Financial Statements by Insurance Company (Form N-VPFS)

VARIABLE ACCOUNT A

OF MONARCH LIFE INSURANCE COMPANY

ANNUAL REPORT

DECEMBER 31, 2025

This is a copy of the annual report of the variable account in which your Monarch Life Insurance Company variable life insurance policy invests. We take pride in our continued commitment to provide prompt, courteous service to our policyowners. For inquiries regarding your policy, please call our Variable Life Service Center at 1-800-544-0049.

The investment results presented in this report are historical and are no indication of future performance.

Report of Independent Registered Public Accounting Firm

To the Insurance Commissioner of the Commonwealth of Massachusetts Division of Insurance, acting as Receiver of Monarch Life Insurance Company, and the Policyowners of Variable Account A of Monarch Life Insurance Company

Opinions on the Financial Statements

We have audited the accompanying statements of net assets of each of the divisions of Variable Account A of Monarch Life Insurance Company indicated in the table below as of December 31, 2025, and the related statements of operations and changes in net assets for each of the periods indicated in the table below, including the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the divisions of Variable Account A of Monarch Life Insurance Company as of December 31, 2025, and the results of each of their operations and the changes in each of their net assets for the periods indicated in the table below, in conformity with accounting principles generally accepted in the United States of America.

Government Money Market Portfolio (1)

Advantage Large Cap Core Portfolio (1)

Capital Appreciation Portfolio (1)

Balanced Portfolio (1)*

High Yield Portfolio (1)

Global Allocation Portfolio (1)

Basis for Opinions

These financial statements are the responsibility of the Monarch Life Insurance Company management. Our responsibility is to express an opinion on the financial statements of each of the divisions of Variable Account A of Monarch Life Insurance Company 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 each of the divisions of Variable Account A of Monarch Life Insurance Company 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 of these financial statements 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 are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, 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. 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.

Our procedures included confirmation of investments owned as of December 31, 2025 by correspondence with the transfer agent of the investee mutual funds. We believe that our audits provide a reasonable basis for our opinions.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

April 20, 2026

We have served as the auditor of one or more of the divisions of Variable Account A of Monarch Life Insurance Company since 1991.

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VARIABLE ACCOUNT A

MONARCH LIFE INSURANCE COMPANY

STATEMENTS OF NET ASSETS AT DECEMBER 31, 2025

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

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VARIABLE ACCOUNT A

MONARCH LIFE INSURANCE COMPANY

STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS

FOR THE YEAR ENDED DECEMBER 31, 2025

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

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VARIABLE ACCOUNT A

MONARCH LIFE INSURANCE COMPANY

STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS 

FOR THE YEAR ENDED DECEMBER 31, 2024

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

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VARIABLE ACCOUNT A

OF MONARCH LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2025

NOTE 1-ORGANIZATION

Variable Account A of Monarch Life Insurance Company (the Account) is a segregated account of Monarch Life Insurance Company (Monarch Life) and is registered as a unit investment trust under the Investment Company Act of 1940, as amended (1940 Act), and is currently comprised of six investment divisions. Five investment divisions of the Account are invested solely in the shares of five corresponding portfolios of the BlackRock Series Fund, Inc., and the remaining investment division is invested solely in the shares of the corresponding separate portfolio of the BlackRock Series Fund II, Inc. (Series Funds), both are diversified open-end management investment companies registered under the 1940 Act. The Series Funds' investment advisor is BlackRock Advisors, LLC.

The change in net assets maintained in the Account provides the basis for the periodic determination of the amount of increased or decreased benefits under the policies. The net assets may not be less than the amount required under state insurance law to provide for death benefits (without regard to the minimum guaranteed death benefit) and other policy benefits. Additional assets are held in Monarch Life's general account to cover the contingency that the guaranteed death benefit might exceed the death benefit which would have been payable in the absence of such guarantee.

Monarch Life makes certain deductions from premiums before such amounts are transferred to the Account. The deductions are for (1) premiums for optional benefits, (2) additional premiums for extra mortality risks, (3) sales load, and (4) state premium taxes. For certain policies, the sum of deductions (3) and (4) is initially included in the investment base of a policyowner in the Account. This allocated policy loading is subtracted from that policyowner's investment base in installments during subsequent policy years.

Monarch Life is a wholly-owned subsidiary of Regal Reinsurance Company (Regal Re). On June 9, 1994, the Insurance Commissioner of the Commonwealth of Massachusetts (the Commissioner) was appointed receiver (the Receiver) of Monarch Life in a rehabilitation proceeding pending before the Supreme Judicial Court for Suffolk County, Massachusetts (the Court). A term sheet dated July 19, 1994 (-the Term Sheet) among the Commissioner (in her capacity as Commissioner and Receiver) and certain Regal Re shareholders and noteholders and holders of Monarch Life's surplus notes (representing approximately 85% of both the total outstanding Regal Re notes and common stock) (the Holders) was approved by the Court on September 1, 1994. Pursuant to the Term Sheet, the Holders transferred their notes and stock into voting trusts for which the Commissioner is the sole trustee, which effectively vests control of Monarch Life and Regal Re in the Commissioner.

Some insurance departments have either suspended, revoked, or not renewed Monarch Life's certificate of authority, ordered Monarch Life to cease writing new business, or have requested a voluntary suspension of sales.

Monarch Life currently limits its business to maintaining its existing blocks of disability income insurance policies, variable life insurance policies, and annuity contracts. Monarch Life ceased issuing new variable life insurance policies and new annuity contracts effective May 1, 1992, and new disability income insurance policies effective June 15, 1993.

Monarch Life, as well as other life insurance companies, performs annual cash flow testing in accordance with the Actuarial Opinion and Memorandum Regulation to ensure adequacy of their reserves.

Management has recorded its best estimate of loss reserves within Monarch Life's financial statements based on current known facts and circumstances. While management believes this estimate to be reasonable, there exists significant uncertainty inherent in the estimation of loss reserves, and ultimate results may differ materially from these estimates which could have an adverse impact on Monarch Life's results and financial condition. Factors contributing to the uncertainty includes the ability to achieve expense reductions, deviation from historical termination rates and volatility in the run-off of disability income and variable life businesses, adverse persistency, morbidity and mortality, along with a prolonged period of low interest rates.

If Monarch Life's financial results prove worse than those estimated in their cash flow testing projections, the Receiver could, among other things, propose a plan of rehabilitation that would modify Monarch Life's insurance obligations. If circumstances made such a plan not feasible (reasonably expected to return Monarch Life to solvency) then liquidation, and the consequent triggering of the insurer guaranty association system, is also possible. (Monarch Life has sought to secure its obligations to variable life policyholders through the combined effect of the Separate Accounts and a court-approved escrow account. Monarch Life therefore expects that there would be no adverse impact on variable life policyholders due to a plan of rehabilitation or liquidation.)

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VARIABLE ACCOUNT A

OF MONARCH LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2025

NOTE 1-ORGANIZATION (Continued)

Under applicable insurance law, the assets and liabilities of the Account are clearly identified and distinguished from the other assets and liabilities of Monarch Life and Regal Re. The Account cannot be charged with liabilities arising out of any other business of Monarch Life or Regal Re and is held for the exclusive benefit of the policyowner's participating in the Account.

Effective May 1, 2025, Sustainable Balanced Portfolio was renamed to Balanced Portfolio

NOTE 2-SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Account in preparation of its financial statements. Preparation of financial statements requires the use of estimates made by management. Actual results may differ from these estimates. The policies are in conformity with accounting principles generally accepted in the United States of America.

INVESTMENTS: The investments in shares of the Series Funds are valued at fair value, which is the reported net asset value per share of the respective portfolios of the Series Fund each day that the New York Stock Exchange is open. Investment transactions are accounted for on the date the shares are purchased or sold. The cost of shares redeemed and realized gains and losses are determined on the first-in, first-out method. Dividend income and capital gain distributions received from the Series Funds are reinvested in additional shares of the Series Funds and are recorded by the Account on the ex-dividend date.

FEDERAL INCOME TAXES: For federal income tax purposes, operations of the Account are combined with those of Monarch Life, which is taxed as a life insurance company. Under existing federal income tax law, Monarch Life anticipates no tax liability resulting from the operations of the Account.

FAIR VALUE MEASUREMENT: At December 31, 2025, all of the Account's recurring fair value measurements, which consist solely of mutual funds and marketable securities, represent Level 1 fair value measurements.

Recent Accounting Pronouncements

Effective for the annual reporting period ended December 31, 2024, the Account adopted FASB Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The adoption of the ASU impacted only the financial statement disclosures and did not affect the Account's financial position or its results of its operations.

Segment Reporting

The Account is an independent accounting entity established by the resolution of Monarch Life's board of directors to engage in a single line of business for Monarch Life's variable life insurance policies. The Account is comprised of one or more investment division(s) to invest in its specific corresponding Portfolio or Fund. Each division of the Account constitutes a single reportable segment because its separate financial information is available, regularly evaluated and used by the chief operating decision maker ("CODM") to measure the segment's performance, and also to assess the allocation of resources across the segments. The accounting policies of the segment(s) are the same as those described in Note 2: Significant Accounting Policies.

The Account's CODM is comprised of the chief financial officer and vice president of variable products of Monarch Life. The measure of segment profit or loss is reported on the Statements of Operations and Changes in Net Assets as "Net Increase (Decrease) in Net Assets Resulting from Principal Transactions" and the measure of segment assets is reported as "Net Assets" on the Statements of Net Assets. Due to the nature of the business, the segment's significant expenses are charges for mortality and expense risk and administration, and transaction charges, which are reported separately on the Statement(s) of Operations.

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VARIABLE ACCOUNT A

OF MONARCH LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2025

NOTE 3-PURCHASES AND SALES OF SECURITIES

Total cost of purchases and proceeds from sales of shares of the Series Funds by the Account for the year ended December 31, 2025, are shown below:

NOTE 4-EXPENSES

Monarch Life assumes mortality and expense risks related to the operations of the Account and deducts a daily charge from the assets of the Account to cover these risks. The daily charge varies by policy form and is currently equal to a rate of .50% to .90% (on an annual basis) of the policyowners' investment base.

NOTE 5-CHANGES IN UNITS OUTSTANDING

The changes in units outstanding for the years ended December 31, are shown below:

NOTE 6-POLICY CHARGES

Monarch Life periodically deducts a charge for mortality cost from a policyowner's investment base. This charge is for the cost of providing life insurance coverage for the insured.

Monarch Life may charge certain policies a quarterly administrative fee of $12.50. Additionally, Monarch Life may charge an excess reallocation fee of $25.00 for those policyowner's who reallocate investment base more than five times a year. These fees (if applicable) would be deducted from a policyowner's investment base.

Policies that have outstanding policyowner loans are charged an annual net loan cost, which ranges by policy form from .60% to 2.00%. A policyowner's investment base is reduced by the net loan cost.

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VARIABLE ACCOUNT A

OF MONARCH LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2025

NOTE 7-POLICYOWNERS' INVESTMENT BASE

Policyowners' investment base for 2025, 2024, 2023, 2022, and 2021 consists of the following:

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VARIABLE ACCOUNT A

OF MONARCH LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2025

NOTE 7-POLICYOWNERS' INVESTMENT BASE (continued)

NOTE 8-DIVERSIFICATION REQUIREMENTS

Under the provisions of Section 817(h) of the Internal Revenue Code, as amended (the Code), a variable life insurance policy, other than a policy issued in connection with certain types of employee benefit plans, will not be treated as a life insurance policy for federal tax purposes for any period for which the investments of the segregated asset account, on which the policy 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 the Treasury.

The Internal Revenue Service has issued regulations under Section 817(h) of the Code. Monarch Life believes, based on assurances from the Series Fund, that the Account satisfies the current requirements of the regulations.

NOTE 9-PRINCIPAL UNDERWRITING AND GENERAL DISTRIBUTOR

Baystate Capital Services, Inc. (BCSI), is the principal underwriter and general distributor of the policies maintained in the Account. BCSI is a wholly-owned subsidiary of Monarch Life.

NOTE 10-SUBSEQUENT EVENTS

Management has determined that no subsequent events have occurred following the balance sheet date of December 31, 2025 which require recognition or disclosure in the financial statements.

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59598 04/2026

MONARCH LIFE INSURANCE COMPANY

(in Receivership)

(A Wholly-Owned Subsidiary of

Regal Reinsurance Company)

AUDITED STATUTORY BASIS FINANCIAL STATEMENTS

and Supplemental Schedules

as of December 31, 2025 and 2024

and for each of the three years ended December 31, 2025

MONARCH LIFE INSURANCE COMPANY

(in Receivership)

(A Wholly-Owned Subsidiary of

Regal Reinsurance Company)

TABLE OF CONTENTS TO STATUTORY BASIS FINANCIAL STATEMENTS

Report of Independent Auditors

To the Insurance Commissioner of the Commonwealth of Massachusetts Division of Insurance, acting as Receiver of Monarch Life Insurance Company

Opinions

We have audited the accompanying statutory basis financial statements of Monarch Life Insurance Company (the "Company"), which comprise the statutory basis statements of admitted assets, liabilities, capital stock and surplus as of December 31, 2025 and 2024, and the related statutory basis statements of operations, capital and surplus, and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the "financial statements").

Unmodified Opinion on Statutory Basis of Accounting

In our opinion, the accompanying financial statements present fairly, in all material respects, the admitted assets, liabilities, capital stock and surplus of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in accordance with the accounting practices prescribed or permitted by the Massachusetts Division of Insurance described in Note 2.

Adverse Opinion on U.S. Generally Accepted Accounting Principles

In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles section of our report, the accompanying 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, 2025 and 2024, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 2025.

Basis for Opinions

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the 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 audit. 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 U.S. Generally Accepted Accounting Principles

As described in Note 2 to the financial statements, the financial statements are prepared by the Company on the basis of the accounting practices prescribed or permitted by the Massachusetts Division of Insurance, which is a basis of accounting other than accounting principles generally accepted in the United States of America.

The effects on the financial statements of the variances between the statutory basis of accounting described in Note 2 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material.

Emphasis of Matter

As discussed in Note 1 to the financial statements, the Insurance Commissioner of the Commonwealth of Massachusetts was appointed receiver (the Receiver) of the Company in a rehabilitation proceeding pending before the Supreme Judicial Court for Suffolk County, Massachusetts, and the Receiver could, among other things, propose a plan of rehabilitation that would modify the Company's insurance obligations. Our opinion is not modified with respect to this matter.

Responsibilities of Management for the Financial Statements

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

In preparing the 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 the financial statements are available to be issued.

Auditors' Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' 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 US 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 financial statements.

In performing an audit in accordance with US GAAS, we:

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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.

Supplemental Information

Our audit was conducted for the purpose of forming an opinion on the financial statements taken as a whole. The supplemental summary investment schedule, investment risk interrogatories, reinsurance disclosure schedule, and selected financial data (collectively referred to as the "supplemental schedules") of the Company as of December 31, 2025 and for the year then ended are presented to comply with the National Association of Insurance Commissioners' Annual Statement Instructions and Accounting Practices and Procedures Manual and for purposes of additional analysis and are not a required part of the financial statements. The supplemental schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The supplemental schedules have been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves and other additional procedures, in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplemental schedules are fairly stated, in all material respects, in relation to the financial statements taken as a whole.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

April 20, 2026

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STATUTORY BASIS STATEMENTS OF ADMITTED ASSETS, LIABILITIES,

CAPITAL STOCK AND SURPLUS

(in thousands, except per share amounts)

December 31,

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

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MONARCH LIFE INSURANCE COMPANY

(in Receivership)

(A Wholly-Owned Subsidiary of Regal Reinsurance Company)

STATUTORY BASIS STATEMENTS OF OPERATIONS, CAPITAL AND SURPLUS

(in thousands)

For the years ended December 31,

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

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MONARCH LIFE INSURANCE COMPANY

(in Receivership)

(A Wholly-Owned Subsidiary of Regal Reinsurance Company)

STATUTORY BASIS STATEMENTS OF CASH FLOWS

(in thousands)

For the years ended December 31,

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

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MONARCH LIFE INSURANCE COMPANY

Notes to Statutory Basis Financial Statements

December 31, 2025

NOTE 1-ORGANIZATION AND BUSINESS

Monarch Life Insurance Company (Monarch Life) was incorporated in 1901 and is domiciled in Massachusetts. Monarch Life is a wholly-owned subsidiary of Regal Reinsurance Company (Regal Re), formerly Monarch Capital Corporation (Monarch Capital). On September 23, 1992, pursuant to a reorganization under Chapter 11 of the Federal Bankruptcy Code, Monarch Capital was reorganized and emerged from bankruptcy as a Massachusetts reinsurer, Regal Re. Regal Re is owned by Monarch Capital's pre-bankruptcy secured and unsecured creditors.

On June 9, 1994, the Insurance Commissioner of the Commonwealth of Massachusetts (the Commissioner) was appointed receiver (the Receiver) of Monarch Life in a rehabilitation proceeding pending before the Supreme Judicial Court for Suffolk County, Massachusetts (the Court).

A term sheet dated July 19, 1994 (the Term Sheet) among the Commissioner (in her capacity as Commissioner and Receiver) and certain Regal Re shareholders and noteholders and holders of Monarch Life's surplus notes (representing approximately 85% of both the total outstanding Regal Re notes and common stock) (the Holders) was approved by the Court on September 1, 1994. Pursuant to the Term Sheet, the Holders transferred their notes and stock into voting trusts for which the Commissioner is the sole trustee, which effectively vests control of Regal Re and Monarch Life in the Commissioner.

Some state insurance departments have either suspended, revoked or not renewed Monarch Life's certificate of authority, ordered Monarch Life to cease writing new business, or have requested a voluntary suspension of sales.

Monarch Life currently limits its business to maintaining its existing blocks of disability income insurance policies, variable life insurance policies, and annuity contracts. Monarch Life ceased issuing new variable life insurance policies and new annuity contracts effective May 1, 1992, and new disability income insurance policies effective June 15, 1993.

Reserve Estimates 

Monarch Life, as well as other life insurance companies, performs annual cash flow testing in accordance with the Actuarial Opinion and Memorandum Regulation to ensure adequacy of their reserves.

Management has recorded its best estimate of loss reserves based on current known facts and circumstances. While management believes this estimate to be reasonable, there exists significant uncertainty inherent in the estimation of loss reserves, and ultimate results may differ materially from these estimates which could have an adverse impact on Monarch Life's results and financial condition. Factors contributing to the uncertainty includes Monarch Life's ability to achieve expense reductions as contemplated in its business plan (as detailed below), deviation from historical termination rates and volatility in the run-off of Monarch Life's disability income and variable life businesses, adverse persistency, morbidity and mortality, along with a prolonged period of low interest rates.

Business Plan

Monarch Life's business plan calls for the continuation of efforts to further stabilize the financial condition of Monarch Life and to effectively manage Monarch Life's existing blocks of inforce business. The major operating strategies will continue to be focused on disability income insurance claims, general operating expenses, and management of the investment portfolio.

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MONARCH LIFE INSURANCE COMPANY

Notes to Statutory Basis Financial Statements

December 31, 2025

NOTE 1-ORGANIZATION AND BUSINESS-continued

Risks Inherent in the Business Plan

Management believes certain events and conditions that could be adverse to Monarch Life have been adequately considered in developing reserve estimates and preparing the business plan. However, there are a number of risks that are beyond management's control which would impair management's ability to successfully manage its run-off blocks and implement the business plan, including the following:

Monarch Life has experienced losses from its disability income insurance operations in most years. Monarch Life no longer writes new business and is in a run-off mode. Expense levels, persistency, and loss ratios are expected to exhibit continuing volatility. Monarch Life has strengthened its disability income insurance claim reserves several times in recent years. However, it is difficult to determine the ultimate losses resulting from underpricing, liberal underwriting, and optimistic investment assumptions used at the time the policies were written.

Management may be unable to maintain or improve persistency, claim ratios, and operating results in the disability income insurance business. Should poor persistency or mortality in the variable life insurance business develop, anticipated profits from this line of business could be adversely impacted. 

Except for a small amount of deferred annuity business, Monarch Life's policy liabilities are relatively insensitive to interest rate changes and are not exposed to such risks as disintermediation. However, given the difficulty in matching the extremely long duration of some of these liabilities, reinvestment risk associated with a low interest rate environment will continue to be a concern as proceeds are received and reinvested to match these longer duration liabilities. While interest rates have returned to higher levels, thereby reducing reinvestment risk, management continues to have exposure to losses in their portfolio due to market volatility and changing interest rates, which could be realized to the extent cash outflows continue to exceed inflows.

Monarch Life has managed expenses and unit costs by continuously reevaluating its internal processes and activities, as well as its relationships with outside service providers and costs related to other vendors. Management has kept annual expense levels relatively stable, in part by strategic personnel reductions and compensation modifications. Beginning in April 2011, management implemented an across-the-board decrease in salaries and suspensions of certain employee benefits. Management plans to implement additional expense reductions that will substantially reduce ongoing maintenance costs. These maintenance expense reductions may be achieved through third-party administration of the business, other outsourcing efforts, or internal restructuring. However, Monarch Life remains subject to increasing inflationary and other economic pressures that continue to challenge its ability to sustain meaningful economies of scale and it may be unable to achieve reduced unit cost and expense levels.

8

MONARCH LIFE INSURANCE COMPANY

Notes to Statutory Basis Financial Statements

December 31, 2025

NOTE 1-ORGANIZATION AND BUSINESS-continued

Monarch Life invests the majority of its general account assets in investment grade corporate bonds. Although credit risk is relatively low for this asset class, rating downgrades and defaults are possible which could have a material impact on results. Additionally, Monarch Life has a portion of its bond portfolio invested in structured mortgage-backed securities. During an extended period of low interest rates, cash flows may be received sooner than expected and reinvestment risks associated with a low interest rate environment could be a concern.

Monarch Life's profits on the variable life business are derived from fees that are charged to variable life policies. Much of the fee income is calculated as a percentage of policyholder separate account fund values. Should unfavorable fund performance occur, anticipated profits from this line of business could be adversely impacted.

Risks and Uncertainties

If Monarch Life's financial results prove worse than those estimated in their cash flow testing projections, the Receiver could, among other things, propose a plan of rehabilitation that would modify Monarch Life's insurance obligations. If circumstances made such a plan not feasible (reasonably expected to return Monarch Life to solvency) then liquidation, and the consequent triggering of the insurer guaranty association system, is also possible. (Monarch Life has sought to secure its obligations to variable life policyholders through the combined effect of the Separate Accounts and a court-approved escrow account. Monarch Life therefore expects that there would be no adverse impact on variable life policyholders due to a plan of rehabilitation or liquidation.)

NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements have been prepared on the basis of statutory accounting principles prescribed or permitted by the Massachusetts Division of Insurance (the Division); a comprehensive basis of accounting that differs from accounting principles generally accepted in the United States of America (GAAP). The Division requires that insurance companies domiciled in the Commonwealth of Massachusetts prepare their statutory basis financial statements in accordance with the National Association of Insurance Commissioners (NAIC) Statutory Accounting Principles (SAP), subject to any deviation prescribed or permitted by the Division. Differences between GAAP and SAP are noted below.

Monarch Life received approval from the Division to apply permitted accounting practices for certain balance sheet liability amounts. Financial statement amounts for the Interest Maintenance Reserve, the Asset Valuation Reserve and the liability for deferred guaranty fund assessments have been reported as zero at December 31, 2025 and December 31, 2024. Additional details are included in the reconciliation that follows.

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MONARCH LIFE INSURANCE COMPANY

Notes to Statutory Basis Financial Statements

December 31, 2025

NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-continued

A reconciliation of Monarch Life's net income and capital and surplus between NAIC SAP and practices prescribed and permitted by the State of Massachusetts is shown below:

Monarch Life has no other permitted accounting practices that depart from NAIC SAP. Monarch Life's risk-based capital would not have been at a different regulatory action level had it not elected to use the state permitted accounting practices described above.

Use of Estimates

Preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

Revenue and Expenses

Premiums on ordinary life business are recognized as revenue when due. Premiums on accident and health business are recognized pro-rata over the life of the policies and the unexpired portion of premiums reflected are reported as an unearned premium liability, a portion of which is included in the "Premiums received in advance" line item. Premiums are recorded net of ceded reinsurance.

Commissions and expense allowances on reinsurance ceded are recognized as income when due rather than deferred and amortized over the terms of the respective reinsurance agreements, as would be the case under GAAP.

10

MONARCH LIFE INSURANCE COMPANY

Notes to Statutory Basis Financial Statements

December 31, 2025

NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-continued

Policy Liabilities 

Liabilities for policy and contract claims are established at amounts estimated to cover current and future benefits. Estimates of incurred and unreported claims are based on past experience. Policy reserves are based on statutory mortality and morbidity tables and interest assumptions rather than on the basis of the mortality, morbidity, interest, and withdrawal assumptions anticipated by Monarch Life when the policies were issued, as would be used under GAAP. The life reserves are based primarily on the 1980 CSO and CET tables at 4% and the 1958 CSO table at 4 1/2%. The annuity reserves are calculated in accordance with the Commissioner's Annuity Reserve Valuation Methodology (CARVM) and either the 1983 IAM, 1983 GAM, Annuity 2000, or 2012 IAR tables at various interest rates. The health reserves are based primarily on the 1985 CIDA, the 1985 CIDC, the 1964 CDT, and the 1941, 1958, and 1980 CSO tables at interest rates ranging from 2 1/2% to 5 1/2%.

Life insurance policies, for substandard lives, are charged an extra premium. Reserves for substandard policies are calculated as appropriate multiples of standard reserves.

Certain annuity contracts were priced with substandard loadings in the form of percentages and/or extra deaths. The respective reserves are calculated using 75% of these loadings.

The tabular interest, tabular less actual reserve released, and tabular cost have been determined by formula, as described in the NAIC Annual Statement Instructions.

Non-Admitted Assets

Certain assets (designated as "non-admitted assets"), principally assets with uncertain recoverability and agents' balances, are excluded from the statements of admitted assets, liabilities, capital stock and surplus and are charged to unassigned surplus. Under GAAP, such assets would be recorded at net realizable value.

Interest Maintenance Reserve/Asset Valuation Reserve

The Interest Maintenance Reserve (IMR) is maintained to capture certain realized gains and losses, net of federal income tax, on fixed income investments resulting from changes in interest rates. The IMR requires that these gains and losses be deferred and amortized to income over the stated or expected maturity of the disposed investment. The Asset Valuation Reserve (AVR) requires a reserve on invested assets to provide for the overall risks of asset credit or default losses. IMR and AVR would not be recorded under GAAP. Pursuant to a state permitted accounting practice, the IMR and AVR have been reported as zero at December 31, 2025 and December 31, 2024.

Investments

Investments are valued in accordance with methods prescribed by the NAIC. Short-term investments and bond investments are generally carried at amortized cost. Bonds that are considered other-than-temporarily impaired or deemed ineligible to be carried at amortized cost by the NAIC Securities Valuation Office (SVO) are carried at fair value. Asset-backed securities are carried at amortized cost, maintaining a level yield using the scientific method. The retrospective adjustment method is used in revaluing asset-backed securities taking into account anticipated prepayments and the estimated economic life of the securities. Prepayment assumptions for asset-backed securities were obtained from industry prepayment models. The NAIC SVO is used in determining the fair value of the asset-backed securities. Preferred stocks are generally carried at cost. However, preferred stock of Monarch Life's parent company, Regal Re, is carried at zero. Common stocks are carried at fair value. However, common stock of certain Monarch Life wholly-owned subsidiaries has been non-admitted.

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MONARCH LIFE INSURANCE COMPANY

Notes to Statutory Basis Financial Statements

December 31, 2025

NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-continued

Unrealized gains and losses on investments are credited or charged directly to unassigned surplus rather than being included in net income. Realized gains and losses on investments are recognized in net operating income, net of federal income taxes and amounts transferred to IMR. If it is determined that a decline in the fair value of a bond is other-than-temporary, the cost basis of the bond is written down to fair value as a new cost basis, and the amount of the write down is accounted for as a realized loss.

Under GAAP, investments in debt securities would be classified as held-to-maturity, available-for-sale, or trading securities, and the accounting treatment would be different for each category. Securities classified as held-to-maturity would be recorded at amortized cost. Securities classified as available-for-sale would be recorded at fair value, and unrealized gains and losses would be reported net of deferred income taxes as a separate component of shareholders' equity. Securities classified as trading securities would also be recorded at fair value, and unrealized gains and losses would be recorded in earnings. Impaired held-to-maturity and available-for-sale securities would be written down to fair value, which would become the new cost basis.

Ownership interests in limited partnerships are carried at the lower of cost or estimated fair value.

Policy loans are carried at unpaid principal balances, plus accrued interest.

Changes in the carrying amounts of Monarch Life's wholly-owned subsidiaries are credited or charged directly to unassigned surplus rather than being included in net income. Distributions from subsidiaries are included in net income. Under GAAP, wholly-owned subsidiaries would be presented on a consolidated basis.

Separate Accounts

The separate account assets and liabilities reported in the accompanying statements of admitted assets, liabilities, capital stock and surplus represent funds that are separately administered for variable life insurance policies and variable annuity contracts, and for which the policyowners and contract owners, rather than Monarch Life, bear the investment risk.

Separate account assets represent funds deposited by separate account policyowners and contract owners, segregated into accounts with specific investment objectives. The assets are carried at fair value. An offsetting liability is maintained to the extent of policyowners' and contract owners' interests in the assets.

Policyowners' and contract owners' interests in net investment income and realized and unrealized capital gains and losses on separate account assets are not reflected in Monarch Life's net income.

Transfers from separate accounts represent the net of premium and benefit activity between the separate accounts and Monarch Life's general account, and deferred policy loading and other charges assessed the separate accounts and/or the policyowners and contract owners.

Reinsurance

The policy liabilities in the statements of admitted assets, liabilities, capital stock and surplus are reported net of reinsurance on unpaid losses. Under GAAP, the statements would be shown gross of reinsurance.

12

MONARCH LIFE INSURANCE COMPANY

Notes to Statutory Basis Financial Statements

December 31, 2025

NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-continued

Pension and Other Postretirement Benefits

Monarch Life offered employer paid life insurance benefits, as described in Note 12, to certain retirees. NAIC SAP requires that the expected future cost of providing postretirement benefits be accrued during the related service period instead of when the benefits are paid and also provides a choice of options for recognizing the benefit obligation. Monarch Life has elected to record the entire liability for the expected future cost of the benefit obligation.

Surplus Notes

Monarch Life has surplus notes outstanding (issued September 23, 1992, with a stated maturity of September 23, 1997) with the Holders, as described in Note 1, with face amounts totaling $1.5 million. The surplus notes had interest rates of 5.13% at December 31, 2025 and 6.26% at December 31, 2024. Interest on the notes is reset at six month intervals. Payment of interest and repayment of principal are not payable and cannot be paid without prior approval of the Commissioner. There have been no payments approved to date.

Interest on a surplus note is recorded as an expense and a liability only after Monarch Life has received approval to make a payment from the Commissioner. Accrued interest that has not been approved for payment is not reported through operations or as an addition to the surplus note, and accordingly, is not reflected in these financial statements. Under GAAP, a surplus note would be reflected as a liability and interest expense would be accrued in accordance with the terms of the note.

Subsequent Events

Management has determined that no subsequent events have occurred following the balance sheet date of December 31, 2025, which require recognition or disclosure in the financial statements.

Recent Accounting Pronouncements

During 2025, the NAIC adopted revisions to SSAP No. 26 "Bonds" to incorporate a principle-based bond definition. Revisions were also made to SSAP No. 43 "Asset Backed Securities" and SSAP No. 21 "Other Admitted Assets". The revised definition includes criteria that must be met in order for a debt instrument to be reported as a bond, classified as either an issuer credit of obligations or asset-backed security. The Company adopted the new guidance on January 1, 2025. Upon adoption, no debt securities were reclassified to other invested assets.

Fair Value Measurement

Fair value is defined as the price at which an asset could be exchanged in an orderly transaction between market participants at the balance sheet date. Monarch Life's financial assets have been classified based upon a hierarchy defined by SAP. The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). An asset's or a liability's classification is based on the lowest level input that is significant to its measurement. For example, a financial asset or liability carried at fair value would be classified in Level 3 if unobservable inputs were significant to the instrument's fair value, even though the measurement may be derived using inputs that are both observable (Levels 1 and 2) and unobservable (Level 3).

13

MONARCH LIFE INSURANCE COMPANY

Notes to Statutory Basis Financial Statements

December 31, 2025

NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-continued

14

MONARCH LIFE INSURANCE COMPANY

Notes to Statutory Basis Financial Statements

December 31, 2025

NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-continued

Federal Income Taxes

Deferred income taxes are provided for differences in the values of assets and liabilities for financial statement reporting purposes and for federal income tax purposes, except that the amount of deferred tax assets that can be admitted is subject to limitation.

Monarch Life has certain temporary differences that may generate future tax deductions. These temporary differences primarily relate to basis differences in reserves, investments, non-deductible accruals, and carryforward items.

The valuation of deferred tax assets requires judgement in assessing the likely future tax consequences of events that have been recognized in Monarch Life's financial statements or tax returns and future profitability. Monarch Life's accounting for deferred tax consequences represents the best estimate of those future events. Changes in Monarch Life's current estimates, due to unanticipated events or otherwise, could have a material impact on the financial condition and results of operations.

In assessing the need for a valuation allowance, Monarch Life considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets. If, based on the weight of available evidence, it is more likely than not the deferred tax assets will not be realized, Monarch Life records a valuation allowance. The weight given to the positive and negative evidence is commensurate with the extent to which the evidence may be objectively verified. Statement of Statutory Accounting Principles (SSAP) 101, "Income Taxes" (SSAP 101), states that a cumulative loss in recent years is a significant piece of negative evidence that is difficult to overcome in determining that a valuation allowance is not needed against deferred tax assets. As such, Monarch Life maintained a full valuation allowance on the deferred tax assets until sufficient positive evidence exists to support reversal of the valuation allowance.

Monarch Life and its noninsurance subsidiaries are included in the consolidated life/non-life federal income tax return of Regal Re, its parent. Based on a written tax allocation agreement entered into on September 23, 1992, federal income taxes are allocated first within the life and the non-life subgroups and then to each member company within the respective subgroup with taxable income based upon the ratio of that member's separate taxable income to the total taxable income of all members with taxable income.

15

MONARCH LIFE INSURANCE COMPANY

Notes to Statutory Basis Financial Statements

December 31, 2025

NOTE 3-POLICY LIABILITIES

Monarch Life's major categories of reserves for life, annuity, and accident and health policies (excluding separate accounts) at December 31, are summarized below: