Independence Life and

Annuity Company

(A Wholly-Owned Subsidiary of Sun Life

of Canada (U.S.) Holdings, Inc.)

Independent Auditor’s Report,

Statutory-Basis Financial Statements as of and for the

Years Ended December 31, 2023, and 2022 and

Supplemental Schedules as of and for the Year Ended

December 31, 2023

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

TABLE OF CONTENTS

		Page
INDEPENDENT AUDITOR'S REPORT		1
Statutory-Basis Statements of Admitted Assets, Liabilities and Capital Stock and Surplus		4
Statutory-Basis Statements of Operations		5
Statutory-Basis Statements of Changes in Capital Stock and Surplus		6
Statutory-Basis Statements of Cash Flows		7
Notes to Statutory-Basis Financial Statements		8
Supplemental Schedules:
	Schedule 1 - Selected Financial Data	41
	Schedule 2 - Supplemental Investment Risks Interrogatories	45
	Schedule 3 - Summary Investment Schedule	47

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors of Independence Life and Annuity Company One Sun Life Executive Park

Wellesley Hills, Massachusetts 02481

Opinions

We have audited the statutory-basis financial statements of Independence Life and Annuity Company (the "Company"), which comprise the statutory-basis statements of admitted assets, liabilities, and capital stock and surplus as of December 31, 2023 and 2022, and the related statutory-basis statements of operations, changes in capital stock and surplus, and cash flows for the years then ended, and the related notes to the statutory-basis financial statements (collectively referred to as the “statutory-basis financial statements”).

Unmodified Opinion on Statutory-Basis of Accounting

In our opinion, the accompanying statutory-basis financial statements present fairly, in all material respects, the admitted assets, liabilities, and capital stock and surplus of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in accordance with the accounting practices prescribed or permitted by the Delaware Department of Insurance described in Note 1.

Adverse Opinion on Accounting Principles Generally Accepted in the United States of America

In our opinion, because of the significance of the matter described in the Basis for Adverse Opinion on Accounting Principles Generally Accepted in the United States of America section of our report, the statutory-basis financial statements do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Company as of December 31, 2023 and 2022, or the results of its operations or its cash flows for the years then ended.

Basis for Opinions

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Statutory-Basis Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Basis for Adverse Opinion on Accounting Principles Generally Accepted in the United States of America

As described in Note 1 to the statutory-basis financial statements, the statutory-basis financial statements are prepared by the Company using the accounting practices prescribed or permitted by the Delaware Department of Insurance, which is a basis of accounting other than accounting principles generally accepted in the United States of America, to meet the requirements of the Delaware Department of Insurance. The effects on the statutory-basis financial statements of the variances between the statutory-basis of accounting described in Note 1 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material and pervasive.

Emphasis-of-Matter

As discussed in Note 2 to the statutory-basis financial statements, the statutory-basis financial statements reflect significant balances and transactions with affiliates. The Company's admitted assets, liabilities, and capital stock and surplus and results of its operations and cash flows may have been different if these balances and transactions had been with unrelated parties. Our opinion is not modified with respect to this matter.

Responsibilities of Management for the Statutory-Basis Financial Statements

Management is responsible for the preparation and fair presentation of the statutory-basis financial statements in accordance with the accounting practices prescribed or permitted by the Delaware Department of Insurance. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of statutory-basis financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the statutory-basis financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that the statutory-basis financial statements are issued.

Auditor’s Responsibilities for the Audit of the Statutory-Basis Financial Statements

Our objectives are to obtain reasonable assurance about whether the statutory-basis financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the statutory-basis financial statements.

In performing an audit in accordance with GAAS, we:

•	Exercise professional judgment and maintain professional skepticism throughout the audit.

•

Identify and assess the risks of material misstatement of the statutory-basis financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the statutory-basis financial statements.

•	Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.

•	Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the statutory-basis financial statements.

•	Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.

Report on Supplemental Schedules

Our 2023 audit was conducted for the purpose of forming an opinion on the 2023 statutory-basis financial statements as a whole. The supplemental schedule of investment risks interrogatories, the supplemental summary investment schedule, and the supplemental schedule of selected financial data as of and for the year ended December 31, 2023, are presented for purposes of additional analysis and are not a required part of the 2023 statutory-basis financial statements. These schedules are the responsibility of the Company's management and were derived from and relate directly to the underlying accounting and other records used to prepare the statutory-basis financial statements. Such schedules have been subjected to the auditing procedures applied in our audit of the 2023 statutory-basis financial statements and certain additional procedures, including comparing and reconciling such schedules directly to the underlying accounting and other records used to prepare the

statutory-basis financial statements or to the statutory-basis financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, such schedules are fairly stated in all material respects in relation to the 2023 statutory-basis financial statements as a whole.

/s/ DELOITTE & TOUCHE LLP

Boston, Massachusetts

April 19, 2024

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

STATUTORY-BASIS STATEMENTS OF ADMITTED ASSETS, LIABILITIES AND CAPITAL

STOCK AND SURPLUS AS OF DECEMBER 31, 2023 AND 2022

ADMITTED ASSETS		2023	2022
GENERAL ACCOUNT ASSETS:
	Debt securities	$ 218,664,199	$ 202,582,826
	Cash, cash equivalents and short-term investments	2,920,225	18,963,437
	Contract loans	6,786,991	7,189,650
	Other invested assets	2,175,793	2,177,782
	Investment income due and accrued	1,503,902	1,498,095
	Receivable for securities	—	4,688
	Uncollected premiums and agents' balances	417,315	15,313
	Amounts recoverable from reinsurers	970,118	596,910
	Funds held by or deposited with reinsured companies	2,961,329,081	2,980,734,655
	Other amounts receivable under reinsurance contracts	37,283,561	26,953,492
	Net deferred tax asset	283,585	288,773
	Receivable from parent and affiliates	594	—
	Other assets	4,221,364	1,509,970
	Total general account assets	3,236,556,728	3,242,515,591
SEPARATE ACCOUNT ASSETS		42,219,218	36,726,930
TOTAL ADMITTED ASSETS		$ 3,278,775,946	$ 3,279,242,521

LIABILITIES, CAPITAL STOCK AND SURPLUS
GENERAL ACCOUNT LIABILITIES:
	Aggregate reserve for life contracts	$ 14,114,544	$ 15,419,251
	Liability for deposit-type contracts	358,762	427,072
	Contract claims	2,834,219	2,284,229
	Other amounts payable on reinsurance	36,895,527	26,665,160
	Interest maintenance reserve	5,119,593	5,650,450
	Commissions to agents due or accrued	205,029	108,144
	Commissions and expense allowances payable on reinsurance assumed	791,293	773,698
	Premiums received in advance	—	24,874
	Taxes, licenses and fees due or accrued, excluding federal income taxes	—	75,799
	General expenses due or accrued	122,759	78,821
	Current federal income taxes due or accrued	435,158	182,841
	Remittances and items not allocated	944,765	795,568
	Asset valuation reserve	1,091,898	999,267
	Reinsurance in unauthorized companies	1,338,169	844,471
	Payable to parent and affiliates	367,155	297,153
	Funds held under coinsurance	2,961,329,081	2,980,734,655
	Other liabilities	1,058	227,032
	Total general account liabilities	3,025,949,010	3,035,588,485
SEPARATE ACCOUNT LIABILITIES		42,219,218	36,726,930
Total liabilities		3,068,168,228	3,072,315,415

CAPITAL STOCK AND SURPLUS:
	Common capital stock, $1.00 par value - 2,500,500 shares
	authorized; 2,500,350 shares issued and outstanding	2,500,350	2,500,350

	Gross paid in and contributed surplus	407,719,681	407,719,680
	Unassigned funds	(199,612,313)	(203,292,924)
Total surplus		208,107,368	204,426,756

Total capital stock and surplus		210,607,718	206,927,106

TOTAL LIABILITIES, CAPITAL STOCK AND SURPLUS		$ 3,278,775,946	$ 3,279,242,521

See notes to statutory-basis financial statements.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

STATUTORY-BASIS STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

		2023	2022
INCOME:
	Premiums and annuity considerations	$ 8,245,274	$ 5,421,040
	Net investment income	8,154,801	5,778,525
	Amortization of interest maintenance reserve	373,738	510,487
	Commissions and expense allowances on reinsurance ceded	3,312,886	3,242,865
	Fee income from Separate Accounts	1,214,220	1,361,062
	Investment income on funds withheld	85,381,532	7,704,894
	Other income	89,979	101,824

	Total income	106,772,430	24,120,697

BENEFITS AND EXPENSES:
	Death benefits	4,717,884	2,146,517
	Disability benefits	5,714,985	3,677,148
	Surrender benefits and withdrawals for life contracts	1,050,890	2,871,998
	Interest and adjustments on contracts or deposit-type contract funds	44,837	37,183
	Payments on supplementary contracts with life contingencies	31,222	31,222
	Decrease in aggregate reserves for life contracts	(1,304,707)	(2,129,436)

	Total benefits	10,255,111	6,634,632

	Commissions on premiums	585,842	465,188
	Commissions and expense allowances on reinsurance assumed	3,312,886	3,242,865
	General insurance expenses	4,718,002	3,658,850
	Insurance taxes, licenses and fees, excluding federal income taxes	813,734	682,634
	Net transfers from Separate Accounts	(3,590,280)	(2,348,522)
	Investment income on funds withheld ceded	85,382,375	7,705,024

	Total benefits and expenses	101,477,670	20,040,671

Net gain from operations before federal income taxes and
	net realized capital gains	5,294,760	4,080,026

Federal income tax expense, excluding tax on
	capital gains	949,975	704,190

Net gain from operations after federal income taxes and
	before net realized capital gains	4,344,785	3,375,836

Net realized capital gains (losses) less capital gains tax and
	transfers to the interest maintenance reserve	(72,649)	5,954

NET INCOME		$ 4,272,136	$ 3,381,790

See notes to statutory-basis financial statements.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

STATUTORY-BASIS STATEMENTS OF CHANGES IN CAPITAL STOCK AND SURPLUS

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

	2023	2022

CAPITAL STOCK AND SURPLUS, BEGINNING OF YEAR	$ 206,927,106	$ 189,461,715

Net income	4,272,136	3,381,790

Change in net deferred income tax	(12,819)	(45,590)

Change in non-admitted assets	7,623	34,856

Change in liability for reinsurance in unauthorized companies	(493,697)	(673,127)

Change in asset valuation reserve	(92,631)	(123,451)

Change in paid in surplus	—	15,000,000

Prior period adjustment (Note 1)	—	(109,087)

CAPITAL STOCK AND SURPLUS, END OF YEAR	$ 210,607,718	$ 206,927,106

See notes to statutory-basis financial statements.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

STATUTORY-BASIS STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

		2023	2022
CASH FROM OPERATIONS:
	Premiums collected net of reinsurance	$ 7,818,389	$ 5,430,601
	Net investment income	8,183,795	5,495,971
	Miscellaneous income	24,622,363	45,375,327
	Total receipts	40,624,547	56,301,899

	Benefits and loss related payments	10,956,032	5,100,358
	Net transfers from Separate Accounts	(3,590,280)	(2,348,522)
	Commissions and other expenses paid	29,453,666	48,429,269
	Federal income taxes paid	726,152	312,658
	Total payments	37,545,570	51,493,763
Net cash from operations		3,078,977	4,808,136

CASH FROM INVESTMENTS:
	Proceeds from investments sold, matured or repaid	53,475,865	21,879,666
	Cost of investments acquired	(70,110,916)	(32,478,484)
	Net change in contract loans	88,011	361,008
Net cash used in investments		(16,547,040)	(10,237,810)

CASH FROM FINANCING AND MISCELLANEOUS SOURCES:
	Capital and paid in surplus, less treasury stock	—	15,000,000
	Net deposits on deposit-type contracts	(81,512)	(48,865)
	Net payments from (to) related parties	69,408	(37,839)
	Other cash applied	(2,563,045)	(515,896)
Net cash (used in) provided by financing and miscellaneous sources		(2,575,149)	14,397,400

Net change in cash, cash equivalents and short-term investments		(16,043,212)	8,967,726

CASH, CASH EQUIVALENTS
	Beginning of year	18,963,437	9,995,711

	End of year	$ 2,920,225	$ 18,963,437

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES

During the years ended December 31, 2023 and 2022, the Company recorded the following non-cash activity:

	2023	2022

Taxable and non-taxable bond exchanges	$ —	$ 2,984,509
Accumulated policy value used to pay down contract loans	314,648	1,894,487
Non-cash transactions from deposit type contracts	13,201	475,937

See notes to statutory-basis financial statements.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GENERAL

The Independence Life and Annuity Company (the “Company”) is a direct wholly-owned subsidiary of Sun Life of Canada (U.S.) Holdings, Inc. (“Life Holdco”) and manages a block of variable life insurance and fixed annuity policies. The Company began to issue Stop Loss insurance policies during 2020. The Company is an indirect wholly-owned subsidiary of Sun Life Assurance Company of Canada - U.S. Operations Holdings, Inc. (“SLC - U.S. Ops Holdings”) and is an indirect wholly-owned subsidiary of Sun Life Financial Inc. (“SLF”), a reporting company under the Securities Exchange Act of 1934. SLF and its subsidiaries are collectively referred to herein as “Sun Life Financial.”

BASIS OF PRESENTATION

The accompanying statutory-basis financial statements of the Company are presented on the basis of accounting principles prescribed or permitted by the Delaware Department of Insurance (the “Department”). The Department recognizes only statutory accounting principles prescribed or permitted by the State of Delaware for determining and reporting the financial condition and results of operations of an insurance company and for determining its solvency under the Delaware insurance laws. The National Association of Insurance Commissioners’ (“NAIC”) Accounting Practices and Procedures Manual (“NAIC SAP”) has been adopted as a component of prescribed or permitted principles by the State of Delaware.

As of December 31, 2023 and 2022, the Commissioner of the Department has not permitted the Company to use any accounting practices that would cause the Company's earnings or financial position to deviate materially from NAIC SAP.

Accounting principles and procedures of the NAIC as prescribed or permitted by the Department comprise a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America (“GAAP”). The more significant differences between NAIC SAP and GAAP that affect the Company are as follows:

•	NAIC SAP do not recognize, as assets, deferred policy acquisition costs and statutory non-admitted assets, such as prepaid expenses and receivables aged greater than 90 days. These assets are recognized under GAAP.

•

Under NAIC SAP, contracts that have any mortality and morbidity risk, regardless of significance, and contracts with life contingent annuity purchase rate guarantees are classified as insurance contracts, whereas under GAAP, contracts that do not subject the Company to significant risks arising from policyholder mortality or morbidity would be accounted for in a manner consistent with the accounting for interest bearing or other financial instruments.

•	Actuarial assumptions and reserving methods differ under NAIC SAP and GAAP.

•	Under NAIC SAP, an asset valuation reserve (“AVR”) and interest maintenance reserve (“IMR”) are established, but are not under GAAP.

•	Under NAIC SAP, there are certain limitations on net deferred tax assets.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

BASIS OF PRESENTATION (CONTINUED)

•

Under NAIC SAP, fixed maturity securities are generally carried at amortized cost. Under GAAP, investments in fixed maturity securities classified as available-for-sale or trading are carried at aggregate fair value. Changes in unrealized gains and losses for securities classified as available-for-sale are reported net of taxes in a separate component of stockholder’s equity. Changes in unrealized gains and losses on trading securities are recorded in net investment income.

•	Under NAIC SAP, investments in wholly owned subsidiaries are accounted for as common stocks using the equity pick-up method of accounting. Under GAAP, these subsidiaries would be consolidated into the parent company’s financial statements.

•	The statutory-basis Statements of Cash Flows include the change in cash, cash equivalents and short-term investments whereas under GAAP only the change in cash and cash equivalents is included.

•

Under NAIC SAP, contracts that contain an embedded derivative are not bifurcated between components and are accounted for consistent with the host contract, whereas under GAAP the embedded derivative would be bifurcated from the host contract and accounted for separately unless the entire hybrid instrument is carried at fair value with changes in fair value reflected in GAAP earnings.

•	Under NAIC SAP, certain reinsurance transactions are accounted for using deposit accounting and assets and liabilities are reported net of reinsurance, whereas under GAAP, these transactions qualify for reinsurance accounting and assets and liabilities are reported gross of reinsurance.

•

GAAP requires that for certain reinsurance arrangements whereby assets are retained by the ceding insurer (such as funds withheld or modified coinsurance) and a return is paid based on the performance of underlying investments, that the liabilities for these reinsurance arrangements must be adjusted to reflect the fair value of the invested assets; NAIC SAP do not contain a similar requirement.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles prescribed or permitted by the Department requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. It also requires disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could materially differ from those estimates. The most significant estimates are those used in determining the fair value of financial instruments, aggregate reserves for life policies and contracts, contract claims incurred but not reported, deferred income taxes, provision for income taxes and other-than-temporary impairment (“OTTI”) of investments.

CORRECTION OF ERRORS

A prior period error was identified relating to the calculation of deferred and current tax expenses. Current taxes were understated by $109,087. This adjustment is presented as a prior period adjustment in the Statement of Changes in Capital Stock and Surplus as of December 31, 2022.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

FINANCIAL INSTRUMENTS

In the normal course of business, the Company enters into transactions involving various types of financial instruments, including cash equivalents, short-term investments and debt securities. These instruments involve credit risk and also may be subject to risk of loss due to interest rate fluctuation. The Company evaluates and monitors each financial instrument individually and, when appropriate, obtains collateral or other security to minimize losses.

SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed by the Company in preparing the accompanying statutory-basis financial statements:

CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

The Company’s cash and cash equivalents primarily include cash on hand, commercial paper and money market investments which have an original term to maturity of three months or less. Short-term investments include debt instruments with a term to maturity exceeding three months, but less than one year on the date of acquisition. Cash equivalents and short-term investments are held at amortized cost, which approximates fair value.

INVESTED ASSETS

Debt Securities

Investments in debt securities including bonds, mortgage-backed securities (“MBS”) and asset-backed securities (“ABS”) are carried at amortized cost using the scientific method, except for those securities where the NAIC designation is 6 and the fair value is less than amortized cost, in which case they are carried at fair value. Adjustments to the value of MBS and ABS securities based on changes in cash flows, including those related to changes in prepayment assumptions, are made retrospectively. The designations for residential and commercial mortgage-backed securities (“RMBS” and “CMBS”, respectively) were determined by comparing the insurer’s carrying value divided by remaining par value to price ranges provided by the third-party vendors corresponding to each NAIC designation. Comparisons were initially made to the model based on amortized cost. Where the resulting designation was a NAIC 6, further comparison based on fair value was required which, in some cases, resulted in a higher final NAIC designation. There was no impact to surplus due to RMBS and CMBS securities placed under regulatory review.

Interest income on bonds, MBS, and ABS is recognized when earned based upon estimated principal repayments, if applicable. For debt securities subject to prepayment risk, yields are recalculated and asset balances adjusted periodically so that expected return on future cash flows matches the expected return over the life of the investment from acquisition. If the collection of all contractual cash flows is not probable, an OTTI may be indicated. The process of analyzing securities for OTTI adjustment is further described in Note 3.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INVESTED ASSETS (CONTINUED)

Investments in Subsidiaries

The Company accounts for its investments in subsidiaries in accordance with the Statement of Standard Accountancy Practice ("SSAP") No. 97, Investments in Subsidiary, Controlled and Affiliated Entities, A Replacement of SSAP No. 88. Investments in subsidiaries are carried at values based on the underlying statutory equity of the investee. However, at December 31, 2023 and 2022, the equity method did not apply to the investment in Sun Life Financial (U.S.) Reinsurance Company II (“SLDE”) as the investment was valued at zero based on the operating losses incurred. Application of the equity method will be discontinued until such a time that SLDE generates positive earnings in excess of cumulative losses. The Company's current period share of SLDE net gain is $51,748,055, accumulated share of SLDE net loss is $1,412,247,161, and the share of SLDE equity, including negative equity, is $550,494,773.

Contract Loans

Contract loans are carried at the amount of outstanding principal balance. Contract loans are collateralized by the related insurance policy and do not exceed the net cash surrender value of such policy.

Other Invested Assets

Other invested assets represent a surplus note that is stated at amortized cost.

ASSET VALUATION RESERVE AND INTEREST MAINTENANCE RESERVE

The AVR is established as a liability based upon a formula prescribed by the NAIC to offset potential credit-related investment losses on all invested assets, with changes in the AVR charged or credited directly to surplus. The IMR is established as a liability to capture realized gains and losses, net of income tax, on the sale of fixed income investments, principally bonds, resulting from changes in the general level of interest rates, and is amortized into income over the remaining years to expected maturity of the assets sold.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

POLICY AND CONTRACT RESERVES

The reserves for life insurance contracts are computed in accordance with presently accepted actuarial standards, and are based on actuarial assumptions and methods (including use of published mortality tables and prescribed interest rates) which produce reserves at least as great as those required by law and contract provisions.

Liabilities for unpaid claims consist of the estimated amount payable for claims reported but not yet settled and an estimate of claims incurred but not reported. The amounts reported are based upon historical experience, adjusted for trends and current circumstances. Revisions to these estimates are included in operations in the year such adjustments are determined to be required.

INCOME TAXES

The Company accounts for current and deferred income taxes and recognizes reserves for income tax contingencies in accordance with the Statement of Standard Accountancy Practice ("SSAP") No. 101, Income Taxes, A Replacement of SSAP No. 10R and SSAP No. 10 (“SSAP No. 101”). Under the applicable asset and liability method for recording deferred income taxes, deferred taxes are recognized when assets and liabilities have different values for financial statement and tax reporting purposes, using enacted tax rates in effect for the year in which the differences are expected to reverse.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in surplus in the period that includes the enactment date. Valuation allowances on deferred tax assets are estimated based on the Company’s assessment of the realizability of such amounts.

INCOME AND EXPENSES

For Variable Life, ceded and assumed life premiums are calculated based on the net amount at risk. Annuity considerations are recognized as revenue when received. Health premiums are earned ratably over the terms of the related insurance policies. Expenses are charged to operations as incurred. For Universal Life, income and expenses are assumed from Sun Life Assurance Company of Canada ("SLOC") and ceded down to SLDE.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SEPARATE ACCOUNTS

The Company has established unitized separate accounts applicable to various classes of contracts providing for variable benefits (the “variable separate accounts”). Contracts for which funds are invested in the variable separate accounts are individual variable life insurance contracts.

Net investment income, capital gains and losses, and changes in mutual fund asset values on the variable separate accounts are allocated to policyholders and therefore do not affect the operating results of the Company. Assets held in the variable separate accounts are carried at fair value. The investment risk of such securities is retained by the contract holder. The Company earns separate account fees for providing administrative services and bearing the mortality risks related to contracts for which funds are invested in variable separate accounts.

The activity of the separate accounts is not reflected in the Company’s financial statements except for the following:

•	The fees that the Company receives, which are assessed periodically and recognized as revenue when assessed.

•	The activity related to the guaranteed minimum death benefit (“GMDB”) which is reflected in the Company’s financial statements.

•	Premiums and withdrawals with offsetting transfers to/from the separate accounts are reflected in the Statements of Operations.

•	The dividends-received-deduction (“DRD”), which is included in the computation of the Company’s income tax expense, is calculated based upon the variable separate accounts’ assets held in connection with variable contracts.

2. RELATED PARTY TRANSACTIONS

The Company has significant transactions with affiliates. Management believes intercompany revenues and expenses are calculated on a reasonable basis; however, these amounts may not necessarily be indicative of costs that would be incurred if the Company operated on a stand-alone basis and these transactions were with unrelated parties. Below is a summary of the significant transactions with affiliates.

The Company received a capital contribution in the amount of $15,000,000 from its sole shareholder, Life Holdco, on December 23, 2022.

The Company did not receive any cash dividends from its wholly owned subsidiary as of December 31, 2023 and 2022.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

2. RELATED PARTY TRANSACTIONS (CONTINUED)

Reinsurance Agreements

The Company has a reinsurance agreement with SLOC, under which SLOC ceded to the Company 100% of the risks associated with certain universal life policies issued by SLOC’s United States Branch between January 1, 2000 and February 28, 2006 on a 100% funds withheld coinsurance basis. The Company has a retrocession agreement with SLDE, a wholly-owned subsidiary of the Company, under which the Company retroceded 100% of the liabilities assumed pursuant to the reinsurance agreement with SLOC. See additional disclosure in Note 4.

Under the terms of the reinsurance and retrocession agreements, the Company maintains a funds withheld receivable from SLOC and a retrocession funds withheld payable to SLDE in an amount equal to the funds withheld coinsurance reserve. The retrocession funds withheld account balance is adjusted to equal the receivable from SLOC as the funds withheld account is increased or decreased. These transactions do not result in a net impact to the surplus of the Company. See additional disclosures in Note 4.

Administrative Services Agreements and Other

The Company has an administrative services agreement with its affiliate, SLOC, under which SLOC provides general administrative services. The services provided include personnel, facilities, actuarial, legal and other administrative services on a cost reimbursement basis.

The Company is party to an investment advisory agreement with its affiliate, Sun Life Capital Management (U.S.) LLC ("SLCMUS"), formerly Sun Life Institutional Investments (U.S.) LLC, under which SLCMUS acts as investment manager for certain of the Company’s portfolios.

The Company has a risk management agreement with Disability Reinsurance Management Services, Inc., under which Disability Reinsurance Management Services, Inc. provides the Company with reinsurance intermediary broker services with regards to ceding Stop Loss business and provides accounting and actuarial services on the Company's behalf.

The Company had $367,155 and $297,153 due to related parties and $594 and $0 due from related parties at December 31, 2023 and 2022, respectively, under the terms of various management and service contracts which provide for cash settlements on a quarterly or more frequent basis.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

3.	INVESTMENTS

Debt Securities

The statement value and fair value of the Company’s debt securities were as follows:

	December 31, 2023
		Gross	Gross
	Statement	Unrealized	Unrealized	Estimated
	Value	Gains	Losses	Fair Value

US Treasury & Agency	$ 24,901,977	$ 6,900	$ (4,807,392)	$ 20,101,485
Residential Mortgage Backed Securities	45,918,403	665,709	(2,826,910)	43,757,202
Commercial Mortgage Backed Securities	29,084,463	2,761	(1,625,856)	27,461,368
Corporate	92,028,689	223,524	(6,412,967)	85,839,246
Asset Backed Securities	26,730,667	101,942	(167,654)	26,664,955
Grand Total	$ 218,664,199	$ 1,000,836	$ (15,840,779)	$ 203,824,256

	December 31, 2022
		Gross	Gross
	Statement	Unrealized	Unrealized	Estimated
	Value	Gains	Losses	Fair Value

US Treasury & Agency	$ 27,509,560	$ 7,012	$ (5,455,649)	$ 22,060,923
Residential Mortgage Backed Securities	32,187,053	44,582	(3,571,297)	28,660,338
Commercial Mortgage Backed Securities	22,494,202	—	(1,283,907)	21,210,295
Corporate	93,383,861	21,567	(9,851,758)	83,553,670
Asset Backed Securities	27,008,150	638	(365,095)	26,643,693
Grand Total	$ 202,582,826	$ 73,799	$ (20,527,706)	$ 182,128,919

The statement value and estimated fair value by maturity date for debt securities, other than ABS and MBS are shown below. Actual maturities may differ from contractual maturities on ABS and MBS because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties; accordingly, the contractual maturities for those securities are not shown.

	December 31, 2023		December 31, 2022
	Statement	Estimated	Statement	Estimated
	Value	Fair Value	Value	Fair Value
Due in one year or less	$ 3,354,187	$ 3,246,709	$ 1,398,345	$ 1,380,927
Due after one year through five years	60,311,769	57,113,679	63,833,407	58,601,180
Due after five years through ten years	30,072,378	25,638,461	32,480,268	26,740,551
Due after ten years	23,192,332	19,941,882	23,181,401	18,891,935
Total before asset and mortgage-backed securities	116,930,666	105,940,731	120,893,421	105,614,593
Asset and mortgage-backed securities	101,733,533	97,883,525	81,689,405	76,514,326
Total debt securities	$ 218,664,199	$ 203,824,256	$ 202,582,826	$ 182,128,919

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

3.	INVESTMENTS (CONTINUED)

Proceeds from sales and maturities of investments in debt securities during the years ended December 31, 2023 and 2022 were $47,432,858 and $18,360,210, respectively; gross realized gains were $167,531 and $365,623 and gross realized losses were $359,936 and $589,728, respectively.

Debt securities included above with a statement value of approximately $3,506,966 and $3,161,211 as of December 31, 2023 and 2022, respectively, were on deposit with governmental authorities as required by law. Debt securities on deposit with governmental authorities represented 0.1% of total admitted assets as of December 31, 2023 and 2022, respectively.

Investment grade debt securities, which are those rated by the NAIC as either 1 or 2, were 100% of the Company’s total debt securities based on statement value, as of December 31, 2023 and 2022. Exposure to any single issuer is less than 10% of net admitted assets.

The Company recognizes and measures OTTI for structured securities in accordance with SSAP No. 43R, Loan-Backed and Structured Securities (“SSAP No. 43R”). In accordance with SSAP No. 43R, if the fair value of a structured security is less than its amortized cost basis at the balance sheet date, the Company assesses whether the impairment is an OTTI. If the Company intends to sell the structured security, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis, an OTTI is considered to have occurred. When an OTTI has occurred, the amount of OTTI recognized in earnings is the difference between the amortized cost basis of the security and the present value of its expected future cash flows discounted at the effective interest rate implicit in the security.

If the Company does not intend to sell the structured security, or it is not more likely than not that it will be required to sell the security before recovery of its amortized cost basis, the Company performs cash flow based testing to determine if the present value of its expected future cash flows discounted at the effective interest rate implicit in the security is less than its amortized cost basis. Estimating future cash flows is a quantitative and qualitative process that incorporates information received from third parties, along with assumptions and judgments about the future performance of the underlying collateral. Losses incurred on the respective portfolios are based on loss models using assumptions about key systematic risks, such as unemployment rates and housing prices, and loan specific information such as delinquency rates and loan-to-value ratios.

If the fair value of a debt security, other than those subject to SSAP No. 43R, is less than its amortized cost basis at the balance sheet date, the Company assesses whether the impairment is an OTTI. When an OTTI has occurred, the amount of OTTI recognized in earnings is the difference between the amortized cost basis of the security and its fair value.

If the Company intends to sell the debt security, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis, an OTTI is considered to have occurred. If the Company does not intend to sell the debt security, or it is not more likely than not that it will be required to sell the security before recovery of its amortized cost basis, the Company employs a portfolio monitoring process to identify securities that are OTTI.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

3.	INVESTMENTS (CONTINUED)

The Company has a Credit Committee comprised of investment and finance professionals which meets at least quarterly to review individual issues or issuers that may be of concern. In determining whether a security is OTTI, the Credit Committee considers the factors described below. The process involves a quarterly screening of all securities where fair value is less than the amortized cost basis. Discrete credit events, such as a designation downgrade, are also used to identify securities that may be OTTI. The securities identified are then evaluated based on issuer-specific facts and circumstances, such as the issuer’s ability to meet current and future interest and principal payments, an evaluation of the issuer’s financial position and its near term recovery prospects, difficulties being experienced by an issuer’s parent or affiliate, and management’s assessment of the outlook for the issuer’s sector. In making these evaluations, the Credit Committee exercises considerable judgment. Based on this evaluation, issues or issuers are considered for inclusion on one of the Company’s following credit lists:

“Monitor List”- Management has concluded that the Company’s amortized cost will be recovered through timely collection of all contractually specified cash flows, but that changes in issuer-specific facts and circumstances require monitoring on a quarterly basis. No OTTI charge is recorded in the Company’s Statements of Operations for unrealized losses on securities related to these issuers.

“Watch List”- Management has concluded that the Company’s amortized cost will be recovered through timely collection of all contractually specified cash flows, but that changes in issuer-specific facts and circumstances require continued monitoring during the quarter. A security is moved from the Monitor List to the Watch List when changes in issuer-specific facts and circumstances increase the possibility that a security may become impaired within the next 24 months. No OTTI charge is recorded in the Company’s Statements of Operations for unrealized losses on securities related to these issuers.

“Impaired List”- Management has concluded that the Company has the intent to sell the security, it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, or the amortized cost basis of the security is not expected to be recovered due to expected delays or shortfalls in the contractually specified cash flows. For these investments, the amount of OTTI recognized in the Company’s Statements of Operations is the difference between the amortized cost basis of the security and its fair value or discounted cash flows.

Should it be determined that a security is other than temporarily impaired, the Company must record a loss through an appropriate adjustment in carrying value. The Company did not record OTTI for debt securities for the years ended December 31, 2023 and 2022, respectively.

There was no OTTI recorded on debt securities pursuant to SSAP No. 43R held as of December 31, 2023 and

2022.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

3.	INVESTMENTS (CONTINUED)

There are inherent risks and uncertainties in management’s evaluation of securities for OTTI. These risks and uncertainties include factors both external and internal to the Company, such as general economic conditions, an issuer’s financial condition or near-term recovery prospects, market interest rates, unforeseen events which affect one or more issuers or industry sectors, and portfolio management parameters, including asset mix, interest rate risk, portfolio diversification, duration matching, and greater than expected liquidity needs. All of these factors could impact management’s evaluation of securities for OTTI.

The gross unrealized losses and estimated fair value of investments, which have been deemed temporarily impaired, aggregated by investment category, number of securities and length of time that securities have been in an unrealized loss position at December 31, 2023 are as follows:

	Less than 12 months			12 months or more			Total
			Gross			Gross			Gross
		Fair	Unrealized		Fair	Unrealized		Fair	Unrealized
	#	Value	Losses	#	Value	Losses	#	Value	Losses

US Treasury and Agency	—	$ —	$ —	9	$ 19,935,032	$ (4,807,392)	9	$19,935,032	$ (4,807,392)
RMBS	4	4,078,996	(128,352)	10	22,963,823	(2,698,558)	14	27,042,819	(2,826,910)
CMBS	6	11,946,403	(620,343)	9	15,085,495	(1,005,513)	15	27,031,898	(1,625,856)
Asset Backed Securities	1	4,480,567	(19,284)	2	2,572,079	(148,370)	3	7,052,646	(167,654)
Corporate	1	994,121	(5,100)	40	80,733,282	(6,407,867)	41	81,727,403	(6,412,967)
Grand Total	12	$ 21,500,087	$ (773,079)	70	$ 141,289,711	$ (15,067,700)	82	$162,789,798	$ (15,840,779)

	Less than 12 months			12 months or more			Total
			Gross			Gross			Gross
		Fair	Unrealized		Fair	Unrealized		Fair	Unrealized
	#	Value	Losses	#	Value	Losses	#	Value	Losses

US Treasury and Agency	5	$ 6,736,958	$ (1,884,603)	5	$ 15,155,947	$ (3,571,046)	10	$ 21,892,905	$ (5,455,649)
RMBS	9	22,762,524	(2,593,752)	3	3,836,644	(977,545)	12	26,599,168	(3,571,297)
CMBS	10	17,128,421	(631,016)	2	4,081,875	(652,891)	12	21,210,296	(1,283,907)
Asset Backed Securities	7	18,643,595	(365,095)	—	—	—	7	18,643,595	(365,095)
Corporate	33	57,327,866	(4,951,751)	12	25,950,859	(4,900,007)	45	83,278,725	(9,851,758)
Grand Total	64	$ 122,599,364	$ (10,426,217)	22	$ 49,025,325	$ (10,101,489)	86	$ 171,624,689	$ (20,527,706)

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

3.	INVESTMENTS (CONTINUED)

Investment Gains and Losses

Realized capital gains and losses on debt securities, which relate to changes in levels of interest rates, are charged or credited to the IMR, net of tax, and amortized into income over the remaining contractual life of the security sold. Realized gains and losses from the remaining investments are reported, net of tax, on the Statements of Operations, but are not included in the computation of net gain from operations. Realized capital gains and losses, including OTTI, for the years ended December 31, 2023 and 2022 are shown below.

	Years Ended December 31,
	2023	2022
Realized (losses) gains:
Debt securities	$ (192,405)	$ (224,105)
Cash, cash equivalents and short-term investments	(6,478)	12,372
Contract loans	—	644
Derivative instruments	(2,391)	—
Gross realized loss	(201,274)	(211,089)
Capital gains tax expense paid (recovered)	28,494	(40,506)
Net realized loss	(229,768)	(170,583)
Transferred to IMR	(157,119)	(176,537)
Total	$ (72,649)	$ 5,954

Changes in unrealized gains and losses from investments carried at fair value are reported as a component of capital and surplus net of deferred income taxes. There has been no change in net unrealized capital gains during the years ended December 31, 2023 and 2022.

There was no deferred tax expense netted in unrealized capital gains during the years ended 2023 and 2022.

Net Investment Income

Net investment income consisted of:

	Years ended December 31,
	2023	2022
Debt securities	$ 7,587,246	$ 5,333,703
Contract loans	312,386	424,560
Cash, cash equivalents and short-term investments	408,124	181,683
Other invested assets	87,682	87,758
Other investment income	37,372	6,730
Gross investment income	8,432,810	6,034,434

Investment expense	278,009	255,909
Net investment income	$ 8,154,801	$ 5,778,525

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

3.	INVESTMENTS (CONTINUED)

The Company’s policy is to exclude all investment income due and accrued with amounts that are over 90 days past due or where the collection of income is uncertain. The Company did not exclude any investment income due and accrued from surplus for the years ended December 31, 2023 and 2022.

4.	REINSURANCE

Reinsurance ceded contracts do not relieve the Company from its obligations to policyholders. The Company remains liable to its policyholders for the portion reinsured to the extent that any reinsurer does not meet the obligations assumed under the reinsurance agreement. To minimize its exposure to significant losses from reinsurer insolvencies, the Company regularly evaluates the financial condition of its reinsurers and monitors concentrations of credit risk. Management believes that any liability arising from this contingency is unlikely.

See Note 2 for disclosure regarding the reinsurance and retrocession agreements with related parties.

The effects of reinsurance for the years ended December 31, 2023 and 2022, were as follows:

	Years Ended December 31,
	2023	2022
Premiums and annuity considerations:
Direct	$ 15,275,582	$ 10,895,552
Assumed - Affiliated	(15,734,913)	18,221,082
Ceded - Non-Affiliated	(7,030,308)	(5,474,512)
Ceded - Affiliated	15,734,913	(18,221,082)
Net premiums and annuity considerations	$ 8,245,274	$ 5,421,040

Insurance and other individual policy benefits, claims and expenses:
Direct	$ 16,241,990	$ 9,585,541
Assumed - Affiliated	111,236,643	163,725,934
Ceded - Non-Affiliated	(5,777,899)	(3,730,654)
Ceded - Affiliated	(111,236,643)	(163,725,934)
Net policy benefits and claims	$ 10,464,091	$ 5,854,887

The following schedule reflects related party reinsurance information recorded in the Statements of Operations for the years ended December 31, 2023 and 2022.

	December 31, 2023
	Assumed	Ceded
Premiums and annuity considerations	$ (15,734,913)	$ 15,734,913
Commission and expense allowance	3,312,886	(3,312,886)
Policy benefits and changes in reserves	71,373,473	(71,373,473)

	December 31, 2022
	Assumed	Ceded
Premiums and annuity considerations	$ 18,221,082	$ (18,221,082)
Commission and expense allowance	3,242,865	(3,242,865)
Policy benefits and changes in reserves	138,656,816	(138,656,816)

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

4.	REINSURANCE (CONTINUED)

Due to the nature of the Company’s operations, the balances reported on the Statements of Operations for the years ended December 31, 2023 and 2022 represent the effects of non-affiliated ceded reinsurance for the following: Premium and annuity considerations, Death benefits and Change in aggregate reserves for life contracts, Surrender benefits and withdrawals for life contracts, as well as Investment income on funds withheld, Commission and expense allowances as related to the affiliated reinsurance, assumed and ceded.

The Company has not identified any reinsurance contracts with risk-limiting features that require additional disclosure under SSAP No. 61R.

5.	RESERVES FOR LIFE CONTRACTS AND DEPOSIT TYPE CONTRACTS

Policy and contract reserves are computed and developed as described in Note 1.

The Company does not have in force any recurring premium life insurance business. Surrender values are not promised in excess of reserves as legally computed. The Company did not have any substandard policies as of December 31, 2023 and 2022.

As of December 31, 2023 and 2022, the Company had $3,426,046,095 and $2,938,540,615, respectively, of insurance in force for which gross premiums were less than the net premiums according to the standard of valuation required by the State of Delaware. This amount is the direct amount of insurance in force of $6,260,855,850 and $6,512,043,058, respectively, on the applicable policies as reported by the direct writer, SLOC, reduced by the amount ceded by SLOC for its yearly renewable term reinsurance agreements with other companies. Deficiency reserves held by the Company to cover the above insurance totaled $293,609,478 and $311,821,612 as of December 31, 2023 and 2022, respectively. All of this insurance is assumed and then ceded 100% to an affiliate.

The Tabular Interest, Tabular Less Actual Reserves Released, and the Tabular Cost have all been determined by formula, as described in the NAIC instructions. For the determination of Tabular Interest on funds not involving life contingencies for each valuation rate of interest, the tabular interest is calculated as one hundredth of the product of such valuation rate of interest times the mean of the amount of funds subject to such valuation rate of interest held at the beginning and end of the year of valuation.

Other than the normal update of reserves, there were no significant reserve changes during the years ended December 31, 2023 and 2022.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

6.	WITHDRAWAL CHARACTERISTICS OF ANNUITY RESERVES AND DEPOSIT LIABILITIES AND LIFE RESERVES

The withdrawal characteristics of annuity actuarial reserves and deposit-type contract funds and other liabilities without life or disability contingencies are as follows for the statement year:

		December 31, 2023
INDIVIDUAL ANNUITIES		General Account	% of Total
Subject to discretionary withdrawal:
	With fair value adjustment	$ —	0 %
	At book value less current surrender charge
	of 5% or more	—	0 %
	At fair value	—	0 %
	Total with adjustment or at fair value	—	0 %
	At book value without adjustment
	(minimal or no charge or adjustment)	—	0 %
Not subject to discretionary withdrawal		211,862	100 %
Total (Gross: Direct & Assumed)		211,862	100 %
Reinsurance ceded		—
Total, net		$ 211,862

		December 31, 2023
DEPOSIT-TYPE CONTRACTS		General Account	% of Total
Subject to discretionary withdrawal:
	With fair value adjustment	$ —	— %
	At book value less current surrender charge
	of 5% or more	—	— %
	At fair value	—	— %
	Total with adjustment or at fair value	—	— %
	At book value without adjustment
	(minimal or no charge or adjustment)	—	— %
Not subject to discretionary withdrawal		358,762	100 %
Total (Gross: Direct & Assumed)		358,762	100 %
Reinsurance ceded		—
Total, net		$ 358,762

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

6.	WITHDRAWAL CHARACTERISTICS OF ANNUITY RESERVES AND DEPOSIT LIABILITIES AND LIFE RESERVES (CONTINUED)

The withdrawal characteristics of annuity actuarial reserves and deposit-type contract funds and other liabilities without life or disability contingencies for December 31, 2022 are as follows:

		December 31, 2022
INDIVIDUAL ANNUITIES		General Account	% of Total
Subject to discretionary withdrawal:
	With fair value adjustment	$ —	— %
	At book value less current surrender charge
	of 5% or more	—	— %
	At fair value	—	— %
	Total with adjustment or at fair value	—	— %
	At book value without adjustment
	(minimal or no charge or adjustment)	—	— %
Not subject to discretionary withdrawal		220,397	100 %
Total (Gross: Direct & Assumed)		220,397	100 %
Reinsurance ceded		—
Total, net		$ 220,397

		December 31, 2022
DEPOSIT-TYPE CONTRACTS		General Account	% of Total
Subject to discretionary withdrawal:
	With fair value adjustment	$ —	— %
	At book value less current surrender charge
	of 5% or more	—	— %
	At fair value	—	— %
	Total with adjustment or at fair value	—	— %
	At book value without adjustment
	(minimal or no charge or adjustment)	—	— %
Not subject to discretionary withdrawal		427,072	100 %
Total (Gross: Direct & Assumed)		427,072	100 %
Reinsurance ceded		—
Total, net		$ 427,072

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

6.	WITHDRAWAL CHARACTERISTICS OF ANNUITY RESERVES AND DEPOSIT LIABILITIES AND LIFE RESERVES (CONTINUED)

The withdrawal characteristics of life actuarial reserves as of December 31, 2023 are as follows:

	General Account			Separate Account - Guaranteed and Non-guaranteed
	Account Value	Cash Value	Reserve	Account Value	Cash Value	Reserve
Subject to Discretionary Withdrawal:
Term Policies with Cash Value	$ —	$ —	$ —	$ —	$ —	$ —
Universal Life	—	—	—	—	—	—
Universal Life with Secondary Guarantees	1,320,902,882	1,312,554,580	3,845,785,441	—	—	—
Indexed Universal Life	—	—	—	—	—	—
Indexed Universal Life with Secondary Guarantees	—	—	—	—	—	—
Indexed Life	—	—	—	—	—	—
Other Permanent Cash Value Life with Secondary Guarantees	—	—	—	—	—	—
Variable Life	9,674,142	9,674,142	9,674,142	42,219,218	42,219,218	42,219,218
Variable Universal Life	—	—	—	—	—	—
Miscellaneous Reserves	—	—	—	—	—	—

Not Subject to Discretionary Withdrawal:
Term Policies without Cash Value	XXX	XXX	—	XXX	XXX	—
Accidental Death Benefits	XXX	XXX	60	XXX	XXX	—
Disability - Active Lives	XXX	XXX	497	XXX	XXX	—
Disability - Disabled Lives	XXX	XXX	—	XXX	XXX	—
Miscellaneous Reserves	XXX	XXX	297,838,018	XXX	XXX	—

Total	1,330,577,024	1,322,228,722	4,153,298,158	42,219,218	42,219,218	42,219,218
Reinsurance Ceded	1,320,902,882	1,312,554,580	4,139,395,477	—	—	—
Total (Net)	$ 9,674,142	$ 9,674,142	$ 13,902,681	$ 42,219,218	$ 42,219,218	$ 42,219,218

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

7. LIABILITY FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES

The following accident and health policy claim incurred but not reported reserve activity, including the present value of amounts not yet due, is reported as a component of the total aggregate reserves for accident and health contracts and the contract claims. The activity for the year ended December 31, 2023 and December 31, 2022 is summarized as follows:

	2023	2022
Balance, beginning of year	$ 1,840,424	$ 740,260
Incurred losses related to:
Current year	4,586,946	3,320,561
Prior year	1,128,039	356,587
Total incurred	5,714,985	3,677,148
Paid losses related to:
Current year	2,320,125	1,534,634
Prior year	2,907,667	1,042,350
Total paid	5,227,792	2,576,984

Balance, end of year	$ 2,327,617	$ 1,840,424

The incurred losses and loss adjustments relating to insured events in the prior year are a result of a reassessment of the estimates of the costs on certain claims outstanding.

8. SEPARATE ACCOUNTS

The Company has established unitized separate accounts applicable to various classes of contracts providing for variable benefits. Contracts for which funds are invested in variable separate accounts include individual variable life insurance contracts. The assets of this account are carried at fair value and the investment risk of such securities is retained by the contract holder. These variable products provide minimum death benefits. The minimum guaranteed benefit reserves associated with the unitized separate account are reported in Aggregate reserve for life contracts in the Company’s Statements of Admitted Assets, Liabilities, Capital Stock and Surplus.

The Company earns separate account fees for providing administrative services and bearing the mortality risks related to these variable contracts. Investment income and changes in mutual fund asset values on variable separate accounts are allocated to policyholders and therefore are not reflected in the Statements of Operations of the general account.

The Company summarized the reported assets and liabilities from these product lines/transactions into the Independence Variable Life Separate Account.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

8.	SEPARATE ACCOUNTS (CONTINUED)

The variable separate account assets are legally insulated from the general account. The legal insulation of the separate account assets prevents such assets from being generally available to satisfy claims resulting from the general account. In accordance with the domiciliary state procedures for approving items within the separate account, the separate account classification of legally insulated is supported by section 2932 of the Delaware Insurance Code.

The Company maintained separate account assets totaling $42,219,218 and $36,726,930, of which all were assets legally insulated from the general account, as of December 31, 2023 and 2022, respectively.

Separate account liabilities are determined in accordance with prescribed actuarial methodologies, which approximate the fair value of the related assets less applicable surrender charges. The resulting surplus is recorded in the general account Statement of Operations as a component of Net transfers from Separate Accounts. The variable separate accounts are non-guaranteed separate accounts, wherein the policyholder assumes substantially all the investment risks and rewards. In accordance with the guarantees provided, if the investment proceeds are insufficient to cover the rate of return guaranteed for the product, the policyholder proceeds will be remitted by the general account.

The Company had $228,540 and $281,803 of reserves for minimum death benefit guarantees as of December 31, 2023 and 2022, respectively.

The general account of the Company had a maximum guarantee for separate account liabilities of $28,958,841 and $35,575,319 as of December 31, 2023 and 2022, respectively.

To compensate the general account for the risk taken, the separate account paid risk charges of $515,347 and $778,124 during the years ended December 31, 2023 and 2022, respectively.

The Company paid expenses related to the GMDB reserve held in the general account of $1,032,316 and $637,399 for the years ended December 31, 2023 and 2022, respectively.

The Company does not engage in securities lending transactions within the Separate Account.

Below is the reconciliation of net transfers from Separate Accounts:

	Years Ended December 31,
	2023	2022
Transfers from Separate Accounts	$ (3,590,280)	$ (2,348,522)

Net transfers from Separate Accounts on the Statements of Operations	$ (3,590,280)	$ (2,348,522)

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

8.	SEPARATE ACCOUNTS (CONTINUED)

An analysis of the Separate Accounts of the Company as of December 31, 2023 and 2022 is as follows:

		2023	2022
		Non-guaranteed Separate Accounts	Non-guaranteed Separate Accounts

Premiums, considerations or deposits		$ —	$ —

Reserves
For accounts with assets at:
	Fair value	42,219,218	36,726,930
	Total reserves	$ 42,219,218	$ 36,726,930

By withdrawal characteristics:
	With fair value adjustment	$ —	$ —
	At fair value	42,219,218	36,726,930
	Subtotal	42,219,218	36,726,930
	Not subject to discretionary
	withdrawal	—	—
	Total	$ 42,219,218	$ 36,726,930

9. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial assets and liabilities have been classified, for disclosure purposes, based on a hierarchy defined by SSAP No. 100, “Fair Value Measurements” (“SSAP 100”). Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods including market, income and cost approaches. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company has categorized its financial instruments into a three-level hierarchy based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

9. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

The levels of the fair value hierarchy are as follows:

Level 1

Fair value is based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access. Active markets are defined as a market in which many transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

The types of assets and liabilities utilizing Level 1 valuations include U.S. Treasury and agency securities and investments in publicly traded mutual funds with quoted market prices.

Level 2

Observable inputs other than Level 1 prices, such as quoted prices in active markets for similar assets or liabilities; quoted prices in markets that are not active for identical or similar assets or liabilities, or other model driven inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Valuations are generally obtained from third-party pricing services for identical or comparable assets or liabilities or through the use of valuation methodologies using observable market inputs.

The types of assets and liabilities utilizing Level 2 valuations generally include U.S. Government securities not backed by the full faith and credit of the government, municipal bonds, structured notes and certain ABS, including collateralized debt obligations, RMBS, CMBS, certain corporate debt and certain private equity investments.

Level 3

Instruments whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions in pricing the asset or liability. Pricing may also be based upon broker quotes that do not represent an offer to transact. Prices are determined using valuation methodologies such as option pricing models, discounted cash flow models and other similar techniques. Non-binding broker quotes, which are utilized when pricing service information is not available, are reviewed for reasonableness based on the Company’s understanding of the market, and are generally considered Level 3. To the extent the internally developed valuations use significant unobservable inputs, they are classified as Level 3.

Generally, the types of assets and liabilities utilizing Level 3 valuations are certain ABS, RMBS, and CMBS, certain corporate debt, certain private equity investments and certain mutual fund holdings.

There have been no significant changes made in valuation techniques during 2023 or 2022.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

9. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

The Company’s assets by classification reported at fair value as of December 31, 2023 are as follows:

Description for each class of asset or liability	Level 1	Level 2	Level 3	Total
Assets at fair value:
Separate Accounts assets (a)	$ 42,219,218	$ —	$ —	$ 42,219,218
Total assets at fair value	$ 42,219,218	$ —	$ —	$ 42,219,218

The Company’s assets by classification reported at fair value as of December 31, 2022 are as follows:

Description for each class of asset or liability	Level 1	Level 2	Level 3	Total
Assets at fair value:
Separate Accounts assets (a)	$ 36,726,930	$ —	$ —	$ 36,726,930
Total assets at fair value	$ 36,726,930	$ —	$ —	$ 36,726,930

(a) Separate Accounts assets include invested assets carried at fair value. There was no investment income receivable at December 31, 2023 and 2022.

The Company transfers assets into or out of levels at the fair value as of the beginning of the reporting period. Transfers made are the result of changes in the level of observability of inputs used to price assets as well as changes in NAIC designations. No transfers between levels 1 and 2 occurred during the years ended December 31, 2023 and 2022.

There are no assets or liabilities carried at fair value categorized as Level 3 and no transfers to/from assets or liabilities categorized as Level 3 for the years ended December 31, 2023 and 2022.

The following table presents the carrying amounts and estimated fair values by fair value hierarchy of the Company’s financial instruments as of December 31, 2023:

	Aggregate	Admitted				Not Practicable
Type of Financial Instrument	Fair Value	Assets	Level 1	Level 2	Level 3	(Carrying Value)
Financial Assets:
Debt securities	$ 203,824,256	$ 218,664,199	$ 20,101,487	$ 183,722,769	$ —	$ —
Cash, cash equivalents and
short-term investments	2,920,225	2,920,225	2,920,225	—	—	—
Contract loans	6,786,991	6,786,991	—	6,786,991	—	—
Other invested assets	1,843,497	2,175,793	—	1,843,497	—	—
Separate Account assets	42,219,218	42,219,218	42,219,218	—	—	—
Total Assets	$ 257,594,187	$ 272,766,426	$ 65,240,930	$ 192,353,257	$ —	$ —

Financial Liabilities:			—
Contract holder deposit
funds	$ 358,762	$ 358,762	$ —	$ —	$ 358,762	$ —

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

9. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

The following table presents the carrying amounts and estimated fair values by fair value hierarchy of the Company’s financial instruments as of December 31, 2022:

	Aggregate	Admitted				Not Practicable
Type of Financial Instrument	Fair Value	Assets	Level 1	Level 2	Level 3	(Carrying Value)
Financial Assets:
Debt securities	$ 182,128,919	$ 202,582,826	$ 22,060,923	$ 156,068,516	$ 3,999,480	$ —
Cash, cash equivalents and
short-term investments	18,963,437	18,963,437	18,963,437	—	—	—
Contract loans	7,189,650	7,189,650	—	7,189,650	—	—
Other invested assets	1,729,224	2,177,782	—	1,729,224	—	—
Separate Account assets	36,726,930	36,726,930	36,726,930	—	—	—
Total Assets	$ 246,738,160	$ 267,640,625	$ 77,751,290	$ 164,987,390	$ 3,999,480	$ —

Financial Liabilities:
Contract holder deposit
funds	$ 427,072	$ 427,072	$ —	$ —	$ 427,072	$ —

The methods and assumptions that the Company uses in determining the estimated fair value of its financial instruments are summarized below:

Debt securities - The Company determines the fair value of its publicly traded fixed maturity securities using three primary pricing methods: third-party pricing services, non-binding broker quotes and pricing models. Prices are first sought from third-party pricing services with the remaining unpriced securities priced using one of the other two methods. Third-party pricing services derive the security prices through recently reported trades for identical or similar securities with adjustments for trading volumes and market observable information through the reporting date. In the event that there are no recent market trades, pricing services and brokers may use pricing models to develop a security price based on future expected cash flows discounted at an estimated market rate using collateral performance and vintages. The Company generally does not adjust quotes or prices obtained from brokers or pricing services.

Structured securities, such as ABS, RMBS and CMBS, are priced using third-party pricing services, a fair value model, or independent broker quotations. Typical inputs used by these three pricing methods include, but are not limited to, reported trades, benchmark yields, issuer spreads, bids and/or estimated cash flows and prepayment speeds. In addition, estimates of expected future prepayments are factors in determining the price of ABS, RMBS and CMBS. These estimates are based on the underlying collateral and structure of the security, as well as prepayment speeds previously experienced in the market at interest rate levels projected for the underlying collateral. Actual prepayment experience may vary from these estimates.

For privately-placed fixed maturity securities, fair values are estimated using models which take into account credit spreads for a variety of public and private securities of similar credit risk, maturity, prepayment and liquidity characteristics. A portion of privately-placed fixed maturity securities also are priced using market prices or broker quotes.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

9. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

Debt securities (continued) - The Company’s ability to liquidate positions in privately-placed fixed maturity securities could be impacted to a significant degree by the lack of an actively traded market. Although the Company believes that its estimates reasonably reflect the fair value of those instruments, its key assumptions about risk-free interest rates, risk premiums, performance of underlying collateral (if any) and other factors may not reflect those of an active market.

Cash, cash equivalents and short-term investments - Cash on hand and cash equivalents, which are comprised of cash sweep investments, are classified as Level 1. Short-term investments are comprised of U.S. Treasury securities that have quoted prices in an active market and are categorized as Level 1.

Contract loans - Contract loans are carried at their unpaid principal balances. The fair value of contract loans, for disclosure purposes, is approximated by their carrying value, as policy loans are fully secured by policy values on which the loans are made.

Other invested assets – Other invested assets include a surplus note. The fair values of surplus notes are estimated using models which take into account credit spreads for a variety of public and private securities of similar credit risk, maturity, prepayment and liquidity characteristics or are priced using market prices or broker quotes.

Separate Accounts assets - Separate Account assets reported as Level 1 in the fair value hierarchy are mostly comprised of common stocks and actively traded open-end registered mutual funds with a daily net asset value (“NAV”). The NAV can be observed by redemption and subscription transactions between third parties, or may be obtained from third party asset managers.

Contract holder deposit funds - The fair values of the Company’s general account insurance reserves and liabilities under investment-type contracts (universal life, annuities and certain pension contracts and institutional contracts) are estimated using discounted cash flow analyses or surrender values. Those contracts that are deemed to have short-term guarantees have a carrying amount equal to the estimated fair value.

10. STATUTORY INVESTMENT VALUATION RESERVES

The AVR provides a reserve for credit-related losses from investments in debt securities, preferred stocks, mortgage loans and short-term investments with related increases or decreases being recorded directly to surplus.

Realized capital gains and losses on debt securities which relate to changes in levels of interest rates are charged or credited to the IMR and amortized into income over the remaining contractual life of the security sold.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

10. STATUTORY INVESTMENT VALUATION RESERVES (CONTINUED)

The table shown below presents changes in the AVR and IMR:

	December 31, 2023		December 31, 2022
	AVR	IMR	AVR	IMR
Balance, beginning of year	$ 999,267	$ 5,650,450	$ 875,816	$ 6,337,474
Net realized investment gains (losses),
net of tax	—	(157,119)	—	(176,537)
Less amortization of net investment gains	—	(373,738)	—	(510,487)
Increase in reserve based upon Securities
Valuations Office requirements	92,631	—	123,451	—
Balance, before transfers	1,091,898	5,119,593	999,267	5,650,450
Adjustment down to maximum	—	—	—	—
Balance, end of year	$ 1,091,898	$ 5,119,593	$ 999,267	$ 5,650,450

11. FEDERAL INCOME TAXES

The application of SSAP No. 101 requires a company to evaluate the recoverability of deferred tax assets and to establish a valuation allowance, if necessary, to reduce the deferred tax asset to an amount which is more likely than not to be realized. Considerable judgment is required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. Although the realization is not assured, management believes it is more likely than not that the deferred tax assets will be realized. Therefore, the Company has not recorded a valuation allowance as of December 31, 2023 and 2022.

On August 16, 2022, the Inflation Reduction Act (“IRA”) was signed into law and includes certain corporate income tax provisions. Impacts to the Company include the imposition of a corporate alternative minimum tax "CAMT" applicable to tax years beginning after December 31, 2022. The CAMT imposes a 15% minimum tax on adjusted financial statement income on applicable corporations that have an average adjusted financial statement income over $1 billion in the prior three-year period (2020-2022). As of the reporting date, the Company has determined it is an applicable reporting entity and is subject to CAMT in 2023. In accordance with INT 23-03: Inflation Reduction Act - Corporate Alternative Minimum Tax, the Company determined that it does not have a CAMT liability in 2023. The Company has not made an accounting policy election regarding CAMT when evaluating the need for a valuation allowance for its regular tax DTAs.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

11. FEDERAL INCOME TAXES (CONTINUED)

The components of the deferred tax assets (“DTAs”) and deferred tax liabilities (“DTLs”) as of December 31, 2023 and 2022 are as follows:

	December 31, 2023
Description	Ordinary	Capital	Total
Gross Deferred Tax Assets	$ 939,128	$ —	$ 939,128
Statutory Valuation Allowance Adjustments	—	—	—
Adjusted Gross Deferred Tax Assets	939,128	—	939,128
Deferred Tax Assets Nonadmitted	525,833	—	525,833
Subtotal Net Admitted Deferred Tax Assets	413,295	—	413,295
Deferred Tax Liabilities	129,710	—	129,710
Net Admitted Deferred Tax Assets	$ 283,585	$ —	$ 283,585

	December 31, 2022
Description	Ordinary	Capital	Total
Gross Deferred Tax Assets	$ 954,838	$ —	$ 954,838
Statutory Valuation Allowance Adjustments	—	—	—
Adjusted Gross Deferred Tax Assets	954,838	—	954,838
Deferred Tax Assets Nonadmitted	533,464	—	533,464
Subtotal Net Admitted Deferred Tax Assets	421,374	—	421,374
Deferred Tax Liabilities	132,601	—	132,601
Net Admitted Deferred Tax Assets	$ 288,773	$ —	$ 288,773

	Change
Description	Ordinary		Capital	Total
Gross Deferred Tax Assets	$ (15,710)		$ —	$ (15,710)
Statutory Valuation Allowance Adjustments	—		—	—
Adjusted Gross Deferred Tax Assets	(15,710)		—	(15,710)
Deferred Tax Assets Nonadmitted	(7,631)		—	(7,631)
Subtotal Net Admitted Deferred Tax Assets	(8,079)	—	—	(8,079)
Deferred Tax Liabilities	(2,891)		—	(2,891)
Net Admitted Deferred Tax Assets	$ (5,188)		$ —	$ (5,188)

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

11. FEDERAL INCOME TAXES (CONTINUED)

The following table provides component amounts of the Company's net admitted DTA calculation by tax character. The components of the admission calculation were performed under (i) paragraphs 11.a, 11.b.i, 11.b.ii, and 11.c of SSAP No. 101 for the years ended December 31, 2023 and 2022.

	December 31, 2023
Description	Ordinary	Capital	Total
Admission Calculation Components SSAP No. 101
(a) Admitted Pursuant to 11.a.	$ —	$ —	$ —
(b) Admitted Pursuant to 11.b. (lesser of 11.b.i. or 11.b.ii.)	283,585	—	283,585
(c) 11.b.i	283,585	—	283,585
(d) 11.b.ii	XXX	XXX	31,548,620
(e) Admitted Pursuant to 11.c.	129,710	—	129,710
(f) Total admitted under 11.a. - 11.c.	413,295	—	413,295
(g) Deferred tax liabilities	129,710	—	129,710
Net admitted deferred tax assets	$ 283,585	$ —	$ 283,585

	December 31, 2022
Description	Ordinary	Capital	Total
Admission Calculation Components SSAP No. 101
(a) Admitted Pursuant to 11.a.	$ —	$ —	$ —
(b) Admitted Pursuant to 11.b. (lesser of 11.b.i. or 11.b.ii.)	288,773	—	288,773
(c) 11.b.i	288,773	—	288,773
(d) 11.b.ii	XXX	XXX	30,996,644
(e) Admitted Pursuant to 11.c.	132,601	—	132,601
(f) Total admitted under 11.a. - 11.c.	421,374	—	421,374
(g) Deferred tax liabilities	132,601	—	132,601
Net admitted deferred tax assets	$ 288,773	$ —	$ 288,773

	Change
Description	Ordinary	Capital	Total
Admission Calculation Components SSAP No. 101
(a) Admitted Pursuant to 11.a.	$ —	$ —	$ —
(b) Admitted Pursuant to 11.b. (lesser of 11.b.i. or 11.b.ii.)	(5,188)	—	(5,188)
(c) 11.b.i	(5,188)	—	(5,188)
(d) 11.b.ii	XXX	XXX	551,976
(e) Admitted Pursuant to 11.c.	(2,891)	—	(2,891)
(f) Total admitted under 11.a. - 11.c.	(8,079)	—	(8,079)
(g) Deferred tax liabilities	(2,891)	—	(2,891)
Net admitted deferred tax assets	$ (5,188)	$ —	$ (5,188)

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

11. FEDERAL INCOME TAXES (CONTINUED)

	2023	2022
Ratio Percentage Used To Determine Recovery Period And Threshold Limitation Amount	531 %	474 %

Amount Of Adjusted Capital And Surplus Used To Determine Recovery Period And Threshold Limitation Above	$ 210,324,133	$ 206,638,333

The following table provides the impact of tax planning strategies, if used in the Company’s SSAP No. 101 calculation, on adjusted gross and net admitted DTAs.

		December 31, 2023		December 31, 2022		Change
Description		Ordinary	Capital	Ordinary	Capital	Ordinary	Capital
Impact of Tax Planning Strategies
Determination of adjusted gross deferred
tax assets and net admitted deferred
assets, by tax character as a percentage
1	Adjusted Gross DTAs	$ 939,128	$ —	$ 954,838	$ —	$ (15,710)	$ —
2	Percentage of adjusted gross DTAs by tax character attributable to the impact of tax planning strategies	0 %	0 %	0 %	0 %	0 %	0 %
3	Net admitted Adjusted Gross DTAs	$ 413,295	$ —	$ 421,374	$ —	$ (8,079)	$ —
4	Percentage of net admitted adjusted gross DTAs by tax character admitted because of the impact of tax planning strategies	66 %	0 %	66 %	0 %	0 %	0 %

The Company’s tax planning strategy includes the use of reinsurance-related strategies.

Current income taxes incurred consist of the following major components:

	Years Ended December 31,
	2023	2022	Change
Federal tax expense from operations	$ 949,975	$ 704,190	$ 245,785
Federal income tax on net capital gains	28,494	(40,506)	69,000
Other - prior period adjustment	—	109,087	(109,087)
Current income tax expense	$ 978,469	$ 772,771	$ 205,698

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

11. FEDERAL INCOME TAXES (CONTINUED)

The main components of DTAs and DTLs as of December 31, 2023 and 2022 are as follows:

	2023	2022	Change
Deferred Tax Assets:
Ordinary:
Policyholder reserves	$ 921,683	$ 939,038	$ (17,355)
Investments	1,045	—	1,045
Other	16,400	15,800	600
Total ordinary deferred tax assets	939,128	954,838	(15,710)
Nonadmitted	525,833	533,464	(7,631)
Admitted ordinary deferred tax assets	413,295	421,374	(8,079)
Admitted capital deferred tax assets	—	—	—

Admitted deferred tax assets	$ 413,295	$ 421,374	$ (8,079)

Deferred Tax Liabilities:
Ordinary:
Investments	$ 129,710	$ 132,601	$ (2,891)
Total ordinary deferred tax liabilities	129,710	132,601	(2,891)
Total capital deferred tax liabilities	—	—	—

Deferred tax liabilities	$ 129,710	$ 132,601	$ (2,891)

Net admitted deferred tax assets	$ 283,585	$ 288,773	$ (5,188)

The change in net deferred income taxes is comprised of the following:

Description	2023	2022	Change
Total deferred tax assets	$ 939,128	$ 954,838	$ (15,710)
Total deferred tax liabilities	129,710	132,601	(2,891)
Net deferred tax asset	$ 809,418	$ 822,237	$ (12,819)

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

11. FEDERAL INCOME TAXES (CONTINUED)

The provision for federal income taxes incurred is different from that which would be obtained by applying the statutory federal income tax rate of 21% to income before federal income taxes. The significant items causing this difference at December 31, 2023 and 2022 are as follows:

	December 31, 2023			December 31, 2022
Description	Amount	Tax Effect @ 21%	Effective Tax Rate	Amount	Tax Effect @ 21%	Effective Tax Rate
Income before taxes	$ 5,294,760	$ 1,111,900	21.8 %	$ 4,080,026	$ 856,805	22.1 %
Pre-tax capital gains - Pre IMR	(201,274)	(42,268)	-0.8 %	(211,086)	(44,328)	-1.1 %
Dividends received deduction	(20)	(4)	0.0 %	(62)	(13)	0.0 %
Non-deductible expenses	855	180	0.0 %	215	45	0.0 %
Interest Maintenance Reserve	(373,738)	(78,485)	-1.5 %	(510,487)	(107,202)	-2.8 %
Prior year (over) under accrual	(157)	(33)	0.0 %	18,890	3,967	0.1 %
Prior period adjustment tax	—	—	0.0 %	—	109,087	2.8 %
Other	(8)	(2)	0.0 %	—	—	0.0 %
Total statutory income taxes		$ 991,288	19.5 %		$ 818,361	21.1 %

Federal income taxes incurred		978,469	19.2 %		772,771	20.0 %
Change in net deferred income taxes		12,819	0.3 %		45,590	1.1 %
Total statutory income taxes		$ 991,288	19.5 %		$ 818,361	21.1 %

At December 31, 2023 and 2022, respectively, the Company has no net operating losses carryforwards and no capital loss carryforwards.

The following are income tax expenses (benefits) incurred in the current and prior years. Losses incurred after December 31, 2020 are not allowed to be carried back under the Tax Cuts and Jobs Act of 2017.

Year		Amount
2023		$ 974,135
2022		$ 697,067
2021		$ 649,817

The Company has no protective tax deposits under Section 6603 of the Internal Revenue Service ("IRS") Code.

The Company files its federal tax return as part of a consolidated group return. The IRS completed an examination of the consolidated return in 2021 with a disagreed Notice of Proposed Adjustment related to another member of the group. The adjustment is currently being reviewed by IRS Appeals. The IRS is currently completing an examination of 2017 to 2018 and there have been no significant findings relating to the Company.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

11. FEDERAL INCOME TAXES (CONTINUED)

The Company will file a consolidated federal income tax return with SLC - U.S. Ops Holdings for the year ended December 31, 2023, as the Company did for the year ended December 31, 2022. See further details below. The Company has written agreement approved by the Board of Directors, which sets forth the manner in which the total combined federal income tax is allocated to each entity which is a party to the consolidation. Pursuant to this agreement, allocation is based upon separate return calculations with current credit (benefit) given for losses and tax attributes that are utilized by the consolidated group. Intercompany tax balances are settled on a quarterly basis, with a final true up after filing of the federal income tax return, as prescribed by the terms of the tax sharing agreement.

The Company will file a consolidated federal income tax return for 2023 including the following companies:

(1)	Sun Life Assurance Company of Canada - U.S. Operations Holdings, Inc.	(22)	The Premier Dental Group, Inc.
(2)	Sun Life Financial (U.S.) Holdings, Inc.	(23)	Landmark Dental Alliance, Inc.
(3)	Sun Life Financial (Japan), Inc.	(24)	Sun Life Financial (Bermuda) Reinsurance Ltd.
(4)	Sun Canada Financial Co.	(25)	Dailyfeats, Inc. (d.b.a Maxwell Health)
(5)	Sun Life Financial Distributors, Inc.	(26)	Sun Life (U.S.) Holdco 2020 Inc.
(6)	Sun Life of Canada (U.S.) Holdings, Inc.	(27)	SL Finance 2007-1, Inc.
(7)	Sun Life of Canada (U.S.) Financial Services Holdings, Inc.	(28)	Sun Life Financial (U.S.) Delaware Finance, LLC 2020
(8)	Independence Life and Annuity Company	(29)	SL Investment US-RE Holdings 2009-1, Inc.
(9)	Sun Life Financial (U.S.) Reinsurance Company	(30)	Pinnacle Care International, Inc.
(10)	Massachusetts Financial Services Company	(31)	Dentaquest Group, Inc.
(11)	MFS Fund Distributors, Inc.	(32)	Pacific Dental Network, Inc.
(12)	MFS Service Center, Inc.	(33)	) California Dental Network, Inc.
(13)	MFS Institutional Advisors, Inc.	(34)	Adenta, Inc.
(14)	MFS Heritage Trust Company	(35)	Advantage Leveraged Lenders, Inc.
(15)	Sun Life Administrators (U.S.), Inc.	(36)	Insurance Associated Plus, Inc.
(16)	Sun Life Financial (U.S.) Services Company, Inc.	(37)	DCP Holding Company, Inc.
(17)	Professional Insurance Company	(38)	DentaQuest USA Insurance Company, Inc.
(18)	Sun Life Financial (U.S.) Reinsurance Company II	(39)	DentaQuest of Florida, Inc.
(19)	Sun Life Financial (U.S.) Delaware Finance, LLC	(40)	DentaQuest National Insurance Company, Inc.
(20)	Sun Life Financial Investment Management U.S., Inc.	(41)	Dental Care Plus, Inc.
(21)	Disability Reinsurance Management Services

As of December 31, 2023 and 2022, there are no positions for which management believes it to be reasonably possible that total amounts of tax contingencies will significantly increase or decrease within 12 months of the reporting date.

At December 31, 2023, the Company has no Corporate Alternative Minimum Tax ("CAMT") credit carryforward.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

12. CAPITAL STOCK AND SURPLUS AND DIVIDEND RESTRICTIONS

The Company’s ability to pay dividends is subject to certain statutory restrictions. The State of Delaware has enacted laws governing the payment of dividends to stockholders by domestic insurers.

Pursuant to Delaware's statute, the maximum amount of dividends and other distributions that a domestic insurer may pay in any twelve-month period without the prior approval of the Delaware Commissioner of Insurance is limited to the greater of: (i) 10% of its statutory surplus as of the preceding December 31, or (ii) the Company's statutory net gain from operations for the preceding calendar year, not including realized capital gains. Any dividends to be paid by an insurer from a source other than statutory surplus, whether or not in excess of the aforementioned threshold, would also require the prior approval of the Delaware Commissioner of Insurance.

No dividends were declared or paid by the Company during the years ended December 31, 2023 and 2022.

The portion of unassigned funds (surplus) represented or (reduced) by each of the following items at December 31, 2023 and 2022 was as follows:

	2023	2022
Net unrealized capital losses	$ (268,000,000)	$ (268,000,000)
Non-admitted assets	(525,841)	(533,464)
Asset valuation reserve	(1,091,898)	(999,267)

13. RISK-BASED CAPITAL

Life and health insurance companies are subject to certain Risk-Based Capital (“RBC”) requirements as specified by the NAIC. The RBC requirements provide a method for measuring the minimum acceptable amount of adjusted capital that a life insurer should have, as determined under NAIC SAP, taking into account the risk characteristics of its investments and products. The Company has met the minimum RBC requirements at December 31, 2023 and 2022.

14. COMMITMENTS AND CONTINGENT LIABILITIES

Regulatory and industry developments

Under insurance guaranty fund laws in each state, the District of Columbia and Puerto Rico, insurers licensed to do business can be assessed by state insurance guaranty associations for certain obligations of insolvent insurance companies to policyholders and claimants. Most of these laws do provide, however, that an assessment may be excused or deferred if it would threaten an insurer's solvency and provide annual limits on such assessments. Part of the assessments paid by the Company pursuant to these laws may be used as credits for a portion of associated premium taxes.

The Company has not established any asset for premium tax credits or policy surcharges as their recoveries are not estimable.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

14. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)

Litigation, income taxes and other matters

The Company is sometimes party to threatened or pending legal proceedings, including ordinary routine litigation incidental to the business, both as a defendant and as a plaintiff. While it is not possible to predict the resolution of these proceedings, management believes, based upon currently available information, that the ultimate resolution of these matters will not be materially adverse to the Company’s financial position, results of operations or cash flows.

Indemnities

In the normal course of its business, the Company has entered into agreements that include indemnities in favor of third parties, such as contracts with advisors and consultants, outsourcing agreements, underwriting and agency agreements, information technology agreements, distribution agreements, and service agreements. The Company has also agreed to indemnify its directors and certain of its officers and employees in accordance with the Company’s by-laws. The Company believes any potential liability under these agreements is neither probable nor estimable. Therefore, the Company has not recorded any associated liability.

Lease commitments

The Company has no direct leases for facilities and equipment. Total rental expenses allocated to the Company were $41,023 and $81,975 for the years ended December 31, 2023 and 2022, respectively.

15. SUBSEQUENT EVENTS

Subsequent events were evaluated from the balance sheet date through the date of issuance of the audited statutory-basis financial statements, which were made available on April 19, 2024.

***

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

SCHEDULE 1 - SELECTED FINANCIAL DATA

ANNUAL STATEMENT AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2023

INVESTMENT INCOME
U.S. Government bonds	$ 425,767
Other bonds (unaffiliated)	7,161,479
Bonds of affiliates	—
Preferred stocks (unaffiliated)	—
Preferred stocks of affiliates	—
Common stocks (unaffiliated)	—
Common stocks of affiliates	—
Mortgage loans	—
Real estate	—
Contract loans	312,386
Cash, cash equivalents & short-term investments	408,124
Derivative instruments	—
Miscellaneous investment income	37,372
Other invested assets	87,682
Gross investment income	$ 8,432,810

REAL ESTATE OWNED - Gross book value less encumbrances	—

MORTGAGE LOANS - Gross book value
Farm mortgages	—
Residential mortgages	—
Commercial mortgages	—
Total mortgage loans	$ —

MORTGAGE LOANS BY STANDING - Gross book value:
Good standing	—
Good standing with restructured terms	—
Interest overdue more than 90 days, not in foreclosure	—
Foreclosure in process	—

OTHER LONG-TERM INVESTED ASSETS - Statement value	2,175,793

COLLATERAL LOANS	—

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

SCHEDULE 1 - SELECTED FINANCIAL DATA

ANNUAL STATEMENT AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2023


BONDS AND STOCKS OF PARENTS, SUBSIDIARIES AND AFFILIATES:
Book value:
Bonds		$ —
Preferred stocks		—
Common stocks		—

BONDS AND SHORT-TERM INVESTMENTS BY CLASS AND MATURITY:
Bonds by maturity - statement value:
Due within 1 year or less		$ 27,570,817
Over 1 year through 5 years		99,246,064
Over 5 years through 10 years		54,405,098
Over 10 years through 20 years		28,512,889
Over 20 years		10,420,093
Total by maturity		$ 220,154,961

Bonds by class - statement value:
Class 1 and Exempt Obligations		$ 168,056,209
Class 2		52,098,752
Class 3		—
Class 4
Class 5		—
Class 6		—
Total by class		$ 220,154,961

Total bonds publicly traded		150,361,145
Total bonds privately placed		69,793,816

PREFERRED STOCKS - Statement value		—

COMMON STOCKS - Market value		—

SHORT-TERM INVESTMENTS - Book value		—

OPTIONS, CAPS & FLOORS OWNED - Statement value		—

OPTIONS, CAPS & FLOORS WRITTEN AND IN FORCE - Statement value		—

COLLAR, SWAP & FORWARD AGREEMENTS OPEN - Statement value		—

FUTURES CONTRACTS OPEN - Current value		—

CASH ON DEPOSIT		1,429,463

CASH EQUIVALENTS		1,490,762

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

SCHEDULE 1 - SELECTED FINANCIAL DATA

ANNUAL STATEMENT AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2023

LIFE INSURANCE IN FORCE:
Industrial	$ —
Ordinary	4,637,166,000
Credit Life	—
Group Life	—

AMOUNT OF ACCIDENTAL DEATH INSURANCE IN FORCE UNDER
ORDINARY POLICIES	550,000

LIFE INSURANCE POLICIES WITH DISABILITY PROVISION IN FORCE:
Industrial	—
Ordinary	8,148,000
Credit life	—
Group life	—

SUPPLEMENTARY CONTRACTS IN FORCE:
Ordinary - not involving life contingencies:
Amount on deposit	358,762
Income payable	81,510
Ordinary - involving life contingencies:
Income payable	31,222
Group - not involving life contingencies:
Amount of deposit	—
Income payable	—
Group - involving life contingencies
Income payable	—

ANNUITIES:
Ordinary:
Immediate - amount of income payable	—
Deferred - fully paid account balance	—
Deferred - not fully paid - account balance	—
Group:
Amount of income payable	—
Fully paid account balance	—
Not fully paid - account balance	—

ACCIDENT AND HEALTH INSURANCE - Premiums in force:
Ordinary	—
Group	14,740,779
Credit	—

DEPOSIT FUNDS AND DIVIDEND ACCUMULATIONS:
Deposit funds - account balance	—
Dividend accumulations - account balance	—

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

SCHEDULE 1 - SELECTED FINANCIAL DATA

ANNUAL STATEMENT AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2023

CLAIM PAYMENTS 2023:
Group accident and health - year ended December 31, 2023:
2023	$ 2,320,125
2023 - 1	2,907,667
2023 - 2	—
2023 - 3	—
2023 - 4	—
Prior	—

Other accident and health:
2023	—
2023 - 1	—
2023 - 2	—
2023 - 3	—
2023 - 4	—
Prior	—

OTHER COVERAGES THAT USE DEVELOPMENTAL METHODS TO
CALCULATE CLAIMS RESERVES:
2023	—
2023 - 1	—
2023 - 2	—
2023 - 3	—
2023 - 4	—
Prior	—

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

SCHEDULE 2 - SUPPLEMENTAL INVESTMENT RISKS INTERROGATORIES

ANNUAL STATEMENT AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2023

1.	The Company’s total general account admitted assets as reported on page three of its Statutory Annual Statement for the year ended December 31, 2023 are $3,236,556,728.

Following are the 10 largest exposures to a single issuer/borrower/investment, by investment category excluding: U.S. government, U.S. government agency securities, Other U.S. Government Obligations, and those U.S. government money market funds listed in the Appendix to the SVO Purposes and Procedures Manual as exempt, property occupied by the company and contract loans.

				Percentage of Total
	Issuer		Amount	Admitted Assets
a.	Bonds -	Wells Fargo WFCM 2014-LC16	$ 5,434,206	0.2%
b.	Bonds -	Octane Rec Trust OCTL 2023-3A	4,999,525	0.2%
c.	Bonds -	Nextera Energy Inc	4,997,929	0.2%
d.	Bonds -	JP Morgan JPMBB 2014-C24	4,574,528	0.1%
e.	Bonds -	Westlake Auto WLAKE 2023-1A	4,499,851	0.1%
f.	Bonds -	Goldman GSMS 2017-GS8	4,018,430	0.1%
g.	Bonds -	Evergreen Cred EVGRN 2022-CRT2	3,999,732	0.1%
h.	Bonds -	Cooperative Rabobank U.A.	3,800,000	0.1%
i.	Bonds -	UBS Group AG	3,592,363	0.1%
j.	Bonds -	Avalonbay Communities Inc	3,242,061	0.1%

3.	The Company’s total admitted assets held in bonds by NAIC designation at December 31, 2023 are:

	Amount	Percentage of Total Admitted Assets
NAIC-1	$ 168,056,209	5.2%
NAIC-2	52,098,752	1.6%
NAIC-3	—	0.0%
NAIC-4	—	0.0%
NAIC-5	—	0.0%
NAIC-6	—	0.0%

4.	Assets held in foreign investments at December 31, 2023 were $27,308,733 which represented 0.84% of the Company’s total admitted assets and excluded Canadian investments and currency exposure of $8,695,877; therefore detail is not required for interrogatories #5 - #10.

11.	Assets held in Canadian investments are less than 2.5% of the Company’s total admitted assets at December 31, 2023, therefore detail not required for interrogatory #11.

12.	Assets held in investments with contractual sales restrictions are less than 2.5% of the Company’s total admitted assets at December 31, 2023, therefore detail not required for interrogatory #12.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

SCHEDULE 2 - SUPPLEMENTAL INVESTMENT RISKS INTERROGATORIES

ANNUAL STATEMENT AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2023

13.	The Company holds no assets in equity interests at December 31, 2023, therefore detail not required for interrogatory #13.

14.	The Company holds no investments held in non-affiliated, privately placed equities at December 31, 2023, therefore detail not required for interrogatory #14.

15.	The Company holds no assets in general partnership interests at December 31, 2023, therefore detail not required for interrogatory #15.

16.	The Company holds no assets in mortgage loans at December 31, 2023, therefore detail not required for interrogatory #16 and #17.

18.	The Company holds no assets in real estate at December 31, 2023, therefore detail not required for interrogatory #18.

19. The Company holds no assets in mezzanine real estate loans at December 31, 2023, therefore detail not required for interrogatory #19.

20. The Company’s total admitted assets were not subject to the following agreements during the year 2023:

a. Securities lending

b. Repurchase agreements

c. Reverse repurchase agreements

d. Dollar purchase agreements

e. Dollar reverse repurchase agreements

21. The Company had no warrants that were not attached to other financial instruments, options, caps, and floors at December 31, 2023.

22. The Company had no collars, swaps, and forward contracts at December 31, 2023.

23. The Company had no futures contracts at December 31, 2023.

INDEPENDENCE LIFE AND ANNUITY COMPANY

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

SCHEDULE 3 - SUMMARY INVESTMENT SCHEDULE

ANNUAL STATEMENT AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2023

			Admitted Assets as Reported in
	Gross Investment Holdings		the Annual Statement
Investment Categories	Amount	Percentage	Amount	Percentage
Long-Term Bonds:
U.S. governments	$ 25,551,042	11.08 %	$ 25,551,042	11.08 %
All other governments	—	—	—	—
U.S. states, territories and possessions, etc. guaranteed	—	—	—	—
U.S. political subdivisions of state, territories, and
possessions, guaranteed	—	—	—	—
U.S. special revenue and special assessment obligations,
etc. non-guaranteed	34,578,508	15.00	34,578,508	15.00
Industrial and miscellaneous	158,534,649	68.76	158,534,649	68.76
Hybrid securities	—	—	—	—
Parent, subsidiaries and affiliates	—	—	—	—
SVO identified funds	—	—	—	—
Unaffiliated bank loans	—	—	—	—
Total long-term bonds	218,664,199	94.85	218,664,199	94.85
Preferred stocks:
Industrial and miscellaneous	—	—	—	—
Parent, subsidiaries and affiliates	—	—	—	—
Total preferred stocks	—	—	—	—
Common stocks:
Industrial and miscellaneous Publicly traded (Unaffiliated)	—	—	—	—
Industrial and miscellaneous other (Unaffiliated)	—	—	—	—
Parent, subsidiaries and affiliates Publicly traded	—	—	—	—
Parent, subsidiaries and affiliates Other	—	—	—	—
Mutual funds	—	—	—	—
Unit investment trusts	—	—	—	—
Closed-end funds	—	—	—	—
Total common stocks	—	—	—	—
Mortgage loans:
Farm mortgages	—	—	—	—
Residential mortgages	—	—	—	—
Commercial mortgages	—	—	—	—
Mezzanine real estate loans	—	—	—	—
Total valuation allowance	—	—	—	—
Total mortgages loans	—	—	—	—
Real estate:
Properties occupied by company	—	—	—	—
Properties held for production of income	—	—	—	—
Properties held for sale	—	—	—	—
Total real estate	—	—	—	—
Cash, cash equivalents and short-term investments:
Cash	1,429,463	0.62	1,429,463	0.62
Cash equivalents	1,490,762	0.65	1,490,762	0.65
Short-term investments	—	—	—	—
Total cash, cash equivalents and short-term investments	2,920,225	1.27	2,920,225	1.27
Contract loans	6,786,991	2.94	6,786,991	2.94
Derivatives	—	—	—	—
Other invested assets	2,175,793	0.94	2,175,793	0.94
Receivables for securities	—	—	—	—
Securities lending	—	—	—	—
Other invested assets	—	—	—	—
Total invested assets	$ 230,547,208	100.00 %	$ 230,547,208	100.00 %

Independence Variable Life Separate Account

(A Separate Account of Independence Life and Annuity Company)

Financial Statements as of and for the Year Ended December 31, 2023 and Report of Independent Registered Public Accounting Firm

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Participants of Independence Variable Life Separate Account and the Board of Directors of Independence Life and Annuity Company (the “Sponsor”):

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities for each sub-account included in the Independence Variable Life Separate Account (comprising the Columbia Variable Portfolio – Government Money Market Fund, (Class 1) Sub-Account, Columbia Variable Portfolio – Dividend Opportunity Fund, (Class 1) Sub-Account, Columbia Variable Portfolio – Overseas Core Fund, (Class 1) Sub-Account, Columbia Variable Portfolio – Large Cap Growth Fund, (Class 1) Sub-Account, Columbia Variable Portfolio – Small Company Growth Fund, (Class 1) Sub-Account, Columbia Variable Portfolio – Strategic Income Fund, (Class 1) Sub Account and Columbia Variable Portfolio – U.S. Government Mortgage Fund, (Class 1) Sub-Account; collectively, the “Sub-Accounts”), as of December 31, 2023, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended in Note 10 to the financial statements, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of each of the Sub-Accounts as of December 31, 2023, and the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Sub-Accounts’ management. Our responsibility is to express an opinion on the Sub-Accounts’ financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Sub-Accounts in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Sub- Accounts are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Sub-Accounts’ internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the underlying mutual fund companies. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Boston, Massachusetts

April 19, 2024

We have served as the Sponsor’s auditor since 2002.

INDEPENDENCE VARIABLE LIFE SEPARATE ACCOUNT
(A Separate Account of Independence Life and Annuity Company)
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2023
ASSETS:	Shares	Cost	Values
Investments at fair value:
Columbia Variable Portfolio - Government Money Market Fund, (Class 1) Sub-Account ("FFT")	4,098,334	$ 4,098,334	$ 4,098,334
Columbia Variable Portfolio - Dividend Opportunity Fund, (Class 1) Sub-Account ("CV6")	74,563	1,357,532	2,925,867
Columbia Variable Portfolio - Overseas Core Fund, (Class 1) Sub-Account ("CV3")	121,056	1,553,326	1,616,095
Columbia Variable Portfolio - Large Cap Growth Fund, (Class 1) Sub-Account ("CV5")	769,835	5,796,859	28,699,457
Columbia Variable Portfolio - Small Company Growth Fund, (Class 1) Sub-Account ("CGA")	194,419	3,231,618	2,264,982
Columbia Variable Portfolio - Strategic Income Fund, (Class 1) Sub-Account ("SIA")	283,125	1,713,793	1,047,561
Columbia Variable Portfolio - U.S. Government Mortgage Fund, (Class 1) Sub-Account ("AAB")	175,467	1,806,983	1,566,922
Total investments at fair value		$ 19,558,445	$ 42,219,218

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

INDEPENDENCE VARIABLE LIFE SEPARATE ACCOUNT

(A Separate Account of Independence Life and Annuity Company)

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)

DECEMBER 31, 2023

Variable Life Insurance Contracts

	Units	Value
Net Assets: FFT	395,295	$ 4,098,334
CV6	115,749	2,925,867
CV3	105,972	1,616,095
CV5	625,343	28,699,457
CGA	2,564	2,264,982
SIA	2,558	1,047,561
AAB	143,336	1,566,922

Total net assets $42,219,218

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

INDEPENDENCE VARIABLE LIFE SEPARATE ACCOUNT

(A Separate Account of Independence Life and Annuity Company)

STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2023

Income:

FFT

Sub-Account

CV6

Sub-Account

CV3

Sub-Account

Dividend Income $ 194,274 $ — $ 25,200

Expenses:
Mortality and expense risk charges		(24,057)			(17,167)			(8,870)
Net investment income (loss)		170,217			(17,167)			16,330
Net realized and change in unrealized gains (losses):
Net realized gains (losses) on sale of investments		—			30,394			1,808
Realized gain distributions		—			—			—
Net realized gains (losses)		—			30,394			1,808
Net change in unrealized appreciation (depreciation)		—			111,937			182,736
Net realized and change in unrealized gains (losses)		—			142,331			184,544
Increase (decrease) from operations		$ 170,217			$ 125,164			$ 200,874
		CV5 Sub-Account			CGA Sub-Account			SIA Sub-Account
Income:
Dividend Income	$		—	$		—	$		36,265
Expenses:

Mortality and expense risk charges	(154,117)	(13,063)	(6,174)
Net investment income (loss)	(154,117)	(13,063)	30,091
Net realized and change in unrealized gains (losses): Net realized gains (losses) on sale of investments	2,454,308	20,337	(9,102)
Realized gain distributions	—	—	—
Net realized gains (losses)	2,454,308	20,337	(9,102)
Net change in unrealized appreciation (depreciation)	6,582,779	499,580	70,712
Net realized and change in unrealized gains (losses)	9,037,087	519,917	61,610
Increase (decrease) from operations	$ 8,882,970	$ 506,854	$ 91,701

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

INDEPENDENCE VARIABLE LIFE SEPARATE ACCOUNT

(A Separate Account of Independence Life and Annuity Company)

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2023

Income:

AAB

Sub-Account

Dividend Income $ 42,214

Expenses:

Mortality and expense risk charges	(9,593)
Net investment income (loss)	32,621
Net realized and change in unrealized gains (losses): Net realized gains (losses) on sale of investments	(53,637)
Realized gain distributions	—
Net realized gains (losses)	(53,637)
Net change in unrealized appreciation (depreciation)	106,982
Net realized and change in unrealized gains (losses)	53,345
Increase (decrease) from operations	$ 85,966

INDEPENDENCE VARIABLE LIFE SEPARATE ACCOUNT

(A Separate Account of Independence Life and Annuity Company)

STATEMENTS OF CHANGES IN NET ASSETS

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

FFT Sub-Account CV6 Sub-Account December 31, December 31, December 31, December 31,

2023 2022 2023 2022

Operations:
Net investment income (loss)	$ 170,217	$ 26,336		$ (17,167) $	(18,258)
Net realized gains (losses)	—	—		30,394	6,012
Net change in unrealized appreciation (depreciation)	—	—		111,937	(55,312)
Net increase (decrease) from Operations	170,217	26,336		125,164	(67,558)
Contract Owner Transactions:
Transfers between Sub-Accounts (including the Fixed Account), net	(29,354)		(73,021)	29,173	(2,834)
Withdrawals, surrenders, and contract charges	(447,831)		(511,309)	(245,702)	(174,615)
Contract loan activity	(8,019)		66,116	(175)	45,580
Net increase (decrease) from contract owner transactions	(485,204)		(518,214)	(216,704)	(131,869)
Total increase (decrease) in net assets	(314,987)		(491,878)	(91,540)	(199,427)
Net assets at beginning of year	4,413,321		4,905,199	3,017,407	3,216,834
Net assets at end of year	$ 4,098,334 $		4,413,321	$ 2,925,867 $	3,017,407

Operations:

CV3 Sub-Account CV5 Sub-Account December 31, December 31, December 31, December 31,

2023 2022 2023 2022

Net investment income (loss)	$ 16,330	$ 3,041	$ (154,117) $		(162,348)
Net realized gains (losses)	1,808	71,779	2,454,308		1,567,448
Net change in unrealized appreciation (depreciation)	182,736	(326,830)	6,582,779		(12,530,131)
Net increase (decrease) from Operations	200,874	(252,010)	8,882,970		(11,125,031)
Contract Owner Transactions:
Transfers between Sub-Accounts
(including the Fixed Account), net	223,737	(108,923)	343,279	(315,365)
Withdrawals, surrenders, and contract charges	(63,741)	(73,786)	(3,502,310)	(1,657,151)
Contract loan activity	1,657	(1,684)	16,679	65,079
Net increase (decrease) from
contract owner transactions	161,653	(184,393)	(3,142,352)	(1,907,437)
Total increase (decrease) in net assets	362,527	(436,403)	5,740,618	(13,032,468)
Net assets at beginning of year	1,253,568	1,689,971	22,958,839	35,991,307
Net assets at end of year	$ 1,616,095	$ 1,253,568	$ 28,699,457	$ 22,958,839

INDEPENDENCE VARIABLE LIFE SEPARATE ACCOUNT

(A Separate Account of Independence Life and Annuity Company)

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

	CGA Sub-Account			SIA Sub-Account
	December 31, December 31,			December 31, December 31,
	2023 2022			2023 2022
Operations:
Net investment income (loss)	$ (13,063) $		(14,867)	$ 30,091	$ 29,268
Net realized gains (losses)	20,337		910,140	(9,102)	32,835
Net change in unrealized appreciation (depreciation)	499,580		(2,205,319)	70,712	(234,097)
Net increase (decrease) from Operations	506,854		(1,310,046)	91,701	(171,994)
Contract Owner Transactions:
Transfers between Sub-Accounts
(including the Fixed Account), net	(12,155)	(135,390)		26,625	3,451
Withdrawals, surrenders, and contract charges	(356,229)	(122,334)		(187,100)	(272,855)
Contract loan activity	(1,719)	(1,621)		(324)	(1,208)
Net increase (decrease) from
contract owner transactions	(370,103)	(259,345)		(160,799)	(270,612)
Total increase (decrease) in net assets	136,751	(1,569,391)		(69,098)	(442,606)
Net assets at beginning of year	2,128,231	3,697,622		1,116,659	1,559,265
Net assets at end of year	$ 2,264,982	$ 2,128,231		$ 1,047,561	$ 1,116,659

AAB Sub-Account

	December 31, 2023	December 31, 2022
Operations:
Net investment income (loss)	$ 32,621	$ 31,080
Net realized gains (losses)	(53,637)	(9,445)
Net change in unrealized appreciation (depreciation)	106,982	(349,319)
Net increase (decrease) from Operations	85,966	(327,684)
Contract Owner Transactions:
Transfers between Sub-Accounts (including the Fixed Account), net	(161,685)		(35,985)
Withdrawals, surrenders, and contract charges	(194,707)		(302,427)
Contract loan activity	(1,557)		151,710
Net increase (decrease) from contract owner transactions	(357,949)		(186,702)
Total increase (decrease) in net assets	(271,983)		(514,386)
Net assets at beginning of year	1,838,905		2,353,291
Net assets at end of year	$ 1,566,922 $		1,838,905

INDEPENDENCE VARIABLE LIFE SEPARATE ACCOUNT

(A Separate Account of Independence Life and Annuity Company)

NOTES TO FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023

1.	BUSINESS AND ORGANIZATION

Independence Variable Life Separate Account (the “Variable Account”) is a separate account of Independence Life and Annuity Company (the “Sponsor”), and was established as a funding vehicle to receive and invest premium payments under variable life insurance contracts (the “Contracts”) issued by the Sponsor. Policyholders are able to invest in certain funds within the Columbia Funds Variable Insurance Trust. The Variable Account is registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended, as a unit investment trust existing in accordance with the regulations of the Delaware Department of Insurance.

The assets of the Variable Account are divided into subaccounts (“Sub-Accounts”). Each Sub-Account is invested in shares of a specific mutual fund (collectively the “Funds”), or series thereof, registered under the Investment Company Act of 1940, as amended. The contract owners of the Variable Account direct the deposits into the Sub-Accounts of the Variable Account.

Under applicable insurance law, the assets and liabilities of the Variable Account are clearly identified and distinguished from the Sponsor’s other assets and liabilities. The portion of the Variable Account’s assets applicable to the variable life contracts is not chargeable with liabilities arising out of any other business the Sponsor may conduct.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Investment Valuation and Transactions

Investments made in mutual funds are carried at fair value as of December 31, 2023, and are valued at their closing net asset value as determined by the respective mutual fund, which in turn value their investments at fair value. Transactions are recorded on a trade date basis. Realized gains and losses on sales of investments are determined on the last in, first out basis. Dividend income and realized gain distributions are reinvested in additional fund shares and recognized on the ex-dividend date.

Units

The number of units issued is determined by dividing the dollar amount allocated to a Sub-Account by the unit value for that Sub-Account for the period during which the purchase payment was received.

Purchase Payments

Upon issuance of new contracts, the initial purchase payment is credited to the contract in the form of units. All subsequent purchase payments are applied using the unit values for the period during which the purchase payment is received. The Sponsor maintains a closed block of variable life insurance business. Therefore, there were no purchase payments recorded on the Variable Account’s Statements of Changes in Net Assets for the years ended December 31, 2023 and 2022.

Transfers

Transfers between Sub-Accounts requested by contract owners are recorded in the receiving Sub-Account upon receipt of the redemption proceeds at the net asset value at the time of receipt. In addition, transfers can be made between the Sub- Accounts and the fixed account (“Fixed Account”). The Fixed Account is part of the general account of the Sponsor in which purchase payments or contract values may be allocated or transferred.

INDEPENDENCE VARIABLE LIFE SEPARATE ACCOUNT

(A Separate Account of Independence Life and Annuity Company)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Federal Income Taxes

The operations of the Variable Account are part of the operations of the Sponsor and are not taxed separately. The Sponsor qualifies for the federal income tax treatment granted to life insurance companies under Subchapter L of the Internal Revenue Code (the “Code”). Under existing federal income tax law, investment income and realized gain distributions earned by the Variable Account on contract owner reserves are not taxable, and therefore, no provision has been made for federal income taxes. In the event of a change in applicable tax law, the Sponsor will review this policy and if necessary a provision may be made in future years.

Accounting for Uncertain Tax Provisions

Management evaluates whether or not there are uncertain tax positions that require financial statement recognition and has determined that no reserves for uncertain tax positions are required at December 31, 2023. The 2014 through 2022 tax years generally remain subject to examination by U.S. federal and most state tax authorities. While the final outcome of future tax examinations is not determinable, the Sponsor does not believe that any potential adjustments would be material to the Variable Account’s financial statements.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income, expenses and disclosures of any contingencies during the period. The most significant estimate is fair value measurements of investments. Actual results could vary from the amounts derived from management's estimates.

Subsequent events

Subsequent events were evaluated through the date of issuance of the audited financial statements, which were made available on April 19, 2024.

3.	FAIR VALUE MEASUREMENTS

The Sub-Accounts’ investments are carried at fair value. Fair value is an exit price, representing the amount that would be received from a sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, GAAP establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value (i.e., Level 1, 2 and 3). Level 1 inputs are observable inputs that reflect quoted prices for identical assets or liabilities in active markets that the Variable Account has the ability to access at the measurement date. Level 2 inputs are observable inputs, other than quoted prices included in Level 1, for the asset or liability or prices for similar assets and liabilities. Level 3 inputs are unobservable inputs reflecting the reporting entity’s estimates of the assumptions that market participants would use in pricing the asset or liability. Topic 820 Fair Value Measurements and Disclosures requires that a fair value measurement technique include an adjustment for risks inherent in a particular valuation technique (such as a pricing model) and/or the risks inherent in the inputs to the model, if market participants would also include such an adjustment.

The Variable Account has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into the three level hierarchy described above. If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument.

As of December 31, 2023 the inputs used to price the Funds are observable and the Funds represent Level 1 assets under the Topic 820 hierarchy levels. There were no Level 2 or 3 investments in the Variable Account during the year ended December 31, 2023. There were no transfers between levels during the period.

INDEPENDENCE VARIABLE LIFE SEPARATE ACCOUNT

(A Separate Account of Independence Life and Annuity Company)

4.	RELATED PARTY TRANSACTIONS

The Sponsor has an administrative services agreement with its affiliate, Sun Life Assurance Company of Canada (“SLOC”), whereby SLOC provides general administrative services to the Sponsor, including services relating to the maintenance of the Variable Account. Under the agreement, the Sponsor reimburses SLOC for costs associated with the services.

5.	CONTRACT CHARGES

Mortality and expense risk charges

Charges for mortality and expense risks are based on the value of the Sub-Account and are deducted daily from the Variable Account to cover the risks assumed by the Sponsor. The deductions are transferred periodically to the Sponsor. Mortality and expense risk charges result in a reduction of unit value. As of December 31, 2023, the deduction is at an effective annual rate of 0.60% of contract value.

Cost of Insurance Charges

The cost of insurance is deducted annually on the policy anniversary from the Variable Account and varies based on age, sex, and rating class. In general, the cost of insurance charges increase as the insured ages. Cost of insurance charges result in a redemption of units and are included in withdrawals, surrenders and contract charges in the Statements of Changes in Net Assets. The deductions are transferred periodically to the Sponsor.

6.	CONTRACT LOANS

Contract holders are permitted to borrow against the cash value of their accounts. The loan proceeds are deducted from the Variable Account and recorded in the Sponsor’s general account as an asset. Contract loan activity is recorded in the Statements of Changes in Net Assets.

7.	INVESTMENT PURCHASES AND SALES

The cost of purchases and proceeds from sales of investments for the year ended December 31, 2023 were as follows:

	Purchases	Sales
FFT	$ 197,965	$ 512,953
CV6	31,587	265,458
CV3	267,615	89,633
CV5	501,152	3,797,620
CGA	—	383,166
SIA	66,869	197,578
AAB	42,998	368,327

The Board of Trustees of Columbia Funds Variable Insurance Trust has approved the suspension of the offering and sale of shares of CGA effective June 1, 2021.

INDEPENDENCE VARIABLE LIFE SEPARATE ACCOUNT

(A Separate Account of Independence Life and Annuity Company)

8.	CHANGES IN UNITS OUTSTANDING

The changes in units outstanding for the year ended December 31, 2023 were as follows:

Units Issued

Units Redeemed

Net Increase (Decrease)

FFT	368	(48,318)	(47,950)
CV6	1,300	(10,249)	(8,949)
CV3	17,187	(5,708)	11,479
CV5	13,974	(100,569)	(86,595)
CGA	—	(467)	(467)
SIA	79	(494)	(415)
AAB	74	(33,484)	(33,410)

The changes in units outstanding for the year ended December 31, 2022 were as follows:

Units Issued

Units Redeemed

Net Increase (Decrease)

FFT	7,646	(59,993)	(52,347)
CV6	11,422	(17,403)	(5,981)
CV3	1,723	(15,275)	(13,552)
CV5	50,219	(99,524)	(49,305)
CGA	—	(332)	(332)
SIA	12	(696)	(684)
AAB	15,617	(31,921)	(16,304)

9.	TAX DIVERSIFICATION REQUIREMENTS

Under the provisions of Section 817(h) of the Code, a variable life contract, other than a pension plan contract, is not treated as a life contract for federal tax purposes for any period in which the investments of the segregated asset account on which the contract is based are not adequately diversified. The Code provides that the “adequately diversified” requirement may be met if the underlying investments satisfy either a statutory safe harbor test or diversification requirements set forth in regulations issued by the Secretary of Treasury. The Sponsor believes that the Variable Account satisfies the current requirements of the regulations, and it intends that the Variable Account will continue to meet such requirements.

INDEPENDENCE VARIABLE LIFE SEPARATE ACCOUNT

(A Separate Account of Independence Life and Annuity Company)

10.	FINANCIAL HIGHLIGHTS

The summary of units outstanding (some of which may be rounded), unit value (some of which may be rounded), net assets, investment income ratio, expense ratio (excluding expenses of the underlying mutual funds) and the total return, for each of the five years in the period ended December 31, is as follows:

At December 31 For the year ended December 31

Investment

	Units	Unit Value	Net Assets	Income Ratio¹	Expense Ratio²	Total Return³
FFT
2023	395,295	10.368	$ 4,098,334	4.61 %	0.60 %	4.13	%
2022	443,244	9.957	4,413,321	1.16	0.60	0.61
2021	495,591	9.898	4,905,199	0.01	0.60	(0.58)
2020	650,258	9.955	6,473,363	0.04	0.60	(0.29)
2019	62,481	9.984	623,808	1.86	0.60	1.29
CV6
2023	115,749	25.278	2,925,867	—	0.60	4.46
2022	124,698	24.198	3,017,407	—	0.60	(1.70)
2021	130,679	24.616	3,216,834	—	0.60	25.41
2020	117,871	19.629	2,313,665	—	0.60	0.54
2019	73,218	19.523	1,429,407	—	0.60	23.33
CV3
2023	105,972	15.250	1,616,095	1.70	0.60	14.95
2022	94,493	13.266	1,253,568	0.83	0.60	(15.18)
2021	108,045	15.641	1,689,971	1.31	0.60	9.30
2020	97,088	14.310	1,389,327	1.69	0.60	8.46
2019	84,443	13.193	1,114,077	2.12	0.60	24.72
CV5
2023	625,343	45.894	28,699,457	—	0.60	42.31
2022	711,939	32.248	22,958,839	—	0.60	(31.79)
2021	761,244	47.280	35,991,307	—	0.60	27.96
2020	798,248	36.948	29,493,317	—	0.60	33.93
2019	790,715	27.587	21,813,669	—	0.60	35.09
CGA
2023	2,564	883.378	2,264,982	—	0.60	25.88
2022	3,032	701.923	2,128,231	—	0.60	(36.15)
2021	3,364	1,099.174	3,697,622	—	0.60	(3.48)
2020	3,764	1,138.647	4,285,869	—	0.60	70.10
2019	3,035	669.551	2,032,086	—	0.60	39.86
SIA
2023	2,558	409.523	1,047,561	3.52	0.60	9.02
2022	2,973	375.600	1,116,659	2.90	0.60	(11.90)
2021	3,657	426.378	1,559,265	5.62	0.60	1.48
2020	3,537	420.130	1,485,999	3.87	0.60	6.18
2019	2,400	395.590	949,415	4.01	0.60	9.72

INDEPENDENCE VARIABLE LIFE SEPARATE ACCOUNT

(A Separate Account of Independence Life and Annuity Company)

10. FINANCIAL HIGHLIGHTS (CONTINUED)

At December 31 For the year ended December 31

Investment

Units

Unit Value

Net Assets

Income Ratio¹

Expense Ratio²

Total Return³

AAB
	2023	143,336	$ 10.932	$ 1,566,922	2.64	%	0.60	%	5.07 %
	2022	176,746	10.404	1,838,905	2.10		0.60		(14.65)
	2021	193,050	12.190	2,353,291	2.13		0.60		(1.54)
	2020	226,962	12.381	2,809,987	2.61		0.60		4.46
	2019	252,478	11.852	2,992,413	2.76		0.60		6.10

¹ Represents the dividends, excluding distributions of capital gains, received by the Sub-Account from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. The ratio excludes those expenses, such as mortality and expense charges, that result in direct reductions in the unit values. The recognition of investment income by the Sub-Account is affected by the timing of the declaration of dividends by the underlying mutual fund in which the Sub-Accounts invest.

² Ratio represents the annualized contract expenses of the Sub-Account, consisting of mortality and expense charges. The ratio includes only those expenses that result in a direct reduction to unit values and does not include expenses that are part of the contractholder’s wider insurance product.

³ Ratio represents the total return for the year indicated, including changes in value of the underlying mutual fund, and expenses assessed through the reduction of units. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in reduction in the total return presented.