, high qualitygift administration, expert program consulting, and constructive reporting. In2010, TIAA expanded its endowment management business with the launchof its wholly-owned subsidiary, Covariance Capital Management, Inc.(Covariance). Covariance provides comprehensive endowment managementservices to non-profit institutions with endowment assets of $25 million orgreater and provides clients access to third-party investment managers intraditional as well as alternative assets cases (private equity, real estate,commodities, and hedge funds). Covariance’s endowment-investing styleapproach provides customized investment solutions designed to address theliquidity and risk/return profiles of nonprofit institutions.

TOTAL PREMIUM COMPOSITION & GROWTH ANALYSISReinsurance

Period ————DPW———— ——Prem Assumed——Ending ($000) (% Chg) ($000) (% Chg)2010 258,155 -4.3 … …2011 265,032 2.7 … …2012 339,158 28.0 … …2013 598,958 76.6 … …2014 800,611 33.7 … …

5-Yr CAGR … 24.3 … …

ReinsurancePeriod ———Prem Ceded——— —NPW & Deposits—Ending ($000) (% Chg) ($000) (% Chg)2010 39,273 5.4 449,592 -5.52011 41,247 5.0 981,497 118.32012 56,650 37.3 1,741,640 77.42013 118,103 108.5 2,605,899 49.62014 125,095 5.9 2,266,902 -13.0

5-Yr CAGR … 27.4 … 36.7

Territory: The company is licensed in the District of Columbia and all states.

Business Trends: Net cash flows into its non-insurance activities haveincreased steadily over the past several years. A.M. Best believes that theseinitiatives will allow the organization to maintain its overall scale of operationwhile better serving the needs of its customer base. The acquisition of Nuveenmeaningfully expanded the organization’s assets under management andexpanded the customer base. Nevertheless, the pension and retirementsegment continues to comprise a sizable majority of the organization’s assetsunder management.


2014 BY-LINE BUSINESS ($000)

——DPW——Reinsurance

—Prem Assumed—Product Line ($000) (%) ($000) (%)Ordinary life 329,733 41.2 … …Group life 124,275 15.5 … …Individual annuities 340,038 42.5 … …Individual A&H 6,565 0.8 … …

Total 800,611 100.0 … …Reinsurance

——Prem Ceded—— ——NPW——Product Line ($000) (%) ($000) (%)Ordinary life 63,375 50.7 266,358 39.4Group life 55,155 44.1 69,119 10.2Individual annuities … … 340,038 50.3Individual A&H 6,565 5.2 … …

Total 125,095 100.0 675,516 100.0

BY-LINE RESERVES ($000)Product Line 2014 2013 2012 2011 2010Ordinary life 702,356 430,845 252,653 170,892 124,830Group life 207,555 116,241 17,399 … …Supplementary contr 1,712 1,762 1,826 1,418 836Individual annuities 1,334,760 1,348,130 1,305,083 1,276,146 1,239,048Deposit type contracts 2,298,473 2,013,451 1,859,466 1,515,775 973,202

Total 4,544,856 3,910,429 3,436,428 2,964,230 2,337,916

LIFE POLICIES STATISTICS-Ordinary Policies- -Group Policies- -Group Certificates-

Year Issued In Force Issued In Force Issued In Force2010 2,411 53,785 … … … …2011 4,302 56,880 … … … …2012 7,996 63,603 … … 96 962013 7,916 69,449 … … 484 5752014 7,296 74,676 … … 476 1,041

LIFE INSURANCE IN FORCE ($000)

Year

Whole LifeEndow. &

Adds Term Credit Group Industrial

TotalInsuranceIn Force

2010 1,403,239 23,250,173 … … … 24,653,4122011 1,636,365 24,633,524 … … … 26,269,8892012 2,048,109 27,597,764 … 292,854 … 29,938,7282013 3,075,074 30,222,093 … 2,143,689 … 35,440,8562014 4,532,938 33,034,053 … 3,502,093 … 41,069,084

NEW LIFE BUSINESS ISSUED ($000)

YearWhole Life& Endow. Term Credit Group

Indus-trial

TotalInsurance

Issued

Non-Par(%)

Par(%)

2010 306,905 1,093,684 … … … 1,400,589 100.0 …2011 281,010 1,856,342 … … … 2,137,352 100.0 …2012 466,305 3,370,687 … 291,155 … 4,128,147 100.0 …2013 1,084,354 3,395,722 … 1,875,434 … 6,355,510 100.0 …2014 1,500,968 3,641,612 … 1,391,197 … 6,533,777 100.0 …

ORDINARY LIFE STATISTICSOrd. Renew Average 1st Yr 1st Yr Gen.

Lapse Premium Ord. Policy Avg Prem / Comm / Exp. /Ratio Persist (in dollars) Prem Total 1st Yr Policies

Year % % Issued In Force ($/M) Prem Prem In Force2010 2.6 79.6 580,916 458,370 2.97 32.8 … 449.562011 1.9 72.1 496,828 461,848 3.55 43.3 … 568.032012 1.6 63.1 479,864 466,108 4.64 57.3 1.4 761.072013 2.4 51.3 565,952 479,448 6.98 69.6 2.8 882.372014 2.2 35.9 704,849 503,066 8.78 74.7 3.3 955.71

First Year Gen’l Exp/ Return onNumber of Policies Premium Reserves Reserves

Year Issued In Force (000) (%) (%)2010 2,411 53,785 24,087 19.37 -6.802011 4,302 56,880 40,428 18.91 -6.882012 7,996 63,603 78,787 19.16 -11.722013 7,916 69,449 161,758 14.22 -13.912014 7,296 74,676 246,369 10.16 -15.55

INDIVIDUAL ANNUITY STATISTICS

YearNPW(000)

Res(000)

Exp toRes(%)

Comm &Exp toNPW(%)


Benefits &Wdrwls to

Res (%)2010 178,211 1,239,884 1.0 7.2 66.7 9.62011 165,762 1,277,563 1.1 8.5 73.0 9.52012 172,328 1,306,910 1.6 12.2 72.6 9.62013 222,943 1,349,892 2.1 12.5 49.5 8.22014 340,038 1,336,472 2.7 10.6 48.5 12.3

TOTAL ANNUITY ACTUARIAL RESERVESBY WITHDRAWAL CHARACTERISTICS

YearTotal Annuity

Res (000)

Min or NoSurrender

Charge (%)

WithSurrenderCharge 5%or more (%)

WithMVA (%)

NoSurrender

Allowed (%)2010 1,239,884 96.3 0.1 1.8 1.82011 1,277,563 96.1 0.0 1.6 2.32012 1,306,910 97.0 0.0 1.2 1.92013 1,349,892 97.6 0.0 0.8 1.62014 1,336,472 98.2 0.0 0.5 1.3


SEPARATE ACCOUNT DATA

2014 2013 2012 2011 2010Sep Acct Assets 4,851,892 3,668,669 1,789,814 867,988 848,443% Growth 32.3 105.0 106.2 2.3 20.6S/A Assets/Adm Assets 49.5 45.9 31.6 20.4 23.8

Sep Acct Reserves 1,666,395 1,348,852 1,008,156 837,873 818,856% Ordinary Life 6.5 6.3 6.2 5.5 5.0% Individual Annuities 91.0 91.8 93.5 94.5 95.0% Group Life 2.6 1.9 0.3 … …Deposit Type Liabilities 3,127,104 2,277,342 732,916 3,820 2,809Other Liabilities 44,142 13,994 17,219 48 1,642Sep Acct Surplus 13,685 29,928 29,325 26,248 25,136

S/A Prems & Deposits 1,177,110 1,786,292 877,901 121,284 121,041% Ordinary Life 2.6 1.7 4.4 17.4 11.4% Individual Annuities 25.6 9.4 12.4 82.6 88.6% Group Annuities 70.0 86.2 82.6 … …% Group Life 1.9 2.7 0.6 … …

Sep Acct Fees & Charges 18,175 12,249 6,306 4,070 3,563% Ordinary Life 4.0 4.3 5.5 6.7 6.4% Individual Annuities 34.8 41.5 65.8 93.3 93.6% Group Annuities 54.4 48.5 28.3 … …% Group Life 6.8 5.6 0.5 … …Fees & Chgs to Assets% 0.4 0.4 0.5 0.5 0.5

Sep Acct Ben & Wdrwls 136,068 119,637 108,528 96,315 85,003% Ordinary Life 8.3 17.4 25.8 15.3 10.1% Individual Annuities 87.6 61.6 72.0 84.7 89.9% Group Life 4.0 21.0 2.2 … …Ben & Wdrwl to Assets% 3.2 4.4 8.2 11.2 11.0

GEOGRAPHIC BREAKDOWN BYDIRECT PREMIUM WRITINGS ($000)

2014 2013 2012 2011 2010Pennsylvania 405,219 799,317 17,703 11,906 15,130North Carolina 274,650 542,008 17,317 14,674 10,177California 263,400 231,802 190,107 522,521 17,771Iowa 235,548 281,589 735,236 5,142 3,784Minnesota 178,211 30,466 26,107 26,737 25,075Michigan 166,147 156,409 275,367 67,636 67,427New York 109,104 73,118 46,062 43,825 41,000Connecticut 76,322 79,740 71,201 67,605 62,541Georgia 72,524 54,469 56,139 24,471 23,053Florida 65,766 33,883 23,765 20,075 18,983All Other 533,244 435,438 329,622 211,630 190,901

Total 2,380,134 2,718,237 1,788,626 1,016,223 475,844

RISK MANAGEMENTThe following text is derived from A.M. Best’s Credit Report on TIAA


The mission of TIAA’s Enterprise Risk Management (ERM) division is toprotect TIAA-CREF’s mission, financial strength and reputation, and to be acompetitive advantage for the organization. To achieve this mission, ERMpromotes the proactive identification, measurement, assessment, andmanagement of risks within the firm’s risk appetite to drive risk-basedbusiness decisions. ERM is an independent function reporting directly toTIAA’s President and Chief Executive Officer. Board oversight is through aRisk and Compliance Committee. ERM operates a risk committee structurethat includes integrated risk committees. The division is designed to alignwith the lines of business to better support business and strategic objectives inaddition to providing complementary ERM functions The ERM teamsinclude: TIAA-CREF Asset Management Risk, Retirement & IndividualRisk, Risk Transformation, Business Management, ERM Governance &Operational Risk, Financial Risk, and Valuation Services.

OPERATING PERFORMANCE

Operating Results: Historically, TIAA-CREF Life’s net operatingperformance had been profitable, but fluctuating. However, in 2013 and 2014,the company incurred large net operating losses. These net operating losseswere triggered principally by statutory expense strains associated with strongsales growth in its ordinary life segment coupled with reserve strengthening asa consequence of cash-flow testing results. A.M. Best notes that thecompany’s “other” segment has generated meaningful net earnings in recentyears and consists primarily of net investment income and federal incometaxes not allocated to the lines of business.

TIAA-CREF Life’s overall net premiums have increased rapidly the pastfour years. The ordinary life segment has generated strong growth dueprincipally to solid sales of both its fixed and variable universal life products.Ordinary life sales have been enhanced by its partnership with the M FinancialGroup. The company’s individual annuity production has also increased ineach of the past three years aided by solid sales of its variable annuityproducts. The increase in variable annuity sales appears to have been driven byparticipant behavior in response to the overall increase in equity markets andthe continuing low interest rate environment. A.M. Best notes TIAA-CREFLife’s deposit-type contracts have increased significantly the past severalyears due primarily to funding agreements issued from the general account tosupport education-related investment and/or savings programs sponsored byvarious states. A.M. Best notes that in 2014, deposits related to fundingagreements and its SAGIC product totaled almost $1.6 billion.


Overall, TIAA Group has demonstrated a generally consistent track recordof strong net operating profitability, reflecting its extremely stable liabilitystructure, lean expense structure, and favorable investment income trends thathave continued to increase despite the challenges of the current low interestrate environment. TIAA Group’s operating and administrative expenses are


exceptionally low and compare favorably with those of mutual fundcompanies which typically have significantly lower cost infrastructures thanmost insurance companies. Distribution of traditional annuity products isconducted directly with its institutional clients. Pension and retirementproducts (other than products sold by TIAA-CREF Life) are offered toemployees on a payroll deduction basis and, therefore, incur no commissioncosts. However, full administrative service and support is provided both to theinstitution and individual plan participants through the organization’s staff. Inaddition to this low-cost distribution structure, the group’s overall unit costsare further minimized by the scale of its operations and its effectiveadministrative links with its institutional clients for payroll deduction,premium payment and servicing. TIAA Group has been strategicallyincreasing infrastructure costs over the past several years to add to itstechnology platform and advertising expense in order to raise brandawareness.

The growth of the TIAA Group’s general account share of premium incomehas been relatively modest, since premium deposits have been concentrated inthe CREF variable annuities and mutual funds. Furthermore, the trends inrevenues have been affected by fluctuations in internal transfers - resultingfrom the state of economic cycles and capital market conditions - andpremium allocations between TIAA, CREF and mutual funds. The companyenjoys a significant competitive advantage due to its extremely stable liabilitystructure, which ensures long-term persistency of its policies in force andprovides for considerable flexibility in its investment strategies. TIAA Groupgenerates predictable and significant positive cash flow, and withapproximately 75% of its general account reserves not cashable, the companycan invest in opportunities - such as real estate or alternative investments -with long-term payback, a luxury not available to most of its competitors.

Some of the group’s newer non-core businesses remain challenged toachieve meaningful profitability on a fully stand-alone basis due to the lack ofcritical mass and the impact of start-up costs. The group will continue to makemodest investments in these activities over the next several years to build theirinfrastructure and position them to absorb projected growth. Over time,management will continue to evaluate these ventures and their ability tobecome profitable on a stand-alone basis, generate an acceptable return oninvestment and demonstrate synergies with TIAA Group’s core pensionoperations.

TIAA Group has generated generally consistent net operating gains the pastseveral years despite the challenges of the persistent low interest rate andvolatile equity market environment. The majority of pension business has 3%guaranteed interest rates. In response, TIAA now utilizes an indexedminimum interest guarantee basis for new institutional and individualretirement accounts. As part of this strategy, new institutional clients areoffered only an indexed guaranteed contract. Overall earnings declinedsomewhat in 2014, primarily due to an increase in operating expenses andhigher dividend payouts to policyholders.

Net operating earnings have been driven primarily by solid earnings fromits core individual and group annuity segments enhanced by an active spreadmanagement process. The group’s capital allocated to the non-insurancesegments has also contributed meaningful earnings. The ordinary lifesegment’s net operating performance has fluctuated in recent years dampenedsomewhat by expense strains associated with increased sales.

PROFITABILITY ANALYSIS ($000)————————Company————————

Pre-tax NetPeriod Net Oper Operating Net TotalEnding Income Gain Income Return2010 34,303 25,794 24,944 24,2722011 30,860 20,315 29,505 32,2282012 21,746 20,503 18,143 18,2712013 -22,342 -29,291 -29,328 -29,0142014 -13,629 -20,496 -17,526 -17,472

5-Yr Total 50,938 16,825 25,737 28,285

———Company——— —Industry Composite—Period Operating Operating Operating OperatingEnding ROR (%) ROE (%) ROR (%) ROE (%)2010 7.1 7.1 6.5 15.32011 5.5 5.3 1.7 4.22012 4.4 5.1 7.8 17.42013 -4.0 -7.4 8.4 19.12014 -2.2 -5.6 5.5 14.4

5-Yr Avg 0.6 0.9 5.9 14.1

PROFITABILITY TESTSComm & Pre-tax

Ben Paid Exp to NOG Operating Investto NPW NPW to Tot NOG to Return on Net Total

Year & Dep & Dep Assets Tot Rev Equity Yield Return2010 33.6 8.7 0.7 7.1 7.1 4.98 4.872011 15.4 4.8 0.5 5.5 5.3 4.44 4.272012 9.1 4.3 0.4 4.4 5.1 4.13 3.982013 5.6 4.3 -0.4 -4.0 -7.4 3.79 3.752014 9.1 5.8 -0.2 -2.2 -5.6 3.65 3.61

5-Year Avg 10.1 5.0 0.1 0.6 0.9 4.11 4.01


NET OPERATING GAIN ($000)Product Line 2014 2013 2012 2011 2010Ordinary life -109,193 -59,949 -29,621 -11,766 -8,490Group life 1,055 -544 -742 … …Supplementary contr -13,706 -5,003 -2,050 -759 -255Individual annuities 17,945 -18,355 11,951 9,856 12,177Group annuities 83,142 29,215 20,573 8,655 5,635Individual A&H 262 -38 -36 -9 -28Other … 25,383 20,428 14,338 16,753

Total -20,496 -29,291 20,503 20,315 25,794


ACCIDENT & HEALTH STATISTICS ($000)Net Premiums Net Premiums Loss Exp. Underwriting

Year Written Earned Ratio Ratio Results2010 -372011 … … … … -142012 … … … … -382013 … … … … -292014 … … … … 174Current Year Experience:Guarant renew … … … … 174

INVESTMENT GAINS ($000)—————————Company—————————Net Realized UnrealizedInv Capital Capital

Year Income Gains Gains2010 128,693 -849 -6722011 131,639 9,190 2,7232012 145,499 -2,360 1292013 148,804 -37 3142014 161,035 2,969 54

5-Year Total 715,670 8,912 2,547——————Company—————— -Industry Composite-

Pre-taxInvest

Inv Inc Inv Return on Total Inv Inc InvGrowth Yield Inv Assets Return Growth Yield

Year (%) (%) (%) (%) (%) (%)2010 -1.2 5.0 5.0 4.9 7.6 5.52011 2.3 4.4 4.8 4.3 3.6 5.42012 10.5 4.1 4.1 4.0 0.9 5.22013 2.3 3.8 3.8 3.8 4.8 5.32014 8.2 3.7 3.6 3.6 2.3 5.2

5-Yr Avg 4.5 4.1 4.2 4.0 3.8 5.3


BALANCE SHEET STRENGTH

Capitalization: TIAA-CREF Life’s stand-alone risk-adjusted capitalizationas measured by Best’s Capital Adequacy Ratio (BCAR) model remainssatisfactory for its current business and investment risks despite the decline intotal capital incurred since 2012. TIAA-CREF Life’s risk-adjustedcapitalization is enhanced by a high quality fixed-income investment portfolioand capital support from its financially strong parent. In 2014, total capitaldecreased due primarily to a net loss resulting from significant statutory newbusiness expense strain associated with higher life insurance sales. Thesignificant increase in life sales is a direct result of TIAA-CREF Life’s recentdistribution agreement with the M Financial Group. A.M. Best notes that in2009, TIAA-CREF Life’s total capital was enhanced by a $70 million capitalinfusion made by TIAA. The company did not require or receive any capitalcontributions from TIAA in 2014.

TIAA-CREF Life has a financial support agreement with TIAA, and, underthis agreement, TIAA will provide financial support, if necessary, so thatcapital and surplus is maintained at the greater of $250 million, the amountnecessary to maintain a 150% risk-adjusted capital ratio as measured by theNAIC Risk Based Capital model, or the amount necessary to maintain itsfinancial strength rating at the same level as TIAA.


TIAA Group’s consolidated risk-adjusted capitalization as measured byBest’s Capital Adequacy Ratio (BCAR) model is strong for its currentbusiness and investment risks. The company’s unique organizational structureand considerable latitude in managing its capital base - given its stableliabilities and its ability to adjust crediting and dividend rates - have providedthe group with significant financial flexibility.

TIAA Group’s capital has increased over the past several years as strong netoperating gains, coupled with large unrealized investment gains primarilyderived from its alternative asset portfolio, have more than offset realizedinvestment losses generated primarily from its long-term bond portfolio. In2014, the increase in capital was enhanced by the issuance of $2 billion insurplus notes to help fund the acquisition of Nuveen.Current BCAR: 247

CAPITAL GENERATION ANALYSIS ($000)——————Source of Surplus Growth——————

Pre-Tax Net Realized UnrealizedAdjusted Capital Income Capital

Year Gain Gains Taxes Gains2010 34,303 -849 8,509 -6722011 30,860 9,190 10,545 2,7232012 21,746 -2,360 1,243 1292013 -22,342 -37 6,949 3142014 -13,629 2,969 6,867 54

5-Yr Total 50,938 8,912 34,113 2,547—————Source of Surplus Growth—————Change Change % Chg

in Other in inYear AVR Changes C&S C&S2010 -7,513 510 17,268 4.92011 -2,789 -1,635 27,804 7.52012 -3,570 -155 14,546 3.72013 -3,773 -6,311 -39,098 -9.52014 -9,368 7,582 -19,258 -5.2

5-Yr Total -27,014 -9 1,262 0.1


QUALITY OF SURPLUS ($000)Surplus Other Contributed Unassigned

Year Notes Debt Capital Surplus2010 … … 360,000 10,5812011 … … 360,000 38,3852012 … … 360,000 52,9312013 … … 360,000 13,8332014 … … 360,000 -5,425

Year-End Asset Valuation AdjustedYear C&S Reserve C&S2010 370,581 7,805 378,3862011 398,385 10,594 408,9792012 412,931 14,164 427,0952013 373,833 17,937 391,7712014 354,575 27,305 381,881

LEVERAGE ANALYSIS————————Company———————— -Industry Composite-C&S NPW Change C&S

to Surplus & Dep in NPW to SurplusYear Liab(%) Relief(%) to Capital & Dep(%) Liab(%) Relief(%)2010 16.0 2.1 1.2 -5.5 11.8 4.42011 13.6 2.1 2.4 118.3 11.8 2.92012 12.3 3.1 4.1 77.4 11.9 4.12013 9.9 7.9 6.7 49.6 11.9 4.42014 8.3 8.3 5.9 -13.0 12.3 3.9

CEDED REINSURANCE ANALYSIS—————————Company————————— -Industry Composite-

Face Affil Unaffil Total TotalAmount Reins Reins Reins Surplus Reins Reins Reins

Year Reins Ceded Rec/C&S Rec/C&S Rec/C&S Relief Leverage Rec/C&S Leverage2010 18,975,266 … 2.1 2.1 2.1 87.8 3.9 161.22011 20,044,674 … 2.7 2.7 2.1 92.7 4.0 173.22012 22,522,415 … 3.1 3.1 3.1 102.0 4.0 191.82013 25,760,308 … 4.4 4.4 7.9 130.8 4.0 192.92014 29,089,774 … 6.0 6.0 8.3 148.7 3.7 182.5

Liquidity: A significant portion of TIAA-CREF Life’s general accountinvestments consist of investment grade publicly-traded long-term bondswhich can be readily converted to cash. TIAA-CREF Life carefully reviews itsliquidity position on an ongoing basis. TIAA-CREF Life maintains a $100million unsecured revolving line of credit with TIAA. As of year-end 2014,$30 million of this facility was maintained on a committed basis. Alldraw-downs made during the year were repaid. TIAA-CREF Life has nomaterial off-balance sheet arrangements for financing or other purposes.


The Group enjoys very strong liquidity, with its high-quality, unleveragedbalance sheet, solid earnings capacity, predictable cash flows and favorable

liability structure. TIAA Group’s long-term liability structure containsminimal disintermediation risk and enables the Group to manage itsinvestment portfolio with a view toward long term performance, and to obtainthe highest possible long term rates of return within reasonable riskparameters. Short term liquidity is not a major concern due to the long termliability structure, although any liquidity requirements are monitoredcarefully. TIAA maintains adequate levels of liquid investment holdingsincluding cash, cash equivalents, short-term investments, and U.S. treasurysecurities to manage short term liquidity needs. TIAA expects total cashinflow to be adequate to meet withdrawal and benefit obligations for theforeseeable future.

TIAA has extended several guarantees in support of its subsidiaries andaffiliates. TIAA has a financial support agreement with TIAA-CREF Life.Under the agreement, TIAA will provide support so that TIAA-CREF Lifewill have the greater of (a) capital and surplus of $250 million, (b) the amountof capital and surplus needed to maintain TIAA-CREF Life’s capital andsurplus at a level not less than 150% of the NAIC Risk Based Capital model or(c) such other amounts as necessary to maintain TIAA-CREF Life’s financialstrength rating at least at the same or better than TIAA’s rating at all times. Thisagreement was not utilized during 2014 or 2013.

TIAA provides a $100 million unsecured revolving line of credit toTIAA-CREF Life. As of year-end 2014, $30 million was maintained on acommitted basis for which TIAA received a commitment fee on the undrawncommitted amount. All draw-downs were repaid by year-end.

TIAA provides a $1.0 billion uncommitted and unsecured line of credit tocertain accounts of CREF and certain TIAA-CREF Funds. Loans under therevolving credit facility are for a maximum of 60 days and are made solely atthe discretion of TIAA to fund shareholder redemption requests or othertemporary or emergency needs of CREF and the TIAA-CREF Funds. It is theintent of TIAA, CREF and the TIAA-CREF Funds to use this facility as asupplement liquidity facility, which would be used only after the availability ofthe current $1.5 billion committed credit facility that is maintained by a groupof banks for the benefit of the TIAA-CREF Fund Complex (which includesCREF and the TIAA-CREF Funds) has been exhausted.

TIAA provides mortality, expense and liquidity guarantees to REA and iscompensated for these guarantees. TIAA provides REA with a liquidityguarantee to ensure it has funds available to meet participant transfer or cashwithdrawal requests. If REA cannot fund participant requests, TIAA’s generalaccount will fund them by purchasing accumulation units from REA. Pursuantto the liquidity guarantee obligation, TIAA’s general account did not own anyaccumulation units at year-end 2014.

TIAA conducted leveraged investing through its wholly-owned subsidiary,TGM, through December 16, 2013, at which time TGM was dissolved. As aresult, TIAA no longer guarantees up to $5 bil. of TGM’s debt or provides a$1.0 bil. uncommitted and unsecured 364-day revolving line of credit.


LIQUIDITY ANALYSIS———————————Company———————————

Operating Non-Inv Delnq &Cash Quick Current Grade Bonds Foreclsd

Year Flow ($000) Liquidity Liquidity to Capital Mtg to Capital2010 131,080 74.7 111.3 23.3 …2011 161,191 76.7 110.7 10.8 …2012 162,033 71.6 109.5 12.9 …2013 316,931 70.4 107.2 16.6 …2014 338,781 65.8 105.8 19.3 …

————Company———— ——Industry Composite——Mtg & Cred Affil

Ten Lns Invest Quick CurrentYear & RE to Cap to Capital Liquidity Liquidity2010 15.9 0.3 51.9 91.12011 3.4 0.3 50.8 89.52012 … 0.3 49.5 89.32013 … 0.3 48.2 88.32014 … 0.3 47.4 88.2

Investments: TIAA-CREF Life’s total admitted assets are allocatedapproximately 51% to the general account with the remainder allocated to itsseparate accounts. A.M. Best notes the company’s separate account assetshave been increasing rapidly in recent years primarily due to discretionarycontract-holder activity, investment performance, and increased deposits onthe SAGIC product. The majority of TIAA-CREF Life’s general accountinvested assets are long-term bonds that currently represent more thanninety-seven percent of the total general account invested assets. Theremainder of the company’s general account invested assets are allocated toshort-term securities, cash balances, contract loans and other invested assets(Schedule BA) consisting primarily of surplus debentures. As a result ofmaturities, scheduled principal payments and unscheduled redemptions, thecompany no longer holds direct mortgage loans. The company has no currentplans to invest in additional direct mortgage loans going forward.

TIAA-CREF Life’s long-term bond portfolio is almost entirely investmentgrade with slightly more than seventeen percent of the portfolio in privateplacements that are well diversified across industry sectors. A.M. Best notesthe company’s exposure to below investment grade bonds relative to capital ismodest. The total long-term bond portfolio is currently in a net unrealized gainposition. The long-term bond portfolio is well-diversified in publicly tradedcorporate obligations, public utility holdings, structured securities, and U.S.and foreign government debt. A.M. Best notes the company’s exposure tostructured securities is minimal representing approximately eleven percent ofthe total long-term bond portfolio. The structured securities consist ofresidential and commercial mortgage-backed structured (CMBS) securitiesand asset-backed structured securities.

Separate accounts that support TIAA-CREF Life’s variable businesses areregistered with the Securities and Exchange Commission as unit investmenttrusts, and their assets are invested in corresponding portfolios of theTIAA-CREF Life funds or in other, non-proprietary funds. The variableannuities do not offer any living benefit riders.


TIAA Group benefits from an unusually stable and long-maturity liabilitystructure, as the majority of its insurance reserves are comprised of annuitiesthat are not subject to discretionary withdrawal at the option of thepolicyholder. This unique structure provides the group with a significantdegree of flexibility in its investment strategy. TIAA Group has used awell-balanced mix of long-maturity corporate bonds - including public andprivate, direct commercial mortgages, structured securities, treasuries andother alternative investment classes that include private equity and real estateto support its liabilities. The group also uses derivative instruments foreconomic hedging, income generation, and asset replication purposes. As aresult of its stable liability structure, the company has historically been able totake a higher degree of credit risk and, to some extent, liquidity and interestrate risk, in its investment portfolio when compared to other insurers.Nonetheless, policyholders have benefited from TIAA Group’s ability totranslate this incremental risk into above-average investment performance thathas contributed to enhanced policyholder dividends compared to its peers.Policyholders also benefit from the significant economies of scale inTIAA-CREF’s operations, resulting in lower investment expenses and highernet investment yields.

TIAA Group’s total admitted assets are allocated approximately 88% to itsgeneral account with the remainder allocated to its separate accounts. Themajority of the group’s general account invested assets is in long-term bondsthat currently represent about 78% of total general account invested assets.The remainder of TIAA Group’s general account invested assets consist ofalternative assets (Schedule BA), direct mortgage loans, preferred andcommon stocks, real estate assets, contract loans, cash balances, short-termsecurities, and derivative instruments. A.M. Best notes TIAA does not engagein derivative financial instrument transactions for speculative purposes.

TIAA Group currently maintains three non-guaranteed separate accountsthat have been established to fund variable annuities in its non-pension andpension lines of business. A fourth separate account was established to fund aflexible fixed annuity contract offered to employer sponsored defined pensionplans principally in the 403(b) market. The separate account assets increasedduring 2014 driven by improving economic conditions, and improvedperformance of the commercial mortgage and equity markets.

INVESTMENT YIELDSCash & Invest.

Net Short- —Real Estate— Exp.Year Yield Bonds Stocks Mortgages Term Gross Net Ratio2010 4.98 5.20 7.13 2.69 0.71 … … 1.282011 4.44 4.61 6.61 3.03 0.53 … … 1.662012 4.13 4.25 7.52 … 0.45 … … 1.912013 3.79 3.88 5.23 … 0.03 … … 2.522014 3.65 3.70 8.72 … 0.03 … … 2.70

Investments - Bond Portfolio: TIAA Group’s fixed income investmentexpertise is reflected in the historical performance of its general accountportfolio. The long-term bond portfolio is primarily investment gradesecurities with the majority in NAIC class 1 securities. Private placement


instruments comprise about 24% of the total long-term bond portfolio and area combination of 144A issues and “true” private placements and are generallyof lower credit quality than the public portfolio, but with greater covenantprotection in order to generate incremental investment yield. A.M. Best notesthat the group’s exposure to below investment grade bonds relative to capitaldeclined again slightly in 2014 and remains well below industry averages. Thetotal long-term bond portfolio is currently in a net unrealized gain position.The long-term bond portfolio is well-diversified being invested in publiclytraded corporate obligations, structured securities, and U.S. and foreigngovernment debt. A.M. Best notes that the Group’s European financialexposure is modest and concentrated primarily in senior debt holdings of theUnited Kingdom, Netherlands and France. Total structured securities that arerepresented primarily by residential mortgage-backed, commercialmortgage-backed and asset-backed securities account for about 39% of thetotal long-term bond portfolio and have structures that are well suited to TIAAGroup’s liability profile. The majority of TIAA Group’s residentialmortgage-backed structured securities (RMBS) is investment grade andconsist principally of government agency-backed and non-agency primeRMBSs that have specific prepayment and maturity profiles. The majority ofTIAA Group’s commercial mortgage-backed structured (CMBS) securities isinvestment grade. The CMBSs are typically originated by single or multipleissuers, which are collateralized by mortgage loans secured by incomeproducing commercial properties such as office buildings, multi-familydwellings, industrial, retail, hotels and other property types. The asset-backedsecurities have some modest exposure to the subprime residential mortgagemarket and collateralized debt obligations.

INVESTMENTS - SECURITIESCurrent Year Distribution of Bonds By Maturity

————Years———— Yrs-Avg0-1 1-5 5-10 10-20 20+ Maturity

Government 0.9 2.2 3.2 2.3 0.2 8Gov’t Agencies & Muni 0.1 1.6 1.9 3.8 1.3 12Industrial & Misc 7.3 28.9 23.7 4.4 17.9 10Hybrid Securities 0.1 … … … 0.1 15

Total 8.4 32.7 28.9 10.6 19.5 10

2014 2013 2012 2011 2010Bonds (000) 4,743,873 4,105,952 3,684,513 3,182,147 2,518,764US Government 7.0 6.8 5.6 4.4 3.7Foreign Government 1.4 0.5 … … …Foreign - All Other 16.9 18.1 17.0 14.7 13.0State/Special Revenue - US 8.7 9.1 11.2 10.5 9.5Industrial & Misc - US 65.9 65.3 66.0 70.0 72.3Hybrid Securities 0.2 0.2 0.2 0.4 1.2Credit Tenant Lns - US … … … … 0.3

Private Issues 17.5 16.1 16.3 12.7 14.5Public Issues 82.5 83.9 83.7 87.3 85.5

Bond Quality (%) 2014 2013 2012 2011 2010Class 1 64.1 62.1 64.5 64.6 67.7Class 2 34.4 36.3 34.1 34.0 28.9Class 3 1.3 1.5 1.3 0.8 1.3Class 4 0.3 … 0.2 0.3 0.8Class 5 0.0 0.1 0.0 0.3 1.2Class 6 … … … 0.0 0.0

Investments - Equity Portfolio: The preferred stock portfolio is comprised ofpublic, non-public, and REIT securities with the majority of the returnscoming from dividends.

TIAA Group’s total common stock portfolio rose in 2014. The portfolio iscomprised of unaffiliated securities, mutual fund investments, andinvestments in affiliated wholly-owned subsidiaries including real estateproperties, life insurance and annuity operations, investment advisory andbanking and trust services.

INVESTMENTS - EQUITIES2014 2013 2012 2011 2010

Stocks (000) 790 3,044 2,742 7,506 7,343Unaffiliated Common 76.9 18.8 9.9 2.2 …Unaffiliated Preferred 23.1 81.2 90.1 97.8 100.0

Investments - Mortgage Loans and Real Estate: The group originatesmortgage loans that are primarily collateralized by first mortgage liens oncompleted, income-producing commercial properties with the majority inshopping centers, office and industrial buildings, and apartments. Themortgage loan portfolio is well-diversified geographically. The majority of themortgage loan portfolio is fixed rate loans. TIAA Group does not underwriteor hold any direct subprime mortgages in its commercial mortgage portfolioand has only minimal indirect subprime exposure. No portion of the mortgageportfolio was delinquent for more than 180 days or in the process offoreclosure at year-end 2014. The mortgage portfolio increased in 2013 and2014 driven by acquisitions and refinancings that more than offset pay-downs,maturities and prepayments.

TIAA Group invests in commercial real estate directly, through itswholly-owned subsidiaries and through real estate limited partnerships. Atyear-end 2014, the majority of the group’s directly owned real estate was inproperties held for production of income primarily in office and industrialbuildings.

INVESTMENTS - MORTGAGE LOANS & REAL ESTATE2014 2013 2012 2011 2010

Mortgages (000) … … … 13,726 52,651Commercial … … … 100.0 100.0

Investments - Other Invested Assets: A large portion of TIAA Group’salternative assets (Schedules BA) consist of unaffiliated private equity fundsand real estate related holdings. A majority of the other invested assets isrepresented by a diversified portfolio of affiliated entities that invest inagricultural products for the production of income, timber harvesting,financial instruments that include fixed income securities, and mortgageloans, investments in real estate related holdings, operating subsidiaries,investment advisory subsidiaries and fund investments. During 2014, this


portfolio increased through increases in affiliated investments, including ameaningful investment in TIAA Asset Management, LLC to fund theacquisition of Nuveen. While these investments enhance the company’s spreadmanagement strategy, they could adversely affect operating performance andfinancial strength should the worldwide economic recovery stall ordeteriorate.

INVESTMENTS - OTHER INVESTED ASSETS2014 2013 2012 2011 2010

Other Inv Assets (000) 117,431 138,122 107,885 123,550 93,130Cash 74.5 24.8 73.2 16.5 44.1Short-Term 2.5 58.3 8.3 69.7 50.4Schedule BA Assets 9.2 9.2 11.9 10.4 1.2All Other 13.7 7.6 6.6 3.4 4.3

HISTORYDate Incorporated: 11/20/1996 Date Commenced: 12/18/1996

Domicile: NY

MANAGEMENT

Officers: President and Chief Executive Officer, David M. Anderson; VicePresident and Chief Financial Officer, Linda S. Dougherty; Secretary,Marjorie Pierre-Merritt; Treasurer, Jorge Gutierrez.

Directors: David M. Anderson (Chairman), Kathie J. Andrade, RashmiBadwe, Elizabeth D. Black, Douglas E. Chittenden, Sue Collins, Nancy F.Heller, Eric T. Jones, Russell G. Noles, Ajay Sawhney.

REGULATORYAn examination of the financial condition is being made as of December

31, 2013, by the insurance department of New York. The 2014 annualindependent audit of the company was conducted byPricewaterhouseCoopers, LLP. The annual statement of actuarial opinion isprovided by John Esch, Vice President and Senior Actuary.

Reserve basis: (Current ordinary business): (Current ordinary business):2001 CSO 3.5% CRVM valuation. (Current 2015 annuity business): AG43Non-Qual Annuities (DEF, NFI), 2012 IAR 4.50%, CARVM (immediate).

FINANCIAL INFORMATIONBALANCE SHEET ($000) - December 31, 2014

Assets LiabilitiesTotal bonds 4,743,873 +Net policy reserves 2,246,383Total preferred stocks 183 Policy claims 5,700Total common stocks 607 Deposit type contracts 2,298,473Contract loans 16,077 Interest maint reserve 7,066Cash & short-term inv 90,507 Comm taxes expenses 618Prems and consids due -13,146 Asset val reserve 27,305Accrued invest income 43,297 Other liabilities 24,832Other assets 69,869

Tot liab w/o sep accts 4,610,377Tot assets w/o sep accts 4,951,267 Separate account bus 4,838,207

Separate account bus 4,851,892Total liabilities 9,448,584

Common stock 2,500Paid in & contrib surpl 357,500Unassigned surplus -5,425

Assets 9,803,159 Total 9,803,159

+Analysis of reserves; Life $866,014; annuities $1,334,479; supplementary contracts withlife contingencies $1,712; disability active lives $6,563; disability disabled lives $991;miscellaneous reserves $36,625.

SUMMARY OF OPERATIONS ($000)Premiums: Death benefits 12,578Ordinary life 266,358 Annuity benefits 38,181Individual annuities 340,038 Disability benefits 74Group life 69,119 Surrender benefits 130,657Total premiums 675,516 Int on policy funds 25,616

Net investment income 161,035 Supplementary contracts 134Amort interest maint res 1,244 Incr life reserves 349,405Net gain from sep acct 3,473 Commissions 34,937Comm & exp reins ceded 29,581 Insur taxes lic & fees 12,445Res adj on reins ceded 59,209 General ins expenses 113,554Other income 18,315 Net transf to sep acct 227,552

Misc operating expense 16,869

Total 948,372 Total 962,001

Gain from operations before FIT & div to policyholders....................................... -13,629

Federal income taxes incurred........................................................................... 6,867

Net gain from operations after federal income taxes............................................. -20,496


CASH FLOW ANALYSIS ($000)

Funds Provided Funds AppliedGross cash from oper 879,072 Benefits paid 120,851Long-term bond proceeds 518,847 Comm, taxes, expenses 180,526Other cash provided 264,071 Long-term bonds acquired 1,135,774Decr cash & short-term 24,375 Other cash applied 249,215

Total 1,686,365 Total 1,686,365


Why is this Best’s® Rating Report important to you?

A Best’s Rating Report from the A.M. Best Company showcases theopinion from the leading provider of insurer ratings of a company’sfinancial strength and ability to meet its obligations to policyholders,as well as its relative credit risk.

The A.M. Best Company is the oldest, most experienced ratingagency in the world and has been reporting on the financial conditionof the insurance companies since 1899.

A Best’s Financial Strength Rating is an independent opinion of aninsurer’s financial strength and ability to meet its ongoing insurancepolicy and contract obligations.

The Financial Strength Rating opinion addresses the relative abilityof an insurer to meet its ongoing insurance policy and contractobligations. The rating is not assigned to specific insurance policiesor contracts and does not address any other risk, including, but notlimited to, an insurer’s claims-payment policies or procedures; theability of the insurer to dispute or deny claims payment on grounds ofmisrepresentation or fraud; or any specific liability contractuallyborne by the policy or contract holder. The rating is not arecommendation to purchase, hold or terminate any insurance

policy, contract or any other financial obligation issued by an insurer,nor does it address the suitability of any particular policy or contractfor a specific purpose or purchaser.

In arriving at a rating decision, A.M. Best relies on third-partyaudited financial data and/or other information provided to it. Whilethis information is believed to be reliable, A.M. Best does notindependently verify the accuracy or reliability of the information.

The company information appearing in this pamphlet is an extractfrom the complete company report prepared by the A.M. BestCompany or A.M. Best Europe – Rating Services Limited.

For the latest Best’s Financial Strength Ratings along with theirdefinitions and A.M. Best’s Terms of Use, visit the A.M. Best websiteat www.ambest.com. You may also obtain AMB Credit Reports byvisiting our site or calling our Customer Service department at+1-908-439-2200, ext. 5472. To expedite your request, pleaseprovide the company’s identification number (AMB#).

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