MERRILL LYNCH LIFE INSURANCE CO
In 2002, Registrant   formed a Disclosure Committee to assist with the monitoring and evaluation of   our disclosure controls and procedures. Registrant’s Chief Executive Officer,   Chief Financial Officer and Disclosure Committee have evaluated the effectiveness   of Registrant’s disclosure controls and procedures (as defined in Rule   15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period   covered by this Report. Based on that evaluation, Registrant’s Chief Executive   Officer and Chief Financial Officer have concluded that Registrant’s disclosure   controls and procedures are effective.        In addition, no   change in Registrant’s internal control over financial reporting (as defined   in Rule 15d-15(f) under the Securities Exchange Act of 1934) occurred during   the fourth fiscal quarter of 2005 that has materially affected, or is reasonably   likely to materially affect, Registrant's internal control over financial reporting.    Item 9B. Other Information.       No information is required to be disclosed under this item. PART III       Information called for by items 10 through 13 of this part is omitted pursuant to General Instruction I. of Form 10-K.  -24-     Item 14. Principal Accounting Fees and Services.  Pre-Approval of Services Provided by the Registrant’s Independent Auditor       Consistent with SEC rules regarding auditor independence, the Audit Committee has established a policy governing the provision of audit and non-audit services to the Registrant.       Pursuant to this policy, the Audit Committee will consider annually and, if appropriate, approve the provision of all audit services to the Registrant by the independent auditor. The Audit Committee will also consider and, if appropriate, pre-approve the provision by the independent auditor of services that fit within the following categories of permitted non-audit services within a specified dollar limit.             •   Audit services include audit work performed in the review and preparation of the financial statements, as well as, services that generally only the independent auditor can be expected to provide, such as comfort letters, statutory audits, attest services, consents and assistance with and review of documents filed with the SEC.             •   Audit-Related services include accounting consultations relating to actuarial valuations.            •   Tax services include all services performed by the independent auditor’s tax personnel.            •   All Other services include all other miscellaneous services not captured in the other two categories that are not prohibited services, as defined by the SEC, and that the Audit Committee believes will not impair the independence of the independent auditor.          Any proposed engagement of the independent auditor that does not fit within one of the pre-approved categories of service or is not within the established fee limits must be pre-approved by the Audit Committee.       The Audit Committee has delegated pre-approval authority to the Chair of the Audit Committee in time sensitive cases. The exercise of such authority must be reported to the Audit Committee at its next regularly scheduled meeting. The Audit Committee regularly reviews summary reports detailing all services (and related fees and expenses) being provided to the Registrant by the independent auditor.  Fees Paid to the Registrant’s Independent Auditor       The following table presents fees for professional services rendered by Deloitte & Touche LLP for the audit of the Registrant’s financial statements for the years ended December 31, 2005 and 2004 and fees billed for other services rendered by Deloitte & Touche LLP during those periods.                              2005    2004      Audit (1)   $ 831,624     $ 724,295     Audit-Related (2)     18,105       15,896     Tax (3)     9,053       7,948     All Other (4)     46,469       46,638                           Total   $ 905,251     $ 794,777                                       (1)  Audit Fees included audit work performed in       the review and preparation of the financial statements, as well as, services       that generally only the independent auditor can be expected to provide,       such as comfort letters, statutory audits, attest services, consents and       assistance with and review of documents filed with the Securities and Exchange       Commission.       (2)  Audit-Related Fees included accounting consultations relating       to actuarial valuations.              (3)  Tax Fees included all services performed by       the independent auditor’s tax personnel.       (4)  All Other Fees included miscellaneous out-of-pocket       expenses.   -25-     PART IV  Item 15.  Exhibits and Financial Statement Schedules.       (a)   Financial Statements and Exhibits.              (1)    The following financial statements of the Registrant are filed as part of this report:    a.    Independent Auditors’ Report dated February 27, 2006.    b.    Balance Sheets at December 31, 2005 and 2004.    c.    Statements of Earnings for the Years Ended December 31, 2005, 2004 and 2003.    d.    Statements of Comprehensive Income for the Years Ended December 31, 2005, 2004 and 2003.    e.    Statements of Stockholder’s Equity for the Years Ended December 31, 2005, 2004 and 2003.    f.    Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003.    g.    Notes to Financial Statements for the Years Ended December 31, 2005, 2004 and 2003.    (2)    Not applicable.    (3)    The following exhibits are filed as part of this report as indicated below:    2.1    Merrill Lynch Life Insurance Company Board of Directors Resolution in Connection with the Merger between Merrill Lynch Life Insurance Company and Tandem Insurance Group, Inc. (Incorporated by reference to Exhibit 2.1, filed September 5, 1991, as part of Post-Effective Amendment No. 4 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    2.2    Plan and Agreement of Merger between Merrill Lynch Life Insurance Company and Tandem Insurance Group, Inc. (Incorporated by reference to Exhibit 2.1a, filed September 5, 1991, as part of Post-Effective Amendment No. 4 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    3.1    Articles of Amendment, Restatement and Redomestication of the Articles of Incorporation of Merrill Lynch Life Insurance Company. (Incorporated by reference to Exhibit 6(a) to Post-Effective Amendment No. 10 to Merrill Lynch Life Variable Annuity Separate Account A’s registration statement on Form N-4, File No. 33-43773, filed December 10, 1996.)    3.2    Amended and Restated By-Laws of Merrill Lynch Life Insurance Company. (Incorporated by reference to Exhibit 6(b) to Post-     -26-                     Effective Amendment No. 10 to Merrill Lynch Life Variable Annuity Separate Account A’s registration statement on Form N-4, File No. 33-43773, filed December 10, 1996.)    4.1    Group Modified Guaranteed Annuity Contract, ML-AY-361. (Incorporated by reference to Exhibit 4.1, filed February 23, 1989, as part of Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    4.2    Individual Certificate, ML-AY-362. (Incorporated by reference to Exhibit 4.2, filed February 23, 1989, as part of Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    4.2a    Individual Certificate, ML-AY-362 KS. (Incorporated by reference to Exhibit 4.2a, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    4.2b    Individual Certificate, ML-AY-378. (Incorporated by reference to Exhibit 4.2b, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    4.2c    Modified Guaranteed Annuity Contract. (Incorporated by reference to Exhibit 4(a), filed August 18, 1997, as part of the Registrant’s registration statement on Form S-3, File No. 333-33863.)    4.3    Individual Tax-Sheltered Annuity Certificate, ML-AY-372. (Incorporated by reference to Exhibit 4.3, filed February 23, 1989, as part of Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    4.3a    Individual Tax-Sheltered Annuity Certificate, ML-AY-372 KS. (Incorporated by reference to Exhibit 4.3a, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    4.4    Qualified Retirement Plan Certificate, ML-AY-373. (Incorporated by reference to Exhibit 4.4 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.)    4.4a    Qualified Retirement Plan Certificate, ML-AY-373 KS. (Incorporated by reference to Exhibit 4.4a, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)     -27-                4.5    Individual Retirement Annuity Certificate, ML-AY-374. (Incorporated by reference to Exhibit 4.5 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.)    4.5a    Individual Retirement Annuity Certificate, ML-AY-374 KS. (Incorporated by reference to Exhibit 4.5a, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    4.5b    Individual Retirement Annuity Certificate, ML-AY-375 KS. (Incorporated by reference to Exhibit 4.5b, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    4.5c    Individual Retirement Annuity Certificate, ML-AY-379. (Incorporated by reference to Exhibit 4.5c, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    4.6    Individual Retirement Account Certificate, ML-AY-375. (Incorporated by reference to Exhibit 4.6, filed February 23, 1989, as part of Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    4.6a    Individual Retirement Account Certificate, ML-AY-380. (Incorporated by reference to Exhibit 4.6a, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    4.7    Section 457 Deferred Compensation Plan Certificate, ML-AY-376. (Incorporated by reference to Exhibit 4.7 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.)    4.7a    Section 457 Deferred Compensation Plan Certificate, ML-AY-376 KS. (Incorporated by reference to Exhibit 4.7a, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)     -28-                4.8    Tax-Sheltered Annuity Endorsement, ML-AY-366. (Incorporated by reference to Exhibit 4.8 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.)    4.8a    Tax-Sheltered Annuity Endorsement, ML-AY-366 190. (Incorporated by reference to Exhibit 4.8a, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    4.8b    Tax-Sheltered Annuity Endorsement, ML-AY-366 1096. (Incorporated by reference to Exhibit 4(h)(3), filed March 27, 1997, as part of Post-Effective Amendment No. 2 to the Registrant’s registration statement on Form S-1, File No. 33-58303.)    4.9    Qualified Retirement Plan Endorsement, ML-AY-364. (Incorporated by reference to Exhibit 4.9 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.)    4.10    Individual Retirement Annuity Endorsement, ML-AY-368. (Incorporated by reference to Exhibit 4.10 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.)    4.10a    Individual Retirement Annuity Endorsement, ML-AY-368 190. (Incorporated by reference to Exhibit 4.10a, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    4.10b    Individual Retirement Annuity Endorsement, ML009. (Incorporated by reference to Exhibit 4(j)(3) to Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-60290, filed March 31, 1994.)    4.10c    Individual Retirement Annuity Endorsement. (Incorporated by reference to Exhibit 4(b) to Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-3, File No. 333-33863, filed October 31, 1997.)    4.11    Individual Retirement Account Endorsement, ML-AY-365. (Incorporated by reference to Exhibit 4.11 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.)    4.11a    Individual Retirement Account Endorsement, ML- AY-365 190. (Incorporated by reference to Exhibit 4.11a, filed March 9, 1990,     -29-                     as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    4.12    Section 457 Deferred Compensation Plan Endorsement, ML-AY-367. (Incorporated by reference to Exhibit 4.12 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.)    4.12a    Section 457 Deferred Compensation Plan Endorsement, ML-AY-367 190. (Incorporated by reference to Exhibit 4.12a, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    4.13    Qualified Plan Endorsement, ML-AY-369. (Incorporated by reference to Exhibit 4.13 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.)    4.13a    Qualified Plan Endorsement, ML-AY-448. (Incorporated by reference to Exhibit 4.13a, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    4.13b    Qualified Plan Endorsement. (Incorporated by reference to Exhibit 4(c), filed October 31, 1997, as part of Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-3, File No. 333-33863.)    4.14    Application for Group Modified Guaranteed Annuity Contract. (Incorporated by reference to Exhibit 4.14 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.)    4.15    Annuity Application for Individual Certificate Under Modified Guaranteed Annuity Contract. (Incorporated by reference to Exhibit 4.15 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.)    4.15a    Application for Modified Guaranteed Annuity Contract. (Incorporated by reference to Exhibit 4(d), filed August 18, 1997, as part of the Registrant’s registration statement on Form S-3, File No. 333-33863.)    4.16    Form of Company Name Change Endorsement. (Incorporated by reference to Exhibit 4.16, filed September 5, 1991, as part of Post-Effective Amendment No. 4 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    4.17    Group Modified Guaranteed Annuity Contract, ML-AY-361/94. (Incorporated by reference to Exhibit 4(a)(2), filed December 7, 1994, as part of Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-60290.)     -30-                4.18    Individual Certificate, ML-AY-362/94. (Incorporated by reference to Exhibit 4(b)(4), filed December 7, 1994, as part of Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-60290.)    4.19    Individual Tax-Sheltered Annuity Certificate, ML-AY-372/94. (Incorporated by reference to Exhibit 4(c)(3), filed December 7, 1994, as part of Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-60290.)    4.20    Qualified Retirement Plan Certificate, ML-AY-373/94. (Incorporated by reference to Exhibit 4(d)(3), filed December 7, 1994, as part of Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-60290.)    4.21    Individual Retirement Annuity Certificate, ML-AY-374/94. (Incorporated by reference to Exhibit 4(e)(5), filed December 7, 1994, as part of Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-60290.)    4.22    Individual Retirement Account Certificate, ML-AY-375/94. (Incorporated by reference to Exhibit 4(f)(3), filed December 7, 1994, as part of Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-60290.)    4.23    Section 457 Deferred Compensation Plan Certificate, ML-AY-376/94. (Incorporated by reference to Exhibit 4(g)(3), filed December 7, 1994, as part of Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-60290.)    4.24    Qualified Plan Endorsement, ML-AY-448/94. (Incorporated by reference to Exhibit 4(m)(3), filed December 7, 1994, as part of Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-60290.)    10.1    Management Services Agreement between Family Life Insurance Company and Merrill Lynch Life Insurance Company. (Incorporated by reference to Exhibit 10.1 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.)    -31-                10.2    General Agency Agreement between Merrill Lynch Life Insurance Company and Merrill Lynch Life Agency, Inc. (Incorporated by reference to Exhibit 10.2, filed February 23, 1989, as part of Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    10.3    Service Agreement among Merrill Lynch Insurance Group, Inc., Family Life Insurance Company and Merrill Lynch Life Insurance Company. (Incorporated by reference to Exhibit 10.3, filed March 13, 1991, as part of Post-Effective Amendment No. 2 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    10.3a    Amendment to Service Agreement among Merrill Lynch Insurance Group, Inc., Family Life Insurance Company and Merrill Lynch Life Insurance Company. (Incorporated by reference to Exhibit 10(c)(2) to Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-60290, filed March 31, 1994.)    10.4    Indemnity Reinsurance Agreement between Merrill Lynch Life Insurance Company and Family Life Insurance Company. (Incorporated by reference to Exhibit 10.4, filed March 13, 1991, as part of Post-Effective Amendment No. 2 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    10.5    Assumption Reinsurance Agreement between Merrill Lynch Life Insurance Company, Tandem Insurance Group, Inc. and Royal Tandem Life Insurance Company and Family Life Insurance Company. (Incorporated by reference to Exhibit 10.6, filed April 24, 1991, as part of Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-26322.)    10.6    Amended General Agency Agreement between Merrill Lynch Life Insurance Company and Merrill Lynch Life Agency, Inc. (Incorporated by reference to Exhibit 10(g) to the Registrant’s registration statement on Form S-1, File No. 33-46827, filed March 30, 1992.)     -32-                10.7    Indemnity Agreement between         Merrill Lynch Life Insurance Company and Merrill Lynch Life Agency, Inc.         (Incorporated by reference to Exhibit 10(h) to the Registrant’s         registration statement on Form S-1, File No. 33-46827, filed         March 30, 1992.)             10.8    Management Agreement between         Merrill Lynch Life Insurance Company and Merrill Lynch Asset Management,         Inc. (Incorporated by reference to Exhibit 10(i) to the Registrant’s         registration statement on Form S-1, File No. 33-46827, filed March 30,         1992.)             10.9    Amendment No. 1 to Indemnity         Reinsurance Agreement between Family Life Insurance Company and Merrill         Lynch Life Insurance Company. (Incorporated by reference to Exhibit 10.5,         filed April 24, 1991, as part of Post-Effective Amendment No. 3         to the Registrant’s registration statement on Form S-1, File         No. 33-26322.)           10.10     Insurance Administrative Services Agreement between Merrill Lynch Life Insurance Company and Liberty Insurance Services Corporation.  (Incorporated by reference to Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K, File Nos. 33-26322, 33-46827, 33-52254, 33-60290, 33-58303, 333-33863, filed March 30, 2005.)            23.1    Written consent of Deloitte         & Touche, LLP, independent registered public accounting firm, is filed herewith.             24.1    Power of attorney of Barry         G. Skolnick. (Incorporated by reference to Exhibit 24(e) to the Registrant’s         registration statement on Form S-1, File No. 33-58303, filed         March 29, 1995.)             24.2    Power of attorney of John C. Carroll is filed herewith.             24.3    Power of attorney of Paul Michalowski is filed herewith.             24.4   Power of attorney of Deborah         J. Adler. (Incorporated by reference to Exhibit 24.5 to Annual Report on Form 10-K, File Nos. 33-26322, 33-46827, 33-52254, 33-60290, 33-58303, 333-33863, filed March 29, 2004.)           31.1    Certification by the Chief         Executive Officer of the Registrant pursuant to Rule 15d-14(a), is filed         herewith.              31.2     Certification by the Chief         Financial Officer of the Registrant pursuant to Rule 15d-14(a), is filed         herewith.              32.1    Certification by the Chief         Executive Officer of the Registrant pursuant to 18 U.S.C. Section 1350,         as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,         is filed herewith.             32.2    Certification by the Chief         Financial Officer of the Registrant pursuant to 18 U.S.C. Section 1350,         as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,         is filed herewith.    -33-     INDEX TO FINANCIAL STATEMENTS         Independent Auditors’ Report   Balance Sheets at December 31, 2005 and 2004   Statements of Earnings for the Years Ended December 31, 2005, 2004 and 2003   Statements of Comprehensive Income for the Years Ended December 31, 2005, 2004 and 2003   Statements of Stockholder’s Equity for the Years Ended December 31, 2005, 2004 and 2003   Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003   Notes to Financial Statements for the Years Ended December 31, 2005, 2004 and 2003           REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  To the Board of Directors Merrill Lynch Life Insurance Company  We have audited the accompanying balance sheets of Merrill Lynch Life Insurance Company (the “Company”) as of December 31, 2005 and 2004, and the related statements of earnings, comprehensive income, stockholder’s equity, and cash flows for each of the three years in the period ended December 31, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements based on our audits.  We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.  In our opinion, such financial statements present fairly, in all material respects, the financial position of Merrill Lynch Life Insurance Company as of December 31, 2005 and 2004, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.  As discussed in Note 1 to the financial statements, in 2004 the Company changed its method of accounting for long-duration contracts to conform to Statement of Position 03-1 “Accounting and Reporting by Insurance Enterprises for Certain Non-Traditional Long-Duration Contracts and for Separate Accounts.”  February 27, 2006           MERRILL LYNCH LIFE INSURANCE COMPANY (A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)  BALANCE SHEETS AS OF DECEMBER 31, 2005 AND 2004 (Dollars in thousands, except common stock par value and shares)                                2005     2004       ASSETS                   INVESTMENTS:                   Fixed maturity available-for-sale securities, at estimated fair value (amortized cost: 2005 - $1,900,606; 2004 - $1,978,713)   $ 1,884,039     $ 2,012,589     Equity available-for-sale securities, at estimated fair value (cost: 2005 - $61,696; 2004 - $46,264)     64,278       50,103     Trading account securities, at estimated fair value     27,436       27,996     Limited partnerships, at cost     12,195       13,623     Policy loans on insurance contracts, at outstanding loan balances     992,143       1,030,036                     Total Investments     2,980,091       3,134,347     CASH AND CASH EQUIVALENTS     56,319       64,203     ACCRUED INVESTMENT INCOME     52,466       57,646     DEFERRED POLICY ACQUISITION COSTS     296,189       392,516     FEDERAL INCOME TAXES — DEFERRED     1,937       —     REINSURANCE RECEIVABLES     9,231       3,832     AFFILIATED RECEIVABLES – NET     5,519       5,611     RECEIVABLES FROM SECURITIES SOLD     254       3,021     DEFERRED SALES INDUCEMENTS     8,298       —     OTHER ASSETS     33,338       36,186     SEPARATE ACCOUNTS ASSETS     10,917,234       11,052,839                     TOTAL ASSETS   $ 14,360,876     $ 14,750,201                              See accompanying notes to financial statements.  (Continued)            MERRILL LYNCH LIFE INSURANCE COMPANY (A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)  BALANCE SHEETS (Continued) AS OF DECEMBER 31, 2005 AND 2004 (Dollars in thousands, except common stock par value and shares)                                2005     2004       LIABILITIES AND STOCKHOLDER’S EQUITY                   LIABILITIES:                   POLICYHOLDER LIABILITIES AND ACCRUALS:                   Policyholder account balances   $ 2,163,838     $ 2,336,844     Future policy benefits     420,542       439,073     Claims and claims settlement expenses     31,147       35,145                     Total Policyholder Liabilities and Accruals     2,615,527       2,811,062     OTHER POLICYHOLDER FUNDS     1,948       7,224     LIABILITY FOR GUARANTY FUND ASSESSMENTS     6,791       7,056     FEDERAL INCOME TAXES – DEFERRED     —       22,022     FEDERAL INCOME TAXES – CURRENT     17,572       23,616     PAYABLES FOR SECURITIES PURCHASED     962       2,429     UNEARNED POLICY CHARGE REVENUE     45,604       112,221     OTHER LIABILITIES     2,405       266     SEPARATE ACCOUNTS LIABILITIES     10,917,234       11,052,839                     Total Liabilities     13,608,043       14,038,735                     STOCKHOLDER’S EQUITY:                   Common stock ($10 par value; authorized: 1,000,000 shares; issued and outstanding: 250,000 shares)     2,500       2,500     Additional paid-in capital     397,324       397,324     Retained earnings     364,708       297,344     Accumulated other comprehensive income (loss)     (11,699 )     14,298                     Total Stockholder’s Equity     752,833       711,466                     TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY   $ 14,360,876     $ 14,750,201                       See accompanying notes to financial statements.          MERRILL LYNCH LIFE INSURANCE COMPANY (A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)  STATEMENTS OF EARNINGS FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003 (Dollars in thousands)                                        2005     2004     2003       REVENUES:                           Policy charge revenue   $ 305,688     $ 236,695     $ 228,878     Net investment income     147,730       157,080       174,662     Net realized investment gains     2,622       3,999       987                           Total Revenues     456,040       397,774       404,527                           BENEFITS AND EXPENSES:                           Interest credited to policyholder liabilities     106,444       119,804       128,958     Market value adjustment expense     840       2,713       4,806     Policy benefits (net of reinsurance recoveries: 2005 - $17,706 2004 - $15,903; 2003 - $17,641)     47,270       54,282       64,631     Reinsurance premium ceded     26,322       25,197       22,599     Amortization of deferred policy acquisition costs     126,281       4,904       76,402     Insurance expenses and taxes     59,396       57,560       52,092                           Total Benefits and Expenses     366,553       264,460       349,488                           Earnings Before Federal Income Tax Provision     89,487       133,314       55,039                           FEDERAL INCOME TAX PROVISION (BENEFIT):                           Current     32,083       37,334       67,516     Deferred     (9,960 )     3,285       (53,902 )                         Total Federal Income Tax Provision     22,123       40,619       13,614                           EARNINGS BEFORE CHANGE IN ACCOUNTING PRINCIPLE     67,364       92,695       41,425                           Change in Accounting Principle, Net of Tax     —       (27,400 )     —                           NET EARNINGS   $ 67,364     $ 65,295     $ 41,425                             See accompanying notes to financial statements.          MERRILL LYNCH LIFE INSURANCE COMPANY (A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)  STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003 (Dollars in thousands)                                        2005     2004     2003       NET EARNINGS   $ 67,364     $ 65,295     $ 41,425                           OTHER COMPREHENSIVE INCOME (LOSS):                           Net unrealized gains (losses) on available-for-sale securities:                           Net unrealized holding gains (losses) arising during the period     (48,849 )     (11,852 )     46,905     Reclassification adjustment for (gains) losses included in net earnings     (2,851 )     (2,562 )     3,286                           Total net unrealized gains (losses) on available-for-sale securities     (51,700 )     (14,414 )     50,191     Adjustments for:                           Policyholder liabilities     11,704       19,033       6,302     Deferred policy acquisition costs     —       (260 )     (3,455 )   Deferred federal income taxes     13,999       (1,526 )     (18,563 )                         Total other comprehensive income (loss), net of tax     (25,997 )     2,833       34,475                           COMPREHENSIVE INCOME   $ 41,367     $ 68,128     $ 75,900                             See accompanying notes to financial statements.          MERRILL LYNCH LIFE INSURANCE COMPANY (A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)  STATEMENTS OF STOCKHOLDER’S EQUITY FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003 (Dollars in thousands)                                                                                Accumulated                       Additional             other     Total         Common     paid-in     Retained     comprehensive     stockholder’s         stock     capital     earnings     loss     equity       BALANCE, JANUARY 1, 2003   $ 2,500     $ 347,324     $ 288,124     $ (23,010 )   $ 614,938     Net earnings                     41,425               41,425     Capital contribution from parent             50,000                       50,000     Other comprehensive income, net of tax                             34,475       34,475                                       BALANCE, DECEMBER 31, 2003     2,500       397,324       329,549       11,465       740,838     Net earnings                     65,295               65,295     Cash dividend paid to parent                     (97,500 )             (97,500 )   Other comprehensive income, net of tax                             2,833       2,833                                       BALANCE, DECEMBER 31, 2004     2,500       397,324       297,344       14,298       711,466     Net earnings                     67,364               67,364     Other comprehensive loss, net of tax                             (25,997 )     (25,997 )                                     BALANCE, DECEMBER 31, 2005   $ 2,500     $ 397,324     $ 364,708     $ (11,699 )   $ 752,833                                         See accompanying notes to financial statements.          MERRILL LYNCH LIFE INSURANCE COMPANY (a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)  STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003 (Dollars in thousands)                                        2005     2004     2003       Cash Flows From Operating Activities:                           Net earnings   $ 67,364     $ 65,295     $ 41,425     Noncash items included in earnings:                           Change in accounting principle, net of tax     —       27,400       —     Amortization of deferred policy acquisition costs     126,281       4,904       76,402     Capitalization of policy acquisition costs     (29,954 )     (34,116 )     (40,051 )   Amortization of investments     9,476       10,863       9,883     Amortization of deferred sales inducements     352       —       —     Capitalization of deferred sales inducements     (8,650 )     —       —     Interest credited to policyholder liabilities     106,444       119,804       128,958     Change in variable contract reserves     1,797       (1,706 )     —     Provision (benefit) for deferred Federal income tax     (9,960 )     3,285       (53,902 )   (Increase) decrease in operating assets:                           Trading account securities     642       (373 )     (559 )   Accrued investment income     5,180       5,919       38     Federal income taxes – current     —       —       40,910     Reinsurance receivables     (5,399 )     2,172       2,193     Affiliated receivables – net     92       (5,611 )     67     Other     2,848       59       1,154     Increase (decrease) in operating liabilities:                           Claims and claims settlement expenses     (3,998 )     2,648       3,192     Other policyholder funds     (5,276 )     (5,691 )     1,100     Liability for guaranty fund assessments     (265 )     (83 )     (82 )   Federal income taxes – current     (6,044 )     3,470       20,146     Affiliated payables – net     —       (2,365 )     2,365     Unearned policy charge revenue     (66,617 )     4,460       (6,013 )   Other     2,139       (3,214 )     (2,553 )   Other operating activities:                           Net realized investment gains     (2,622 )     (3,999 )     (987 )                                                     Net cash and cash equivalents provided by operating activities   $ 183,830     $ 193,121     $ 223,686                                    See accompanying notes to financial statements.  (Continued)            MERRILL LYNCH LIFE INSURANCE COMPANY (a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)  STATEMENTS OF CASH FLOWS (Continued) FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003 (Dollars in thousands)                                        2005     2004     2003       Cash Flow From Investing Activities:                           Proceeds from (payments for):                           Sales of available-for-sale securities   $ 369,222     $ 212,732     $ 312,514     Maturities of available-for-sale securities     191,749       353,824       533,534     Purchases of available-for-sale securities     (503,621 )     (406,551 )     (1,097,868 )   Sales of limited partnerships     3,466       1,357       470     Purchases of limited partnerships     (2,349 )     (3,100 )     (200 )   Policy loans on insurance contracts     37,893       56,501       57,126     Recapture of investment in separate accounts     —       —       3,015     Investment in separate accounts     —       —       (304 )                                                     Net cash and cash equivalents provided by (used in) investing activities     96,360       214,763       (191,713 )                                                     Cash Flows From Financing Activities:                           Proceeds from (payments for):                           Capital contribution received from (cash dividend paid to) parent     —       (97,500 )     50,000     Policyholder deposits (excludes internal policy replacement deposits)     623,148       730,643       936,437     Policyholder withdrawals (including transfers from separate accounts)     (911,222 )     (1,052,253 )     (1,255,198 )                                                     Net cash and cash equivalents used in financing activities     (288,074 )     (419,110 )     (268,761 )                                                     NET DECREASE IN CASH AND CASH EQUIVALENTS     (7,884 )     (11,226 )     (236,788 )                               CASH AND CASH EQUIVALENTS                           Beginning of year     64,203       75,429       312,217                                                       End of year   $ 56,319     $ 64,203     $ 75,429                                                       Supplementary Disclosure of Cash Flow Information:                           Cash paid to affiliates for:                           Federal income taxes   $ 38,127     $ 33,864     $ 6,460     Interest     332       260       197       See accompanying notes to financial statements.          MERRILL LYNCH LIFE INSURANCE COMPANY (a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)  NOTES TO FINANCIAL STATEMENTS (Dollars in thousands)    NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Description of Business: Merrill Lynch Life Insurance Company (the “Company”) is a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc. (“MLIG”). The Company is an indirect wholly owned subsidiary of Merrill Lynch & Co., Inc. (“Merrill Lynch & Co.”). The Company is domiciled in the State of Arkansas.  The Company sells non-participating annuity products, including variable annuities, modified guaranteed annuities and immediate annuities. The Company is currently licensed to sell insurance and annuities in forty-nine states, the District of Columbia, the U.S. Virgin Islands and Guam. The Company markets its products solely through the retail network of Merrill Lynch, Pierce, Fenner & Smith, Incorporated (“MLPF&S”), a wholly owned broker-dealer subsidiary of Merrill Lynch & Co.  Basis of Reporting: The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and prevailing industry practices, both of which require management to make estimates that affect the reported amounts and disclosure of contingencies in the Financial Statements. Actual results could differ from those estimates.  The significant accounting policies and related judgments underlying the Company’s Financial Statements are summarized below. In applying these policies, management makes subjective and complex judgments that frequently require estimates about matters that are inherently uncertain.  For the purpose of reporting cash flows, cash and cash equivalents include cash on hand and on deposit and short-term investments with original maturities of three months or less.  Certain reclassifications and format changes have been made to prior year amounts to conform to the current year presentation.  Revenue Recognition: Revenues for variable annuity contracts consist of policy charges for i) mortality and expense risks, ii) certain benefit guarantees selected by the contract owner, iii) administration fees, iv) annual contract maintenance charges, and v) withdrawal charges assessed on contracts surrendered during the withdrawal charge period.  Revenues for variable life insurance contracts consist of policy charges for i) mortality and expense risks, ii) cost of insurance fees, iii) amortization of front-end and deferred sales charges, and iv) withdrawal charges assessed on contracts surrendered during the withdrawal charge period. The Company does not currently manufacture variable life insurance contracts.  Revenues for interest-sensitive annuity contracts (market value adjusted annuities, immediate annuities, and single premium deferred annuities) and interest-sensitive life insurance contracts (single premium whole life insurance) consist of i) investment income, ii) gains (losses) on the sale of invested assets, and iii) withdrawal charges assessed on contracts surrendered during the withdrawal charge period. The Company does not currently manufacture single premium deferred annuities or single premium whole life contracts.  Investments: The Company’s investments in fixed maturity and equity securities are classified as either available-for-sale or trading and are reported at estimated fair value. Unrealized gains and losses on available-for-sale securities are included in stockholder’s equity as a component of accumulated other comprehensive income (loss), net of tax. These changes in estimated fair value are not reflected in the Statements of Earnings until a sale transaction occurs or when declines in fair          value are deemed other-than-temporary. Unrealized gains and losses on trading account securities are included in net realized investment gains.  If management determines that a decline in the value of an available-for-sale security is other-than-temporary, the carrying value is adjusted to estimated fair value and the decline in value is recorded as a net realized investment loss. Management makes this determination through a series of discussions with the Company’s portfolio managers and credit analysts, information obtained from external sources (i.e. company announcements, ratings agency announcements, or news wire services) and the Company’s ability and intent to hold the investments for a period of time sufficient for a forecasted market price recovery up to or beyond the amortized cost of the investment. The factors that may give rise to a potential other-than-temporary impairment include, but are not limited to, i) certain credit-related events such as default of principal or interest payments by the issuer, ii) bankruptcy of issuer, iii) certain security restructurings, and iv) fair market value less than amortized cost for an extended period of time. In the absence of a readily ascertainable market value, the estimated fair value on these securities represents management’s best estimate and is based on comparable securities and other assumptions as appropriate. Management bases this determination on the most recent information available.  For fixed maturity securities, premiums are amortized to the earlier of the call or maturity date, discounts are accreted to the maturity date, and interest income is accrued daily. For equity securities, dividends are recognized on the ex-dividend date. Realized gains and losses on the sale or maturity of investments are determined on the basis of specific identification. Investment transactions are recorded on the trade date.  Certain fixed maturity and equity securities are considered below investment grade. The Company defines below investment grade securities as unsecured debt obligations that have a Standard and Poor’s (or similar rating agency) rating lower than BBB-.  Investments in limited partnerships are carried at cost.  Policy loans on insurance contracts are stated at unpaid principal balances.  Deferred Policy Acquisition Costs (“DAC”): Policy acquisition costs for variable annuities and variable life insurance contracts are deferred and amortized based on the estimated future gross profits for each group of contracts. These future gross profit estimates are subject to periodic evaluation by the Company, with necessary revisions applied against amortization to date. The impact of these revisions on cumulative amortization is recorded as a charge or credit to current operations, commonly referred to as “unlocking”. It is reasonably possible that estimates of future gross profits could be reduced in the future, resulting in a material reduction in the carrying amount of DAC.  Policy acquisition costs are principally commissions and a portion of certain other expenses relating to policy acquisition, underwriting and issuance that are primarily related to and vary with the production of new business. Insurance expenses and taxes reported in the Statements of Earnings are net of amounts deferred. Policy acquisition costs can also arise from the acquisition or reinsurance of existing inforce policies from other insurers. These costs include ceding commissions and professional fees related to the reinsurance assumed. The deferred costs are amortized in proportion to the estimated future gross profits over the anticipated life of the acquired insurance contracts utilizing an interest methodology.          During 1990, the Company entered into an assumption reinsurance agreement with an unaffiliated insurer. The acquisition costs relating to this agreement are being amortized over a twenty-five year period using an effective interest rate of 7.5%. This reinsurance agreement provided for payment of contingent ceding commissions, for a ten year period, based upon the persistency and mortality experience of the insurance contracts assumed. Payments made for contingent ceding commissions were capitalized and amortized using an identical methodology as that used for the initial acquisition costs. The following is a reconciliation of the acquisition costs related to this reinsurance agreement for the years ended December 31:                                          2005     2004     2003         Beginning balance   $ 62,099     $ 69,289     $ 81,425       Interest accrued     4,657       5,197       6,107       Amortization     (11,975 )     (12,387 )     (18,243 )                             Ending balance   $ 54,781     $ 62,099     $ 69,289                               The following table presents the expected amortization, net of interest accrued, of these deferred acquisition costs over the next five years. Amortization may be adjusted based on periodic evaluation of the expected gross profits on the reinsured policies.                    2006   $ 6,642     2007   $ 5,862     2008   $ 5,651     2009   $ 5,605     2010   $ 5,397       Deferred Sales Inducements: The Company offers a sales inducement whereby the contract owner receives a bonus which increases the initial account balance by an amount equal to a specified percentage of the contract owner’s deposit. This amount may be subject to recapture under certain circumstances. The expense associated with offering this bonus is deferred and amortized over the anticipated life of the related contracts consistent with the amortization of DAC.  Separate Accounts: The Company’s Separate Accounts consist of variable annuities and variable life insurance contracts, of which the assets and liabilities are legally segregated and reported as separate captions in the Balance Sheets. Separate Accounts are established in conformity with Arkansas State Insurance Law and are generally not chargeable with liabilities that arise from any other business of the Company. Separate Accounts assets may be subject to claims of the Company only to the extent the value of such assets exceeds Separate Accounts liabilities. The assets of the Separate Accounts are carried at the daily net asset value of the mutual funds in which they invest.  Absent any contract provision wherein the Company guarantees either a minimum return or account value upon death or annuitization, the net investment income and net realized and unrealized gains and losses attributable to Separate Accounts assets supporting variable annuities and variable life contracts accrue directly to the contract owner and are not reported as revenue in the Statements of Earnings. Mortality, policy administration and withdrawal charges associated with Separate Accounts products are included in policy charge revenue in the Statements of Earnings.  Policyholder Account Balances: The Company’s liability for policyholder account balances represents the contract value that has accrued to the benefit of the policyholder as of the balance sheet date. The liability is generally equal to the accumulated account deposits plus interest credited less policyholders’ withdrawals and other charges assessed against the account balance. Interest-crediting rates for the Company’s fixed rate products are as follows:                      Interest-sensitive life products     4.00% - 4.85 %   Interest-sensitive deferred annuities     1.00% - 6.80 %     These rates may be changed at the option of the Company after initial guaranteed rates expire, unless contracts are subject to minimum interest rate guarantees.          Future Policy Benefits: The Company’s liability for future policy benefits consists of liabilities for immediate annuities and liabilities for certain guarantee benefits contained in the variable insurance products the Company manufactures. Liabilities for immediate annuities are equal to the present value of estimated future payments to or on behalf of policyholders, where the timing and amount of payment generally depends on policyholder mortality. Interest rates used in establishing such liabilities range from 3.00% to 11.00%. Liabilities for guarantee benefits for variable annuity and life insurance contracts are discussed in more detail in Note 6 of the Financial Statements.  Claims and Claims Settlement Expenses: Liabilities for claims and claims settlement expenses equal the death benefit (plus accrued interest) for claims that have been reported to the Company but have not settled and an estimate, based upon prior experience, for unreported claims.  Federal Income Taxes: The results of operations of the Company are included in the consolidated Federal income tax return of Merrill Lynch & Co. The Company has entered into a tax-sharing agreement with Merrill Lynch & Co. whereby the Company will calculate its current tax provision based on its operations. Under the agreement, the Company periodically remits to Merrill Lynch & Co. its current federal income tax liability.  The Company provides for income taxes on all transactions that have been recognized in the financial statements in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 109, Accounting for Income Taxes. Accordingly, deferred taxes are adjusted to reflect the tax rates at which future taxable amounts will likely be settled or realized. The effects of tax rate changes on future deferred tax liabilities and deferred tax assets, as well as other changes in income tax laws, are recognized in net earnings in the period during which such changes are enacted. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.  The Company is generally subject to taxes on premiums and, in substantially all states, is exempt from state income taxes.  Unearned Policy Charge Revenue: Certain variable life insurance products contain policy charges that are assessed at policy issuance. These policy charges are deferred and amortized into policy charge revenue based on the estimated future gross profits for each group of contracts, consistent with the amortization of DAC. The impact of any revisions on cumulative amortization is recorded as a charge or credit to current operations, commonly referred to as “unlocking”. The Company records a liability equal to the unamortized balance of these policy charges.  Accounting Pronouncements: In September 2005, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued SOP 05-1, “Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection With Modifications or Exchanges of Insurance Contracts.” SOP 05-1 provides guidance on accounting by insurance enterprises for deferred acquisition costs on internal replacements of insurance and investment contracts other than those specifically described in SFAS No. 97. The SOP defines an internal replacement as a modification in product benefits, features, rights, or coverages that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. This SOP is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. The Company will adopt SOP 05-1 on January 1, 2007. The Company is currently assessing the Financial Statement impact related to the adoption of SOP 05-1.  On January 1, 2004, the Company adopted the provisions of Statement of Position (“SOP”) 03-1, “Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts.” SOP 03-1 required the establishment of a liability for contracts that contain death or other insurance benefits using a reserve methodology that was different from the methodology that the Company previously employed. As a result, the Company recorded a $41,304 increase in policyholder liabilities and a $850 decrease in deferred policy acquisition costs resulting in a charge to earnings of $27,400, net of a federal income tax benefit of $14,754, which was reported as a cumulative effect of a change in accounting principle during 2004. Excluding the cumulative effect of a change in accounting principle during 2004, the changes in policyholder liabilities related to SOP 03-1 did not have a material impact on the company’s Statements of Earnings for the years ended 2005 and 2004.          NOTE 2. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS  Financial instruments are carried at fair value or amounts that approximate fair value. The carrying value of financial instruments at December 31 were:                              2005     2004       Assets:                   Fixed maturity securities (1)   $ 1,884,039     $ 2,012,589     Equity securities (1)     64,278       50,103     Trading account securities (1)     27,436       27,996     Limited partnerships (2)     12,195       13,623     Policy loans on insurance contracts (3)     992,143       1,030,036     Cash and cash equivalents (4)     56,319       64,203     Separate Accounts assets (5)     10,917,234       11,052,839                                         Total assets   $ 13,953,644     $ 14,251,389                                         Liabilities:                   Policyholder account balances   $ 2,163,838     $ 2,336,844                                  (1)   For publicly traded securities, the estimated fair value is determined using quoted market prices. For securities without a readily ascertainable market value, the Company utilizes pricing services and broker quotes. Such estimated fair values do not necessarily represent the values for which these securities could have been sold at the dates of the balance sheets. At December 31, 2005 and 2004, securities without a readily ascertainable market value, having an amortized cost of $241,557 and $219,866, had an estimated fair value of $242,455 and $227,109, respectively.     (2)   The Company has investments in three limited partnerships that do not have readily ascertainable market values. Management has estimated the fair value of two of the partnerships as equal to cost, based on the review of the underlying investments of the partnerships. During 2005, the Company recognized a realized investment loss of $311 and reduced the carrying value of the third partnership to zero.     (3)   The Company estimates the fair value of policy loans as equal to the book value of the loans. Policy loans are fully collateralized by the account value of the associated insurance contracts, and the spread between the policy loan interest rate and the interest rate credited to the account value held as collateral is fixed.     (4)   The estimated fair value of cash and cash equivalents approximates the carrying value.     (5)   Assets held in Separate Accounts are carried at the net asset value provided by the fund managers.           NOTE 3. INVESTMENTS  The amortized cost and estimated fair value of investments in fixed maturity securities and equity securities (excluding trading account securities) at December 31 were:                                              2005         Cost /     Gross     Gross     Estimated         Amortized     Unrealized     Unrealized     Fair         Cost     Gains     Losses     Value       Fixed maturity securities:                                   Corporate debt securities   $ 1,807,866     $ 13,939     $ 30,359     $ 1,791,446     U.S. Government and agencies     44,593       576       451       44,718     Mortgage-backed securities     22,755       394       402       22,747     Foreign governments     21,369       415       716       21,068     Municipals     4,023       41       4       4,060                                                                     Total fixed maturity securities   $ 1,900,606     $ 15,365     $ 31,932     $ 1,884,039                                                                     Equity securities:                                   Non-redeemable preferred stocks   $ 61,584     $ 2,662     $ 93     $ 64,153     Investment in Separate Accounts     112       13       —       125                                                                     Total equity securities   $ 61,696     $ 2,675     $ 93     $ 64,278                                                                               2004         Cost /     Gross     Gross     Estimated         Amortized     Unrealized     Unrealized     Fair         Cost     Gains     Losses     Value       Fixed maturity securities:                                   Corporate debt securities   $ 1,883,260     $ 40,768     $ 8,644     $ 1,915,384     U.S. Government and agencies     52,439       1,143       395       53,187     Mortgage-backed securities     21,260       762       36       21,986     Foreign governments     19,373       419       214       19,578     Municipals     2,381       73       —       2,454                                                                     Total fixed maturity securities   $ 1,978,713     $ 43,165     $ 9,289     $ 2,012,589                                                                     Equity securities:                                   Non-redeemable preferred stocks   $ 46,160     $ 3,835     $ 13     $ 49,982     Investment in Separate Accounts     104       17       —       121                                                                     Total equity securities   $ 46,264     $ 3,852     $ 13     $ 50,103                                           Estimated fair value and gross unrealized losses by length of time that certain fixed maturity and equity securities have been in a continuous unrealized loss position at December 31, 2005 were:                                                              Less than 12 Months     More than 12 Months     Total         Estimated Fair Value     Unrealized Losses     Estimated Fair Value     Unrealized Losses     Estimated Fair Value     Unrealized Losses       Fixed maturity securities:                                                   Corporate debt securities   $ 852,876     $ 15,046     $ 467,689     $ 15,313     $ 1,320,565     $ 30,359     Foreign governments     1,951       47       15,823       669       17,774       716     U.S. Government and agencies     5,286       7       16,692       444       21,978       451     Mortgage-backed securities     5,647       79       9,308       323       14,955       402     Municipals     2,651       4       —       —       2,651       4                                                         Equity securities:                                                   Non-redeemable preferred stocks     5,292       67       490       26       5,782       93                                                                                                 Total temporarily impaired securities   $ 873,703     $ 15,250     $ 510,002     $ 16,775     $ 1,383,705     $ 32,025                                               Unrealized losses are primarily due to price fluctuations resulting from changes in interest rates and credit spreads. Based on the most recent available information, the Company has the ability and intent to hold the investments for a period of time sufficient for a forecasted market price recovery up to or beyond the amortized cost of the investment.  The Company recorded realized investment losses due to other-than-temporary declines in fair value of $1,937, $2,129 and $9,139 for the years ended December 31, 2005, 2004 and 2003, respectively.  The amortized cost and estimated fair value of fixed maturity securities at December 31 by contractual maturity were:                              2005         Amortized     Estimated         Cost     Fair Value       Fixed maturity securities:                   Due in one year or less   $ 224,814     $ 223,708     Due after one year through five years     1,219,632       1,200,236     Due after five years through ten years     319,999       320,200     Due after ten years     113,406       117,148                           1,877,851       1,861,292                         Mortgage-backed securities     22,755       22,747                                         Total fixed maturity securities   $ 1,900,606     $ 1,884,039                                                           2004         Amortized     Estimated         Cost     Fair Value       Fixed maturity securities:                   Due in one year or less   $ 129,776     $ 130,671     Due after one year through five years     1,280,578       1,294,717     Due after five years through ten years     452,086       465,924     Due after ten years     95,013       99,291                           1,957,453       1,990,603                         Mortgage-backed securities     21,260       21,986                                         Total fixed maturity securities   $ 1,978,713     $ 2,012,589                       In the preceding tables fixed maturity securities not due at a single maturity date have been included in the year of final maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.  The amortized cost and estimated fair value of fixed maturity securities at December 31 by rating agency equivalent were:                              2005         Amortized     Estimated         Cost     Fair Value       AAA   $ 208,688     $ 206,236     AA     305,894       300,621     A     716,440       710,750     BBB     641,376       639,643     Below investment grade     28,208       26,789                                         Total fixed maturity securities   $ 1,900,606     $ 1,884,039                                         Investment grade     99 %     99 %   Below investment grade     1 %     1 %                                 2004         Amortized     Estimated         Cost     Fair Value       AAA   $ 291,059     $ 293,009     AA     318,463       320,592     A     662,445       671,547     BBB     686,698       706,358     Below investment grade     20,048       21,083                                         Total fixed maturity securities   $ 1,978,713     $ 2,012,589                                         Investment grade     99 %     99 %   Below investment grade     1 %     1 %             The Company has recorded certain adjustments to policyholder account balances in connection with unrealized holding gains or losses on investments classified as available-for-sale. The Company adjusts those assets and liabilities as if the unrealized holding gains or losses had actually been realized, with corresponding credits or charges reported in accumulated other comprehensive income (loss), net of taxes. The components of net unrealized gains (losses) included in accumulated other comprehensive income (loss) at December 31 were as follows:                              2005     2004       Assets:                   Fixed maturity securities   $ (16,567 )   $ 33,876     Equity securities     2,582       3,839     Federal income taxes – deferred     6,299       —                           (7,686 )     37,715                                         Liabilities:                   Policyholder account balances     4,013       15,717     Federal income taxes – deferred     —       7,700                           4,013       23,417                                         Stockholder’s equity:                   Accumulated other comprehensive income (loss)   $ (11,699 )   $ 14,298                       Proceeds and gross realized investment gains and losses from the sale of available-for-sale securities for the years ended December 31 were as follows:                                      2005     2004     2003       Proceeds   $ 369,222     $ 212,732     $ 312,514     Gross realized investment gains     7,026       7,927       13,380     Gross realized investment losses     4,175       5,365       16,071       The Company considers fair value at the date of sale to be equal to proceeds received. Proceeds on the sale of available-for-sale securities sold at a realized loss were $191,302, $66,006 and $65,451 for the years ended December 31, 2005, 2004 and 2003, respectively.  The Company had investment securities with a carrying value of $22,756 and $25,068 that were deposited with insurance regulatory authorities at December 31, 2005 and 2004, respectively.  Excluding investments in U.S. Government and agencies, the Company is not exposed to any significant concentration of credit risk in its fixed maturity securities portfolio.          Net investment income by source for the years ended December 31 was as follows:                                      2005     2004     2003       Fixed maturity securities   $ 91,754     $ 97,750     $ 107,940     Policy loans on insurance contracts     51,346       55,243       58,157     Equity securities     4,313       5,199       9,162     Cash and cash equivalents     2,673       2,059       2,155     Limited partnerships     483       30       28     Other     38       374       233                                                       Gross investment income     150,607       160,655       177,675     Less investment expenses     (2,877 )     (3,575 )     (3,013 )                                                     Net investment income   $ 147,730     $ 157,080     $ 174,662                             Net realized investment gains (losses), for the years ended December 31 were as follows:                                      2005     2004     2003       Fixed maturity securities   $ 2,854     $ 1,628     $ (1,167 )   Equity securities     (3 )     934       (395 )   Trading account securities     82       1,437       3,678     Limited partnerships     (311 )     —       —     Investment in Separate Accounts     —       —       (1,129 )                                                     Net realized investment gains   $ 2,622     $ 3,999     $ 987                             The Company maintains a trading portfolio comprised of convertible debt and equity securities. The net unrealized holdings gains (losses) on trading account securities included in net realized investment gains were ($1,012), ($359) and $1,663 at December 31, 2005, 2004 and 2003, respectively.  NOTE 4. DAC AND UNEARNED POLICY CHARGE REVENUE  The components of amortization of DAC for the years ended December 31 were as follows:                                      2005     2004     2003       Normal amortization related to life insurance and annuity insurance contracts   $ 44,415     $ 46,230     $ 54,549     Unlocking related to life insurance products     55,492       —       9,719     Unlocking related to annuity insurance products     26,374       (41,326 )     12,134                                                       Total amortization of DAC   $ 126,281     $ 4,904     $ 76,402                             During 2005, the Company lowered its future gross profit assumptions on certain life insurance and annuity products resulting from historical surrender experience and reinsurance assumptions.  During 2004, the Company elected to adopt new assumptions for market returns associated with assets held in the Company’s variable annuity separate accounts. If returns over a determined historical period differ from the Company’s long-term assumption, returns for future determined periods are calculated so that the long-term assumption is achieved. This method for projecting market returns is known as reversion to the mean, a standard industry practice. The Company          previously established estimates for market returns based on actual historical results and on future anticipated market returns without the use of a mean reversion technique.  The components of amortization (accretion) of unearned policy charge revenue (“UPCR”) for the years ended December 31 were as follows:                                      2005     2004     2003       Normal amortization (accretion) related to variable life insurance products   $ 400     $ (1,921 )   $ 5,056     Unlocking related to variable life insurance products     67,909       —       5,451                                                       Total amortization (accretion) of UPCR (1)   $ 68,309     $ (1,921 )   $ 10,507                             Similar to DAC unlocking, UPCR unlocking during 2005 was a result of lowered future gross profit assumptions resulting from historical surrender experience and reinsurance assumptions.  (1) Recorded as a component of policy charge revenue in the Statement of Earnings.  NOTE 5. DEFERRED SALES INDUCEMENTS  During March 2005, the Company introduced a new variable annuity product in which certain contracts contain sales inducements. The components of deferred sales inducements were as follows:                      December 31,         2005       Balance at January 1, 2005   $ —     Capitalization     8,650     Amortization     (352 )                         Balance at December 31, 2005   $ 8,298                 The expense associated with offering the deferred sales inducement and the subsequent capitalization and amortization are recorded as a component of policy benefits in the Statements of Earnings.  NOTE 6. VARIABLE CONTRACTS CONTAINING GUARANTEES  Variable Annuity Contracts Containing Guarantees  The Company issues variable annuity contracts in which the Company may contractually guarantee to the contract owner a guaranteed minimum death benefit (“GMDB”) and/or an optional guaranteed minimum income benefit (“GMIB”). In general, contracts containing GMDB provisions provide a death benefit equal to the greater of the GMDB or the contract value. Depending on the type of contract, the GMDB may equal: i) contract deposits accumulated at a specified interest rate, ii) the contract value on specified contract anniversaries, iii) return of contract deposits, or iv) some combination of these benefits. Each benefit type is reduced for contract withdrawals. In general, contracts containing GMIB provisions provide the option to receive a guaranteed future income stream upon annuitization. There is a waiting period of ten years that must elapse before the GMIB provision can be exercised. The Company began offering GMIB benefits in 2002.          The Company had the following variable annuity contracts containing guarantees at December 31:                                              2005     2004         GMDB     GMIB     GMDB     GMIB       Net amount at risk (1)   $ 982,449     $ 1,912     $ 1,057,678     $ —     Average attained age of contract owners     67       59       67       58     Weighted average period remaining until expected annuitization     n/a     8 yrs     n/a       9 yrs                  (1)   Net amount at risk for GMDB is defined as the current GMDB in excess of the contract owners’ account balance at the balance sheet date.         Net amount at risk for GMIB is defined as the present value of the minimum guaranteed annuity payments available to the contract owner determined in accordance with the terms of the contract in excess of the contract owners’ account balance at the balance sheet date.   The Company records liabilities for contracts containing guarantees as a component of future policy benefits in the Balance Sheets. Changes in these guarantee liabilities are included as a component of policy benefits in the Statements of Earnings. The GMDB liability is determined by projecting future expected guaranteed benefits under multiple scenarios for returns on Separate Accounts assets. The Company uses estimates for mortality and surrender assumptions based on actual and projected experience for each contract type. These estimates are consistent with the estimates used in the calculation of DAC. The Company regularly evaluates the estimates used and adjusts the GMDB and/or GMIB liability balances with a related charge or credit to earnings (“unlocking”), if actual experience or evidence suggests that earlier assumptions should be revised.  The variable annuity liability for each type of guarantee at December 31, 2005 was as follows:                              GMDB     GMIB       Balance at January 1, 2005   $ 106,222     $ 587     Guarantee benefits incurred     28,603       1,658     Guarantee benefits paid     (24,308 )     —     Unlocking     (4,308 )     —                                         Balance at December 31, 2005   $ 106,209     $ 2,245                            At December 31, contract owners’ account balances by mutual fund class for contracts containing guarantee provisions were distributed as follows:                                                              2005         Money                                       Market     Bond     Equity     Balanced     Other     Total       GMDB only   $ 652,257       1,299,032       4,179,526       244,804       4,304     $ 6,379,923     GMIB and GMDB (2)     245,410       333,382       1,240,068       85,355       14,613       1,918,828     GMIB only     1,216       6,613       31,763       8,547       2,193       50,332                                                                                                 Total   $ 898,883       1,639,027       5,451,357       338,706       21,110     $ 8,349,083                                                                                                           2004         Money                                 Market     Bond     Equity     Balanced     Total       GMDB only   $ 271,469       1,470,963       4,555,552       671,860     $ 6,969,844     GMIB and GMDB (2)     37,601       278,840       929,006       148,416       1,393,863                                                                                   Total   $ 309,070       1,749,803       5,484,558       820,276     $ 8,363,707                                                        (2)   Certain variable annuity contracts with GMIB provisions include a GMDB provision.   At December 31, 2005, $10,339 of contract owners’ account balances did not contain any guarantee provisions. At December 31, 2004, all contract owners’ account balances contained guarantee provisions.  Variable Life Contracts Containing Guarantees  The Company has issued variable life contracts in which the Company contractually guarantees to the contract owner a GMDB. In general, contracts containing GMDB provisions provide a death benefit equal to the amount specified in the contract regardless of the level of the contract’s account value.  The Company records liabilities for contracts containing guarantees as a component of future policy benefits. Changes in these guarantee liabilities are included as a component of policy benefits in the Statements of Earnings. The variable life GMDB liability at December 31, 2005 and 2004, was $2,132 and $1,980 respectively. The variable life GMDB liability is set as a percentage of asset-based fees and cost of insurance charges deducted from contracts that include a GMDB provision. The percentage is established based on the Company’s estimate of the likelihood of future GMDB claims.  At December 31, contract owners’ account balances by mutual fund class for contracts containing GMDB provisions were distributed as follows:                              2005     2004       Equity   $ 977,768     $ 997,103     Balanced     951,955       990,099     Bond     371,649       415,743     Money market     245,084       277,415     Other     11,356       8,772                                         Total   $ 2,557,812     $ 2,689,132                       NOTE 7. FEDERAL INCOME TAXES  The following is a reconciliation of the provision for income taxes based on earnings before Federal income taxes, computed using the Federal statutory tax rate, versus the reported provision for income taxes for the years ended December 31:                                      2005     2004     2003       Provision for income taxes computed at Federal statutory rate   $ 31,320     $ 46,660     $ 19,264     Increase (decrease) in income taxes resulting from:                           Dividend received deduction     (8,615 )     (6,635 )     (3,478 )   Foreign tax credit     (582 )     594       (2,172 )                                                     Federal income tax provision   $ 22,123     $ 40,619     $ 13,614                                     The Federal statutory rate for each of the three years ended December 31 was 35%.  The Company provides for deferred income taxes resulting from temporary differences that arise from recording certain transactions in different years for income tax reporting purposes than for financial reporting purposes. The sources of these differences and the tax effect of each were as follows:                                      2005     2004     2003       DAC (1)   $ (29,060 )   $ 15,013     $ (8,582 )   Other     (3,405 )     29       29     Investment adjustments     1,031       (1,959 )     488     Deferred sales inducements     2,904       —       —     Policyholder account balances (1)     18,570       (9,798 )     (45,837 )                                                     Deferred Federal income tax provision (benefit)   $ (9,960 )   $ 3,285     $ (53,902 )                                       (1)   The 2004 amounts exclude deferred tax benefits related to the adoption of SOP 03-1 (see Note 1 to the Financial Statements).    Deferred tax assets and liabilities at December 31 were as follows:                              2005     2004       Deferred tax assets:                   Policyholder account balances   $ 72,500     $ 91,070     Net unrealized investment loss on investment securities     6,299       —     Liability for guaranty fund assessments     2,377       2,469     Investment adjustments     1,913       2,944                     Total deferred tax assets     83,089       96,483                                         Deferred tax liabilities:                   DAC     77,757       106,817     Net unrealized investment gain on investment securities     —       7,700     Deferred sales inducements     2,904       —     Other     491       3,988                     Total deferred tax liabilities     81,152       118,505                                         Net deferred tax asset (liability)   $ 1,937     $ (22,022 )                     The Company anticipates that all deferred tax assets will be realized; therefore no valuation allowance has been provided.  NOTE 8. REINSURANCE  In the normal course of business, the Company seeks to limit its exposure to loss on any single insured life and to recover a portion of benefits paid by ceding reinsurance to other insurance enterprises or reinsurers under indemnity reinsurance agreements, primarily excess coverage and coinsurance agreements. The maximum amount of mortality risk retained by the Company is approximately $500 on single life policies and $750 on joint life policies.  Indemnity reinsurance agreements do not relieve the Company from its obligations to contract owners. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company regularly evaluates the financial condition of its reinsurers so as to minimize its exposure to significant losses from reinsurer insolvencies. The Company holds collateral under reinsurance agreements in the form of letters of credit and funds withheld totaling $597 that can be drawn upon for delinquent reinsurance recoverables.               As of December 31, 2005 the Company had the following life insurance inforce:                                                                                      Percentage                 Ceded to     Assumed             of amount         Gross     other     from other     Net     assumed to         amount     companies     companies     amount     net       Life insurance inforce   $ 10,330,157     $ 2,888,911     $ 845     $ 7,442,091       0.01 %     The Company is party to an indemnity reinsurance agreement with an unaffiliated insurer whereby the Company coinsures, on a modified coinsurance basis, 50% of the unaffiliated insurer’s variable annuity contracts sold through the Merrill Lynch & Co. distribution system from January 1, 1997 to June 30, 2001.  In addition, the Company seeks to limit its exposure to guaranteed features contained in certain variable annuity contracts. Specifically, the Company reinsures certain GMIB and GMDB provisions to the extent reinsurance capacity is available in the marketplace. As of December 31, 2005, 70% and 6% of the account value for variable annuity contracts containing GMIB and GMDB provisions, respectively, were reinsured.  NOTE 9. RELATED PARTY TRANSACTIONS  The Company and MLIG are parties to a service agreement whereby MLIG has agreed to provide certain accounting, data processing, legal, actuarial, management, advertising and other services to the Company. Expenses incurred by MLIG in relation to this service agreement are reimbursed by the Company on an allocated cost basis. Charges allocated to the Company by MLIG pursuant to the agreement were $33,127, $33,164 and $33,518 for 2005, 2004 and 2003, respectively. Charges attributable to this agreement are included in insurance expenses and taxes, except for investment related expenses, which are included in net investment income. The Company is allocated interest expense on its accounts payable to MLIG that approximates the daily Federal funds rate. Total intercompany interest incurred was $332, $260 and $197 for 2005, 2004 and 2003, respectively. Intercompany interest is included in net investment income.  The Company and Merrill Lynch Investment Managers, L.P. (“MLIM”) are parties to a service agreement whereby MLIM has agreed to provide certain invested asset management services to the Company. The Company pays a fee to MLIM for these services through the MLIG service agreement. Charges attributable to this agreement and allocated to the Company by MLIG were $1,681, $1,821 and $1,845 for 2005, 2004 and 2003, respectively.  MLIG has entered into agreements with MLIM and Roszel Advisors, LLC, a subsidiary of MLIG (collectively, “Affiliated Investment Advisors”), with respect to administrative services for the Merrill Lynch Series Fund, Inc., Merrill Lynch Variable Series Funds, Inc., Mercury Variable Trust, and MLIG Variable Insurance Trust (collectively, “the Funds”). Certain Separate Accounts of the Company may invest in the various mutual fund portfolios of the Funds in connection with the variable life insurance and annuity contracts the Company has inforce. Under these agreements, the Affiliated Investment Advisors pay MLIG an amount equal to a percentage of the assets invested in the Funds through the Separate Accounts. Revenue attributable to these agreements is included in policy charge revenue. The Company received from MLIG its allocable share of such compensation in the amount of $19,116, $20,243 and $18,471 during 2005, 2004 and 2003, respectively.  The Company has a general agency agreement with Merrill Lynch Life Agency Inc. (“MLLA”) whereby registered representatives of MLPF&S, who are the Company’s licensed insurance agents, solicit applications for contracts to be issued by the Company. MLLA is paid commissions for the contracts sold by such agents. Commissions paid to MLLA were $54,058, $56,506 and $60,686 for 2005, 2004 and 2003, respectively. Certain commissions were capitalized as DAC and are being amortized in accordance with the accounting policy discussed in Note 1 to the Financial Statements. Charges attributable to this agreement are included in insurance expenses and taxes, net of amounts capitalized.  While management believes that the service agreements referenced above are calculated on a reasonable basis, they may not necessarily be indicative of the costs that would have been incurred with an unrelated third party. Affiliated          agreements generally contain reciprocal indemnity provisions pertaining to each party’s representations and contractual obligations thereunder.  NOTE 10. STOCKHOLDER’S EQUITY AND STATUTORY REGULATIONS  During 2005 and 2003, the Company did not pay a dividend. During 2004, the Company paid a cash dividend of $97,500 to MLIG, of which $29,322 was an ordinary dividend. Pending regulatory approval, the Company intends to pay a cash dividend during the first half of 2006.  Applicable insurance department regulations require that the Company report its accounts in accordance with statutory accounting practices. Statutory accounting practices differ from principles utilized in these financial statements as follows: policy acquisition costs are expensed as incurred, policyholder liabilities are established using different actuarial assumptions, provisions for deferred income taxes are limited to temporary differences that will be recognized within one year, and securities are valued on a different basis.  The Company’s statutory financial statements are presented on the basis of accounting practices prescribed or permitted by the Arkansas Insurance Department. The State of Arkansas has adopted the National Association of Insurance Commissioners (“NAIC”) statutory accounting practices as a component of prescribed or permitted practices by the State of Arkansas.  Statutory capital and surplus at December 31, 2005 and 2004, were $400,951 and $284,765, respectively. At December 31, 2005 and 2004, approximately $39,845 and $28,227, respectively, of stockholder’s equity was available for distribution to MLIG that does not require approval by the Arkansas Insurance Department.  The Company’s statutory net income for 2005, 2004 and 2003 was $117,262, $79,115 and 98,570, respectively.  During 2002, the Company established $144,000 in statutory reserves to support its cashflow testing analysis required by state insurance regulation. As a result, statutory capital and surplus was significantly reduced from December 2001, but remained in excess of regulatory capital requirements. However, due to the inherent volatility in statutory earnings, the Company received a $50,000 capital contribution from MLIG during the first quarter 2003.  The NAIC utilizes the Risk Based Capital (“RBC”) adequacy monitoring system. The RBC calculates the amount of adjusted capital that a life insurance company should have based upon that company’s risk profile. As of December 31, 2005 and 2004, based on the RBC formula, the Company’s total adjusted capital level was well in excess of the minimum amount of capital required to avoid regulatory action.  NOTE 11. COMMITMENTS AND CONTINGENCIES  State insurance laws generally require that all life insurers who are licensed to transact business within a state become members of the state’s life insurance guaranty association. These associations have been established for the protection of contract owners from loss (within specified limits) as a result of the insolvency of an insurer. At the time an insolvency occurs, the guaranty association assesses the remaining members of the association an amount sufficient to satisfy the insolvent insurer’s contract owner obligations (within specified limits). The Company has utilized public information to estimate what future assessments it will incur as a result of insolvencies. At December 31, 2005 and 2004, the Company’s estimated liability for future guaranty fund assessments was $6,791 and $7,056, respectively. If additional future insolvencies occur, the Company’s estimated liability may not be sufficient to fund these insolvencies and the estimated liability may need to be adjusted. The Company regularly monitors public information regarding insurer insolvencies and adjusts its estimated liability appropriately.  During 2000, the Company committed to participate in a limited partnership. As of December 31, 2005, $9,750 had been advanced towards the Company’s $10,000 commitment to the limited partnership. The contractual commitment expires June 2006.          In the normal course of business, the Company is subject to various claims and assessments. Management believes the settlement of these matters would not have a material effect on the financial position or results of operations of the Company.  NOTE 12. SEGMENT INFORMATION  In reporting to management, the Company’s operating results are categorized into two business segments: Life Insurance and Annuities. The Company’s Life Insurance segment consists of variable life insurance and interest-sensitive life insurance contracts. The Company currently does not manufacture, market, or issue life insurance contracts. The Company’s Annuity segment consists of variable annuity and interest-sensitive annuity contracts. The accounting policies of the business segments are the same as those described in the summary of significant accounting policies. All revenue and expense transactions are recorded at the contract level and accumulated at the business segment level for review by management. The “Other” category, presented in the following segment financial information, represents net revenues and earnings on invested assets that do not support life or annuity policyholder liabilities.  The following tables summarize each business segment’s contribution to the consolidated amounts for the years ended December 31.                                      Life Insurance         2005     2004     2003       Policy charge revenue   $ 152,030     $ 85,645     $ 98,503     Net interest spread (1)     15,025       11,630       14,823     Net realized investment gains (losses)     (521 )     (79 )     (7,327 )                                                     Net revenues     166,534       97,196       105,999                               Market value adjustment expense     —       —       —     Policy benefits     20,807       25,405       18,238     Reinsurance premium ceded     20,642       20,498       21,337     Amortization of DAC     68,018       10,495       31,467     Insurance expenses and taxes     8,727       8,726       8,192                                                       Net benefits and expenses     118,194       65,124       79,234                                                       Earnings before federal income tax provision     48,340       32,072       26,765                                                       Federal income tax provision     14,138       7,381       5,778                                                       Earnings before change in accounting principle     34,202       24,691       20,987                                                       Change in accounting principle, net of tax     —       (1,185 )     —                                                       Net earnings   $ 34,202     $ 23,506     $ 20,987                               Balance Sheet Information:                                                       Total assets   $ 4,487,349     $ 4,827,192     $ 5,036,572     DAC     103,248       170,192       178,918     Policyholder liabilities and accruals     1,746,565       1,829,825       1,916,761     Other policyholder funds     3,817       3,965       6,213                                                   Annuities         2005     2004     2003       Policy charge revenue   $ 153,658     $ 151,050     $ 130,371     Net interest spread (1)     18,542       16,764       25,887     Net realized investment gains (losses)     3,371       2,515       4,497                                                       Net revenues     175,571       170,329       160,755                               Market value adjustment expense     840       2,713       4,806     Policy benefits     26,463       28,877       46,393     Reinsurance premium ceded     5,680       4,699       1,262     Amortization of DAC     58,263       (5,591 )     44,935     Insurance expenses and taxes     50,669       48,834       43,900                                                       Net benefits and expenses     141,915       79,532       141,296                                                       Earnings before federal income tax provision     33,656       90,797       19,459                                                       Federal income tax provision     5,363       29,582       4,751                                                       Earnings before change in accounting principle     28,293       61,215       14,708                                                       Change in accounting principle, net of tax     —       (26,215 )     —                                                       Net earnings   $ 28,293     $ 35,000     $ 14,708                                                       Balance Sheet Information:                               Total assets   $ 9,598,360     $ 9,752,836     $ 9,438,256     DAC     192,941       222,324       185,496     Policyholder liabilities and accruals     868,962       981,237       1,072,894     Other policyholder funds     (1,869 )     3,259       6,702                                           Other         2005     2004     2003       Policy charge revenue   $ —     $ —     $ 4     Net interest spread (1)     7,719       8,882       4,994     Net realized investment gains (losses)     (228 )     1,563       3,817                                                       Net revenues     7,491       10,445       8,815                                                       Earnings before federal income tax provision     7,491       10,445       8,815                                                       Federal income tax provision     2,622       3,656       3,085                                                       Net earnings   $ 4,869       6,789     $ 5,730                                                       Balance Sheet Information:                                                       Total assets   $ 275,167     $ 170,173     $ 172,720                          (1)   Management considers investment income net of interest credited to policyholder liabilities in evaluating results.   The following table summarizes the Company’s net revenues by contract type for the years ended December 31.                                      2005     2004     2003       Life Insurance:                           Variable life   $ 157,312     $ 85,999     $ 97,002     Interest-sensitive whole life     9,222       11,197       8,997                                                       Total Life Insurance     166,534       97,196       105,999                                                       Annuities:                           Variable annuities     161,370       159,528       139,577     Interest-sensitive annuities     14,201       10,801       21,178                                                       Total Annuities     175,571       170,329       160,755                                                       Other     7,491       10,445       8,815                                                       Net Revenues   $ 349,596     $ 277,970     $ 275,569                             * * * * *         SIGNATURES       Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.             Merrill Lynch Life Insurance Company          (Registrant)                   Date: March 27, 2006    By:    /s/ Joseph E. Justice                      Joseph E. Justice           Chief Financial Officer         Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.                  Signature   Title   Date     By: /s/ Barry G. Skolnick      Director, Senior Vice President, and General Counsel*    March 27, 2006   Barry G. Skolnick                       /s/ Joseph E. Justice      Director, Senior Vice President, Chief Financial Officer, and Treasurer    March 27, 2006   Joseph E. Justice                       *      Director, Chairman of the Board, President, Chief Executive Officer and Chief Actuary    March 27, 2006   Deborah J. Adler                       *      Director and Senior Vice President    March 27, 2006   John C. Carroll                       *      Director and Vice President    March 27, 2006   Paul Michalowski                       /s/ Elizabeth Garrison      Vice President and Controller    March 27, 2006   Elizabeth Garrison             *Signing in his own capacity and as Attorney-in-Fact.        SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT.         No annual report covering the Registrant’s last fiscal year or proxy material has been or will be sent to Registrant’s security holder.          EXHIBIT INDEX                 Exhibit No.   Description   Location            2.1    Merrill Lynch Life Insurance Company Board of Directors Resolution in Connection with the Merger between Merrill Lynch Life Insurance Company and Tandem Insurance Group, Inc.    Incorporated by reference to Exhibit 2.1, filed September 5, 1991, as part of Post-Effective Amendment No. 4 to the Registrant’s registration statement on Form S-1, File No. 33-26322.    2.2    Plan and Agreement of Merger between Merrill Lynch Life Insurance Company and Tandem Insurance Group, Inc.    Incorporated by reference to Exhibit 2.1a, filed September 5, 1991, as part of Post-Effective Amendment No. 4 to the Registrant’s registration statement on Form S-1, File No. 33-26322.    3.1    Articles of Amendment, Restatement and Redomestication of the Articles of Incorporation of Merrill Lynch Life Insurance Company    Incorporated by reference to Exhibit 6(a) to Post-Effective Amendment No. 10 to Merrill Lynch Life Variable Annuity Separate Account A’s registration statement on Form N-4, File No. 33-43773, filed December 10, 1996.    3.2    Amended and Restated By-Laws of Merrill Lynch Life Insurance Company    Incorporated by reference to Exhibit 6(b) to Post-Effective Amendment No. 10 to Merrill Lynch Life Variable Annuity Separate Account A’s registration statement on Form N-4, File No. 33-43773, filed December 10, 1996.    4.1    Group Modified Guaranteed Annuity Contract, ML-AY-361    Incorporated by reference to Exhibit 4.1, filed February 23, 1989, as part of Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.     E-1                    4.2    Individual Certificate, ML-AY-362    Incorporated by reference to Exhibit 4.2, filed February 23, 1989, as part of Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.    4.2a    Individual Certificate, ML-AY-362 KS    Incorporated by reference to Exhibit 4.2a, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.    4.2b    Individual Certificate, ML-AY-378    Incorporated by reference to Exhibit 4.2b, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.    4.2c    Modified Guaranteed Annuity Contract    Incorporated by reference to Exhibit 4(a), filed August 18, 1997, as part of the Registrant’s registration statement on Form S-3, File No. 333-33863.    4.3    Individual Tax-Sheltered Annuity Certificate, ML-AY-372    Incorporated by reference to Exhibit 4.3, filed February 23, 1989, as part of Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.    4.3a    Individual Tax-Sheltered Annuity Certificate, ML-AY-372 KS    Incorporated by reference to Exhibit 4.3a, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.    4.4    Qualified Retirement Plan Certificate, ML-AY-373    Incorporated by reference to Exhibit 4.4 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.     E-2                    4.4a    Qualified Retirement Plan Certificate, ML-AY-373 KS    Incorporated by reference to Exhibit 4.4a, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.    4.5    Individual Retirement Annuity Certificate, ML-AY-374    Incorporated by reference to Exhibit 4.5 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.    4.5a    Individual Retirement Annuity Certificate, ML-AY-374 KS    Incorporated by reference to Exhibit 4.5a, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.    4.5b    Individual Retirement Annuity Certificate, ML-AY-375 KS    Incorporated by reference to Exhibit 4.5b, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.    4.5c    Individual Retirement Annuity Certificate, ML-AY-379    Incorporated by reference to Exhibit 4.5c, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.    4.6    Individual Retirement Account Certificate, ML-AY-375    Incorporated by reference to Exhibit 4.6, filed February 23, 1989, as part of Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.     E-3                    4.6a    Individual Retirement Account Certificate, ML-AY-380    Incorporated by reference to Exhibit 4.6a, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.    4.7    Section 457 Deferred Compensation Plan Certificate, ML-AY-376    Incorporated by reference to Exhibit 4.7 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.    4.7a    Section 457 Deferred Compensation Plan Certificate, ML-AY-376 KS    Incorporated by reference to Exhibit 4.7a, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.    4.8    Tax-Sheltered Annuity Endorsement, ML-AY-366    Incorporated by reference to Exhibit 4.8 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.    4.8a    Tax-Sheltered Annuity Endorsement, ML-AY-366 190    Incorporated by reference to Exhibit 4.8a, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.    4.8b    Tax-Sheltered Annuity Endorsement, ML-AY-366 1096    Incorporated by reference to Exhibit 4(h)(3), filed March 27, 1997, as part of Post-Effective Amendment No. 2 to the Registrant’s registration statement on Form S-1, File No. 33-58303.    4.9    Qualified Retirement Plan Endorsement, ML-AY-364    Incorporated by reference to Exhibit 4.9 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.     E-4                    4.10    Individual Retirement Annuity Endorsement, ML-AY-368    Incorporated by reference to Exhibit 4.10 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.    4.10a    Individual Retirement Annuity Endorsement, ML-AY-368 190    Incorporated by reference to Exhibit 4.10a, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.    4.10b    Individual Retirement Annuity Endorsement, ML-009    Incorporated by reference to Exhibit 4(j)(3) to Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-60290, filed March 31, 1994.    4.10c    Individual Retirement Annuity Endorsement    Incorporated by reference to Exhibit 4(b) to Pre- Effective Amendment No. 1 to the Registrant’s registration statement on Form S-3, File No. 333-33863, filed October 31, 1997.    4.11    Individual Retirement Account Endorsement, ML-AY-365    Incorporated by reference to Exhibit 4.11 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.    4.11a    Individual Retirement Account    Incorporated by reference to Exhibit        Endorsement, ML-AY-365 190    4.11a, filed March 9, 1990, as part of           Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.    4.12    Section 457 Deferred Compensation Plan Endorsement, ML-AY-367    Incorporated by reference to Exhibit 4.12 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.    4.12a    Section 457 Deferred Compensation Plan    Incorporated by reference to Exhibit        Endorsement, ML-AY-367 190    4.12a, filed March 9, 1990, as part of           Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.     E-5                    4.13    Qualified Plan Endorsement, ML-AY-369    Incorporated by reference to Exhibit 4.13 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.    4.13a    Qualified Plan Endorsement, ML-AY-448    Incorporated by reference to Exhibit 4.13a, filed March 9, 1990, as part of Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.    4.13b    Qualified Plan Endorsement    Incorporated by reference to Exhibit 4(c), filed October 31, 1997, as part of Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-3, File No. 333-33863.    4.14    Application for Group Modified Guaranteed Annuity Contract    Incorporated by reference to Exhibit 4.14 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.    4.15    Annuity Application for Individual Certificate Under Modified Guaranteed Annuity Contract    Incorporated by reference to Exhibit 4.15 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.    4.15a    Application for Modified Guaranteed Annuity Contract    Incorporated by reference to Exhibit 4(d), filed August 18, 1997, as part of the Registrant’s registration statement on Form S-3, File No. 333-33863.    4.16    Form of Company Name Change Endorsement    Incorporated by reference to Exhibit 4.16, filed September 5, 1991, as part of Post-Effective Amendment No. 4 to the Registrant’s registration statement on Form S-1, File No. 33-26322.    4.17    Group Modified Guarantee Annuity Contract    Incorporated by reference to Exhibit 4.(a)(2), filed December 7, 1994, as part of Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-60290.    4.18    Individual Contract    Incorporated by reference to Exhibit 4.(b)(4), filed December 7, 1994, as part of Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-60290.     E-6                    4.19    Individual Tax-Sheltered Annuity Certificate    Incorporated by reference to Exhibit 4.(c)(3), filed December 7, 1994, as part of Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-60290.    4.20    Qualified Retirement Plan Certificate    Incorporated by reference to Exhibit 4.(d)(3), filed December 7, 1994, as part of Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-60290.    4.21    Individual Retirement Annuity Certificate    Incorporated by reference to Exhibit 4.(e)(5), filed December 7, 1994, as part of Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-60290.    4.22    Individual Retirement Account Certificate    Incorporated by reference to Exhibit 4.(f)(3), filed December 7, 1994, as part of Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-60290.    4.23    Section 457 Deferred Compensation Plan Certificate    Incorporated by reference to Exhibit 4.(g)(3), filed December 7, 1994, as part of Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-60290.    4.24    Qualified Plan Endorsement    Incorporated by reference to Exhibit 4.(m)(3), filed December 7, 1994, as part of Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-60290.     E-7                    10.1    Management Services Agreement between Family Life Insurance Company and Merrill Lynch Life Insurance Company     Incorporated by reference to Exhibit 10.1 to the Registrant’s registration statement on Form S-1, File No. 33-26322, filed January 3, 1989.    10.2    General Agency Agreement between Merrill Lynch Life Insurance Company and Merrill Lynch Life Agency, Inc.    Incorporated by reference to Exhibit 10.2, filed February 23, 1989, as part of Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-26322.    10.3    Service Agreement among Merrill Lynch Insurance Group, Family Life Insurance Company and Merrill Lynch Life Insurance Company    Incorporated by reference to Exhibit 10.3, filed March 13, 1991, as part of Post-Effective Amendment No. 2 to the Registrant’s registration statement on Form S-1, File No. 33-26322.    10.3a    Amendment to Service Agreement among Merrill Lynch Insurance Group, Family Life Insurance Company and Merrill Lynch Life Insurance Company    Incorporated by reference to Exhibit 10(c)(2) to Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-60290, filed March 31, 1994.    10.4    Indemnity Reinsurance Agreement between Merrill Lynch Life Insurance Company and Family Life Insurance Company    Incorporated by reference to Exhibit 10.4, filed March 13, 1991, as part of Post-Effective Amendment No. 2 to the Registrant’s registration statement on Form S-1, File No. 33-26322.    10.5    Assumption Reinsurance Agreement Between Merrill Lynch Life Insurance Company, Tandem Insurance Group, Inc. and Royal Tandem Life Insurance Company and Family Life Insurance Company    Incorporated by reference to Exhibit 10.6, filed April 24, 1991, as part of Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-26322.     E-8                    10.6    Amended General Agency Agreement         between Merrill Lynch Life Insurance Company and Merrill Lynch Life Agency,         Inc.    Incorporated by reference to         Exhibit 10(g) to the Registrant’s registration statement on Form S-1,         File No. 33-46827, filed March 30, 1992.             10.7    Indemnity Agreement between         Merrill Lynch Life Insurance Company and Merrill Lynch Life Agency, Inc.            Incorporated by reference to         Exhibit 10(h) to the Registrant’s registration statement on Form S-1,         File No. 33-46827, filed March 30, 1992.             10.8    Management Agreement between         Merrill Lynch Life Insurance Company and Merrill Lynch Asset Management,         Inc.    Incorporated by reference to         Exhibit 10(i) to the Registrant’s registration statement on Form S-1,         File No. 33-46827, filed March 30, 1992.             10.9    Amendment No. 1 to Indemnity         Reinsurance Agreement between Family Life Insurance Company and Merrill         Lynch Life Insurance Company    Incorporated by reference to         Exhibit 10.5, filed April 24, 1991, as part of Post-Effective Amendment         No. 3 to the Registrant’s registration statement on Form S-1,         File No. 33-26322.             10.10     Insurance Administrative Services Agreement between Merrill Lynch Life Insurance Company and Liberty Insurance Services Corporation.    Incorporated by reference to Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K, File Nos. 33-26322, 33-46827, 33-52254, 33-60290, 33-58303, 333-33863, filed March 30, 2005.               23.1    Written Consent of Deloitte         & Touche, LLP, independent registered public accounting firm    Exhibit 23.1                         24.1    Power of attorney of Barry         G. Skolnick    Incorporated by reference to         Exhibit 24(e) to the Registrant’s registration statement on Form S-1,         File No. 33-58303, filed March 29, 1995.              E-9                    24.2    Power of attorney of John C. Carroll            Exhibit 24.2             24.3   Power of attorney of Paul Michalowski    Exhibit 24.3             24.4    Power of attorney of Deborah           J. Adler     Incorporated by reference to Exhibit 24.5 to Annual Report on Form 10-K, File Nos. 33-26322, 33-46827, 33-52254, 33-60290, 33-58303, 333-33863, filed March 29, 2004.           31.1    Certification by the Chief         Executive Officer of the Registrant pursuant to Rule 15d-14(a).               Exhibit 31.1             31.2    Certification by the Chief         Financial Officer of the Registrant pursuant to Rule 15d-14(a).               Exhibit 31.2             32.1    Certification by the Chief         Executive Officer of the Registrant pursuant to 18 U.S.C. Section 1350,         as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.             Exhibit 32.1             32.2    Certification by the Chief         Financial Officer of the Registrant pursuant to 18 U.S.C. Section 1350,         as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.            Exhibit 32.2              E-10      EX-23.1 2 w18063exv23w1.htm EXHIBIT 23.1    exv23w1      Exhibit 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  We consent to the incorporation by reference in Registration Statement Nos. 333-34192 and 33-58303 on Form S-3 of our report on the financial statements dated February 27, 2006, (which report expresses an unqualified opinion and includes an explanatory paragraph for the change in accounting method in 2004 for long-duration contracts to conform to Statement of Position 03-1 “Accounting and Reporting by Insurance Enterprises for Certain Non-Traditional Long Duration Contracts and for Separate Accounts”) relating to the financial statements and financial statement schedules of Merrill Lynch Life Insurance Company for the year ended December 31, 2005. /s/ DELOITTE & TOUCHE LLP  New York, New York March 28, 2006         EX-24.2 3 w18063exv24w2.htm POWER OF ATTORNEY    exv24w2       Exhiibit 24.2  POWER OF ATTORNEY       KNOW ALL MEN BY THESE PRESENTS, that John C. Carroll, a member of the Board of Directors of Merrill Lynch Life Insurance Company (the “Company”), whose signature appears below, constitutes and appoints Barry G. Skolnick, Frances C. Grabish and Kirsty Lieberman, respectively, and each of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all Registration Statements and Amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, under the Investment Company Act of 1940, where applicable, and the Securities Act of 1933, respectively, with the Securities Exchange Commission, for the purpose of registering any and all variable life and variable annuity separate accounts (collectively “Separate Accounts”), of the Company that may be established in connection with the issuance of any and all variable life and variable annuity contracts funded by such Separate Accounts, granting unto said attorney-in-fact and agent, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done.  Effective Date: January 6, 2006                     /s/ John C. Carroll                John C. Carroll     State of County of       On the 3rd day of February, 2006, before me came John C. Carroll, Director of Merrill Lynch Life Insurance Company, to me known to be said person and he signed the above Power of Attorney on behalf of Merrill Lynch Life Insurance Company.                     /s/ Denise A. Marshall           [SEAL]    Notary Public     Denise A. Marshall Notary Public of New Jersey My Commission Expires Feb. 24, 2006          EX-24.3 4 w18063exv24w3.htm POWER OF ATTORNEY    exv24w3       Exhiibit 24.3  POWER OF ATTORNEY       KNOW ALL MEN BY THESE PRESENTS, that Paul Michalowski, a member of the Board of Directors of Merrill Lynch Life Insurance Company (the “Company”), whose signature appears below, constitutes and appoints Barry G. Skolnick, Frances C. Grabish and Kirsty Lieberman, respectively, and each of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all Registration Statements and Amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, under the Investment Company Act of 1940, where applicable, and the Securities Act of 1933, respectively, with the Securities Exchange Commission, for the purpose of registering any and all variable life and variable annuity separate accounts (collectively “Separate Accounts”), of the Company that may be established in connection with the issuance of any and all variable life and variable annuity contracts funded by such Separate Accounts, granting unto said attorney-in-fact and agent, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done.  Effective Date: January 6, 2006                     /s/ Paul Michalowski                Paul Michalowski     State of County of       On the 3rd day of February, 2006, before me came Paul Michalowski, Director of Merrill Lynch Life Insurance Company, to me known to be said person and he signed the above Power of Attorney on behalf of Merrill Lynch Life Insurance Company.                     /s/ Denise A. Marshall           [SEAL]    Notary Public     Denise A. Marshall Notary Public of New Jersey My Commission Expires Feb. 24, 2006          EX-31.1 5 w18063exv31w1.htm EXHIBIT 31.1    exv31w1       Exhibit 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER I, Deborah J. Adler, certify that:   1. I have reviewed this annual report on Form 10-K of Merrill Lynch Life Insurance Company;   2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;   3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;   4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:       (a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;       (b)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and       (c)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and   5. The registrant’s other certifying     officer(s) and I have disclosed, based on our most recent evaluation of internal     control over financial reporting, to the registrant’s auditors and the     audit committee of the registrant’s board of directors (or persons performing     the equivalent function):      (a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and       (b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.   Dated: March  28, 2006    /s/ DEBORAH J. ADLER     Deborah J. Adler Chairman of the Board, President, Chief Executive Officer and Chief Actuary           EX-31.2 6 w18063exv31w2.htm EXHIBIT 31.2    exv31w2       Exhibit 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER I, Joseph E. Justice, certify that:   1. I have reviewed this annual report on Form 10-K of Merrill Lynch Life Insurance Company;   2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;   3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;   4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:       (a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;       (b)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and       (c)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and   5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):       (a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and       (b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.   Dated: March  27, 2006    /s/ JOSEPH E. JUSTICE Joseph E. Justice Senior Vice President and Chief Financial Officer            EX-32.1 7 w18063exv32w1.htm EXHIBIT 32.1    exv32w1      Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002  In connection with the Annual Report of Merrill Lynch Life Insurance Company (the “Company”) on Form 10-K for the period ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Deborah J. Adler, Chairman of the Board, President, Chief Executive Officer and Chief Actuary of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:       (1)   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and         (2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.        /s/ DEBORAH J. ADLER                               Deborah J. Adler Chairman of the Board, President, Chief Executive Officerand Chief Actuary   Dated: March 28, 2006      A signed original of this written statement required by Section 906 has been provided to Merrill Lynch Life Insurance Company and will be retained by Merrill Lynch Life Insurance Company and furnished to the Securities and Exchange Commission or its staff upon request.        EX-32.2 8 w18063exv32w2.htm EXHIBIT 32.2    exv32w2      Exhibit 32.2  CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002  In connection with the Annual Report of Merrill Lynch Life Insurance Company (the “Company”) on Form 10-K for the period ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph E. Justice, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:       (1)   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and         (2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.        /s/ JOSEPH E. JUSTICE                               Joseph E. Justice Senior Vice President and Chief Financial Officer   Dated: March 27, 2006      A signed original of this written statement required by Section 906 has been provided to Merrill Lynch Life Insurance Company and will be retained by Merrill Lynch Life Insurance Company and furnished to the Securities and Exchange Commission or its staff upon request.        -----END PRIVACY-ENHANCED MESSAGE-----