Report of Independent Registered Public Accounting Firm
To the Board of Directors and Contract holders of Transamerica Asset Allocation Variable Funds:
In planning and performing our audits of the financial statements of Transamerica Asset Allocation Variable Funds (the “Trust”) (comprising, respectively, Transamerica Asset Allocation - Short Horizon Subaccount, Transamerica Asset Allocation - Intermediate Horizon Subaccount and Transamerica Asset Allocation - Intermediate/Long Horizon Subaccount (collectively, the “Subaccounts”)) as of and for the year ended December 31, 2022, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), we considered the Trust’s internal control over financial reporting, including controls over safeguarding securities, as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements and to comply with the requirements of Form N-CEN, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
The management of the Trust is responsible for establishing and maintaining effective internal control over financial reporting. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of controls. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.
Our consideration of the Trust’s internal control over financial reporting was for the limited purpose described in the first paragraph and would not necessarily disclose all deficiencies in internal control that might be material weaknesses under standards established by the PCAOB. However, we noted no deficiencies in the Trust’s internal control over financial reporting and its operation, including controls over safeguarding securities that we consider to be a material weakness as defined above as of December 31, 2022.
This report is intended solely for the information and use of management and the Board of Trustees of the Trust and the Securities and Exchange Commission and is not intended to be and should not be used by anyone other than these specified parties.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 27, 2023
TRANSAMERICA VARIABLE FUNDS
TRANSAMERICA ASSET ALLOCATION VARIABLE FUNDS
Issued by
TRANSAMERICA FINANCIAL LIFE INSURANCE COMPANY
Supplement dated June 23, 2022
to the
Prospectus dated May 1, 2022
On June 15, 2022, the Managing Board of the Transamerica Asset Allocation Variable Funds considered and approved the liquidation and dissolution (“Liquidation”) of the Short Horizon Subaccount, the Intermediate Horizon Subaccount and the Intermediate/Long Horizon Subaccounts (each a “Horizon Subaccount” and collectively, the “Horizon Subaccounts”). Each Horizon Subaccount is a managed investment company, which invests in units of the Transamerica Variable Funds subaccounts (“TVF Subaccounts”). Transamerica Asset Management, LLC (“TAM”) serves as the investment adviser of the Horizon Subaccounts.
The Horizon Subaccounts, on the Liquidation Date (as defined below), will liquidate in accordance with the Plan of Liquidation: (1) sell units in the underlying TVF Subaccounts; (2) pay any liabilities; (3) purchase on behalf of participants with allocations to a Horizon Subaccount, units of the TVF Subaccounts in the same proportion as the Horizon Subaccount target allocations in the underlying TVF Subaccounts prior to the liquidation; and (4) wind up its operations and dissolve its existence. In addition, Contractholders or participants whose Contract value has an allocation to a Horizon Subaccount will receive notices of the Liquidation approximately 90 days and 30 days prior to the Liquidation Date and approximately 5 days and 30 days after the Liquidation Date. The Liquidation is expected to take effect on or about October 28, 2022 (the “Liquidation Date”), subject to any necessary regulatory approvals.
If you are a Contractholder or participant, you may transfer your interest in the Horizon Subaccount to any of the other TVF Subaccounts in accordance with the terms of your Contract at any time prior to the Liquidation Date. Additionally, if your Contract value in a Horizon Subaccount is transferred to the TVF Subaccounts upon the Liquidation, you may subsequently transfer your Contract value into any of the other TVF Subaccounts under your Contract in accordance with the terms of your Contract. Both transfers out of a Horizon Subaccount prior to the Liquidation and transfers out of the TVF Subaccounts following the Liquidation will be free of any applicable transfer restrictions, transfer charges and without such transfer counting as one of a limited number of transfers permitted during any period free of charge for a period of ninety (90) days after the Liquidation Date.
The Liquidation, as well as Contract value transfers in anticipation of or subsequent to the Liquidation, will not create federal income tax liability for you in connection with your Contract.
Effective on or about the close of business on September 1, 2022, the Horizon Subaccounts will close to new investors (“Closing Date”). If your Contract value is not allocated to a Horizon Subaccount on the Closing Date, you will not be able to make contributions or transfers into a Horizon Subaccount. If your Contract value is allocated to a Horizon Subaccount on the Closing Date, you will be able to continue to make allocations into that Horizon Subaccount through the Liquidation Date; provided however, if you subsequently transfer your Contract value out of a Horizon Subaccount you will not be able to make new contributions or transfers into that Horizon Subaccount. The Horizon Subaccounts reserve the right to modify the foregoing terms of the closure at any time and to accept or reject any investment for any reason consistent with the terms of the Contract.
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Investors Should Retain this Supplement for Future Reference